Agriculture Committee on Feb. 17th, 2015

[Greg Meredith]

I've given you your ten minutes. I'm going to give my three to Frédéric.

[Voices]

Oh, oh!

[Frédéric Seppey]

Thank you.

I shall preface my answer to your question, sir, with the fact that this study is very important because it is really the industry stakeholders, the people who are operating, who would be best informed to provide answers to that question.

That being said, because of the extensive consultations that the agency has had in the context of the harmonization of the food safety regulations and in the context of the discussions that we have with the industry, we have a certain sense of what types of impediments exist. The first example I would give is the one that we just discussed in terms of red meat and the differences in standards. However, I shall say that 95% of the animals slaughtered in Canada are in federally registered establishments. In other words, 95% of the animals that are slaughtered and the meat that is processed meets the national standards and can be traded across the country, so when we talk about even a sector like red meat, we are talking about relatively small-sized operations that are subject to some impediments.

Another example I could give, in the area of horticulture, is fresh fruits and vegetables. This is an area where there is a lot of trade going on but we still have legislation at the federal level that regulates how the trade in bulk products should proceed. These regulations have been in place from the time when it was difficult to fully trust the scales in the public markets. We had established standard container sizes and we established requirements for operations to use the products in their immediate vicinity before sourcing outside the province.

What we see is that in the federal legislation these elements are still largely in place, although we are making certain regulatory changes to standard container size. What we have in the federal legislation is the possibility for ministerial exemptions to these restrictions for trade to take place. These ministerial exemptions are extensively used. Would it be easier to have the trade if we didn't have to have recourse to these ministerial exemptions? Yes, it would be easier, but there are other policy objectives that perhaps would not be met to the same extent.

If you talk to witnesses from the horticultural sector, to fruit and vegetable producers or the processing industries, you may hear these types of comments.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

Maybe we'll come back and, Mr. Mayers, you may get a chance.

Now I'll go to Mr. Eyking, for five minutes, please.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you, Chair.

I thank the witnesses for coming.

It used to be noted in Europe, before the European Union got strong, that every country had its own set of regulations and it was very difficult to go from one country to the next. In the EU now there are almost seamless borders. Brussels still has a lot of regulations, but everybody has the same regulations whether you're in Denmark or in France.

It was alluded to that if we had a freer flow of products between provinces that would help us internationally. We're doing these trade agreements with the European Union and in the Pacific.

My first line of questioning would be if we're more streamlined within our own country, how would that help us prepare to compete or find new markets outside? On the other hand, how can we still help with local content? When you look, for instance, at the beer market, you see all these small breweries popping up, in Ontario especially but right across the country, but you also see some of our breweries going onto the international scene. Can you have that balance where somehow you have your uniqueness and smallness but you can also be on the world scene as a competitor with products? How do you achieve that?

[Frédéric Seppey]

To answer the first part of your question, I think that having a more integrated economic and internal market helps internationally. In this world it is a question of being as competitive as possible and economies of scale.

To start with, the Canadian market is small from an international perspective. If you can produce for the Canadian market subject to national regulations instead of being subject to production within a province, even one of the size of Ontario, that helps you to be more competitive and to be able to export.

We have a number of examples where you can keep the authenticity in a global world. I don't think that having interprovincial barriers would necessarily preserve the local character. You quote the example of Europe, and it is true that there are a lot of distinctive products, but again to have the capacity to export and have larger markets you need a regional identity and this is a contributing factor. I think that overall being able to be more competitive, to reduce costs, and to have the economies of scale are factors that should be taken into account.

[Paul Mayers]

If the chair will permit me, the only thing I would add to what my colleague has said is recognizing that any product that's not permitted to be traded interprovincially is equally not permitted to be traded internationally. This highlights the opportunity that more interprovincial trade means more businesses with the opportunity to trade internationally as well.

A system where there is greater alignment of regulation means that the approach we currently employ, which is those products that cross a boundary, whether provincial or international, being subject only to the federal regulatory framework, highlights the limitation.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

So we're concentrating on the winners here. But let's assume that the Prime Minister had a meeting with the premiers and they all agreed on making it seamless for our products to move across so everybody has the same things. Who are going to be the losers? What products and what industries, especially in the agriculture and food industry, are going to have to make a lot of adjustments?

[Paul Mayers]

The reality is that there will be more competition and that means more competition from out of province. Does that really constitute losers? Not necessarily and industry is probably best placed to speak to that. It will mean more competition because, in essence, there aren't the regulatory barriers to the participation in local markets from out of province.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

So you don't see many losers. You see an adjustment.

