International Trade Committee on Sept. 18th, 2024

[Brian Kingston]

It's just the very end.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

I was asking you if that was a path you'd be prepared to support. It seems that green tendering and environmental tendering would pass the legal test.

[The Chair, Liberal, Judy Sgro]

I'm sorry, Mr. Savard-Tremblay. We're going to start this over again, so repeat your question. We're going to give you the time.

Start again.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Kingston, I was telling you that we had representatives from Electric Mobility Canada at the last meeting two days ago. I was also saying that, unlike NAFTA, CUSMA doesn't have a chapter on government procurement. So there couldn't be an exemption for Canada, although there was one under the Obama administration. Now it's no longer possible.

If memory serves, in the previous Parliament, our committee studied the issue of green technologies and initiatives. According to a study by the Université de Sherbrooke and according to researchers, a call for tenders based on environmental criteria would pass the test of free trade rules. Is that something you could support so that we could benefit from American markets and, of course, implement it here at home?

[Brian Kingston]

Thank you. That is a great question.

First and foremost, with any policy we take with respect to green tendering, particularly for the government sector, we have to make sure that we're compliant in the context of CUSMA. As we approach the review in 2026, we need to remove any possible irritants for the United States to ensure that we get through it successfully and that the agreement does not sunset. It is very important to remain compliant with our existing trade rules.

However, I think there is some merit to examining ways, particularly for procurement and public procurement of green products, including electric vehicles.... The federal government has committed to greening and electrifying the federal fleet and has made very slow progress in doing that, and this is where we should be leading. We should be leading EV adoption in federal fleets. Anything that can be done for programs that can encourage and accelerate that, as long as they're compliant with trade rules, would be helpful.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Should we also push for that in Washington?

[Brian Kingston]

Yes. The reality is that we have always had challenges with the U.S. and “buy America” policies. There have been great, valiant efforts by federal and provincial governments to try to open those up to Canadian products. We should always push for that, but we also have to be realistic. There will always be a protectionist sentiment that favours U.S. products and goods.

It doesn't mean we shouldn't try, but it's the reality of dealing with that market.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Desmarais or Ms. Cobden, do you want to add anything about this type of call for tenders?

[François Desmarais]

Yes, of course.

We believe it would be beneficial for us, our members and our local producers if the federal government's calls for tenders contained certain measures or technical criteria regarding the carbon footprint of the steel purchased to respond to these calls for tenders.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Very well, thank you.

Mr. Burton, if I'm not mistaken, you're an expert on China. At our first meeting on Monday, we talked about industrial espionage. I'm surprised that we're not talking about it more, since some cases have been documented or proven. There may be the impression that this is just the tip of the iceberg. We can't say it for sure, but we can say it with some confidence. If we know some of it, there must be a lot more we don't know. In fact, we know that a spy at Hydro-Québec was caught at one point.

From the moment we know that a country is engaging in industrial espionage, we can hardly use the argument that tariffs would harm healthy competition, especially if we know that the country in question isn't practising healthy competition.

[Dr. Charles Burton]

Well, I mean certainly I think the Chinese regime is trying to get it in all directions, and part of it is their pervasive use of industrial espionage or the use of other programs such as inviting to China scientists who have expertise relevant to Chinese government priorities and giving them different benefits, such as maybe putting them on boards to monetize their scientific achievements.

You know, there's an enormous Chinese diplomatic cohort here in Canada, much larger than those of other comparable nations. One assumes that Chinese diplomats are as efficient as any others in our country and that a lot of those people are in fact coordinating targeted espionage to get technologies that would benefit China's rise.

I think we do have a lot of concerns about the overall Chinese strategy of subsidizing EVs to serve various Chinese regime interests. Xi Jinping has a program called the “community of the common destiny of mankind” and his belt and road economic program, which they're quite explicit about. They want to make China the dominant power on the planet and reduce the authority of liberal democratic institutions like the UN and the WTO. He hopes to achieve this as soon as 2050.

Putting the subsidies into the EVs does address China's problem of needing to have overcapacity to keep their economy going. It's useful for them to weaken our economy by displacing the critical industries that are so important to our economy and enabling espionage. I mean, this is all part and parcel of it.

The other concern we have, which was briefly raised, is that we could have problems bringing in these vehicles because of the recently strengthened forced labour legislation and the reports by, say, the Australian Strategic Policy Institute that suggest the critical minerals in those batteries are the product of Uyghur forced labour.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Burton.

We'll move on to Mr. Cannings for six minutes, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

Thank you to all the witnesses here today. It's been a very interesting conversation.

I'd like to concentrate on talking about EVs and the impact these tariffs might have on our EVs that are available in Canada especially. I'm going to start with Mr. Kingston.

This whole thing reminds me of back when I was young, a long time ago in the late 1960s and early 1970s, when the North American auto workers were making big, gas-guzzling cars, and of what students like me were forced to buy. I drove an Austin 850, and my girlfriend drove a Honda Civic. That's when they were small little things. That competition, especially in the seventies, when gas prices went up, drove the North American manufacturers to follow suit and produce those kinds of cars.

