Scrap China EV deal, auto group says in push to focus on U.S.

Diversification beyond the U.S. automobile market is “not an option” for Canada and Ottawa should scrap a trade deal with China that is seeing Chinese electric vehicles enter the Canadian market, a group representing three of the biggest U.S. automakers in Canada said on Tuesday.

The standing committee on international trade in the House of Commons heard from Brian Kingston, the president of the Canadian Vehicle Manufacturers Association, a group that represents the operations of Ford, General Motors and Stellantis in Canada.

“With over 90 per cent of Canadian production destined for the U.S., U.S. market access and North American integration are the foundation of the auto industry. Diversification is not an option,” Kingston said.

European and Asian markets are better served by regional assembly plants, and the Canadian market is too small to justify large-scale manufacturing, he told the committee.

“Simply put, there is no Canadian auto industry without the U.S.,” Kingston said.

Kingston urged the federal government to “eliminate” a trade deal that Prime Minister Mark Carney signed with China in January, which has been allowing the first of 49,000 Chinese EVs in the Canadian market every year.

There were “no guardrails in this agreement to ensure a level playing field for manufacturers that have invested here, or to protect Canadians from cyber risks.”

With less than a month to go before the review deadline of the Canada-U.S-Mexico free trade agreement (CUSMA), the CVMA urged a surtax on Chinese EVs and a ban on some Chinese-connected vehicle software in alignment with the U.S.

Proposed legislation in the United States could mean some Canadians have to leave their cars at home if those automobiles are Chinese electric vehicles.

Last month, two Democratic lawmakers in Michigan announced the Protecting America from Chinese Cars Act, which would prevent Chinese vehicles from entering the U.S.

Michigan Congresswoman Haley Stevens and U.S. Sen. Elissa Slotkin said the Chinese auto industry is “heavily subsidized by the Chinese Communist Party,” which allows it to “undercut competitors and quickly flood new markets.”

Last week, the first batch of 2,900 Chinese EVs arrived in Canada, data from Global Affairs Canada shows.