International Trade Committee on Feb. 9th, 2022

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Adams.

If I heard you correctly, I believe you said your members put approximately 56% of the EVs on the road that received a federal iZEV initiative. Can you expand a little bit further on that, please?

[David Adams]

Sure. As the committee may or may not know, the federal government has put in place a federal incentive program of up to $5,000 for zero-emission vehicles. There are certain constraints on that program, in terms of the MSRP caps for instance, on the vehicles that are eligible. It's currently set, I believe, at around $45,000, so any vehicle priced over $45,000 is not eligible for the incentive. Canadians can apply regardless of the province they live in, and the incentive occurs at the point of sale at the dealership.

[Chris Lewis, Conservative, Essex, ON]

That's excellent. Thank you.

Again, sir, I'll go back to you. I'm sorry to put you on the spot so early.

To your understanding, Mr. Adams, what is Canada's current zero-emissions policy, and has it or has it not impacted the auto trade sector in Canada? If it has, what can be done to alleviate it or make it better or stronger?

[David Adams]

Right now, I guess zero-emission vehicles would fall under the current greenhouse gas emission regulations, so we would argue that, with more stringent regulations, you end up effectively with a de facto zero-emission vehicle mandate, because the only way the vehicle manufacturers would be able to attain those emission standards under increasingly more stringent regulations would be to put more zero-emission vehicles on the road.

As far as zero-emission vehicle legislation is concerned in Canada, two provinces currently have what are called zero-emission vehicle mandates: British Columbia and Quebec. Each province requires manufacturers to meet a certain percentage of zero-emission vehicle sales as we move forward, and increasingly more stringent levels as we move forward. The federal government, as I mentioned, is currently looking at introducing a national zero-emission vehicle mandate.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Adams.

Madam Chair, how much time is left, please?

[The Chair, Liberal, Judy Sgro]

You have two minutes and 20 seconds.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Madam Chair.

Thank you, Mr. Adams.

Mr. Agnew, I'm going to turn my attention over to you, sir. Thank you for your testimony as well.

You said that two things really impact the Essex-Windsor area. Of course, that's supply chain resiliency and Line 5. I know they impact more than Essex-Windsor, but I'm going to suggest we're kind of the front lines. Obviously, what's happening in Essex-Windsor right now with the supply chain and our borders will have a major trickle-down effect not only for the Ambassador Bridge but for the Blue Water Bridge and the Peace Bridge in Niagara Falls. I'm very much aware of that, so thanks for bringing that up.

With regard to Line 5, I'm just curious. With regard to your industry, your manufacturers, if we can't come to a solution between Canada and Michigan or Canada and the United States, is there a dollar figure or a percentage you could put to that with regard to the impact on the industry? How significant is Line 5 and getting all people back to the table and discussing this moving forward? I heard a lot of anxiousness, I'm going to call it, in your remarks, and of course I'm anxious about this too, as many of us are. I'm just curious: Do you have any numbers for that, sir?

[Mark Agnew]

I can commit to following up via the clerk and the chair with the numbers that we do have. I don't have them at hand.

I think, certainly qualitatively, there is the concern about the transportation infrastructure in the southwestern Ontario region that risks not having the fuel it needs to move, whether it's trucks or aircraft, with what's going through the Line 5 pipeline, but I would be happy to follow up with some numbers for the committee's consideration.

[Chris Lewis, Conservative, Essex, ON]

I'm assuming I have only about one more minute, so I'll stick with you, Mr. Agnew.

[The Chair, Liberal, Judy Sgro]

You have 36 seconds, sir.

[Chris Lewis, Conservative, Essex, ON]

I'll give it over to my friends across the way and I'm going to work collectively. As you can see, we work together.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Wonderful.

We will move on to Mr. Virani, for six minutes, please.

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

That means I have six and a half minutes. I'll thank Mr. Lewis right now.

Thank you very much, Madam Chair.

I'm going to start with you, Ms. Cobden, because you mentioned something that came up in the testimony of some of the other witnesses as well. You talked a little bit about the nature of the shift that's going on with the Biden administration: the fact that they're looking very vigorously at carbon reduction and reducing carbon-intensive programs, and the fact that they want to do trade with entities that have positive carbon policies in place and greener policies in place. You mentioned specifically their orientation vis-à-vis the EU on that front, as it compares with China.

Can you tell me, from your perspective, Ms. Cobden, when we have a situation where we have a track record of significant policy that has been implemented here in Canada, including things such as putting a price on carbon pollution, what does that do in terms of our competitive advantage when we are dealing with the Biden administration and putting our best foot forward as a green partner with whom to deal?

[Catherine Cobden]

Yes, in fact I believe that Canada is very well positioned to put our hand up, and we should put our hand up and say that we want in as well.

When you take a look at the specifics—and by the way, both Jean and I were referencing the same agreement because it applies to both aluminum and steel—when you take a look at that, you see that this is a trade agenda with partners who are willing to be green.

