Finance department worried blockades would torpedo negotiations with U.S on EV tax credits


The Canadian government was worried about how the convoy protests and blockades would damage its trading relationship with the U.S. and jeopardize negotiations over electric vehicle (EV) tax credits, a senior Finance official testified Thursday before the Emergencies Act inquiry.

“This was a first-tier issue,” said Michael Sabia, the deputy minister of finance.

The Public Order Emergency Commission is reviewing the federal government’s decision to invoke the Emergencies Act on Feb. 14 to end the protests that had gridlocked parts of downtown Ottawa and some border crossings. 

At the time, Canada was trying to convince the United States to scrap a plan that would exclude electric vehicles assembled in Canada from a proposed consumer tax credit, making the manufacturing of electric cars more advantageous on U.S. soil.

Sabia said the protests darkened Canada’s image as a place to invest in as the U.S. was re-evaluating its trading relationships. The deputy minister said he was hearing from U.S. officials and business stakeholders who were questioning whether Canada was a reliable trading partner.

“There was no doubt that these disruptions coming when they did in that process brought with them the risk we would not be able to get the North American treatment,” he said.

The Biden administration eventually expanded the tax credit to cover electric vehicles produced in North America. 

“Electric vehicles are the future of the automotive industry. So if we had not succeeded in doing that then the particular consequence of that for the central Canadian based-automotive industry would have been very, very serious.” 

WATCH | Convoy protest consequences could have been ‘very, very serious,’ deputy minister says:

Convoy protest consequences could have been ‘very, very serious,’ deputy minister says

During his testimony before the Emergencies Act inquiry, deputy finance minister Michael Sabia says the convoy protests put trade deals with the U.S. at risk, and may have led to dire consequences for the automotive industry.

The Department of Finance has not produced an ex-post assessment of the economic impacts of the blockades. 

“Determining the actual scale of economic impact of the blockades is challenging given that it depends on the length of disruptions and that the shipment of goods across the border affects almost every industry at some point in their business process,” said a report the department put together for the commission.

“However, given that the border closures were ultimately relatively short-lived, the department believes that the impacts were likely transitory.” 

The Emergencies Act gave authorities new powers, including the ability to freeze the finances of those connected to blockades and protests.

The data provided to the commission suggests that approximately 280 accounts totalling approximately $8 million in assets was frozen as a result of the emergency measures.



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