Agriculture Committee on Dec. 2nd, 2010

[Gilles Gauthier]

As I mentioned earlier, the feedback we've been getting from the sector is generally very positive. The sector is very well engaged. They are doing their own analysis of trying to estimate the potential gains for their sector. So I think generally speaking it's certainly a very positive engagement across the board.

In terms of the benefits, hopefully we'll be in a much better position to assess that when we get to the final agreement.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

That's fair.

Are there any national farm organizations that haven't been positive about this deal?

[Gilles Gauthier]

Well, everybody is fully engaged. Of course, representatives of the supply-managed sector want to make sure that the government will stick to our position of defence of the supply-managed sector. But all the sectors are actively engaged and have provided some input to the department.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Absolutely.

When you're at the table, does the Canadian Wheat Board ever come up?

[Gilles Gauthier]

The issue of generic discipline on monopolies and state enterprises is one topic that is being addressed in the negotiations, but it's more in terms of how we ensure that the use of monopolies or state enterprises does not lead to detrimental trade effects. How can we ensure that their behaviour is based on commercial behaviour? It's not cross-subsidization. It is done in a way that enables a fair marketplace. So that's the sort of broad framework of rules pertaining to monopolies and state enterprises we'd be looking at.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

I would think, when they're talking about access and access to markets, the Europeans would see this as an inhibitor to their access to a market, no?

[Gilles Gauthier]

Well, in terms of access to the Canadian market, not really. It has never been raised in that context. There are some importers in Europe that have expressed an interest in being able to deal directly with other suppliers in Canada, but apart from that I think it's more, as I said, a sort of generic discipline pertaining to the behaviour of state enterprises than the nature of the Canadian Wheat Board in and of itself.

[Brian Storseth, Conservative, Westlock—St. Paul, AB]

Thank you very much.

[The Chair, Conservative, Larry Miller]

Thank you.

Now we'll move to Mr. Richards for five minutes, sir.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you.

I just want to maybe look a little more broadly here at things. I've only been to Europe a couple of times, but I was there this summer, travelling. My son was there for a hockey tournament. We travelled around to various countries. So I spent a lot of time on a bus with his hockey team and saw a lot of the countryside in various countries in Europe.

There was one thing that I noticed, and I think it was something that I was probably fairly aware of already, and you can maybe confirm this for me—you probably would have a better idea. There's often a lot more of the smaller farms, I guess we'll call them, in Europe, more mixed operations. There's the standard few milk cows, and a couple of chickens, a small acreage, and a variety, whereas in Canada, generally our farmers are often more “specialized”, I suppose, for lack of a better way of putting it. In other words, you might be a beef farmer, you might be a grain farmer: often our farmers are more specialized.

I guess I'm just curious, when we're talking about agricultural trade with our European Union partners, given the fact that our agriculture is done somewhat differently from the way they do it there, what types of opportunities are created for our farmers and what kinds of challenges.

[Gilles Gauthier]

The European farm sector has some differences from Canada, but there is also some resemblance, in the sense that you have different models: you have smaller farms that are more directed to supplying local markets, but you have also very large operations that are designed to operate in world markets. We have the same sort of configuration in Canada, with some large farm operations that are more geared toward the international market and some smaller ones.

The issue here is that the Canadian market is relatively small compared with the European market, and we have the luxury in Canada of being able to produce more food than we need domestically. Having access to a huge market of 500 million in population, which is becoming more and more an importer of food products across the range of sectors, in and of itself provides a solid basis for us to capitalize on a new and privileged access to that market that nobody else—at least among our competitors—currently has. We compete a lot with U.S. producers, with Australia, and with others, and even with Latin Americans.

If Canada is successful in concluding an agreement with Europe, we would be the only major agricultural exporter to have preferential access to that huge market. That, in and of itself, could represent huge new opportunities for our sector.

[Blake Richards, Conservative, Wild Rose, AB]

Absolutely. Clearly a lot of the work that is being done.... I know you're both a big part of a lot of this work, but certainly Minister Ritz has placed a major focus on opening up new markets and on bilateral agreements. There has been a lot of progress under our government in that regard. I appreciate your roles in it as well.

There are great opportunities for our farmers, and most people recognize that. Farmers are certainly appreciative of it; I know I am.

Specifically in terms of dealing with the EU, their heavy subsidization of their agriculture sector is fairly widely known. That has been touched on a little bit here today. Can you give us some specific examples of some of the concerns you have or that we have about the subsidies and what some of the specific ones are that we may have the biggest concerns with?

