International Trade Committee on Feb. 26th, 2026

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

For example, is the entry of several thousand Chinese electric vehicles safe, when we know that we could have another option, that of European electric vehicles, which does not pose any concerns related to human rights, industrial espionage or the collection of personal data?

We know that these are highly technological vehicles that can record conversations and that, often, many of the components used in their production are made using forced labour. All of that is provable.

Is it a good idea to let them in, when we know that we could have chosen another much more advantageous option?

[Michael Kovrig]

Yes, that's a very good point as well.

So far, Canada has started with a small volume, but it sends a big geopolitical signal that a G7 country is reopening its electric vehicle market to China, and this ultimately tests Canada's alignment with the United States and Mexico ahead of the CUSMA review. It has strategic implications.

For individual Canadians, it's obviously also significant from a privacy and security perspective. Electric vehicles are essentially two-tonne cellphones travelling around the country. The Israeli government, for example, has banned them from anywhere near its military sites, and that country has very sophisticated levels of cybersecurity concerns.

It is absolutely necessary, if Canada is going to allow these vehicles into the country in any quantity, to consult the appropriate security agencies—the CSE and CSIS—to establish what parameters are necessary to make it secure. This may include requiring them to have only indigenous Canadian software and other limitations. This needs to be screened very carefully.

So far, the United States, for example, has ruled that effective next year, such vehicles will not be allowed into the United States if they run Chinese software. This becomes a broader consideration in the same way that with Huawei, Canada had concerns for the United States security community as well.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Mr. Groleau for five minutes.

[Jason Groleau, Conservative, Beauce, QC]

Good morning, Madam Chair, colleagues and guests.

Mr. Kovrig, thank you for being here. It's an honour to speak to you.

I'd like to acknowledge your great resilience. We know your story. You were detained in China for over 1,000 days as part of political retaliation.

You have extensive experience in diplomacy, international security and foreign affairs. I have a simple question. In your opinion, is China a reliable partner for Canada? If not, why?

[Michael Kovrig]

Thank you very much for the question.

I would take this moment to thank all of you for your very kind statements about me. The support of Parliament and of all Canadians was immensely helpful to me in going through that ordeal. I'm deeply grateful.

The short answer to your question is, no, the Chinese Communist Party is manifestly not a reliable partner for the fundamental reason that systemically—it's not about the individuals involved—it does not have checks and balances, transparency or democratic accountability. Its attitude toward the rule of law and its world view are fundamentally different from that of any country with a Westminster-style Parliament, whether common law or civil law.

The law in China and in the eyes of the Communist Party is simply another political tool. It's an instrument of power. International treaties, accords and consular agreements, for example, are just paper. They're adhered to only if it's seen as being within the political interests of the Communist Party to adhere to them. It is not a system that fundamentally respects contracts. I can use the example of my own case. In detaining me, China violated the Vienna Convention on Diplomatic Relations, the Vienna Convention on Consular Relations, the Canada-China consular agreement and a number of human rights covenants to which it is a signatory. That's just one small example. The regime routinely violates accords. Another example, of course, is in the South China Sea, in which it ignored the ruling of the international tribunal in a dispute with the Philippines, and it has proceeded to do so.

It will follow laws and rules when it is convenient, but as we've seen, particularly with its role in the World Trade Organization, it often creates the useful semblance of being a guardian and supporter of globalization and the rules-based order while actively undermining and exploiting these things from within. This creates critical problems for it as a potential partner, trading or otherwise, for Canada.

[Jason Groleau, Conservative, Beauce, QC]

Mr. Kovrig, are you concerned about the arrival of these electric cars? In addition to harming the Canadian auto industry, do you think they carry any security risks?

[Michael Kovrig]

Yes. I would not be the only one to assess that electric vehicles pose a risk. If we don't allow Huawei to build our 5G or 6G telecommunications backbone, why would we allow BYD to sell cars in the Canadian market? They can gather up enormous amounts of information on both the drivers and everyone around them. There's ample documentation of this.

