International Trade Committee on Feb. 2nd, 2022

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Wark.

Thank you to all the witnesses for the very valuable information.

We will now start with the members of the committee.

We will have Mr. Lewis for six minutes, please.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much, Madam Chair,

Committee members, it's great to be back here and doing our very important work.

Thank you to all of the witnesses for their incredible testimony this afternoon. You each brought something really unique to the table. I thank you to each and every one of you for that.

Obviously, as many of you know, my riding of Essex is very close to the busiest international border crossing for trade in all of North America, along with that of my excellent colleague Mr. Masse.

Many of my questions that I'll be focusing on will be with regard to our region. Although I know this is much bigger than just Windsor-Essex, that's really where it starts. There is no reason in the world why Essex-Windsor really shouldn't continue to be the global leader in not only the assembly plants of today but also the assembly plants of tomorrow for EVs, so I want to say thank you to each and every one of you for that.

This is really interesting tonight. I hear about a $6-billion investment, and $4 billion from what I understand for Ontario alone, but with regard to my consultations with at least a few of you before this call, I do understand that it's really about ensuring that we're completely aligned with United States.

I could go on for a long time, but I only have six minutes, and probably just five now. Nonetheless, my first question is this, Mr. Kingston. You spoke about reducing this “price gap”. You said that we have to reduce the price gap. I understand that.

There's been quite a bit of talk about the United States' potential tax rebate of $12,500. I'm going to switch gears here, sir. I'm going to talk about the luxury tax. If we're going to reduce the price gap within Canada so that we're more competitive, what would be your comment with regard to the potential proposed luxury tax on vehicles, only because I'm convinced that an EV is going to be north of $100,000?

[Brian Kingston]

Thank you, Mr. Lewis, for the question.

When it comes to boosting consumer adoption, the biggest challenge is overcoming that cost gap. That cost gap will come down over time as the technology advances, but the reality is that EVs are more expensive than internal combustion engine vehicles, so programs like the iZEV are extremely important.

A luxury tax as is currently being proposed and would apply to electric vehicles costing over $100,000 works against that. We need a suite of policies to help Canadians make that switch. Putting in place a tax that is a direct disincentive and encourages a consumer to go to an ICE vehicle in that price category works against what is ultimately the government's objective of getting to 100% ZEV sales by 2035. We need a whole-of-government approach and a range of consumer incentives to try to close that gap and get more Canadians into an electric one.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Kingston.

Through you, Madam Chair, I'll go back to Mr. Kingston.

I'm sorry to put you on the spot, sir. I'm going to also talk about something that nobody has spoken about yet. The question will first be for you, and then for the representative from Unifor, please.

I'm very concerned about chip shortages. I know there have been major investments downriver. For those who don't know, “downriver” is on the other side of the Detroit River, down in the big assembly plants in Michigan.

I do believe it to be true, Mr. Kingston, and please correct me if my numbers are way [Technical difficulty—Editor] million-unit shortage last year or that wasn't assembled last year due to the chip shortage. Can you advise this committee as to how both sides of the border can work together or what Canada needs to do to ensure that? The reason I'm asking this question, Mr. Kingston, is that obviously we want to produce and we want to assemble, but right in Windsor, right in my backyard, we've had major, major assembly plant shutdowns. The lines have been shut down. We're cut down to one. I'm just curious to know if you could respond to that, please.

[Brian Kingston]

Yes. Thank you, Mr. Lewis

You're absolutely right. The chip shortage has been one of the biggest headwinds facing the industry since the onset of COVID and the associated supply chain challenges and chip production shutdowns. Last year we started to see, towards the end of the year, in the third and fourth quarters, an increase and improvement with respect to chip inventories and, as a result, production.

However, the delta wave of COVID, followed now by the omicron wave, has led to another series of chip shortages that are impacting the industry globally, so production in Canada last year was down by almost a million units. We are hopeful that we're starting to see a light at the end of the tunnel with respect to a balance in terms of global chip production and demand.

The U.S. is taking steps. There is currently $53 billion U.S. about to be approved to enhance U.S. chip production capacity, which will be extremely helpful for the Canadian industry as well as the U.S. industry, given the integrated nature of our auto sector.

It has been a big challenge, but I'm hopeful that we're starting to see an end to that and you'll see production increase and then return to pre-COVID levels.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Kingston.

Mr. Wark, did you have anything to add—

[The Chair, Liberal, Judy Sgro]

Time is very short, Mr. Lewis. You have 31 seconds left.

[Chris Lewis, Conservative, Essex, ON]

Thank you.

I'll let Mr. Wark go if he has anything to add.

[Shane Wark]

Thank you. I will be brief.

I can tell you that the chip shortage has had a huge impact on the Unifor-represented Detroit-three assembly plants. We met with our leadership group just before the Christmas shutdown and calculated that among five assembly plants, the chip shortage has caused over two years' worth of layoffs in that period. I would strongly encourage our government to consider policies that would bring about chip production to Canada. I think it's a worthy discussion to have, for sure.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Mr. Virani, please.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you very much, Madam Chair.

Let me start by picking up on something that was raised by Mr. Lewis because I think the record should reflect the fact that our government's track record on EVs is actually to have instituted a $5,000-tax credit for EVs worth $50,000 or less. That was very deliberate because we've heard the narrative that electric vehicles are effectively a plaything of the rich, and that's not where we see the market going with things like the Leaf and the Volt. We're trying to empower middle-class Canadians to access cars at an affordable rate. That's why our tax credit is in place at that level, and at that level only.

