Tan Sukhera 00:05
Hello, everybody and welcome to Canadian regulatory fireside chats. Now, before the pandemic gr folks used to get together, especially on Fridays at lunch and network, and they would learn from their peers troubleshoot different issues and brush up on tips. But unfortunately with the pandemic, now, it’s a thing of the past. And it’s really in this spirit that we started Canadian regulatory fireside chats. Now, there’s been a massive lack of information out there, especially in our social media feeds about the fantastic work that people in the space are up to. And so we’re really proud to be part of the solution. Now, this series is meant to be a platform for champions industry, from government relations, policy and regulatory teams, to share their take on best practices, overcoming challenges and educating others. Now, if you’re a fan of the chats, please feel free to like, share and join into the conversation. And now it’s time to take a look at some of the housekeeping rules. So as always, it’s a 30 minute session, there’s a q&a in the chat, you can look take a moment to locate that in the Zoom call below. The recording will be shared after the event and if you’re someone who likes to live tweet, our hashtag is hashtag fireside chats. And our our handle is at no it GN o wi t. Now if you’re interested in becoming a speaker, you can always send us an email to Hello at no IP COMM And there’s always different topics and industries. Really the goal is to share as much insights as possible. And on that note, I’m your host Tansa Cara, I’m the VP of insights for Noah Inc. And we’re always instill are really trying to improve so we’re eager to learn and welcome all of your feedback. Now this talk is powered by node Inc. And for those who don’t know, we’re a media regulatory and business intelligence company. We use AI and machine learning to actively search federal, provincial and municipal government sources of information online. This includes the Hansard parliament, because that’s committees debates, request for consultations, regulatory bodies, government agencies, live video feeds, and more. And you can visit www.att.com for more information. So it’s my favorite time of the chat, where I get to introduce our speaker for today, we’re on Episode 15, navigating regulatory environments, and I’ve got David Adams with me. He’s the president of Global Automakers of Canada, he has more than 30 years of experience in the Canadian automotive industry. He brings a unique perspective to the industry being the only individual to have served in executive roles with both of Canada’s leading automotive industry associations. He’s been at the forefront of associations thought leadership in zero emission vehicles and their adoption, as well as the regulatory environments that are necessary to support the adoption of automated and connected vehicles. Now with any without any further ado, you can take it away, David.
David Adams 02:44
Well, thanks very much, Stan, I appreciate that. That kind introduction. It’s a pleasure to be with you today. I thought I might start off by just informing your viewers a little bit more about what the Global Automakers of Canada, isn’t does. We’re a national trade association, we have 15 member companies that essentially represent all of the European and Japanese and Korean automakers and the Canadian automotive marketplace. Two of our members also produced vehicles here, Honda and Toyota as dumb the viewers may be aware. And actually, a little known fact is that Toyota has been the largest producer of vehicles in Canada for the last couple of years now followed closely by by Honda, which is a different maybe assumption that a lot of people might might think about when the thing about one of the largest automakers in Canada. But our focus of our activity is to really advocate on behalf of our members in front of various governments, primarily the federal government, which regulates the the motor vehicle itself, but also provincial governments, which regulate the motor vehicles use on the road. So it it’s an interesting dynamic at times, depending on what the issue happens to be that the association is dealing with, who we have to engage. And sometimes it’s also it’s engaging with both governments on the same time on the same or similar facet of the same issue. And what I thought I might do is just take your viewers through really how we approach regulation generally, and then we can get into some of the specifics that you you kindly outlined in the introduction. So I think from our perspective as, as companies, we prefer to see regulation only where it’s necessary and that may be sounds like a a big business kind of mode of operating. But I think what, what the reality is, is that increasingly, we’re finding the The regulatory world more and more complex, and there are lots of challenges with regulating. And I think they let me look at it from two ways the speed with which regulation can advance, at the same time that technology is advancing. And I think what we’re finding is that technology is advancing sort of exponentially in some ways faster than the regulatory regime can keep up with, with regulating the technology, if you will. So I think our perspective would be is that regulation if necessary, but not necessarily regulation. The advantages, I think that you can look at from an automaker of regulation are that it provides certainty. But as I said, the the the disadvantage is sometimes the complexity and the layering of regulation, which makes it increasingly challenging to conduct business in the world in which we’re, we’re in at the moment. So let me if I just talk a little bit about non regulatory approaches to regulation, for a moment, to highlight some of the work that we’ve done in the