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Canada’s Auto Industry Fears Blowback Over Government’s Tough Emissions Stance

Rob Bostelaar, Automotive News Canada

July 16, 2019

 

OTTAWA — Canada’s alliance with California in a battle over greenhouse-gas emissions could erase hard-won trade protections, deter investment and drive up prices for car buyers, auto industry officials warn.

Federal Environment Minister Catherine McKenna signed a memorandum of understanding (MOU) in June that Canada will align with California in a plan to maintain stringent fuel-economy standards even if U.S. federal regulators dial back the limits scheduled for model-year 2021-2025 vehicles.

The agreement contains no commitments beyond a pledge to work together on regulations to cut greenhouse-gas production and promote clean vehicles.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said that Canadian assembly plants now are chiefly devoted to crossovers and larger vehicles. McKenna’s contention that the MOU would encourage automakers to change the type of vehicles they build in Canada is unrealistic, he said.

“You would put companies into a difficult position of not selling locally what they make locally, increasing their cost per unit and decreasing the competitiveness of local manufacturing,” he said. “And you would de facto put a cloud over the Canadian automotive value proposition.”

Still, Volpe believes the federal Liberals took a “prudent step” with the non-binding agreement, which conveys opposition to lower limits on emissions but doesn’t lock Canada in. He said government officials, who are conducting their own midterm review of the fuel-economy standards, heeded industry advice in devising Canada’s strategy.

“I think the drama on this is far from over, and that’s both political and litigious,” said Volpe. “It is still very early days.”

 

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