[Gilles Gauthier]

The subsidy level in Europe varies product by product. In the beef and hog sectors, their level of subsidy is far beyond ours here in Canada. But despite these heavy subsidies in Europe, our producers believe that if we have preferential access to the European market, we will be able to be competitive in that market--despite these subsidies. That's positive news.

Of course, the subsidies of the European Union will remain of concern to Canada. We will continue to be very aggressive in the WTO context to try to inject new discipline into the use of subsidies by the European Union. Hopefully an agreement will emerge eventually from the WTO that would even add to our ability to penetrate the European market on a preferential basis.

[The Chair, Conservative, Larry Miller]

You're out of time, but we have a few minutes for a couple of further questions.

You can put one question, Wayne, and then we'll return to the other side of the table.

[Wayne Easter, Liberal, Malpeque, PE]

Really, it's two tied together, Mr. Chair.

Just on the last exchange concerning the subsidies in Europe, I take it that the common agricultural policy itself—I spent a month studying it many years ago, and it's very huge—is not specifically on the table in this negotiation.

Secondly, as the last question that I tried to get in earlier, in terms of our entering the beef market in Europe, which has tremendous potential for us, is traceability back to the farm going to be required? That's an important factor for our producers going forward. If we're going to need traceability, then we're going to have to inform the industry that we have to have it to get into that market.

[Gilles Gauthier]

Well, in order to have access on a preferential basis, you will have to have what we call a “rule of origin” for the product: where does the product come from? Does it truly come from Canada? In that context the traceability issue becomes relevant.

Our traditional position in trade agreements has been that if the beef has been slaughtered in Canada, that's sufficient to confirm it as a Canadian product and eligible for the preferential access. In these negotiations, the European Union have had traditionally a different approach, requiring that the beef be born, raised, and slaughtered in the exporting country in order to gain access on a preferential basis.

So we're currently discussing how these two approaches are going to operate.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Hoback, you may have one question.

[Randy Hoback, Conservative, Prince Albert, SK]

I guess my comment and question would be on two things, the low-level presence and the recognition of science.

If there's one thing I think we need out of this with the EU, it's the understanding of what low-level presence is and what the rules are, and the recognition of science—the recognition that what's safe is safe.

My question to you is on those two areas. What are we doing to ensure those are priorities in the agreement?

[Gilles Gauthier]

Well, all questions on sanitary and phytosanitary issues are very important to these negotiations. We have a separate negotiating table pertaining to these topics. Our objective is to reiterate our commitment to the WTO SPS agreement, which is anchored in science, and to devise appropriate institutional mechanisms that will be able to deal with issues related to standards and measures of that nature in order to provide for predictability in trade.

Low-level presence is an area we're making some effort to see addressed in the CETA context, along with a parallel process, because the EU is currently embarking on a proposal to deal with that issue. The minister and the deputy minister have had some meetings with their European counterparts to try to ensure that whatever regulatory framework is put in place in Europe will allow for predictability to our trade, including in instances where a low-level presence is found in our shipments.

[The Chair, Conservative, Larry Miller]

Okay, thank you.

Mr. Atamanenko, you may put one question.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you, Larry; it will be very quick.

Although I understand that supply management is being protected, is there a chance that in order to make the agreement work the government or the negotiators may agree to increase the quota to 10% and to lower the over-quota tariff, which is now something like 240%? It's my understanding that, according to the Dairy Farmers of Canada, even if this will protect the supply management, if we made those moves it could be at a cost of around $70,000 to each dairy farmer.

It's one thing to say we'll protect supply management, but is there some thought that it might be modified a bit to make the agreement?

[Gilles Gauthier]

At this point the only thing I can say is that the defence of supply management has always meant that we need to ensure that the border protection measures currently in place are maintained, so that we can decide domestically the volume of production necessary to meet domestic demand.

Obviously, it's a position that at this point we will continue to advance in the negotiations to ensure that this border protection is maintained, so that we can continue to operate the supply-managed sector the way we have over the past 40 years.

[The Chair, Conservative, Larry Miller]

Thank you very much.

Okay, Mr. Laforest, I'll give you the same opportunity, very quickly.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chairman.

Earlier, Mr. Verheul, you answered my question. You said that there were 22 areas under discussion and 22 negotiating tables. We had heard that there were 14 negotiating tables and that the provinces were participating in 13 of them. Apparently the only table from which provinces were excluded was the financial services one. Is that accurate?

[Steve Verheul]

No, that's not correct. There is a whole series of tables that deal with federal-only issues. Customs and trade facilitation, rules of origin, goods generally in dealing with the tariffs, and intellectual property issues, for the most part--all are tables dealing with federal legislation or federal jurisdiction only, and provinces haven't been invited into those tables.