past as an association. And largely just, again, for your your viewers, edification. Canada has typically followed the United States and how its regulated from both a safety and admissions perspective. Because the sales environment at least is essentially an integrated market on a North American basis, arriving from as a byproduct, rather of the auto pack back in 1965. Why it’s important to have our regulatory regimes as aligned as possible as well. So two things that we saw rising in the United States, this is back maybe 25 years ago. One, one example would be lemon laws. And some of the viewers may be familiar with lemon laws. They were put in place when vehicle quality wasn’t as good as it is now. And it was designed to address the situation of consumers where they were having a number of different problems and challenges with their vehicle, always taking you back to the dealership and not being able to get those problems resolved. What lemon laws did, and lemon being I bought a lemon vehicle wasn’t working the way it was supposed to. Were designed to say basically put in a construct where consumer purchase the vehicle and have it in the shop more than three times generally for the same repair attempt. And the laws were structured such that the manufacturer could be forced to buy that vehicle back. These lemon law spread throughout the United States. And Canada back in the 90s, Ontario, specifically looked at introducing a lemon law and the automotive industry at the time was saying, well, we don’t think that that’s a really viable solution to have specific lemon law in Ontario, we think that there’s a better way of addressing the same challenge. So what the industry did with with the cooperation of the Consumers Association of Canada, and the various provinces was to establish a voluntary arbitration organization, essentially a private court, if you will, to handle these types of challenges. And that we, we structured that as the Canadian Motor Vehicle arbitration plan. And I still in existence today, whereby consumers if they have a problem or an issue with their vehicle on an extended period of over an extended period of time, with the same type of issue or concern can apply for called combat, the acronym can apply for combat, they can have their their case heard in front of a completely independent arbitrator. And the arbitrator can at the end of the day find that the consumers complaint is not valid or can also determine that, fair enough. The consumer does have some valid complaints and has tried to get their vehicle fixed and hasn’t been able to and warrants a buyback of the vehicle. So this is a process that was completely a private court, as I say, if you will, but it’s set up and funded by the automotive industry but is administered at a an arm’s length basis by a free person office in Toronto, and it’s been functioning quite well for the last 25 years or so. And again, we recognize a problem that could be a problem for the Canadian automakers, their automakers operating the Canadian way Market plays. We didn’t want the cost and the complexity, and the the lack of uniformity, if you will, amongst the different that we saw amongst the different states. So we established a national program that provided consumers with the same type of outcome at the end of the day. So, one example of a non regulatory solution, if you will, another example of a similar type of situation was the advancement, I guess, what are known as franchise laws in the United States. I think the the franchise legislation in the various states was, and what I mean by that is the relationship that evolved between a franchisor whether it’s McDonald’s and McDonald’s, restaurants or in our industry, the situation that arises between a manufacturer and their their dealers, various franchise laws were put in place and in all of the different states as well, that essentially tried to ensure that manufacturers didn’t put more dealers in a particular geographic regime then could potentially be supported, and, and provide the the dealers that were in those geographic areas with the type of business that they maybe were anticipating when they signed up with the manufacturer. So again, Canada looked at putting in place, I believe it was Ontario, or actually might have been Alberta at the time, was looking at putting in place franchise legislation, some that as far as the automotive industry was concerned would be mirrored after what was occurring in the United States. Again, we took the opportunity to look to look at a private court approach, same type of approach that we did with the consumer arbitration program. And we established the National automobile dealer arbitration program, which again, addresses the issues and concerns that can arise from time to time between manufacturers and dealers, without having to resort to the courts and to litigation to to resolve these concerns, or having any particular federal or provincial legislation in place to to govern the relationship between manufacturers and dealers in that context. So those are a few examples of non regulatory approaches to issues that, that arise arose, I guess, in both those situations, one between manufacturers and consumers and the other between manufacturers and dealers. And both of those programs continue today. And both of them have been, I think we’re working well for for the parties on both sides of the particular issues, whether it was problems between manufacturers and dealers are issues that consumers have with their new vehicles with their particular manufacturers. I mentioned a moment ago, the necessity in the automotive industry of having similar regulatory regimes and Canada and the United States. And I also mentioned that this, this actually goes back to 1965. And what happened