I think it's lamentable when we were talking so much about tax credits—and many of you have commented on the need to ensure that we're incentivizing the Canadian market—that we don't have a provincial counterpart any longer, because the premier of the province of Ontario, Mr. Ford, has decided to remove that tax credit. I wanted the record to reflect that.

I'm going to pose some questions to the folks from Unifor: Mr. Wark and Mr. DiCaro.

On first reading, the build back better legislation initiative talks about empowering the vehicles to be bought in the United States, but particularly that the final assembly of the vehicles occur in unionized shops. I'm speaking as somebody who represents a lot of good unionized workers here in Toronto, and they're concerned about the health of the labour movement, as they rightfully should be.

At first instance you'd think that's a positive initiative, but can you unpack for me the importance of Minister Ng and Minister Freeland writing pretty stern letters to their counterparts in the United States last December indicating exactly the dramatic consequences of build back better and how it would impact Canadian industry and how it is indeed discriminatory, a term that many of you have used? What would be the impact on unionized labour here on this side of the border? I ask because it is Canadian unionized workers who are first and foremost in our priorities.

Could the folks from Unifor comment on that in about 90 seconds?

Thanks.

[Shane Wark]

Go ahead, Angelo.

[Angelo DiCaro, Director of Research, Unifor]

Thanks very much for the question.

In terms of the impact, as was mentioned in Mr. Wark's opening remarks, we're talking about existential threats to this industry and future investments. To close us off from our biggest trading market would be devastating.

I think our advocacy in this effort has been to try to make sure, as in the past and as in so many things, that we're included. It's important not to disentangle Canada from the U.S. market. Aspects of this proposal were very interesting, very innovative. I think the approach that was taken to try to support good, high-wage jobs to make sure that you don't have a public subsidy incentivizing low-road employers, that is, employers that were actively trying to thwart workers' rights to join unions, and things like that. These are important pieces to build into policies.

The problem is why would the U.S. think that of all the problems that can be dealt with in the world, Canada—which has comparable rates of unionization and wage levels, if not higher—is the problem? We're not the problem. To be caught in the crossfire of this was kind of like a double whammy to union members watching this drama unfold.

I think there are ways we can get at that policy end without being so discriminatory. Hopefully cooler heads will prevail if this bill does resurface. We can have a smarter discussion about what that can look like.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you, Mr. DiCaro.

Further to that point, I found it striking because in the renegotiation of CUSMA, as you well know at Unifor because you were involved in it—people like Jerry and others were—we went to great lengths to co-operate with the United States, particularly on things such as labour reform in Mexico. We've taken the step of actually investing in labour reform in Mexico to the tune of $27.5 million. We've delegated two additional labour attachés to the Canadian diplomatic mission in Mexico.

Can you comment on the importance of those kinds of investments in shoring up labour and support for unionized workers continent-wide?

This is for Mr. DiCaro first, and also Mr. Wark if he wants to jump in.

[Angelo DiCaro]

Absolutely.

I think all of this complements my earlier points about the last number of years specifically through CUSMA. That experience was a bit of a changing of the channel about how we understood the role of labour rights in continental free trade, something another speaker, I can't recall who.... This is very innovative stuff. This is stuff that doesn't exist in trade agreements anywhere else in the world, so we were breaking ground on these concepts.

We're doing it in the spirit of solidarity, working with independent Mexican labour unions. In fact, there's a vote happening right now at a truck plant among a series of workers, all of which has been brought about by the laws established under the CUSMA, which are having a positive effect. It's unfortunate then that a policy like this surfaces that is obviously very inward looking and isolationist, and really in practice aims to undo a lot of that goodwill, a lot of that solidarity that was built up.

I don't know what more to say about this other than it's a disappointment, and again, hopefully there are ways to rectify this as we go forward.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thanks.

Madam Chair, how much time do I have?

[The Chair, Liberal, Judy Sgro]

Thank you very much. I'm sorry Mr. Virani, but your time is up.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you.

[The Chair, Liberal, Judy Sgro]

Mr. Savard-Tremblay the floor is yours, for six minutes please.

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

Thank you, Madam Chair.

I want to thank all the witnesses for their presentations. Their remarks give us an idea of the potential consequences of this policy, which still hasn't been adopted, in their respective fields.

Mr. Breton, your position as president of Electric Mobility Canada gives you a broad perspective. In addition, you were the environment minister in Quebec. As a result, you have a fairly in‑depth knowledge of the electrification sector in Quebec.

I'll first ask you a quick question, which will require a yes or no answer.

I'll paint a rough picture, which could certainly be further developed.

Is it true that light‑duty vehicles are built in Ontario and heavy‑duty vehicles are built in Quebec?

[Daniel Breton]

You could say that, although heavy‑duty vehicles are also built in Manitoba, for example at New Flyer.

Ontario's expertise in light‑duty vehicles is recognized. Quebec has expertise in heavy‑duty vehicles, but so does Ontario. However, heavy‑duty vehicle electrification is more common in Quebec.

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

These include Lion Electric and the bus companies.

[Daniel Breton]

Exactly.

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

Are these two sectors being fairly and properly supported given the current challenges?