[Paul Mayers]

I certainly see an adjustment. I think industry will have a much better view than I would as to the implications for individual producers in that context.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Where is the wine industry right now in interprovincial trade? Is it allowed or not?

[Frédéric Seppey]

I think there continue to be a number of restrictions on interprovincial trade. For example, as an individual I can carry a fair amount of beer and wine across a provincial border. But I live in Quebec and if I want to order a case of wine from British Columbia I cannot do that right now, largely because of rules at the provincial level and the policies of the liquor boards.

A number of steps have been taken. As I explained earlier, measures were taken at the federal level that constituted a restriction on interprovincial trade, supplemented by a series of policies and measures at the provincial level. The federal measures have been lifted most recently through the Budget Implementation Act 2014, but a fair number of provincial measures still exist and we expect will continue to exist for a fair amount of time, because if you have rules—if you have witnesses from provinces—they are not necessarily based on protectionist motives. The principal intention of these barriers is not to be protectionist but it may have that impact. They are there for other reasons such as public safety, an important source of revenue, and these types of issues.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

Now we'll go to Mr. Zimmer, for five minutes, please.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Thank you all for coming to the agriculture committee today.

I'm from British Columbia and represent Prince George—Peace River. We have a lot of agriculture in my neck of the woods, grain, beef, and all kinds of stuff.

Some of the problems we have are with interprovincial barriers, and that's what the study is about. They involve provinces and they are the masters of their own destiny; it's difficult at times to say otherwise. That's the way Confederation has been set up, and we honour that.

It goes back to some questions that were asked before. When we look in the mirror, we ask what we can do first to fix this. Some of what we can do was already talked about from a federal and regulatory perspective.

You've all answered this from each of your perspectives, but I want to get Greg talking. I've heard him talk before and he's pretty good.

Do you have any insight into what we can do federally to make sure that this happens?

[Greg Meredith]

Thank you for thinking of me. I was actually quite comfortable just sitting here.

Nevertheless, my slice of the woods is a little narrower than CFIA's or my colleagues on the trade side. I have one little issue that the committee might want to look into, and it's the implementation of the Agricultural Products Marketing Act. It delegates federal authorities to provincial boards to handle interprovincial trade and facilitate export trade.

That's one topic that my minister would be interested in having the committee look at.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Okay.

How about Frédéric and Paul, as well.

Could you add anything to that? I mean, it's a pretty broad question, but this is the start of the study. Do you have some ideas?

[Paul Mayers]

Certainly from the regulatory perspective, two areas that stand out from our perspective are the grade standards and the standards of identity. Both of those areas are fairly significant. For example, in Canada, we have 511 federal standards of composition or identity for 27 different commodities.

Of course, there are also some standards at the provincial level that are different. You begin to see the complexity of such a large suite...which are not just a single set, but then replicated province by province, with subtle differences. Those two areas, in terms of grades and standards of identity, represent a very significant area of the “tyranny of small differences”, as some have described it.

A single national approach to grades and standards of identity would be extremely liberalizing in terms of the movement of products.

[Frédéric Seppey]

I would complement the points made by my two colleagues.

Given the responsibility of the federal government on interprovincial and international trade, taking into account the recent progress we've made in terms of improving the set of rules governing international trade as they relate to Canada, notably CETA—we are in the middle of negotiations on the Trans-Pacific Partnership—if we could modernize the Agreement on Internal Trade, the general rules, to make them applicable across the board and have the same principles of national treatment, non-discrimination, and, for example, ensuring that technical measures are not more trade-restrictive than necessary....

These elements are not agricultural-specific, but if it would modernize the agreement in such a general way, the agriculture and agri-food sector would especially benefit from this improvement of rules. That's what the federal government announced last June, and what the provinces, at the highest level, the premiers at the Council of the Federation, committed to last summer as well.

This creates a momentum that can help to make the integration of economic markets stronger, especially for the benefit of the agriculture and agri-food sector.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Is that all the time?

[The Chair, Conservative, Bev Shipley]

You're pretty close. There's time for a really short one.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

I'm assuming that the provinces would generally be in agreement with our proceeding with something that's more streamlined, as opposed to not. Can you, or any one of you, speak to that—generally speaking? Again, that's honouring their provincial territories and rights.

Are they typically in receptive moods when we talk about this?

[Paul Mayers]

In general, yes. The detail is where it can get a little more challenging, but in the initiatives that we've undertaken in collaboration with our provincial colleagues the objectives are similar: to enable more businesses to participate in trade across the country as opposed to just in their local contexts.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Thank you.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

Mr. Allen, for five minutes, please.