International Trade Committee on Feb. 9th, 2022

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will move to Ms. Dhillon now.

Go ahead, please, for five minutes.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you, Madam Chair.

Mr. Simard, since the automobile industry is concentrated in Ontario, as a member from Quebec, I'd like you to explain to us the overall effect the proposed tax credit will have on Quebec's aluminum industry businesses that form an active link in the supply chains essential to our Canadian automotive industry.

[Jean Simard]

As I mentioned at the outset, in the current market context, 90% of the aluminum produced in Quebec and British Columbia is sold to the United States. What's important to understand here is that Americans, who consume 6 million tonnes of aluminum a year produce only 1 million tonnes. Consequently, they have to import the rest, and Canada is the source of approximately 70% of what the U.S. imports to meet those needs.

As a result, from our standpoint, with regard to primary production, a tax on electric vehicles or any similar measure wouldn't affect jobs or production because our plants operate at full capacity 365 days a year to meet the needs of a market that can never get enough metal. That's why the United States has to meet the rest of its needs by importing aluminum from countries such as India, Russia and others in regions around the world. It's the biggest and most profitable aluminum market in the world. There are no primary metal impacts.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Okay.

As you know, the federal government offered serious incentives to encourage people to buy electric vehicles. How do you feel the United States could promote the purchase of electric vehicles made in North America?

[Jean Simard]

I'm going to reply from the industry standpoint again. Taking what we discussed earlier into consideration, by which I mean the need to reduce the carbon footprint and offer consumers solutions that help to do that, the best policy should reward those who purchase vehicles made from materials that have the smallest carbon footprint, namely steel and aluminum products made in North America.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

What do you feel is the ideal way to reduce the carbon footprint of vehicles?

[Jean Simard]

As we say in English, that's how you get the most bang for your buck.

For every dollar spent on a vehicle, there would be much more of an impact on decarbonizing the planet because the production cycle would create the lowest possible level of carbon and deliver a vehicle that emits as little carbon as possible.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you very much.

I will end there, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll move on to Mr. Savard-Tremblay for two and a half minutes, please.

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

Thank you, Madam Chair.

I have a question for Mr. Adams this time.

Mr. Adams, I believe you mainly represent the personal vehicle market. I will nevertheless ask you my question, and you can tell me if you can answer it.

Some heavy vehicle manufacturers, including Lion Electric and Vicinity Motor Corp., are building facilities in the United States, partly in order to shelter from protectionist measures. They figure that if vehicles have to be assembled in the United States, they will move their plants there.

Even though the bill has not yet become law, and even though we don't know whether it ever will, there is still what we might call an anticipation impact that is leading companies to avoid the worst by opening plants there. Are you already feeling the impact of the Buy American Act and the potential EV tax credit proposal, in terms of factories moving to the United States?

[David Adams]

Thank you. It's a very important question and I appreciate it.

As I mentioned in my testimony, we are already probably seeing some of the effects of just the threat of an EV tax credit as it's been structured under the build back better bill. Whether or not the tax credit remains as part of any new build back better bill, which is largely dormant at the moment, remains to be seen. However, I would say that it definitely casts a pall over investment in Canada when any EVs that would be built in Canada could potentially be prejudiced by a tax credit that would only be applicable to American-built vehicles.

It's tough to go into a market where 85% to 90% of our vehicle production goes when you're at a $12,500 disadvantage.

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

Do you feel that Canada is taking a strong enough position on this issue?

[David Adams]

I think the federal government is doing everything it can to make officials in the United States aware of the issue and its impact on Canada.

As I said in my comments, there's some ignorance—with all due respect to American legislators—in that they weren't aware of the impact on Canada of those provisions in the build back better bill. With respect, again, it's a humongous bill. I think it's $1.7 trillion and it includes many things, so it's not beyond the realm of expectation that some regulators in the U.S. would not know anything about the EV tax credit.

I believe the federal government, the consuls general and certainly the trade minister are actively engaged in this file and doing everything they can to find a solution. It may be the solution they alluded to in the letter that the trade minister and the Deputy Prime Minister sent last fall—

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Adams. I'm sorry to interrupt.

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

Thank you, Mr. Adams.

[The Chair, Liberal, Judy Sgro]

We'll move on to Mr. Masse, please, for two and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

You can finish your thoughts there, Mr. Adams, please.

[David Adams]

I was just going to say, that's in terms of the potential retaliatory measures that were outlined in the letter that the Deputy Prime Minister and the trade minister sent down to senators last fall.

[Brian Masse, NDP, Windsor West, ON]

I just want to follow up on that. There have been a number of other trade issues with the United States, not just this one. Do you have any suggestions for a more robust approach to deal with those things? We're going from piece to piece: softwood lumber, dairy, a whole series of things. Do you have any suggestions on that? It's becoming a whack-a-mole on these things.

[David Adams]

It is, and it doesn't seem to matter whether it's Republican or Democrat; we have a protectionist sentiment in America right now. As other witnesses have suggested, and we would concur with that, we need to have a more structured and more engaged full team Canada approach to ensure that we help Americans understand that when they put in measures, either knowingly or unknowingly, that impact Canadian industries, it also impacts their own industries and their own citizens.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

I have a very quick question for Mr. Simard.

With regard to the time frames towards getting us more competitive, can you give us an idea...? Are we late to the game, or can we still make up time with regard to EV, the minerals and the connections?

[Jean Simard]

It's very hard for me to answer this question. I think it's more Mr. Zaghib who was handling this subject, if I may say.

[Brian Masse, NDP, Windsor West, ON]

Sure, thank you, and I'm sorry. I didn't mean to put you on the spot that way.

[Jean Simard]

That's okay.

[Brian Masse, NDP, Windsor West, ON]

Mr. Zaghib, go ahead, please.