Friendly rivals: with EV tensions in past, Canada poised to compete with biggest ally
WASHINGTON –
Friends, companions, allies – and rivals.
With cross-border auto tensions now within the rear-view mirror, Prime Minister Justin Trudeau is speaking about Canada’s subsequent massive bilateral problem: head-to-head financial competitors with the United States.
From a Canadian perspective, the primary two years of President Joe Biden’s time period had been all about countering a persistent bout of U.S. protectionism by preaching the virtues of commerce between like-minded companions.
Something sank in. Biden’s panic-inducing plan to energise electric-vehicle gross sales introduced Canada and Mexico into the tent on the eleventh hour. And Treasury Secretary Janet Yellen even coined a brand new time period – “friend-shoring” – to placate America’s anxious allies.
But to listen to Trudeau inform it, none of which means Canada is about to drag its punches within the coming battle for sustainable progress, higher-paying jobs, overseas funding and worldwide expertise.
“Competitiveness with the U.S. has always been a challenge for us – it was a challenge under Trump, it was a challenge under every previous administration,” he mentioned in a year-end interview with The Canadian Press.
“We’ll always figure out ways to make sure that the Canadian advantages” – loads of room for progress, he mentioned, together with a dependable, various and well-educated workforce that comes with built-in well being care – make Canada “an extremely attractive place to invest.”
Trudeau talked about two particular examples.
Steel large ArcelorMittal Dofasco is changing its plant in Hamilton to make it much less carbon-intensive, utilizing electrical arc furnaces as a substitute of coal-burning blast furnaces to slash annual carbon emissions by as a lot as 60 per cent.
The mission, funded partly by the federal and Ontario governments, will make it the primary main steelmaking facility in North America to make the swap, approaching line within the subsequent 4 years.
And GM Canada introduced final month that its meeting facility in Ingersoll, Ont., would change into the nation’s first to provide nothing however electrical automobiles, with a goal of fifty,000 vans and vehicles a 12 months by 2025.
“We didn’t beg them for that,” Trudeau mentioned. “They just realized, ‘Oh, the market’s there, and the quality is there, the Canadian workers are delivered – we’re going to be more ambitious.”’
Just as a result of two nations are allies does not imply they cannot even be financial rivals, mentioned Michael Harvey, vice-president, coverage and worldwide with the Canadian Chamber of Commerce.
“We both co-operate with the United States, our closest ally, and we compete in the economic arena. So we do both,” Harvey mentioned. “It’s in Canada’s interest to co-operate as much as we can, but where we need to compete, we do so.”
That consists of the Inflation Reduction Act, the marquee local weather, tax and health-care bundle that deserted Biden’s authentic Buy American EV tax credit in favour of incentives that included Canadian-made automobiles.
As a lot as Biden’s signature on that invoice was a keep of execution for Canada’s auto sector and a boon to an rising vital minerals business, it was additionally a stark declaration of U.S. ambitions, Harvey added.
“If you look at the Inflation Reduction Act, what you’ve got is a major industrial policy spend. That means that Canada needs to step up and be able to compete with that, or else we can get left behind.”
Critical minerals, the battery building-blocks so integral to Twenty first-century transportation and expertise, are central to that effort.
Canada jumped three spots to second place in BloombergNEF’s annual rating of gamers within the world lithium-ion battery provide chain, because of a wholesome provide, rising North American demand and sturdy upstream clear vitality.
The federal authorities has dedicated $3.8 billion this 12 months alone to foster mining and processing efforts, in addition to part manufacturing and EV manufacturing. Chrysler mum or dad Stellantis has partnered with LG on a $4-billion EV plant in Windsor, whereas Volkswagen and Tesla are additionally kicking Canada’s tires.
The nation ranks second solely to China, the world chief in battery metals refining, which is house to 75 per cent of all battery manufacturing capability worldwide, in addition to nearly all of planet’s anode and electrolyte manufacturing.
The U.S. stays third, BloombergNEF mentioned in its November report, partly as a result of “it will still be reliant on raw material imports for batteries, especially from its free-trade partners.”
That consists of Canada, though the U.S. does not have a tendency to say it by title.
“Friend-shoring is a rebuttal to those who argue that economic security can be achieved only through protectionism,” Yellen wrote in a Project Syndicate essay final week.
“We don’t seek to produce everything ourselves. Nor do we seek to limit trade to a small group of countries. That would substantially harm the efficiency gains of trade and hurt U.S. competitiveness and innovation.”
To guarantee Canada stays each a valued ally to the U.S. and in the identical weight class, it must deal with “trade-enhancing infrastructure,” together with expanded port amenities, to maintain provide chains sturdy, in addition to guaranteeing extra Canadians can participate within the labour pressure, Harvey mentioned.
“Being right next to the United States, the most important economy in the world, is always going to be one of Canada’s greatest economic advantages,” he mentioned.
“We need to make these investments in things that can really beef up our trade.”
This report by The Canadian Press was first printed Dec. 18, 2022.