in 1965 was the establishment of the the auto pack. So the automotive products trade agreement as its formal name, it was called which, at the time was the largest sectoral free trade agreement between two countries anywhere in the world, but essentially established. If you want to call it manage trade, it wasn’t necessarily free trade, but managed trade in automobiles between Canada, the United States. And what that allowed the industry to do in both countries was to essentially take advantage of economies of scale. And the production facilities that they had in Canada could be used to service the entire North American marketplace, just the same as the production facilities in the US could be utilized to service the entire North American marketplace. Because prior to the auto pack, you ended up having automakers that were producing vehicles, you know, a number of different vehicles, basically on one assembly line, which as you can imagine, was very inefficient, and also very, very costly. Canada had in place very high tariffs at that point in time as well, which meant that consumers were not getting a wide variety of vehicles available and really, the cost of those vehicles was more than it had to be if we had lower tariffs and a trade agreement in place and, and the AutoPIPE brought about both lower tariffs that really tariff free trade during Canada, the United States, in vehicles and accomplishing two things, one, a greater supply of vehicles and variety of vehicles in the Canadian marketplace, and also vehicles that lower costs. And then that those agreements were essentially expanded upon in the Canada us free trade agreement, ultimately, NAFTA. And as some of you may know, autos were at the heart of the recently negotiated I guess, a year and a bit ago now, Canada, US Mexico agreement, or the US MCA, depending on which country you’re in, which ACH acronym you want to apply to that agreement. So having that, I guess, really regional trade established in automobiles then required that our standards become a lot, a lot closer than they are. Or we’re at that point in time. So emission standards, we tend to have a better history of developing our standards in concert with those of the United States. And on the safety side, that took a little bit longer. And some of you that maybe you have white hair or no hair like me, you will remember that there was a time when Canada had different bumper standards, for instance, than the US did. And if you want to bring a vehicle in from the United States as a used vehicle, it had to be homologated to meet the standards of the Canadian marketplace, and vice versa, if you wanted to take a vehicle into the United States. So we’ve done a fair amount of heavy lifting over the course of the last couple of decades to bring those safety standards more in alignment with with those of the United States, there are still a few things, daytime running lights, for instance, are more of a sort of a unique Canadian proposition than than in the US. But by and large, all of our safety standards are more or less aligned with those of the United States. Now, likewise, on the emission side of things, and this is important as we move forward, speaking, specifically of the emission standards now as we move forward down the road towards ever more stringent emission standards leading to ultimately to the decarbonisation of, of light duty motor vehicles. And what I mean by that is, you know, essentially vehicles that are producing zero or new near zero emissions from, you know, from a tailpipe perspective. So really, the transition to the electrification or other forms of zero emission vehicles could be hydrogen fuel cell vehicles and that type of thing. And the necessity, I guess, for having those, those regulations harmonized is that, Canada, if you look at it in the broader scheme of the world, as a relatively small automotive jurisdiction, we’ve got about 2% of the global production of vehicles here in Canada and about 2% of sales. So it’s important for us to continue to offer consumers the variety of vehicles that we’re offering them. And I guess the vehicles that are most advanced in the marketplace, and at the lowest possible cost, it’s important for us to ensure that those standards are aligned in Canada with a larger jurisdiction and given that the unit us is right next door, which was that’s been the the the partner that we’ve typically aligned our standards, both emissions and safety standards with, again, switch gears for a moment now to some of the other regulatory challenges in front of the automotive industry. 10 mentions you mentioned some of them at the outset of our discussion. These would be around. I mentioned one of them just a moment ago, but electric vehicle propulsion, for instance, but then also into the world of connected and automated vehicles. So some people think of connecting automobiles, at sorry, connected and automated vehicles being sort of the same thing. And they’re related, but they’re not exactly the same thing. When we’re talking about automated vehicles. We’re talking about vehicles that have advanced driver assistance systems in them varying levels of advanced Drivers system systems, meaning the little lights in your mirror that warn you that there’s a vehicle next due to more active systems, which actually would steer your car back in the lane. If you’re going over the lane line without putting your indicator on, for instance, all the way up to what some people view as the utopia of automated driving, which would be the the fully automated vehicle where somebody can be in the backseat have no no cares or be a passenger on a multi passenger vehicle, without a driver in that vehicle being ferried to their destination, whether that be work or the shopping mall, or wherever