DISTRICT OF COLUMBIA — Canada and the United States are not as far apart on tax credits for electric vehicles as it might seem, Deputy Prime Minister Chrystia Freeland said Wednesday on the eve of a key meeting between Prime Minister Justin Trudeau and President Joe Biden.
Both countries are pursuing fundamentally the same goal, Freeland said: encouraging the move away from gas-powered internal combustion engines in an effort to slow the impact of climate change around the world, while simultaneously encouraging post-pandemic economic growth.
But Biden’s proposed EV tax credit — which would effectively cut Canadian-made vehicles and parts out of a lucrative incentive worth up to $12,500 to a prospective U.S. car buyer — would work counter to their shared goals, Freeland said, warning that it could become a major irritant between the two countries.
She said “job one” for Trudeau and a contingent of cabinet ministers in Washington, D.C., this week “is first of all, to really make our American counterparts aware of the extent to which their current approach to this issue is a problem for Canada and to really explain to them that the way they have formulated this incentive, really, really has the potential to become the dominant issue in our bilateral relationship.”
Trudeau said he plans to use meetings Thursday with his U.S. and Mexican counterparts to push Canada’s abundant supply of critical minerals and stress that the smooth flow of goods across borders is in the best interests of all three countries.
Trudeau made the remarks at the outset of a crucial visit to the U.S. capital, where he spent Wednesday sitting down with U.S. officials before participating Thursday in the first so-called Three Amigos summit since 2016.
When global supply chains are crunched, he said, the U.S. “could do worse” than rely on its closest friend to ensure resilience — especially when it comes to rare-earth minerals that power everything from computers and cellphones to electric vehicles.
“It is a two-way street. We do well when we’re working together,” the prime minister told a question-and-answer session hosted by the Wilson Center.
Trudeau told the crowd that his government began talking with the U.S. two or three years ago about Canada’s supply of critical minerals. China is the world’s leading supplier of those minerals and pandemic-induced bottlenecks have created major shortages.
While Trudeau didn’t name China specifically, he said Canada can’t compete with some countries when it comes to the low cost of production, because those other nations “don’t care” about environmental or labour standards.
However, he said the trade-off is worth it because Canada is a more reliable source.
The prime minister also said climate change will be a focus of his discussions with U.S. President Joe Biden and Mexican President Andrés Manuel Lopez Obrador. He stressed that his government was able to win two elections after implementing a national price on pollution and there is a need for a global carbon price.
Freeland, Foreign Affairs Minister Mélanie Joly, International Trade Minister Mary Ng and Public Safety Minister Marco Mendicino are joining Trudeau in Washington.
Freeland told the Wilson Center event that the world should avoid a “race to the bottom” when it comes to labour standards and she said she looks forward to reinforcing the importance of middle-class jobs in conversations with the Biden administration.
Trudeau was asked about how he would protect the interests of Indigenous Peoples while ramping up extraction of critical minerals. He did not directly answer but said his government is investing in many areas to advance reconciliation, such as working to lift boil-water advisories and reduce the number of Indigenous children in foster care.
“There’s an awful lot of work to do,” he said, adding the pace of change is “too slow” but it must be done in respectful partnership and that always takes a little longer.
Conservative Leader Erin O’Toole called on the prime minister to deliver “tangible results” for Canadians at the summit, saying the relationship between Canada and the U.S. has been getting worse over the past year.
“Under Justin Trudeau’s watch, the United States has doubled tariffs on softwood lumber, put in place stringent Buy America policies threatening Canadian jobs, launched trade disputes against our agriculture sector, and cancelled pipeline projects,” O’Toole said in a statement.
He urged the prime minister to obtain guarantees that Biden will include Canadian-assembled cars in an electric-vehicle tax credit, carve out Canadian exemptions for Buy America policies and support the continuation of Enbridge Inc.’s cross-border Line 5 pipeline.
O’Toole also called for a North American supply chain resilience strategy that includes Canada’s rare-earth minerals as a source for battery and electric-vehicle production.
Trudeau faces mounting pressure to address Canada’s misaligned COVID-19 border restrictions with his North American counterparts as well.
On Monday, four bipartisan U.S. senators wrote to Joly to ask Canada to align border restrictions with its southern neighbours, especially when it comes to Canada’s requirement for a negative molecular COVID-19 test for incoming travellers.
“It is important for both of our nations’ economies that fully vaccinated individuals are able to travel between Canada and the U.S. with ease,” wrote senators Amy Klobuchar, Susan Collins, Chuck Schumer and Mike Crapo.
Business and tourism leaders in Canada echoed the same message at a news conference Wednesday in Ottawa.
“On the eve of the Three Amigos summit, our federal government cannot on the one hand be asking for greater collaboration, co-operation and consistency on trade issues while (taking) a different approach to the border itself,” said Goldy Hyder, president of the Business Council of Canada.
At the same news conference, former deputy prime minister John Manley said it is concerning that Canada’s COVID-19 measures at the border are out of step with the international community.
“Canada needs to align with its North American partners, at least, on standardized reciprocal rules for travel,” said Manley, who served as foreign affairs minister under former prime minister Jean Chrétien.
Government officials are expected to make an announcement on changes to the test measures at the border on Friday, though they’re not currently expected to do away with the measure entirely.
Rather, the government is expected to phase it out gradually, starting with removing the test requirement for people who are out of the country for less than 72 hours.
“We are looking at making steps to loosen up requirements while at the same time keeping Canadians safe,” Trudeau said, adding there’ll be “an announcement in the coming days.”
Removing the test requirement only for short trips was scorned by business leaders Wednesday
“The question that the government will have to answer is, how are you safe in the 72nd hour and you become dangerous in the 73rd? What is the logic of this?” said Perrin Beatty, president of the Canadian Chamber of Commerce.
Trudeau spent most of Wednesday meeting members of Congress before he was set to attend a gala in the evening hosted by the Canadian American Business Council.
Speaking before their meeting, House Speaker Nancy Pelosi saluted Trudeau for his “leadership role” around the world in addressing the climate crisis and COVID-19.
Trudeau said he and Pelosi would discuss the global economic recovery and how they would continue to deepen their partnership to create good middle-class jobs on either side of the border.
He later met with Senate leadership, including Schumer and Minority Leader Sen. Mitch McConnell.
The group, which included Freeland, lined up for a photo, and Trudeau got a kick out of where McConnell positioned himself.
“Mitch to my left, look at that,” Trudeau said, which McConnell appeared to acknowledge with a thin smile.
On Thursday, Trudeau is scheduled to appear in the morning at a local middle school alongside Vice-President Kamala Harris.
He will then hold individual meetings with Lopez Obrador and Biden before three leaders gather for the North American Leaders’ Summit to discuss the challenges facing the continent.
It will be the first meeting of the Three Amigos since 2016, before Donald Trump’s election as U.S. president put the semi-regular gathering on hiatus.
This report by The Canadian Press was first published Nov. 17, 2021.
— With files from Laura Osman in Ottawa
James McCarten, The Canadian Press
Note to readers: This is a corrected story. A previous version misspelled John Manley’s surname and said he served as foreign affairs minister under Stephen Harper.