While Prime Minister Justin Trudeau and his deputy Chrystia Freeland say applying steep tariffs on electric vehicles (EVs) and steel from China is in Canada’s national interest, the organization that represents Canada’s agri-food exporting sectors is reminding the government it’s also in Canada’s interest to maintain an international rules-based system for trade.
The Canadian government, following in line with the U.S., European Union, and others, say China is unfairly subsidizing its EV sector to flood the world market, while failing to meet adequate environmental and labour standards.
However, China’s government was quick to react to the announcement coming out of the Liberals’ cabinet meeting in Halifax this week, vowing retaliation and accusing the Canadian government of claiming to support the World Trade Organization’s multilateral trading system while “blatantly violating WTO rules” with the new tariffs.
Canola, beef, and pork exports from Canada have been the target of Chinese retaliation in the past.
“We don’t think it’s helpful to link issues, to link industries, to react to one industry by responding to another,” says Michael Harvey, executive director of the Canadian Agri-Food Trade Alliance (CAFTA), in the interview below, when asked about the possibility of retaliation against Canadian agricultural exports.
“We think that there are ways for Canada to try to manage the issue that can help reduce the risk of that. One of the biggest is to work multilaterally with partners,” he says, noting the EU and U.S. announced similar tariffs this summer. “There’s real opportunity for Canada to work with like-minded countries and to try to multi-lateralize this issue, to be able to discuss it, not just as us, but as something that different economies are doing.”
At the same time, CAFTA says it’s important that Canada works to support and strengthen the international rules-based trading system, as 90 to 95 per cent of Canada’s agri-food trade is covered by the WTO’s rules, directly or indirectly.
“Canada’s food exporters are concerned about a move away from rules-based trade, and that’s not just a Canadian thing. If you look the biggest economies in the world, the United States, China, the European Union are making some moves away from rules-based trade, and have been over the last few years, and that’s bringing along more mid-sized economies like Canada,” says Harvey. ” So I’d say we’ve got a general concern about the direction that this conversation is going.”
While the EU’s new tariffs on Chinese EVs are significantly lower than those announced by U.S. President Joe Biden, China has announced tit-for-tat anti-subsidy investigations into dairy and pork exports from the EU.
In Canada’s case, it’s important to note the Chinese “see our products as a way to meet their needs,” says Harvey. “We’d like the conversation to continue along those lines.”
As of today, no Chinese EV brands are sold in Canada, but some Teslas manufactured in Shanghai would be immediately affected by the tariffs that are scheduled to begin on October 1. The Canadian government is also launching consultations on adding tariffs to electric-vehicle batteries, battery parts, critical minerals, solar cells, and semi-conductors from China.
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