The key question is whether Canada has the technical capabilities to mitigate those risks through, for example, cybersecurity safeguards, binding local production requirements or snap-back mechanisms that would allow Canada to change or close a quota if it turns out that things are not going the way we want. That is one crucial thing that the government's automotive initiatives and strategies seem to be incorporating and need to incorporate: Treat this as an experiment with the capability of pulling it back and stopping it if it turns out it's going in a dangerous direction.

There are unquestionably cybersecurity risks. The issue is whether they can be mitigated. As well, from an economics and trade standpoint and an investment standpoint, is it worth going to the trouble of having to do all those mitigations? Does the benefit actually outweigh the cost to the taxpayer of all those additional cybersecurity provisions? One of my core arguments about trade with China is not that individual companies can't make some money by trading or that individual investments might not be worthwhile; it's that the cost of security and mitigation measures that Canada as a whole will have to take on in order to make those investments safe, from both a cybersecurity perspective and a political influence perspective, may end up outweighing the value of the investments in that trade.

[Jason Groleau, Conservative, Beauce, QC]

Thank you very much.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Mr. Lavoie, please, for five minutes.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Thank you, Madam Chair.

Mr. Ahmadi and Mr. Kovrig, thank you for being with us. I am very pleased to meet you. I think my colleagues have been full of praise for you concerning what you went through. I hear a lot of wisdom in what you're saying. What you experienced probably brought you that wisdom.

My question is for both of you, and I'll give you a chance to answer quickly, but before I do so, I would like to say that I worked in banks for 20 years, from 2000 to 2020. I was working in banks when they were telling companies to go to China, and also when they were telling them to start taking their business out of China. I've experienced that on the bankers' side.

Today, we find ourselves in a situation where I feel a great deal of caution. I hear what you're saying, Mr. Kovrig.

I am looking at it from the perspective of companies that think there is an opportunity to do business in China. They wonder whether they should go back there or not. If they go back, how should they do it? Many don't want to go back to the movie in which they have already appeared. They don't want to have to withdraw from there like they have done in the past.

I would like you to quickly tell us what your recommendations are. I sense that there is interest in going back and doing business in China, but it has to be done carefully.

I invite Mr. Ahmadi to answer first, followed by Mr. Kovrig, for up to two minutes each.

[Bijan Ahmadi]

It's different for each sector. In each different sector, we also need to have guardrails, and companies, of course, are the first in line to understand and consider the challenges they face in the particular sectors they are operating in.

You mentioned the financial services sector. Our banks, investment firms, asset managers and major Canadian insurance companies have a long-term presence in the Chinese market. They, of course, understand the challenges the market presents. However, because of the significant opportunities the market presents to their companies, they are present in the Chinese market and continue their participation and presence in that market. Some want to expand their operations and their presence as well.

In each sector, we need to consider the challenges and have guardrails, some of them by government. Some are the guardrails that businesses themselves establish to protect their operations in China. When we look at our trade relationship as a whole, year after year, even during the past eight years of diplomatic and political strain and difficulties in our bilateral relationship, our bilateral trade and investment—when we look at the FDI stock—have relatively increased. It has been slow growth in terms of the rate of growth, but it has still increased.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Mr. Ahmadi, I see that my time is running out, so I'll stop you there to give Mr. Kovrig a chance to answer my question. Thank you very much, Mr. Ahmadi.

Mr. Kovrig, I'll let you take your turn.

[Michael Kovrig]

Thank you very much.

The key concern with Canadian companies in China is, first of all, that they can essentially be held hostage through political means and become weaponized as potential points of leverage that affect Canadian policy. However, as long as their investments are not proportionally too large, that's not necessarily a major concern.

At the strategic level, the government needs to be actively encouraging Canadian companies to invest and be involved in other markets across the Indo-Pacific, a large and dynamic region. The Prime Minister is travelling to Australia, Japan and India this week. That is exactly what he needs to be doing, increasing trade and investment opportunities with other countries in the region to balance the level of commitment in China.

