International Trade Committee on March 4th, 2014

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Mr. Al-Katib, welcome back. It's good to see you again. We've appreciated your testimony in the past.

I'm struck by the story of Alliance Grain Traders. You reminded us, as you've told us in the past, that this is a relatively new company that has gone from being a start-up to being a huge success with a billion dollars in revenues.

What was the key to your success? Did it have anything to do with trade liberalization?

[Murad Al-Katib]

[Technical Difficulty—Editor] trade internationally. I talked about the trade imperative. Certainly, from my perspective, with regard to trade liberalization and Canada's ability to access markets, we've seen this pro-trade agenda certainly yielding benefits, both on the various [Technical Difficulty—Editor] cooperation agreements and discussions that are happening between Agriculture Canada and [Technical Difficulty—Editor] leading to full-blown agreements. This has opened up the market access for our products.

When we look at the food sector, food is a basic building block of civil institutions and democratic development. I say [Technical Difficulty—Editor] openly that if young men are unemployed and hungry, they protest. Economic opportunity and access to food and nutrition are basic building blocks of economies, so I'm a believer that economic integration and trade are facilitators of both our economic agenda and our foreign policy agenda.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

You let us know that your plans for the company are to move from a commodity company to a food company. I'm wondering, as you move up the value chain and provide more processed products, whether that decision was at all influenced by something like the CETA agreement and the access to this larger market for an upscale product.

[Murad Al-Katib]

Yes, certainly tariff access, when you're competing with Italian pasta manufacturers or French bakery companies [Technical Difficulty—Editor] we're providing high-quality Canadian-grown and processed ingredients, all I ask for is a level playing field, because we can compete. We have the best farmers. We have an integration of our research [Technical Difficulty—Editor] and innovation and an ability to commercialize that innovation. As long as we have market access, Canadian companies are going to be very dominant. We've shown that in the ability of Canadian companies like Alliance Grain to go from a start-up to exporting over $1 billion [Technical Difficulty—Editor] means we are competitive. From that perspective, CETA and even the lateral trade agenda in general.... Colombia was a big agreement for our sector. It allowed us to have a level playing field with the U.S. agreement that was being negotiated where Canadian lentils that account for about $100 million in exports, were going to be put at a tariff disadvantage...with our move to that agreement..... Peru is the same thing.

We've seen these agreements paving the way for market access. It gives me confidence to deploy tens of millions of dollars and to generate hundreds of new jobs, because that's sustainable access to these markets. The lack of clarity gives you risk. What I like is regulatory certainty, and I like dispute resolution mechanisms.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

You mention dispute resolution mechanisms. What do you think of the investor-state dispute resolution mechanisms that are in place in this agreement?

[Murad Al-Katib]

It's a very complex issue. I'll be very honest; I haven't studied them in a lot of detail, so I'm probably not the best person to give you a comment on that at this point.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

We've also heard concerns about the low level of foreign content in Canadian exports to the European market. Do you have an opinion on what that threshold should be? What's realistic? I understand that these things are being considered at the present time.

[Murad Al-Katib]

There are a couple of ways to look at Canadian content. You have to get into your mind a vision of what it means to be a Canadian international business.

I don't believe that just a strict Canadian [Technical Difficulty—Editor] is the only judge. Canadian companies that are successful are becoming part of global value chains. In order to be successful abroad, our company is an example with our head office in Regina. We have people in Regina working on our Australia operation, Chinese operation, South African operation, and creating jobs in Saskatchewan.

I'm a firm believer that an ability to assemble, to do partial manufacturing, still creates significant economic benefit for Canada. I definitely want those Canadian contents to be significant, but it's only one consideration in what it does for the economy here.

[The Chair, Conservative, Rob Merrifield]

Monsieur Morin, the floor is yours.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Mr. Al-Katib, GMOs are not being discussed as part of the negotiation of the agreement. I am wondering how you will be able to transform your products.

Labelling is also an issue in Europe. Europeans don't share the North American enthusiasm for GMOs. Many countries insist on labelling. Won't that incredibly complicate your work?

[Murad Al-Katib]

In our case, all of our products are non-genetically modified, with the exception.... In our company there may be lentils, peas, chickpeas, beans, the durum wheat that we brought, these are all non-GMOs.

The advantage for us is that the European market is such a GMO-centric market. We view that as a 500 million consumer base of very high-income people demanding quality, safe foods. They are very pleased with the Canadian safety systems. It's actually an advantage on our side.

Clear labelling of non-GMO to me is a general issue in agriculture. Consumers have the right to know and have the right to choose. The fact is that clear labelling isn't there in some regulatory regimes. We want consumers to be educated and we want consumers to choose. Whether they choose to consume or not to consume, they should know.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

There could be problems with traces of GMOs in some products that may be contaminated during transportation. That has still not been resolved. Are you not concerned about that?

