Fisheries Committee on Nov. 21st, 2013

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. Donnelly.

Go ahead, Ms. Davidson.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

Thanks very much, Mr. Chair.

Thanks, Mr. Verheul and Ms. Renart, for being here with us this afternoon. This is an exciting deal, and I want to add my congratulations to both of you for being a part of such a successful outcome.

I'm not like my colleagues on either side. I am from Ontario, from the Great Lakes area. So when you were going through your presentation, Mr. Verheul, you talked about the provinces and territories and named some in particular where the fish and seafood industry had been a top priority. You mentioned Manitoba for the freshwater fishery.

Was Ontario much involved with this as well?

[Steve Verheul]

I don't think Ontario has a freshwater fishery to the same extent as Manitoba does. But we did talk to Ontario about these elements and recognized that this was an important element to it as well.

For all of the freshwater fish that comes from Ontario as well, with the exception of trout if there is extensive trout fishing, everything else will be duty free immediately on the first day. So we did pay quite a bit of attention to the freshwater fishery as well, given that it does represent a significant resource within Canada.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

So there are opportunities there that could be developed as well in the freshwater fisheries.

[Steve Verheul]

Absolutely.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

I just want to go back a bit to some of the questions that Mr. Donnelly had when we talked about the high tariffs for the products going to the EU before the agreement, averaging 11% with peaks of up to 25%. When these tariffs will be removed and go to zero, is it common to see the resulting percentage of profit go to the exporter, to the companies, or are there other costs that creep in that bring that profit margin down?

[Steve Verheul]

No, there aren't any additional costs that would creep in. What it comes down to is really what kind of price the exporter negotiates with the importer in the EU. As it stands now for some of our exporters who are paying 20% tariffs into the EU, that's a considerable cost of doing business. When that's gone, certainly it will add increased value to the exports. I think as importantly from our perspective it will give those exporters a chance to compete with anyone in the world going into the EU market, because they will have that 20% advantage over everybody else.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

We've talked quite a bit about increased opportunity....

Am I done?

[The Chair, Conservative, Rodney Weston]

Yes, you're done, I'm sorry.

Thank you, Ms. Davidson.

Mr. Chisholm.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Thank you very much, Mr. Chairman.

I wanted to ask a little bit about the rules of origin. I know that was a tough issue in a number of different areas, but as it relates to fish products in particular I wondered if you could expand a little bit on it. I'm thinking, of course, of lobster coming from the U.S. and being processed in New Brunswick. Maybe you could talk a little bit about how that will all be treated.

[Steve Verheul]

Yes, the rules of origin was another long fight when it came to the fishery sector. We got a lot of resistance from the EU because when we had scenarios like the one you described, our bringing lobster in from the U.S and then processing it in Canada and exporting it to the EU, which we do, the EU would respond that this was a free trade negotiation with Canada and not with the U.S., so why should we give benefits to the U.S.?

Our response was that this is part of the way we do business. We operate in an integrated North American market in many cases and this is part of our reality and we need some accommodation. What we did end up doing was that we agreed to rules that primarily meant that for us to benefit from the tariff advantage, it has to be Canadian product going into the EU market. But for the main species of interest to us—and that does include salmon and shrimp and crab, halibut, lobster in various forms, herring, and sardines—we agreed to specific quantities where we would be allowed to import the product from the U.S., process it in Canada, export it to the EU and benefit from the duty free tariff environment. We did that species by species as specific volumes. That was a concession that we negotiated.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

In terms of the minimum processing requirements, we've talked about Newfoundland and Labrador but we didn't talk a lot about Quebec.

[Steve Verheul]

No, I didn't. For Quebec, we did have extensive conversations with them as well, because aside from Newfoundland and Labrador, Quebec is the only other province that applies minimum processing requirements at this time, as you probably know.

For Quebec, at the moment they don't export a lot of their production to the EU. They tend to focus more on the U.S. market, the domestic market and some others, but without a big focus to the EU. So they thought that they could operate without minimum processing requirements on exports to the EU with very limited, if any, impact on their sector. They seem to be capable of dealing with that without any real disruption.

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. Chisholm.

Mr. Leef.

[Ryan Leef, Conservative, Yukon, YT]

Thank you, Mr. Chair.

I thank both of you for coming.

I can tell you that even folks up in the Yukon Territory are pretty excited about the fisheries aspect of this trade agreement. There's been a bit of chatter of course on Facebook; people use that social medium to kick around their comments on the EU. I read one that said: “Good morning Newfoundland and Labrador, all the ships at sea, and our fishery crew. Canada's free-trade deal with Europe will not fix our broken fishery—it will give it away....

Would you agree with that characterization?

[Steve Verheul]

Hardly, no.

I would say that this is going to represent a real opportunity for growth in our fisheries industry, the likes of which we haven't seen for a very, very long time.

[Ryan Leef, Conservative, Yukon, YT]

Thank you.

That would probably sound familiar to folks across the way because it came from Mr. Cleary, in fact. As Mr. Chisholm said, we're all interested in hearing about the CETA agreement. He wanted to articulate that the NDP was supportive of the trade deal with the EU, but that they had some questions.

Interestingly enough, Facebook posts like this happened in October, long before we had an opportunity to hear from you. It might solve one of the mysteries of Mr. Cleary's question about why people are fearful of things they don't know about when we have members of Parliament who are broadbanding this kind of fear before they even give you an opportunity to sit here and tell us. I think some of the clarity you've brought here today was fantastic; it was great.

I just want to ask you a question about the three-year deal where it says that Newfoundland and Labrador will remove its minimum processing requirements three years after the EU deal comes into effect. Would you see that as providing sufficient time to realize the increase in the market share for people in Newfoundland and Labrador to adjust to a phased-in minimum processing requirement being removed?

[Steve Verheul]

My personal view is that, yes, that provides lots of time to make that kind of adjustment. Again, this only involves removing minimum processing requirements on exports to the EU, not to any other markets. We don't actually need them or use them that much on exports to the EU. In fact, in Newfoundland and Labrador, when they get requests for exemptions from the minimum processing requirements, they agree to 90% of them. We wouldn't consider this a real obstacle in terms of any kind of adjustment within Newfoundland and Labrador.

I'd also like to make an additional point. This requirement on minimum processing requirements is not out of step with what we already have in terms of commitments. CETA does include rules with respect to restrictions on exports, but we have those exact same commitments—Canada and the EU do—under the WTO, so this is not a brand-new commitment.

[Ryan Leef, Conservative, Yukon, YT]

Will CETA apply to aquaculture products as well?

[Steve Verheul]

Yes, indeed, it will.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Mr. Leef.

We'll go back to Mr. MacAulay.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you, Mr. Chair. You're doing a fine job.

[The Chair, Conservative, Rodney Weston]

Thank you. I appreciate that.

[Lawrence MacAulay, Liberal, Cardigan, PE]

I appreciate your indicating, basically, that the process in industry will expand a lot in this country after the deal is finalized. Of course, I can understand Mr. Cleary's wondering why there would be a $400 million package; I can just understand that. They don't generally give these things away if there's not some little problem.

The Americans have not signed an agreement yet. When do you expect them to sign?

[Steve Verheul]

The Americans have just started their negotiations with the EU. I think they've held two rounds now, and they're at the very early stages. They've got a lot of negotiation ahead of them.