Thank you, Madam Chair. I thought I had the whole two hours to do this, so now I'll have to abridge it. I'm teasing, of course.

It's always a pleasure to be invited to committee, and it's always a pleasure to speak with the committee and my colleagues about the impact of trade policies, especially U.S. trade policies, on the Canadian industry.

The Inflation Reduction Act of 2022 is a correction to a proposal in the build back better plan that scared the hell out of the industry in Canada. I'll speak for the part that I represent: the automotive parts manufacturers industry.

We represent hundreds of companies with just over 1,400 factories that employ 1,000 people in the direct manufacture of parts, systems and tools in Canada. Approximately 52% of what we produce in a normal, non-COVID year goes to factories producing vehicles in Canada, and about 48% of that goes to exports. In a normal year, 95% or more of exports go to U.S. automotive production. That's important context because about 85% of the cars made in Canada that we supply get exported to the U.S. market. Even though two million cars get made in Canada in a normal year and two million cars get sold in Canada in a normal year, there isn't a very strong relationship between the consumer market and what we manufacture.

The most important metric to find out how healthy the Canadian auto parts and tooling sector is going to be in any given stretch—short, mid or long term—is what the U.S. market is going to do. In the U.S. market in 2021, the U.S. President announced that their targets for EV adoption would be 50% of the market by 2030. Then, in the build back better plan, there was a proposed extension for 10 years, from 2021 to 2031, of a $7,500 EV cash credit. Added to that was a $4,500 credit for vehicles produced only in U.S.-based, labour-organized shops and an extra $500 for vehicles with battery cells that come from U.S. locations. The grand total of that was to be $12,500 for any vehicle purchased, or approximately one-third of the average vehicle sale price in the U.S.

On that timeline, in 2027, all of those pieces—the three pieces of that $12,500—would only be applied to vehicles made in the U.S. Therefore, for automotive parts suppliers who supplied production in Canada and relied on those investments being solid in Canada, where more than half of our production went, it was a sign that by 2027, a lot of our production and prospects would disappear if American consumers were incentivized at this unprecedented level to buy American-made cars.

Never mind that it violated the spirit of the new NAFTA, the CUSMA. It also violated the spirit and letter of WTO obligations. We spent a lot of time meeting in Washington with senators and congressional representatives from other auto states. I met 10 of them in person, most of them Republicans, hoping that the Senate vote might tilt in a different direction. We met with the White House economic advisers as well, and we joined this team Canada effort with a whole bunch of people who are on the screen with me today, as well as Minister Ng, Minister Freeland and the Prime Minister, in an effort to flip it around.

The new act adds one word, “north”, to “must be made in America”, and it changes that threat for us. Canadian cars and Canadian production having a home with an American consumer who dictates our future is the most important part.

There is one piece of the bill that gives us some concern, and we will continue to study, monitor and meet with our colleagues in the U.S. on it. It is credits for the production of battery cells, battery modules for critical materials and electrode-active materials that right now create a highly competitive advantage for the attraction of battery manufacturing investments in the U.S. versus in Canada. We're in direct contact, of course, with our Canadian government as well as our automaker customers on the implications of that and on how we make sure that Canada remains competitive in the case of battery investments.

The bottom line is that the IRA changed the threat of build back better, or what I call the biggest existential threat to Canadian parts production in a generation. I'm very happy to see the changes.

Thank you.