Mr. Speaker, I am pleased to speak today to Bill S-5, a bill coming from the Senate.
Bill S-5 is an Act to amend the Motor Vehicle Safety Act and the Canadian Environmental Protection Act, 1999. Its short title is “ensuring safe vehicles imported from Mexico for Canadians act. It was introduced in the Senate on April 14, 2010. The bill would amend sections of the Motor Vehicles Safety Act and the Canadian Environmental Protection Act, 1999, to bring Canada into compliance with its international trade obligations, mainly under NAFTA.
As members know, NAFTA is a multilateral free trade agreement between Canada, the United States and Mexico. Its objectives are to eliminate trade barriers and facilitate cross-border movement of goods and services between the territories of the parties. Furthermore, NAFTA aims to promote fair competition in the free trade area, increase investment opportunities in the territories of the parties and create effective procedures for the agreement's implementation, application, joint administration and for the resolution of disputes.
Several members have already pointed out that this agreement is now two years late. Under the provisions of NAFTA, this particular element of allowing Mexican used cars to be brought into Canada should have occurred back in 2009. As I had indicated, the NDP will be supporting the bill going to committee because we recognize that it simply puts into effect promises that we have already made as a country when we signed into the trade agreements.
However, that does not stop us from having some observations and thoughts about the implementation of what we are approving and what we are signing into now. That will come with the regulations and rules that the government puts into place, as well the consultations, in promulgating the rules and satisfying the concerns of our constituent parts in Canada, like the motor vehicle dealers associations and many other groups in this country.
We look at this situation now and say that it is unlikely that there will be many vehicles being dealt with here. One of the members said that we were trying to hold off a free trade challenge by the Mexicans. and that is part of the equation.
While we do not anticipate a lot of 10-year-old vehicles being imported into Canada under this agreement, the provisions are there to eliminate, on a year-by-year basis over the next nine years, the barriers for newer vehicles. Therefore, in another year from now we will be able to bring in nine-year-old used vehicles. Then it will be eight, then seven and, by 2019, we will be able to bring in all used vehicles. When that happens, that may prove to be a much bigger group of vehicles when we are talking about one, two or three-year-old vehicles. The residual value of those newer vehicles would be much higher than a 10-year-old vehicle would be.
When the cost of upgrading all the safety features that need to be done, the immobilizers in the case of Manitoba and the very expensive cost of transportation from Mexico for used cars is added on, importing a 10-year-old vehicle might not make a lot of sense. When we get to one or two-year-old vehicles, especially high-value vehicles, it may become economically viable for importers to start bringing in vehicles on a fairly large scale.
Whether that creates jobs in Canada or not is really beside the point, because as the members have pointed out, this is part of our trade obligations. It is simply one of the implementation procedures of our trade agreement.
NAFTA, like all free trade agreements, establishes reciprocal rights and obligations for all parties to the agreement. Thus, any trade benefits or rights that are granted in the agreement apply to all parties.
Chapter 3 of NAFTA establishes the rules with respect to according national treatment to all goods of another party to the agreement and the elimination of all tariff and non-tariff measures against goods of another party.
Annex 300-A of chapter 3 applies to trade and investment in the automotive sector. Annex 300-A states that each party shall accord most-favoured nation treatment to all parties of NAFTA with regard to trade and investment in the automotive sector. However, this general commitment is subject to a number of commitments that are country specific.
The country-specific provisions entered into by Canada include that of the U.S. agreement concerning automotive products between the Government of Canada and the Government of the United States of America that will now be incorporated into NAFTA.
Furthermore, Canada reserves the right to adopt or maintain prohibitions or restrictions on imports of used vehicles from Mexico until, once again that date, January 1, 2009, with a gradual phase-out of prohibitions ending in 2019.
There are prohibitions and requirements that jurisdictions put on concerning environmental issues and safety issues, but jurisdictions also have tight rules to protect their own markets, to protect their own dealers' associations.
In a way, this is breaking down some of those barriers that were artificially put there to support local industry or support local dealer organizations in the past.
This is something that business will have to deal with over time, because it is phased in. I guess one could argue that the NAFTA agreement has been around for many years, so it should not come as a surprise to anybody out there in the public or in the dealers' associations that this is in fact coming.
I can guarantee, and I am sure the members on the government bench will recognize this, that when all is said and done and this bill actually passes through the House, there will be a reaction from dealers' organizations that are going to say they never saw this coming, it was out of the blue, and that the problem was created by the government, when in fact it is part of the free trade process.
The phase-out is related to the age of the vehicles. Used vehicles that are at least 10 years old are the first to have restrictions lifted. Younger vehicles will follow, as I have indicated, over a period of 10 years.
NAFTA also clarifies that these restrictions on imports of used vehicles from Mexico into Canada are not inconsistent with Canada's obligations to provide most-favoured nation treatment to Mexico under our agreements.
The purpose of Bill S-5 is to amend the Motor Vehicle Safety Act and the Canadian Environmental Protection Act to allow for the importation of used vehicles from Mexico subject to certain conditions. The amendments are required in order to bring Canada into compliance, as I said, with the international trade obligations under NAFTA that we have with Mexico.
Clause 2 of the bill amends the definition of “vehicle” to include “any vehicle that belongs to a prescribed class of vehicles”.
The “prescribed class” of vehicle is defined in the motor vehicle safety regulations as:
a class of vehicle listed in Schedule III [of the regulations] or the class of incomplete vehicle prescribed under subsection 4(1.1) [of the regulations];
I presume that another set of regulations will be promulgated as a result of and after the committee process. Unless we are led to believe that the regulations are all before us now and are already included here, I am really uncertain about that.