it might happen to be. And a gar assessment in the industry is that that that fully automated world is still a number of decades off, at least for for that technology to be pervasive in our society. But you will see applications of automated vehicle technology being used and geo fenced areas, meaning locations that are essentially technologically fenced off for the the functionality of the automated vehicle to operate. And know those will, we will see and you know, currently, you’re may be aware of them being utilized in in certain locations around the world, that those applications will become certainly a lot more common as as time moves forward. But it will be a while before we we can just leave the full task of driving anyway to somebody else. But this technology is iterative. So every new model of vehicle or platform of vehicle that is coming out, tends to have more and more automated features applied to the vehicle. And this is I think, the way that the automated vehicle technology will evolve. The challenge, as I mentioned at the outset, is that the regulatory environment is not really keeping up with the evolution not only the evolution of this technology, but the application of this technology in the vehicle. And I think, you know, a good case in point would be Tesla with their autopilot feature in their vehicles, it was something that essentially was was put in the vehicles that the driver was allowed to use, but there were no sort of rules and regulations around what this technology should or should not be capable of doing and when it should or shouldn’t be used. So you know, currently right now, there are global efforts around to develop regulations in the automated vehicle space and also in the connected vehicle space, maybe just touch on the connected vehicle space for a moment. So automated vehicles can can certainly operate without necessarily being connected to anything else. Connect connectivity really has to two real I guess modes to it. One would be the connection that you would see to the actual internet to provide in vehicle entertainment, for instance, and the the ability to use other applications while you’re in your vehicle. So the whole connection to the internet would be one application of connectivity. Another application of connectivity is more as we see it between the vehicle and other vehicles. And so that would be called V to be the vehicle to to infrastructure, for instance, and then vehicle to you know, various other applications as well. And the whole idea of being connected to other vehicles and also to the infrastructure is is ultimately to provide that. That opportunity at least where we could eliminate if not all, but you know, certainly the vast majority of of accidents on our roadways. Because right now the the most dangerous aspect of driving isn’t the vehicle itself. It’s the person actually driving the vehicle. So that’s the hope with the connected vehicle. And and I would say the the, the automated vehicle as well as to provide that, that opportunity to essentially have zero deaths on the road from the utilization of motor vehicles. I did want to just touch briefly, again, on the regulation around connected vehicles as well, that I think is I’m not as close to that. But that is advancing, I think in many ways more quickly than automated vehicles, is because there have to be certain standards that are developed to facilitate that intercommunication between between vehicles, one another, excuse me, and also the vehicle landscape and the environment in which it operates. And there there are various technologies that were being looked at, you know, a secure message system was, was the initial thought that could be utilized to allow this kind of activity to do to basically be, I guess, to be made ubiquitous amongst vehicles. But more and more now, I think 5g networks and whatnot are the tool that being looked at to facilitate the the connectivity between vehicles and also the connectivity between the vehicle and the the road infrastructure, and what not. firm decision I don’t think is yet to be made on which technology will prevail. And I suspect it actually may be both technologies that will be utilized as we move forward, because one has each one of them has various aspects where they perform better than than the other. But needless to say, whether we’re talking about connected vehicle technology, automated vehicle technology, or electric propulsion, this is still a very sort of nation and evolving space. And I think it provides really the entire global automotive community with the opportunity to develop standards and regulations that that that are global in nature. And why is that a good thing? I think, what for the same reason that I alluded to a few moments ago that I think the extent that you can have automakers that are developing vehicles, to meet one global standard, as opposed to perhaps, you know, three, four or five regional standards around the world, then, obviously, the cost of developing vehicles is is reduced the compliance costs of developing vehicles are minimized. And my sense is, is that that is a real opportunity for the industry and these, as they kind of new and evolving areas of the automotive industry, as opposed to trying to have to essentially retrofit our regulations, if you will, as we’ve talked, we’ve had to do in the past on our our safety and emissions regulations. Because the other interesting thing about regulations is oftentimes they can be utilized by jurisdictions as essentially non tariff barriers to trade. So your safety standards don’t meet our safety standards, it doesn’t necessarily mean that one set of safety standards is better than the other. Currently, the you know, the, the challenge would be if I had to look at it on a global basis