The Government of Canada has announced a 30-day consultation period starting on July 2, 2024, to address perceived challenges posed by Chinese electric vehicles (EVs) to Canada's auto industry. The consultation indicates that it aims to develop policy responses that will protect Canadian auto workers and support the burgeoning EV sector against unfair trade practices from China.
Key points of the consultation as described by Canada include:
- Potential policy responses: Exploring measures such as a surtax under section 53 of the Customs Tariff, adjustments to the federal Incentives for Zero-Emission Vehicles (iZEV) program, and investment restrictions.
- Cyber and data security: Addressing concerns about data privacy and national security risks posed by Chinese technology in connected vehicles.
- Labour and environmental standards: Considering policies to counter China's overcapacity and substandard labour and environmental practices.
Section 53 of the Customs Tariff allows Canada to impose surtaxes in response to acts, policies, or practices of a foreign government that adversely affect trade in goods and services of Canada. Notably, Canada used Section 53 in 2018 to impose surtaxes on steel and aluminum products originating from the United States in response to US tariffs on certain Canadian steel and aluminum products.
This initiative follows recent trade protections announced by other nations, including the United States and the European Union, concerning Chinese EV imports. The Canadian government's action states that it seeks to ensure a fair competitive environment for domestic auto workers and the EV industry characterizing this as crucial for sustaining good-paying jobs and fostering economic growth.
The Gowling WLG International Trade and Customs team is closely monitoring these developments and are ready to assist clients in navigating the implications of this consultation and any resulting policy changes.
More information is expected to be available next week following the launch of the consultation on July 2, 2024.
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