Fifth annual meeting of the Bilateral Dialogue on Motor Vehicle Regulations

November 23, 2022 (by videoconference)

The fifth meeting of the Bilateral Dialogue on Motor Vehicle Regulations, as established under the Comprehensive Economic and Trade Agreement (CETA), took place on November 23, 2022 by videoconference. Canada was represented by officials from Transport Canada, Environment and Climate Change Canada (ECCC), and Global Affairs Canada, while the European Union (EU) was represented by officials of the European Commission from the Directorate General for Internal Market, Industry, Entrepreneurship and SMEs; Directorate General for Climate Action; and the Directorate General for Trade.

1. Regulatory developments

Canada regulatory updates

Canada’s objectives for Zero Emission Vehicles (ZEVs)

Canada noted that the 2030 Emissions Reduction Plan (ERP), published in March 2022, outlines current and new policies to meet its greenhouse gas (GHG) reduction targets and reach net-zero emissions by 2050. Canada is now developing ZEV regulatory requirements, which will set annually increasing requirements towards 100% light-duty ZEV sales by 2035, including mandatory interim targets of at least 20% by 2026 and at least 60% by 2030. In support of meeting these targets, Canada provided an overview of measures underway to encourage ZEV adoption, including investments in charging infrastructure nationwide, purchase incentives to reduce upfront costs for Canadian consumers, and other incentives to retrofit existing vehicles.

Canada confirmed that ECCC is examining proposed rules from the U.S. Environmental Protection Agency on emissions from heavy-duty vehicles. The 2030 ERP also committed to an integrated strategy to reduce emissions from medium and heavy-duty vehicles (MHDVs). One of the aims of the strategy is for 35% of total MHDV sales to be zero-emission by 2030, and 100% by 2040 (for a subset of vehicles where feasible), with the possibility of setting interim targets. ECCC noted that stakeholder engagement is ongoing and acknowledged that regulations targeting heavy-duty vehicles are still in the early stages and aligned with international standards.

Canada also anticipates publishing an initial notice for ZEV GHG regulations for passenger and light-duty vehicles, with stakeholder consultations targeted for 2023.

Canada’s granted vehicle standards exemption

Canada provided information on the processes in place to request a vehicle standards exemption. The process allows Transport Canada to deem new vehicles that leverage new technology as conforming to existing safety standards. Canada notes that to date, only two exemptions under this framework have been granted.

The EU clarified that a similar exemption mechanism exists under the EU type approval (Article 39).

EU regulatory updates

Proposal for Euro 7 emission rules

The EU presented its proposal for new rules for vehicle emissions. The two main objectives of the proposal for a EURO 7 regulation are to improve air quality and to ensure a proper functioning of the internal market. The Regulation, if adopted, will apply to cars, vans, buses and lorries. It addresses tailpipe emissions but also brake particles and microplastics from tyres. The EU clarified that a tyre abrasion method is in development in UNECE. EURO 7 will save more than 80% of NOx emissions for cars/vans and lorries/buses by 2035 compared to 2018. Besides, the impact on consumers will be low as the emission reductions are expected to be achieved with existing technologies.

CO2 cars and vans zero emission targets for 2035

The EU provided the update on EU’s revised CO2 standards for cars and vans where a political agreement was reached at the end of October between EU Parliament and Council. Vote in the European Parliament is expected for early next year and the new standards would enter into force shortly after.

The EU explained that the agreement confirms fleet-wide CO2 emission reduction targets for new cars and vans as originally proposed in June 2021 by the Commission: 55% reduction for cars and 50% for vans from 2030 vs 2021 and 100% reduction from 2035 onwards. The 100% target implies that only zero emission new cars and vans (calculated at the tailpipe) could be registered in EU from 1 January 2035.

The EU informed that the Commission will also very soon make a proposal to revise the CO2 standards for heavy-duty vehicles.

New type approval rules for automated vehicles

The EU informed about the new rules for a small series type approval of automated vehicles^{Footnote 1}. The EU clarified its intention to apply these rules for vehicles produced in unlimited series by the end of 2024.

The EU emphasized the need to work together on the harmonised set of rules in WP29 as this clearly reflects the industry request to have a certification scheme in place for automated driving systems (ADS) by the end of 2025.