between what are called the UN eceee standards are that the United Nations standards that are developed for for vehicles, essentially everywhere in Europe and elsewhere. BZB you know, the Federal Motor Vehicle Safety Standards, for instance, in the United States, or the Canadian Motor Vehicle Safety Standards that are essentially for all intents and purposes, the same as the Federal Motor Vehicle Safety Standards in North America right now. You know, are the standards better or worse? You could probably make the case that sometimes the European standards are are better sometimes the American standards would be better but I think if you look at you know, if we’re trying to eventually get our safety standards emission standards to the same place that we have the opportunity to go with these new technologies, we will never get there if we look at individual standards, because there are just so many of them. And they are the test methodologies that different ways of approaching the standards. Just make it such that unless you sort of take a holistic look at things and say, okay, you know, we both sets of standards are trying to achieve the same goal. So if they’re essentially achieving the same goal, and they they are, from a performance prospective, are achieving that goal, that we really need to quibble about the details, so to speak, lots of people do want to quibble about the details, but I would say that we’re never really going to get to, you know, global standards on, you know, they, the areas of emissions and, and safety, if we’re looking at the detail. Conversely, we have much more of an opportunity to develop and evolve those global standards. If we’re looking at these new technologies, whether there be propulsion technologies or automated and connected vehicles. I think that the real challenge in these these areas, though, is that, as I said at the very outset that things are moving so quickly and evolving so fast that the regulatory regime, you know, almost regardless of where it is in the world, really can’t keep up. So then the discussion has to take place between regulators and the industry in terms of what other mechanisms can we use to achieve the outcome that we might like to achieve through regulation. And that could be some of these approaches that I, I mentioned at the outset these, these voluntary, non regulatory approaches alternative dispute resolution type mechanisms. Or it could be an initiative such as industry and governments working on broad guidance documents, again, not necessarily specifying the detail, but specifying almost from a performance basis, the outcome of what government would like to see, regulators would like to see as a result of technology being integrated into the vehicle. So it’s, um, it’s a very sort of interesting time, I think it’s a challenging time for automakers now, just because of the I guess the variability in the regulatory environment in which they’re operating at the moment. But I mean, I think it’s also an exciting time just to see the day the speed with which the technology in all these areas is evolving, and has been integrated into the, into the motor vehicle. It’s also a challenge and an opportunity, I think, for those that are in organizations like mine that are dealing with regulators and dealing with I guess what would have been kind of a typical regulatory process where we might have pre discussions with Transport Canada about a particular standard that they would like to achieve, we would know what the regulatory plan was in terms of, okay, next year, in the first quarter, we’re going to see, part wine Canada gives that notice around this particular regulation, and then that would be followed by more consultation and then a part two, and then eventually the regulation would come into effect. And you know, that that whole timing in a way it hasn’t gotten completely out of the window, but it’s both regulators and the industry are having to adjust to this new environment, as I say, where things are evolving much more quickly than that can be appropriately dealt with from a regulatory perspective. So how do we collectively figure out how do we ensure that consumers are getting the utility that convenience? The other aspects that are they’re aware of now they’re available on motor vehicles? So how can we provide the consumers with all of the functionality they’re desiring, while at the same time meet the regulator’s needs of keeping vehicles being vehicles and, more importantly, that the drivers of those vehicles safe and and operating efficiently and effectively in the marketplace? And I think the other side of the coin too, is that regulators want to ensure that that there are consequences I suppose for for manufacturers that, you know, that aren’t meeting either the the spirit of the regulation or the the actual intent of the regulation. And more importantly, as we move forward if we have sort of a more collective guideline approach, well, what are the consequences of not meeting a guideline approach? So I think this maybe comes full full circle to where I started in terms of regulation if necessary, but not necessarily regulation. Regulation, I think it’s desirable in some respects, because it provides certainty to manufacturers and every everyone else that are the subject subject to regulations, about what what you what you really have to do and what you cannot do. The challenges of regulation is that currently, I think is that it’s being it’s being kind of outmoded in a way by this the pace of development, which I’ve mentioned a few times here now, I think I’ve sort of caught covered the waterfront of the things that I wanted to share with with your own your viewers today. 10. So maybe with that, I’ll turn it back to you if there any questions from your viewers.
