Good afternoon. My name is Gian Paolo Vescio. I'm general counsel for APMA. Thank you for having me today.
The Biden administration's Democratic leadership and the United Auto Workers lobby in the U.S. worked together in 2021 to propose a $12,500 tax credit to consumers for electric vehicles made exclusively in the U.S. by 2027 via the build back better bill, which is now stalled in the Senate. While we were very active in trying to get Democrats to change course on a policy instrument that we considered an existential threat to the Canadian automotive sector, we do not celebrate its current demise. We know that the Biden administration is dedicated to bringing the legislation back in a form that it calculates will pass. The threat of the the incentive still hangs in the balance.
The U.S., in our observation, has turned its bipartisan attention to renewed protectionism under the threat of the rise of China. The EV market is just one element of that focus. Since the proposal first saw its amendments authored by Senator Stabenow of Michigan, we've been working closely with the Canadian embassy in Washington and directly with our congressional network in Washington to articulate to both sides of the aisle that this proposal will have an adverse affect on U.S.-based parts suppliers.
While we're Canada's national trade association for OEM suppliers to the global automotive manufacturing industry, the APMA also represents almost 40 companies that own and operate 156 factories in 18 U.S. states and employ 43,000 Americans. We have warned the American lawmakers that it's a discriminatory trade action that will affect the sector in both countries and will be challenged with vigour.
The arguments for Canadian interests against this proposal have been well articulated and, for that matter, have been well defended by the federal government. The Prime Minister and the trade minister have been leads and the APMA has conducted and supported meetings directly with team Canada. However, our focus in Washington is to appeal to U.S. lawmakers to understand the damage they would be doing to the U.S. auto sector, with the hope that this can gain some real traction for the cause down there.
In Canada, we make two million vehicles a year and we buy two million a year in a normal, non-pandemic year. In the U.S., they make 12 million vehicles annually, but buy 17 million. As a net importer of approximately five million vehicles, the country can accommodate an incredible amount of new production to replace imports it chooses to block.
This is the simple math that supporters of this bill are pursuing, but they are ignoring the way in which the automotive sector has been built over the last 100 years in our two countries. In Canada, the proposal would do irreparable harm to U.S. production investments. In addition to that fact, the three U.S.-based automakers—allowing for Chrysler and Dodge's Parisian headquarters—make one million vehicles here for U.S. consumers annually, in a non-pandemic year. They also contain 50% U.S. parts and 60% U.S. raw materials. All told, five assemblers export 80% or 1.6 million vehicles a year from Canada to the U.S.
They will all be hurt by this, especially their U.S. suppliers. We have been clear to the White House in written communication that this is not a smart move if the objective is to boost American automotive fortunes.
In the CUSMA agreement that was recently negotiated between the U.S., Canada and Mexico, we jointly agreed to and introduced the highest regional value content minimums in history, designed to drive increased business to local auto parts and raw materials suppliers.
If the U.S. passes this proposed tax credit scheme, it will nonsensically incentivize reducing purchases from U.S.-based suppliers. A vehicle built in one U.S. state that is destined for another U.S. state does not cross a border. It is not an export under the CUSMA and is not subject to any RVC compliance requirements. Because of this, U.S.-based vehicle assembly will surely reduce U.S. content in pursuit of now-permitted low-cost offshore parts alternatives for their vehicles. With no tariff threat used to source locally, the biggest winners would be suppliers from countries like China, Vietnam, Malaysia and other non-U.S. interests.
We've been very clear about this in our in-person lobby campaign on the Hill since November. As I reflect on some of the meetings that I've had with Senator Ossoff, Senator Warnock from Georgia and the APMA's dozen or so meetings with senators and congressional reps from both parties, we know there is time for the U.S. to reconsider its course of action. However, we have decided to not just focus on reminding them of their trading obligations to us, but to focus on the health and sustainability of the U.S. automotive parts sector, which, through this measure, we feel has been ignored in a misguided attempt to satisfy a special interest, single purpose labour partner.
Thank you.