Canada advised to follow U.S. lead on fuel regulations
Different policies could be risky with potentially higher costs for automakers
TORONTO A move to roll back fueleconomy regulations in the United States could hurt the domestic auto industry if Canada didn’t follow suit, the Canadian presidents of two major automakers warned Friday.
U.S. President Donald Trump has signalled that he’ll relax the corporate average fuel economy regulations, which currently aim to boost automakers’ fleet-wide fuel economy to 54.5 miles per gallon — about 4.3 litres per 100 kilometres — by 2025, up from 25.2 miles per gallon in 2016.
Canada has long harmonized its auto emissions regulations with the United States, but with an environmentally conscious Liberal party in power, it’s unclear whether it would emulate Trump’s move.
Having separate regulations on both sides of the border is risky, said Steve Carlisle, president of General Motors of Canada Ltd.
“Part of what you’d want to retain in the current trade relationship is harmonization in regulation, because to disassociate one from the other, I mean, it’s — wow,” Carlisle said in an interview at the Canadian International Auto Show. “We as an industry would advocate very strongly to stay harmonized.”
The more regulations an automaker has to comply with, the higher its costs will be, said Mark Buzzell, chief executive of Ford Motor Co. of Canada Ltd. Buzzell was general manager for the western market area in the U.S. before taking the Canadian role on Jan. 1.
“I worked in California where there were (electric vehicle) mandates which were different from the rest of the U.S.,” he said. “Our position is that we would like to see harmonization within the U.S. and we would like to see harmonization within Canada, and there are benefits for the U.S. and Canada, since the markets are so similar, to have harmonization too.”
If the U.S. lowers its fuel-economy standards and other jurisdictions don’t follow suit, the industry will be forced to design its products for the “highest common denominator,” said Michael Robinet, managing director of automotive advisory services at IHS Markit.
“This idea that the regulations are going to be flattened is really Pollyanna-ish,” Robinet told the Automotive News Canada Congress Friday. “There’s no such thing as a Canadian automotive industry, there’s no such thing as a U.S. automotive industry, there really is and still is a North American rationalized automotive industry and we’re hopeful that the right people are going to figure that out in Washington and other places of power.”
The same message applies to the NAFTA, which Trump has vowed to renegotiate or scrap altogether. This would be disastrous for the North American auto industry, which is extremely integrated between Canada, the U.S. and Mexico. However, Trump reassured Prime Minister Justin Trudeau this week that he only wants to “tweak” the U.S.-Canada trade relationship.
“It would be expensive and time consuming (to pull apart NAFTA ), and our concern would be it would actually reduce competitiveness, you’d get the opposite of the result that you’re looking for,” Carlisle said.