Tan Sukhera 36:29
Fantastic. Well, thank you so much for that, David. It was really informative. And I thought that was really well put. Now it’s time for the last five minutes of the call, we’ll we’ll go through some of the q&a that’s happening here. So let’s take a look at question number one. So what are some of the areas of regulation that you’re dealing with now that maybe you haven’t had to kind of deal with, say, five to 10 years ago?
David Adams 37:01
Well, yeah, thanks for that question. And that’s, it’s an interesting one, because we still have essentially the same staff complement that the association but a whole new sort of realm of regulations and, and whatnot that we haven’t had to deal with before. I mentioned some of those in my remarks. So when we look at connected and automated vehicles, for instance, and also propulsion technology as well, those are things that that by and large, weren’t on our radar screen. Now, certainly 10 years ago, and probably not even five years ago, either. And one of the other issues that’s come to the forefront more recently has been the whole area of regulating kind of end of life issues related to the vehicle, for instance. So in the broader scheme of things, those regulations would sort of fall under something known as stewardship for extended producer responsibility. Areas where, again, this is more at a provincial jurisdiction than it is at a federal jurisdiction. So that requires a more holistic approach to dealing with these issues, as well, which is, again, a challenge. But no, just in the sense that there’s a recognition, not just word, you got an automobile, but a lot of products that are in our marketplace today, that the the desire of governments, not only in Canada, but around the world is that producers take responsibility of their product at the end of its useful life. So that, you know, we don’t have landfill consequences and whatnot. And, you know, interestingly, to have these issues, regulation of electric vehicles, and also now, the extended producer responsibilities associated with the battery when people start thinking about getting more electric vehicles on the road, both kind of converged into in terms of being to areas that, you know, that we’ve we haven’t had to deal with, let’s say, in the past, over at least the past five to 10 years anyway.
Tan Sukhera 39:23
And the next question here is what are some of the difficult challenges with regulatory authorities?
David Adams 39:29
Well, one of the challenges that we find I think, sometimes in Canada is it gets down to South mucky issues, I suppose, in a way and my remarks, I noted that, from the automotive industry’s perspective, it’s best when we have a aligned regulatory regime with without the United States with some, you know, some variability I guess, to integrate potentially other global standards as well, but Just because of our proximity, it makes sense to, to align with, with the United States and I, you know, sometimes Canada as a sovereign nation wants to proceed with, with regulations that are perhaps unique to itself. And I think our balance sometimes is that those unique regulations can cause cause havoc with the, with the automobile industry. I noted in my my comments that our our market in Canada is relatively small. And, you know, there are challenges that arise when Canada takes a unique position on something from a regulatory standpoint, that would not be aligned with say, the United States or maybe Europe or looking at other global standards, for instance. And one such area, for instance, would be Canada’s chemical management plan. And it’s an issue for our industry, but also other industries as well in Canada, where Canada has taken very much a leadership role, kind of globally and managing chemicals, but the reality is, is that if, if Canada is looking to ban a certain chemical and it’s utilized in motor vehicles or other electronics or what have you, then it becomes a real challenge in terms of what that means for for the availability of automobiles or products in the Canadian marketplace.
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