Here, we have a situation where the world is shifting to EVs, yet it seems like the North American market is just dragging its heels and will have to be dragged kicking and screaming to do anything about it. Perhaps, Mr. Kingston, you could tell me what affordable EVs your members make—in all of North America, not just Canada, because I know everything's integrated—and I mean under $40,000.

[Brian Kingston]

First, I would just say that I think it's a very different situation from what we saw in the seventies. North American auto manufacturers are building EVs. There are over 80 models in the market. That's an increase from three models in 2012. They're here, and they're available in every segment.

The competition that is coming in from China is not being done on a level playing field. They're subsidizing their manufacturers to the tune of nine times what you see in western democracies. This isn't a fair playing field. That's why they bring these vehicles in at a price point that is so significantly lower than what you see in North America.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

For the ones that are available in Europe, there are relatively inexpensive EVs available. Are they all made in China?

[Brian Kingston]

Yes, Chinese manufacturers went from virtually zero market share in Europe.... They went to about 8%.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'm talking about Citroën, Renault and Volkswagen.

[Brian Kingston]

It's a very different car market in Europe, as most Europeans drive smaller vehicles. The North American market is dominated by SUVs and pickup trucks, larger vehicles with larger batteries and, therefore, larger price points at this point in the transition.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay.

I'll turn to Mr. Wallace.

Perhaps you could comment on what your recommendations are to.... What I really care about is having EVs widely available in North America—Canada especially—at a price point people can afford. I went shopping for EVs this summer, and even for someone of my means, the prices were mind-boggling, so Mr. Wallace, perhaps you could suggest what could change that and do so quickly. We have to make this transition.

[Nate Wallace]

The auto industry will often talk out of both sides of its mouth on this issue. They'll say we need these very high tariff walls to make sure these small, cheap electric vehicles can't just come in and completely take over the market, and then they'll say, actually, we don't offer those vehicles in North America because they don't sell. Which one is it?

In Europe there is some degree of Chinese competition. I'll quote the Stellantis CEO, Carlos Tavares, who asked investors in February 2024, as they were introducing a budget EV model in Europe:

Do we want that the Chinese carmakers take a significant share of the U.S. market in the next 20 years, or the next 10 years?

He asked:

How do we prevent that from happening beyond all the protectionist decisions, which are out of my reach? Well, by making our consumers happy.

There are the Stellantis Citroën ë-C3, available in Europe as of this year, at a price of 23,300 euros, which is about $34,000 Canadian; the Stellantis Fiat Panda, also in a similar price range; and the Renault 5 E-Tech. I have a whole table of these models that are being introduced in Europe by incumbent automakers who, whenever they are interviewed by publications like Bloomberg or others, and when they are introducing these models, say they're doing it to fend off the threat of Chinese competition.

What we worry about is that if we take an approach that completely shuts out competition rather than establishing a level playing field based on an actual subsidy investigation, we risk continuing the pattern of very high prices for electric vehicles in North America relative to in other markets like Europe.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay. I'll just give you a bit of a chance to talk about the future, including used car markets and how governments can help those.

[Nate Wallace]

If you look at where Canadian car buyers actually buy their cars, mostly low- and middle-income consumers buy used vehicles. In most cases, they don't buy vehicles brand new. We don't actually have statistics for the Canadian market, because StatsCan doesn't collect those, but if you look at U.S. statistics and U.K. statistics, you're looking at about 80% of vehicle purchases being done in the used vehicle market.

Something we don't do in Canada is to have our EV purchase incentives actually go to the used vehicle market, where we could actually start helping those folks get access to more affordable EVs.

There are a number of things we could be doing to help foster the used EV market in Canada. I realize we're out of time, but I can follow up on that if anyone else has questions about that.

[The Chair, Liberal, Judy Sgro]

Yes. Thank you very much.

We're moving to Mr. Jeneroux for five minutes.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you, Madam Chair.

Thank you to everybody joining us here today in the room, and to those online, for taking time out of a Wednesday afternoon or early evening to spend it with us.

Mr. Burton, I thought some of your testimony at the beginning was quite interesting and even bordering on shocking in terms of what lies ahead. Canada, in the past, has banned Huawei and TikTok over data privacy concerns. Are you suggesting that the same action should be taken with companies like BYD and other Chinese vehicle importers?

[Dr. Charles Burton]

I am, because I don't think there's any way we can prevent these things from being used for hybrid warfare-type purposes.

As the Americans pointed out, when the time comes, we could see a lot of things happening to infrastructure that the Chinese regime has been able to penetrate.

I think, in general, from talking to my friends in the United States, the U.S. is talking about the dumping aspect of EVs in their rhetoric about the tariffs, but the main concern is the security concern. However, if they raise the security concern explicitly with the Chinese, that would probably stimulate worse retaliation on the part of the Chinese regime than the dumping allegations would. There is going to be retaliation. China will not allow us to do this without trying to exact some kind of cost. The question is how bad it will be.