On the steel side, I can say that what's very powerful is that the North American steel industry has the best climate performance of any steel industry in the world, collectively, and that of course applies specifically to the Canadian steel industry, but that's right across North America. I see this as a tremendous opportunity, not just with the regulatory structure we have in place and with the vision we have in place, but also because the industries themselves have that green performance.

My only caution, if I may offer one, is that we must really work in lockstep with our trading partner and not rush out ahead too far on important items like border carbon adjustment mechanisms and that sort of thing.

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

Thank you.

I'm going to build on this a little bit. We've heard a little bit about what we're doing federally, but also just in terms of this committee hearing we've heard about what's going on in certain provinces. I know that in some provinces around the country we're moving in the same direction with things such as replicating our support for the EV industry. That support is also being shown in B.C. and Quebec. It was being shown by the Province of Ontario until a change of government occurred in 2018.

Could you comment on this? When a change of government occurs at the provincial level and EV tax credits that were once there are summarily removed, what impact does that have on promoting the green advantage that Canada offers?

Ms. Cobden, perhaps you could comment on that, and also Monsieur Simard.

[Catherine Cobden]

I actually think this question might be better placed to the automotive sector.

What I can say is that no matter where the steel is being produced in Canada, we are meeting and exceeding the best there is in the world. We are number one in the world on one production type, and number two in another. There are 50 or 60 nations around the world producing steel, so we can hold our head up high.

I would advocate, as I always do, that we need to be aligned federally and provincially in cross-border deliberations. We don't have to be aligned on the exact minutiae, but in terms of the intent and the content of the dialogue. I do think climate is a place where we need to have that alignment in cross-border discussions.

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

Mr. Simard, go ahead.

[Jean Simard]

I totally agree with Catherine. Our industry has the lowest carbon footprint in the world, and it is moving on to no carbon footprint eventually, with the Elysis project. [Technical difficulty—Editor] anchored in two provinces that have carbon pricing mechanisms: namely, B.C. with its tax, and Quebec with its cap and trade system.

We can very robustly approach any system in the world in any trading bloc, with both our footprint and the pricing mechanism, which pass the test of the World Trade Organization or any other organization. Basically, the message here is that Canada has a very highly competitive natural advantage moving forward in the quest to decarbonize the world. Let's get on the ice.

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

Thank you.

I'll put the last question to Mr. Kennedy.

A number of people on this panel have talked about CUSMA. You mentioned not taking it for granted—that's one of the notes I jotted down here—that we have this agreement, and it's been modernized. We've heard some testimony at other meetings of this committee about CUSMA and the dispute settlement mechanisms, and about how that's been improved in favour of Canada and countries like Mexico. I know that we joined a piece of litigation initiated by the Mexicans with respect to things like country-of-origin labelling and how that applies in the auto sector, and specifically to the component parts of the automotive vehicle.

Can you give a comment to the committee on those improvements to the dispute settlement mechanisms within CUSMA and what that does for Canada and Canada's position?

[The Chair, Liberal, Judy Sgro]

I'm sorry. I will have to ask for a very brief answer to a very long question.

[Trevor Kennedy]

Sure.

Very briefly, not only for Canada and Mexico but also for the United States, we now have a framework that there's confidence in. It's enforceable, and we're starting to see the early stages of that agreement working the way it was intended. I would say that's a positive development for North American trade.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Kennedy.

Monsieur Savard-Tremblay, you have six minutes.

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

Good afternoon, everyone.

My question is for Mr. Zaghib.

Generally speaking, we anticipate a relative, even significant, increase in demand for electric vehicles. Electric cars are more and more popular and people are increasingly talking about them.

Canada is investing extensively in the electrification of public transportation. For example, tax measures are being introduced to promote electric vehicle purchases.

According to some stakeholders, however, Canada should do more to ensure that the entire supply chain and economy benefit from that increasing demand. I'm thinking, for example, of Matthew Fortier, president and CEO of Accélérer, a coalition of Canadian industry players. He isn't alone in thinking that Canada has wasted a lot of time and that the current strategy should have been in place long ago.

Is Canada lagging behind other countries?

[Dr. Karim Zaghib]

That's an important question.

Now's the time. Most electric and “regular” car companies will go all in on the electrification of transportation within five years. It's the Kodak syndrome. Canada isn't lagging behind because it has an extensive ecosystem, but it has to seize this opportunity.

Lithium-ion and iron phosphate battery technologies originated in Canada and the United States but have unfortunately been transferred in part to Asia. Consequently, the federal government and the provinces must work together, and soon, to restore industrialization in the manufacturing sector, and for both sectors. As I said earlier, it has to create a budget and establish a policy and strategic plan. It won't be too late if we do that soon.

As I said earlier, Canada has an extensive ecosystem: natural resources, human capital, technology and its strategic position in relation to the United States and Europe. “Regular” car manufacturing is already well established in Ontario, as is truck, bus and other vehicle manufacturing in Quebec and other provinces.

In short, Canada isn't lagging behind, but it has to board the train as soon as possible.

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

How do we board the train as soon as possible?

Canada isn't a laggard, but it wants to maintain its position. It could even get ambitious and take the lead.