The Freedom Convoy blockades at the borders came at a particularly delicate time for the Canadian economy and could have caused irreversible damage had they continued, according to Deputy Minister of Finance Michael Sabia.
“If the disturbances continued for a long period, the concern that we had […] is that it could have a lasting impact in the long term, “said the highest official of the Federal Ministry of Finance on Thursday.
The former big boss of the Caisse de depot et placement du Québec appeared before Judge Paul Rouleau as part of the public inquiry which must determine whether it was justified to invoke emergency measures to dislodge the Convoy of freedom. This protest movement blocked the city of Ottawa and various border points across the country in January and February.
In testimony entirely in English, Michael Sabia painted a portrait of a Canadian economy whose recovery was then very fragile, after two years of the COVID-19 pandemic. This period also coincided with tense negotiations with the United States over Canada’s participation in the manufacture of American electric automobiles.
“The United States was reassessing whether Canada was a reliable trading partner […] There was a risk to Canada’s reputation,” said Mr. Sabia.
The United States finally agreed this summer to extend the tax credit for the purchase of an electric vehicle to those assembled in Canada and Mexico.
Automotive industry held hostage
The existing automotive industry has justly been the sector hardest hit by the Convoy’s border disruptions, particularly during the blocking of Windsor’s Ambassador Bridge. Factories on both sides of the border have a “just in time” practice, which means accumulating a minimum of inventory to use spare parts as they are delivered.
This made it particularly vulnerable to the blockages of last winter, causing temporary stoppages of certain production lines. Trucks had problems crossing between Canada and the United States at Windsor for less than a week, from February 7 to 13.
Documents filed with the Commission show that the cost of the blockages was ultimately not as great as some estimates suggested. Bloomberg, for example, had calculated that Canada could lose up to 0.2 percentage points of annualized real GDP growth in the first quarter of 2022.
Finance Ministry officials said factories were finally able to catch up on production, as the disruptions did not stretch in time or spread to other trade routes. The economy would still have done a little worse than the February estimates, although it is difficult to make the direct link with the Convoy.
“What we don’t know is whether in five years, when a car manufacturer decides where to set up its factory, will [de savoir qu’il est possible de bloquer la frontière] will become a consideration,” said Rhys Mendes, Assistant Deputy Minister, Economic Policy Branch, Department of Finance Canada.
The federal government has also said it fears for its reputation to see its flag flying during convoys of opponents of health measures against COVID-19 elsewhere in the world. The blocking of the border at Windsor was notably the subject of a tense appeal between Prime Minister Justin Trudeau and his Ontario counterpart, Doug Ford.