Canadian Minister in Washington: We must decouple from China
This article is part of Watching Washington, a regular dispatch from CBC News correspondents on US politics and developments affecting Canadians.
Canada’s Minister of Industry was in Washington advocating for projects north of the border to access US federal funding for critical minerals.
François-Philippe Champagne’s trip took place after the passage from the United States several invoices offering large sums of money for green energy and other high-tech projects.
They include hundreds of millions for President Joe Biden to direct certain projects under the US Defense Production Act.
Like a legal member of the American industrial base, and houses several critical minerals that power electric batteries, Canada hopes some cross-border projects may qualify.
“Yes, there are sums in these acts that Canadian companies can exploit,” Champagne, Minister of Innovation, Science and Industry, told reporters Friday at the Canadian Embassy in Washington.
“That’s what we’re going to be working on with Canadian industry. Being on board with these very important initiatives.”
He was speaking at the end of a trip where he met his US counterpart, Commerce Secretary Gina Raimondo, NASA chief Bill Nelson and spoke to a business audience.
What is the context
The context is the rivalry with China and Russia. Washington is increasingly pissed off about being dependent on its biggest geopolitical enemy, China, for the minerals that fuel the economy: phones, computers, clean tech and electric vehicles.
China dominates the market and once cut off access to Japan to these vital industrial inputs. Just as Russia has now cut Europe off from domestic heating gas exports.
The United States is now trying to decouple its high-tech economy from that of China and jlimited exports of advanced computer chips to this country; the United States has define general strategies to break its dependence on Chinese products.
Champagne said countries that share similar values should rely more on each other and less on rivals, including China.
“What we want is definitely decoupling: definitely from China, and I would say other regimes around the world that don’t share the same values,” he told a panel organized by the Canadian American Business Council.
“People want to trade with people who really share the same values.”
WATCH | The future of Canada’s supply chains:
Canadian Deputy Minister Chrystia Freeland gave a speech in Washington this month on a similar theme, advocating for so-called “friend-shoring”: she said democracies should have closer economic and military ties and rely more on each other for trade.
Champagne called this a unique opportunity to rewrite supply chains, as the world turns to electric vehicles and trade with trusted allies.
He cited examples of how Canada fits in.
For example, he said he envisions a future where New York State and Quebec form a semiconductor corridor, similar to the self-production corridor of Windsor and Detroit: as the Detroit Big Three move parts between their factories on either side, he said, an IBM could move computer components to factories back and forth.
He also highlighted Canadian spending on an essential mineral plant in Quebec: Champagne said the titanium produced there will benefit the US military.
During his trip, Champagne also received blowback for two bills currently in parliament, his government bills C-18 and C-11.
They would need big internet platforms to compensate Canadian news organizations for the content they manage and give the CRTC new power over online content.
Director of a major American business lobby group, Abel Torres at the United States Chamber of Commerce, told Champagne that the bills discriminate against American websites; violate commercial covenants; contradict the principles of an open Internet; and give companies little guidance on how Canadian regulators intend to use their new powers.
“We believe these measures are a step in the wrong direction,” he told Champagne during the business panel on Friday.
WATCH | What is the US Inflation Reduction Act?
Canada has increasingly secured a place in new supply chains for zero-emission vehicles: companies have announced new plants and the just-passed US omnibus bill defines cars in Canada as eligible for a domestic electric vehicle tax credit.
But the fine print of this so-called Inflation Reduction Act has yet to be released. Also missing: details on which projects will access funds under the Defense Production Act.
Automakers have complained that so few models will qualify for the electric vehicle tax credit to the point of rendering it meaningless: the companies say there just aren’t enough minerals and batteries produced in friendly countries to qualify for the credits as designed.
We should have more clarity in the coming months on how tax credits work.
The United States is still drafting rules on how to implement the law and the US government announcement this month that people will have until November 4 to submit public comments as part of this process.
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