I don't think that it's at the level of forbidding investment in China or putting up barriers to it, but I don't think there's a strategic benefit for Canada to actively encourage or incentivize more investment in China, because the costs of those risks are often socialized across all of Canada and the government and not just on the particular company. There is also the potential risk of a conflict with Taiwan, resulting in those companies having stranded assets in China.

The geopolitical risks in China are significant. The role of the government is to ensure that Canadian companies are fully aware of them, make prudent decisions accordingly and recognize that the government—the taxpayer—is not going to bail them out if they do something the government has not recommended that they do.

Of course, the government also needs to defend the interests of its companies there. I would just argue against incentivizing more investment in the Chinese market. Realistically, in most cases, that's not likely to end well, and there is a key concern of sectoral, business and elite capture through political influence. This is really the key danger: The Chinese Communist Party can turn companies that are invested in China into advocates for its own interests. It can create reciprocity traps for them. This risk also needs to be managed and mitigated.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Savard-Tremblay, you have two and a half minutes, please.

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

Thank you, Madam Chair.

Mr. Kovrig, let's pick up where we left off earlier, if you don't mind.

You answered the question about vehicles, but, in general, we know that a lot of materials produced by forced labour come from Xinjiang in particular. Even though the region's name means “new territory” and, therefore, Uyghurs don't particularly like it, let's use it for this exchange.

Do you believe that Canada should strengthen its legislative safety net regarding the control of its borders and goods entering the country?

[Michael Kovrig]

Thank you very much for that excellent question.

You raised an important issue of supply chains. The reality is that there are significant risks of environmental damage that would not be tolerable within Canada in the supply chains of a lot of these supposedly clean and green new energy technologies, like batteries and vehicles, as well as, for example, in the mining process that extracts a lot of the rare earths and other things. One cost advantage that China has is that it doesn't have many of the environmental standards that Canada has.

I would say that any strictures on trade or investment by those companies need to ensure for the Canadian consumer that, if I'm a Canadian buying an electric vehicle or making use of Chinese batteries, these things have acceptable supply chains, both from an environmental perspective and from a human rights perspective.

The United Nations and multiple independent civil society organizations have reported on severe problems of forced labour in China. I think Canadians need to be assured, if they are buying a Chinese electric vehicle or another product, that it was not made with slave labour and that it did not pollute and devastate a natural environment somewhere, in a way deemed unacceptable in Canada.

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

The act should therefore be strengthened in this area.

[Michael Kovrig]

Exactly, yes.

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

Thank you.

How much time do I have left, Madam Chair?

[The Chair, Liberal, Judy Sgro]

You have 25 seconds remaining.

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

We recently learned that there was an agreement with Taiwan, but that all that was missing was the signature. The agreement is said to be on the Prime Minister's desk. We won't assume anything, but we might suspect that this is to avoid displeasing China.

Would an agreement with Taiwan be desirable?

[Michael Kovrig]

Yes. I think it's quite important, in fact, to continue to move forward with agreements with Taiwan. We should be actively deepening Canada's support for and engagement with Taiwan, maintaining a polite diplomatic stance with China as we do so. As long as those things are within the parameters of Canadian foreign policy guidelines on the one China policy, there is no reason that Canada should not be able to do those things. Indeed, Canada should also be encouraging like-minded democracies and allies to strengthen ties with Taiwan. We should not accept a false dichotomy, which Beijing would want to force on Canada, that we must choose between relations with China and Taiwan when we are talking about commercial agreements on trade and investment, for example.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll be going slightly over.

Mr. McKenzie, go ahead.

[David McKenzie, Conservative, Calgary Signal Hill, AB]

Thank you very much, Madam Chair.

I'll add my thanks to those of my colleagues on this committee, for both of these witnesses. Your knowledge and expertise are greatly appreciated.

Mr. Kovrig, in the circumstances that we've seen unfold in the last number of months, the fact that China closed its borders to canola exports from Canada inflicted very serious economic harm, primarily on western Canadian farmers. They utilized this economic hostage strategy to great effect: We've opened our borders to EVs. Can we expect more of that treatment in a broadening relationship with China?

[Michael Kovrig]

Very likely, yes.