Thank you, Chair.

Thank you, members of the committee.

Thank you to the staff of CIIT for inviting the APMA back again to talk about our favourite topic—trade within the Americas.

The Automotive Parts Manufacturers' Association is the national association representing automotive suppliers to the global original equipment makers or carmakers market.

We represent over 200 companies and 95% of independent parts production in this country. In a normal, non-constricted year, that capacity is about $35 billion worth of components and systems. About 100,000 people are directly employed.

The APMA took part in the original NAFTA renegotiations from 2017 to 2019 in earnest, working closely with officials in Ottawa as well as Mexico City and Washington, D.C. We attended all seven rounds and one unofficial round of the negotiations with a view to improving and updating the rules of origin as they pertain to automotive supply.

Together, with leadership—especially that of the Canadian negotiating team in automotive—the results were that the new rules represented, in our estimation, about 25% higher volume for Canadian-based supply into the North American automotive market, and that probably means $6 billion to $8 billion in incremental business every year.

As we prepare for the inevitable conversation about the renewal of the CUSMA with either a new or a re-elected American administration and a new Mexican administration, the focus for the automotive sector is twofold, both aspects of which fall under the same context.

Eighty per cent of the business that we do in this country and 80% of the cars that we make in Canada are exported to the U.S. The U.S. vehicle market is the best indicator of the Canadian manufacturing sector's prospects. We always harmonize, in the automotive sector, our regulations and other tools that govern and shape the market with the Americans.

The Americans, after we concluded the new NAFTA—the CUSMA—changed their interpretation of “roll-up”, which, in layperson's terms, means that you have to qualify a subcomponent at a certain percentage of local content before it becomes part of the equation for whether the vehicle has met its local content requirements for tariff-free sale.

The new administration had a different interpretation of roll-up and a stronger one of what was required to qualify than the one that the three countries had agreed on. Canada and Mexico joined together in a CUSMA dispute claim, and ultimately a CUSMA panel ruled in favour of Canada and Mexico over the U.S. We're still waiting for the Americans to come to the table with a response and to comply with the ruling, and it is of concern for the parts sector, especially because it very clearly changes how we interpret supply logistics and content.

In China and on EV mandates, in Canada we've pushed for 100% zero-emission vehicle sales by 2035, as well as in the U.S., but the curves are different. The markers in Canada are higher than in the U.S. in those 11 years between now and then, and it is of concern to us. I think it will be part of the CUSMA discussion with the Americans.

As well, the Americans have now launched tariffs against Chinese-sourced vehicles and critical minerals. Canada has not indicated whether it's going to respond and match that or do something materially the same. We think that's going to be a very important context for how the Americans view our view of our renewing relationship for 2026.

Thank you very much.