2. Implementation of the Agreement

CETA implementation update

The EU underlined their appreciation of the incorporation by Canada of 4 UN regulations out of the 8 listed in table II of Annex 4-A-2 of the CETA agreement. The EU called for a timely incorporation of the 4 remaining ones, namely UN R12, UN R17, UN R43 dealing with safety issues and UN R87 concerning the approval of daytime running lamps for power-driven vehicles. The EU enquired about the reasons preventing Canada to fully implement the Annex.

Canada affirmed the value of ongoing cooperation with the EU in international fora and noted that multiple standards listed in CETA Annex-4A are currently being developed as Global Technical Regulations in the context of the World Forum for Harmonization of Vehicle Regulations (WP.29). Canada emphasized the importance of WP.29 as the ideal forum to advance the synchronization of regulations and sought EU support to prioritize the Groupe de Rapporteurs to advance further alignment between United Nations (UN) and Canadian regulations.

Considerations for enlarging the scope of Annex 4-A-2 – new technologies

The EU proposed to enlarge the scope of Annex 4-A-2 to include new features and technologies. It expressed the view that UN R148, 149 and 150 (all three dealing with lighting, and provided that Canada has already incorporated a number of lighting UN Regulations) could be a good starting point.

Canada reiterated the value of ongoing cooperation with the EU in WP.29 and stated that if the European Commission views any regulations as requiring alignment under CETA Annex 4-A-2, it should seek to do so through WP.29. This includes prioritizing such regulations in the Groupe de Rapporteurs to advance further alignment between UN and Canadian regulations.

3. International regulatory co-operation

Initiatives at UNECE WP.29

This item was discussed above as part of agenda item ‘CETA implementation update.’

Cooperation between Transport Canada and the National Research Council on one side, and Commission and Joint Research Centre on the other side in the area of safety of electric vehicles

Both the EU and Canada noted a good level of cooperation between Canada’s National Research Council and the European Commission’s Joint Research Centre and proposed to continue working together with a view to determining potential new areas for collaboration or coordination.

Common technical elements document for creation of a UN regulation on EDR for heavy duty vehicles (trucks and buses)

As to the future, the EU invited Canada to provide all the necessary support to the UN work on UN regulation on Event Data Recorder (EDR) for heavy-duty vehicles. The new regulation should be ready for WP.29 consideration and vote by November 2023.

4. Policy research

Canada’s research on Automatic Emergency Braking in northern climates

Canada delivered a presentation regarding ongoing research on Automatic Emergency Braking in northern climates, including sharing early results from tests undertaken at Transport Canada’s test facility in Montréal. The tests are designed to evaluate the effect of winter conditions on sensors, equipment, and other related technology affecting a vehicle’s advance detection capabilities and inform its collision prevention and avoidance systems. Transport Canada reiterated its commitment to promoting safety by regularly updating the tests they perform. Results will be shared with WP.29 as they are available. The EU expressed keen interest in the study and indicated that it will consult internally to determine whether there is similar research within the EU.

5. Any other business

Select Luxury Items Tax Act: implications for the Motor Vehicle dialogue

The EU reiterated its concerns regarding provisions in the recently enacted Select Luxury Items Tax Act in Canada. The EU noted the fact that while the proposed Canadian Luxury tax does not target EU imports per se, it implicates a substantial portion of the EU’s vehicles exported to Canada and would have a disproportionately negative impact on such exports. The EU also underlined that this measure could slow down the implementation of Canada’s green agenda.

Canada emphasized that this topic is outside the scope of participants’ authority and was being discussed concurrently by the appropriate experts at Finance Canada, including in the context of the CETA Joint Plenary meeting.

Announced Canada’s tax credits/incentives for clean energy technologies, including industrial zero-emissions vehicles: potential implications for the Motor Vehicle Dialogue

The EU sought more details from Canada regarding Investment Tax Credits for Clean Technologies as announced in the 2022 Fall Economic Statement. The EU underlined that advancing the green transition should be done in a manner that is both mutually supportive and non-discriminatory. Canada noted this issue is outside of the mandate of Transport Canada and was being discussed concurrently by the appropriate experts at Finance Canada, including in the context of the CETA Joint Plenary meeting.

6. Next steps

Agree broad timing for next Dialogue

Canada and the EU thanked one another for their ongoing cooperation and constructive engagement on motor vehicle safety and regulations and agreed that the discussion highlighted the commonalities in their respective objectives and challenges in this area.

The next meeting is likely to be held during the third quarter of 2023.