Once we have an opportunity to take a look at those regulations, we will be able to see possible limitations, impediments and problems with the whole system.
Clause 3 would amend section 7. Section 5 of the act currently requires that all vehicles sold in Canada and all vehicles of a prescribed class that are imported into Canada must conform with certain safety standards as set out in the regulations of the act. Section 7 permits an exception for used vehicles that are imported from the United States. That is certainly an expanding market, and I will get into that later.
The registrar of imported vehicles is a newer situation involving imported vehicles from the United States. The whole regime has been streamlined over the last few years to make it much easier for imported vehicles coming from the United States and we are seeing increasing numbers of them.
It really depends a lot on the value of the dollar. When the Canadian dollar strengthens, we will see more activity with respect to the cross-border purchase of cars in the United States. Just last year when the Canadian dollar was higher than the U.S. dollar, there was a huge amount of cross-border activity. People were buying cars in the United States because of the value of our dollar.
The people buying these cars in the United States have to deal with the registrar of imported vehicles in order to bring them back. While the system is much better than it was a number of years ago, snags are still being reported with these purchases.
I have heard stories about people who buy vehicles and then have to fill out a tremendous amount of paperwork. The paperwork is relatively easy to get. It is all on the website of the registrar of imported vehicles. The information can simply be printed out. The vehicle essentially gets impounded at the border, so it is tied up for a couple of days. If a purchaser can follow the paperwork, then it is possible to purchase vehicles in the United States. However, that does not make our local dealerships very happy.
Ways have been found to work around the problem with warranties. For example, a company such as Honda will not honour the warranty for a vehicle purchased in the United States. Even though an individual can save money by buying a vehicle in the United States because of the value of the Canadian dollar and the vehicle can be brought into Canada, the individual is on his or her own with respect to the warranty. Toyota's rules were similar in the past, but in the last couple of years its rules have changed and now it will honour warranties on Toyota products purchased in the United States using the registrar of imported vehicles system.
The member for Brandon—Souris was a reputable used car dealer in his youth. He is listening very intently. He is one of the few Conservatives who I would buy a used car from. He is an old friend of mine from Manitoba and very knowledgeable about the automobile industry. He has a soft spot for this topic because it takes him back to his younger days when he was in private business and probably enjoyed life more than he does right now. At least he did not have all the travelling that is involved with being an MP.
The section currently provides that used vehicles, vehicles that have been previously sold at the retail level in the United States that failed to meet the Canadian safety standards, must nonetheless be imported into Canada on the condition that the importer makes a declaration that before the vehicle is presented for registration, it will be made to conform with safety requirements. This exception allows importers of used vehicles from the United States time to bring the vehicles up to levels required by the more stringent Canadian safety standards.
I have mentioned this before, but in spite of all these rules between Canada and the United States, we still had a situation in Manitoba only a year ago, exposed by the CBC on a national program. Under the United States' lemon law system, which is a state-by-state regime, car companies in the United States were forced to buy back lemon vehicles from the owners if they were unable to resolve the issue after four attempts.
I never thought about what actually happens to these vehicles that are bought back by the manufacturers. The CBC found out last year that the cars were being taken from, for example, the state of Florida, which, by the way, used to have the strongest lemon law in the United States, and they were being dumped in, say, Louisiana, which did not have a very good lemon law system. Then the importers, in this case a Manitoba dealership that the member for Brandon—Souris knows and I know as well, were actually importing these cars into Canada for an absolutely ridiculous price, perhaps $13,000 for a two- or three-year-old vehicle, and then were able to mark them up by double. This was serious enough that not only did it make the national news, but the Manitoba government actually introduced legislation to deal with that particular issue. That, of course, caused me to want to encourage it to go further and set up its own lemon law system, on which I have been working with Manitoba for many years, unsuccessfully I might add, to get through. However, that is another issue.
The fact of the matter is that we can all have the frameworks we want for trying to deal with the market with the very best of intentions at heart, but people who want to bend rules will always find a way to do it. So we have to try to collectively put our heads together and come up with the best regulations possible to at least minimize the effect on our consumers in terms of bad outcomes. Bad outcomes, of course, are in many ways related to replaced odometers or rolled back odometers, which we saw in Manitoba for many years coming out of Toronto, taxis being sold at auctions and the cars being sent out to Winnipeg and the odometers rolled back.
As a matter of fact, it was the Filmon Conservative government, which the member opposite from Brandon—Souris was part of, that actually dealt with the problem. We had a dealer who, for the second time in 25 years, was charged under the Weights and Measures Act with systematically rolling back odometers. He was buying cars at auctions in Toronto, putting them on a train, taking them to Manitoba, rolling back or replacing the odometers, and then selling those cars, which he was buying for $4,000, for $8,000. He got caught 25 years ago and was charged under the Weights and Measures Act, which really did not impose much of a fine, I guess, because it did not deter him. He kept doing it for another 25 years, until he was caught again. Then, under the Filmon government, they finally dealt with the problem by requiring people to have a history that would follow the ownership of the car.
It is similar to the system used in England, I believe, where every time the ownership of a car changes, the documentation follows it. There would be a record of the mileage and stuff like that, so if all of a sudden the odometer showed the mileage as half of what it was before, it would be inconsistent.
That was an excellent system they developed and it did solve part of the problem.
However, people with ill intent always find ways to circumvent the rules, and of course, this would be something that we would have to deal with.
Having said all of that, though, I agree. We will be supporting getting this bill to committee, and from there we will see where it takes us.