Canada won new Volkswagen battery plant despite 'way, way more' money from U.S.: PM

·5 min read

NEW YORK — Canada won Volkswagen's lucrative new electric vehicle battery plant despite "way, way more" U.S. dollars on the table, Prime Minister Justin Trudeau said Friday as he talked up the virtues of his progressive approach to industrial policy.

Trudeau's two-day trip to New York, aimed at keeping up the momentum from last month's presidential visit to Ottawa, culminated in an earnest sales pitch that framed Canada as a conscientious and forward-thinking place to invest.

Just look at Volkswagen, said Trudeau, which ultimately settled on the one-time industrial manufacturing hotbed of St. Thomas, Ont., despite what the prime minister said were richer offers from south of the border.

"I'll be honest: there were places in the United States that were putting up way, way more money than we put on the table," Trudeau told a moneyed audience of bankers and academics at the Council of Foreign Relations.

Canada wasn't just kicking tires, though: ultimately, subsidies worth up to $13 billion plus a $700 million grant no doubt played a key role in keeping the so-called gigafactory from being built on U.S. soil.

But to hear Trudeau tell it, the abundance of clean energy and critical minerals riches, Canada's carbon price regimen, a well-educated workforce and a long-term investment in those workers were what really sealed the deal.

"Volkswagen said, 'OK, we're showing up with a plant that's not going to be there for five years, or 10 years. It's going to be there for 50 years, maybe even more,'" Trudeau said.

"'We need to invest in a community that is going to be invested in itself and in that future.'"

Without doubt, the VW plant and the 3,000 jobs it is expected to produce is the most towering victory so far in what the federal Liberal government hopes is the ongoing evolution of Canada into a critical minerals powerhouse.

But the modern-day riches poised to power the new industrial revolution — lithium, cobalt, magnesium, nickel and copper, to name but a few — are still largely in the ground, and business leaders are clamouring for more certainty around the regulatory regime that will govern how they are extracted.

Trudeau offered no specific details on that score Friday, except to reiterate that whatever framework emerges will reflect the importance of fighting climate change and working with Indigenous communities.

The framework, when complete, will be "a stronger and clearer process that is both faster and more predictable, while of course making sure we're protecting communities' interests and protecting the environment," he said.

During a recent meeting with the prime minister in Ottawa, U.S. Chamber of Commerce CEO Suzanne Clark described Canada's regulatory regimen as more efficient than that south of the border, Trudeau said.

That's not a universally held view, however.

A 2019 Deloitte study described Canadian businesses as facing outsized regulatory burdens, and that it typically takes five months longer in Canada to obtain a construction permit than in the U.S.

And a 2020 World Bank ranking of countries based on "ease of doing business" placed Canada in 23rd place, well back of the U.S. in sixth. New Zealand, Singapore and Hong Kong topped the list, in that order.

High environmental and labour standards and the carbon-price regimen will likely come at a price to those sourcing their critical minerals from Canada, Trudeau acknowledged earlier in the day.

"If we're being honest ... the lithium produced in Canada is going to be more expensive," he said.

"The world needs to decide — and is still in the process of deciding — whether or not we're actually going to value the things we value throughout our supply chain."

It's important, he added, to build democratic values into decisions about where to source minerals, and it's not just about telling companies not to get them from countries such as China.

"We should simply commit to sourcing our critical minerals from places that ban forced labour, that have safety standards, that pay their workers a living wage, that have high environmental protections, that work in partnership with Indigenous Peoples."

Trudeau spent the bulk of the day Thursday focused on promoting efforts to advance sustainable development outside North America, in particular the global South.

He faced pointed questions about a 15 per cent cut in humanitarian aid spending in the last federal budget, a decline he attributed to recent crises and conflicts like the COVID-19 pandemic and Russia's invasion of Ukraine.

Baseline aid levels will keep going up, even though there will likely be more humanitarian disasters before the end of the fiscal year that will demand Canada make additional commitments, he said.

Trudeau also announced a new five-year, $195-million investment — plus $43 million every subsequent year — in women's rights advocacy around the world.

Trudeau said the program, Women's Voice and Leadership, has helped more than 1,500 organizations since it was launched in 2017, far exceeding the original target of 400 groups, who receive the assistance without strings.

Abortion rights have been under legal siege in recent months in the U.S., Trudeau acknowledged as he seized on the opportunity to depict his government as pro-choice — and its Conservative rivals as the opposite.

The U.S. courts have played host to seismic shifts in access to abortion over the last year, most notably the Supreme Court's decision last June to overturn Roe v. Wade, the landmark 1973 decision that established federal abortion rights.

Advocates had feared that a legal stalemate over access to the so-called abortion pill, mifepristone, would end much the same way, before the high court opted late last week to maintain the status quo — for the time being.

The U.S. Department of Justice is fighting a Texas court decision that, if allowed to stand, would effectively rescind the Food and Drug Administration's 23-year-old approval of the drug.

This report by The Canadian Press was first published April 28, 2023.

James McCarten, The Canadian Press