[Murad Al-Katib]

I'm always concerned about zero tolerance policies because when you're mechanically processing agricultural products, you can never guarantee a zero tolerance, but a properly regulated tolerance. There are ways to ensure that your food handling system and your loading of the product into containers is in a centre to comply with legislation.

The bulk grain handling system is more at risk than a food safety control containerized shipment environment. This is where I see the big opportunity for Canada. It is in processed products that are in identity preserved containers for distribution.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Thank you.

Mr. Cox, let's talk about dispute settlement mechanisms. Provincial governments and municipalities could potentially be prosecuted. What do you see as the most direct threat?

[Graham Cox]

On the direct threat of lawsuits, well, in my understanding the municipalities and the provinces, under the language that we've seen, won't be subject to direct lawsuits. It's the Government of Canada. This is similar to NAFTA. It's the fact that the municipalities and the provinces would be beholden to those regulations, and the first time municipalities themselves would be beholden to the agreement.

We see that there's a growing trend in companies using this tactic to reverse decisions made at the government level but also in the courts. I listed some of those in my brief. In 2010, there was a report by the UN saying that the number of ISDS, investor-state dispute settlement, lawsuits or disputes was 357 and that of these, 60% were in only the past five years. So we see a disturbing trend in the increased use of these provisions to try to undermine regulations and losses in courts.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll go to Mr. Cannan for five minutes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

To our witnesses, thank you for your excellent comments and food for thought.

I want to share this with the witnesses. The committee had the opportunity recently to hear from the EU ambassador, who shared her feelings and enthusiasm about this market of 500 million people that she's opening up to Canada and the billions of opportunities that are offered bilaterally from both procurement and expansion of opportunities for both parties. I wanted to also mention that she held up our technical summary, which she said was a very open and transparent process and which she felt was very well done. Minister Fast had been working hard, as mentioned in the opening comments, for about four and a half years in this process.

I think Mr. Vidler alluded to the fact that it's still a few years from coming into effect. I know that the final details of the agreement will be translated into 23 different languages, and the EU Parliament and the House of Commons will debate it. Our government introduced legislation that trade agreements have to be introduced for 21 days, so it will be debated in the House of Commons. Then it will come back to the committee and then it will go to the Senate. There's still much more opportunity before the implementation of the final agreement, so that we can say it's not being expedited. It has already been about five years, to date, and it will be going on for a couple of more years down the road.

My question is for Mr. Vidler.

You mentioned that Canadian businesses need to take full advantage of CETA. While we're moving through that process, how can the government work with your organization and others across Canada to help prepare Canadian businesses to take full advantage of this opportunity?

[Cam Vidler]

There are a few things that we can do. I mentioned to another member of the committee earlier that the chamber is working on a report right now with our members and our international affairs committee to develop some specific recommendations in this area.

I'll touch briefly on a few things. One is, as I mentioned, coordination of existing services to make them more effective, to fill in gaps between the services so as to ensure that they're accessible for Canadian companies. That's something that should be addressed.

Part of it is a campaign to raise awareness of the opportunities in Europe and awareness of the services that you can use as a business. The government has been doing a fairly bang on job in this area since the announcement. I know that Minister Fast has been travelling around the country, as have other ministers and ministers of state, to promote the agreement, and I think this has had a big impact upon the awareness that Canadian businesses have.

The next step is to make sure that the service offering and the delivery of the services that we have for companies in this area, and there is a large system of services out there, provide the right services, services that are relevant, coordinated, and delivered effectively, and that businesses are able to take advantage of them.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

We've had the provinces work together with Minister Fast and the FCM, as Mr. Holder mentioned, so there has been consultation of unprecedented record.

You mentioned sending a delegation after the EU has its election. Are you recommending that the trade committee go back? We were there in 2008. Are you thinking that a delegation from the trade committee would be appropriate later this fall, or what were your thoughts?

[Cam Vidler]

Yes, I think that's a great idea.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

The provinces as well would come along, and businesses.

Minister Fast, Minister Moore, and others have said they are looking to continue to engage Canadian businesses, so I think it's an ongoing process, but you're saying, because of the political change in May, to wait until they have it to continue to expand the dialogue and the partnership.

[Cam Vidler]

The point I was making was that, with the political challenges in getting this agreement ratified, particularly in the European market in light of the TTIP and some controversy happening there with respect to the U.S. negotiations, we need to have a very strong effort by the government and by businesses as well to explain to Europe why this deal with Canada is of value to them as well.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Here is one quick question, Mr. Cox. Has CUPE supported any trade agreements?

[Graham Cox]

We've had critiques of all the trade agreements that have come up.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Have you supported any?