Thank you very much.
My name is Bill Wymenga. I'm a hog producer here from Blenheim, Ontario, and vice-chair of the Canadian Pork Council. I'm joined here today by Ian Thomson, the Canadian Pork Council's trade advisor.
I would first like to thank the members of your committee for this opportunity to discuss the CETA . The CPC serves as the national voice for hog producers in Canada. We are a federation of nine provincial pork industry associations, and our purpose is to play a leadership role in achieving and maintaining a dynamic and prosperous pork sector.
As you are aware, we are a sector that relies on exports. In fact, more than two-thirds of the hogs produced in Canada are exported either as live hogs or as pork products. Exports help the Canadian hog and pork industry to grow. Our success in achieving and accessing existing foreign markets is directly linked to the level of cooperation between the government and industry.
The completion of CETA is a strong example of what can be achieved through ongoing collaboration and consultation. We appreciate the government's determination to follow through to complete the deal with the EU. This deal is good for the hog sector, and it is in its best interest for Canada and the EU to sign.
Pork is a key component of the Canadian agrifood sector and provincial economies. Canada's pork industry is made up of 7,300 hog farms with cash receipts of $4 billion. Hog producers account for 8% of the total farm cash receipts and are the fifth largest source of farm income in Canada.
The Canadian Pork Council has been following with great interest the developments of the trade agreement. With a population of 500 million in the EU, the majority of whom view pork as their favourite meat, we are very confident that the deal will increase pork exports into this lucrative European market, and that it will benefit hog producers, pork processors, and provincial economies around the country.
The potential in the EU remains untapped. Europe is the only pork-consuming region in the world for which Canada currently has little effective market access. Canada's pork exports to the EU in 2011 were only 415 tonnes. This compares to the total Canadian exports in that year of 1.1 million tonnes.
The 500 million-plus people in the 28 member states consume over 20 million tonnes of pork per year, and that's almost 30 times the Canadian consumption. And despite this, EU imports are just 0.2% of its domestic consumption. By comparison, Canada, with a completely open market approach for pork products, imports more than 200,000 tonnes of pork annually. That's approaching a third of our domestic consumption.
Now is an opportune time for Canada to enter a liberalized trade agreement with the EU. Exports to the EU are currently severely restricted by tariff and non-tariff trade barriers. The new zero tariff access for pork and the much-improved quota administration rules provide unique access for Canada, an advantage over U.S. exports until a trade agreement is worked out between the U.S. and the EU. The potential is seen for hams and to a lesser extent the shoulders, which should help boost the entire carcass value.
Canada's pork industry has a solid reputation for competitive pricing, safe quality products, and reliable customer service.
At the heart of the CETA, for Canadian pork exporters, is the elimination of the EU tariffs. This tariff elimination can be framed within three areas: a quantitative access or tariff rate quota of 80,000 tonnes, a tariff rate quota phase-in period over five years in equal steps until fully implemented, and finding a significantly improved EU import licensing mechanism for Canadian pork. The annual TRQ will be divided and opened in equal quarterly installments. Any unused amounts from a given quarter within the quota year will be rolled forward, up until the end of that same quota year.
It is recognized that Canadian processing plants will need to invest to address EU demands in areas such as feed additives and disease testing. However, with the promise of larger quotas and with a resolution of the quota administration barriers, CETA will encourage additional plans to seek EU certification.
A welcome addition to ensure that all parties meet the intent of the agreement is a TRQ under-fill mechanism. An under-fill is defined as “less than 75% physical imports under the tariff rate quota in a given year”. In such an eventuality, the parties shall meet at the request of either side to consider possible underlying reasons affecting efficient operation of the TRQ.
Progress has been made in the TRQ administration system. The parties will review the operation of the system to make sure it is operating efficiently and effectively, if requested. The review will take into consideration quota utilization, market conditions, and any administrative burdens that might prove excessive.
The Canadian and EU market for pork complement each other, and this relationship holds great potential to enhance our sector's export opportunities as well as benefit workers, businesses, and families who rely on the pork sector for their livelihoods.
The solid trade deal that has been negotiated with the EU will increase Canadian pork exports by up to $400 million per year. This is by far the best opportunity Canada will have for many years to acquire new access to this important pork market.
I would also like to say that in the trade agreements we do have, we have to ensure there are proper resources at all government levels to deal with issues that affect access.
Thank you very much.