Evidence of meeting #25 for International Trade in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was pork.
A recording is available from Parliament.
11:55 a.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
With regard to the need to share those with the local individuals and the community, is that something you have a dialogue with the government on, to try to get those types of policies so that you'd have a level playing field with your competitors as well?
11:55 a.m.
President and Chief Executive Officer, Aura Minerals Inc.
We do. If you look at the countries we operate in—Honduras, Brazil, and Mexico—Honduras is the least developed by far of those countries. So we are, in some ways, transferring CSR technology into Honduras.
I can't say that for Mexico or Brazil. They're very evolved and more advanced. In Peru, you would see a much more advanced CSR sector than you'd see in Honduras. I agree with Erin or whoever it was who said that the best way to improve things is by engagement, not by isolation. There's no doubt about that. We want to improve the lives of those people.
The other thing, though it's not directly related to your question, is that people call Central America a nation divided. It's five little countries that should be one, and if you put them all together, there are 50 million people. There are eight million here and ten million there, but there are logistical systems and regulatory systems and everything, so the more you can do to get Central America to be treated as one country, the better it will be for us and other exporters and Canadian companies.
April 29th, 2014 / 11:55 a.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
I just had a meeting yesterday afternoon with Colombia's ambassador to Canada. You don't have to look very far; we concluded a free trade agreement with them in the last few years, and to see the quality of life, the security.... They have a long way to go yet, but they've made huge leaps and bounds in economic growth, hope, prosperity, and opportunities for Colombians. As a matter of fact, I'm a Rotarian, and we have a Colombian student on exchange right now who talks about the excitement in the relationship with Canada.
I have just one other question for each of you. We have a few minutes to just quickly answer. We've heard from our constituents. Canadians have commented that free trade agreements generally benefit just big corporations. Can you share maybe in 30 seconds or 60 seconds how you feel this trade agreement can help the average Canadian?
11:55 a.m.
President and Chief Executive Officer, Aura Minerals Inc.
I talked a little bit about the mining sector. It's a very strong sector. Honduras, geologically speaking, is a mining target.
So the investment protection provision of this agreement will make a big difference in the required rate of return that you have to make on an investment in Honduras. If there's a lower required rate of return, there are going to be more investments made and more engineering jobs and more administrative jobs and all of the other jobs that are done at headquarter offices here in Canada as well as for our service providers who are engineering and manufacturing firms.
Noon
Director, Latin America, Canada Pork International
I guess I'll just replicate what my colleagues from the potato industry mentioned. Basically the FTA benefits the very base, the very foundation of the producing sector, as well as farmers, distributors, transporters by train, truck, or you name it. It even benefits financial services, insurance, and credit industries. There's a large, vast effect that is replicated in many other industries, not just ours. It's not just a focused effect. It spreads all over.
Noon
Senior Vice-President, Corporate Relations, J.D. Irving Limited, Cavendish Farms
Not to sound like we're duplicating here, but the downstream economic impact of our organization is huge. We're playing in a global market, and the market is shifting and moving. Our inability to trade in countries without the free trade agreement is really prohibiting that growth that Mr. Taddeo spoke of earlier.
Our desire to continue to grow and to play in the global field is also partially being pulled into it. When you get multinational corporations that are the end-product users of your product, then as they go, they want you to go as a supplier. If you're not competitive and you can't go, then that's another inhibiting factor for downstream and the economic impact that goes with it.
Noon
NDP
Laurin Liu NDP Rivière-des-Mille-Îles, QC
Thank you, Mr. Chair.
A few weeks ago we heard from Pablo Heidrich, who came into committee as a witness. He's an economist who's specialized in exchanges between North America and Latin America from the North-South Institute. You might have had a chance to look over his testimony.
His testimony was really interesting, because it actually shed light on how small the Honduran economy really was. He compared it to the Ottawa-Gatineau region. He actually said that the economy of Honduras is smaller than the region of Ottawa-Gatineau, which really helped us understand the reality. Obviously the middle class is very small, and there's very strong class inequality. Mr. Heidrich's argument was that the Honduran market was structurally incapable of procuring advantages because there's nobody to actually buy our Canadian products.
You touched on this briefly in your presentations, but Mr. Urias and also Mr. Taddeo, could you comment on what part of the market share you expect to gain from the FTA?
Noon
Vice-President International, International, Cavendish Farms
Yes. I'll address your point directly.
I disagree that we would not have any customers, because we already had the customers in place. We had the Wendy's, the Burger Kings, the KFCs, the McDonald's over there and they exist. There is sufficient consumption over there, so we—
Noon
NDP
Laurin Liu NDP Rivière-des-Mille-Îles, QC
What part of the market share would it be, more precisely, or what would be the value of those increased exports?
Noon
Vice-President International, International, Cavendish Farms
Let's say that of the total french fry trade, which is $29 million over there, the QSRs, the quick service restaurants, represent 55%. Retail represents about 15%, food service the balance. So there is a consumption over there of that product, without a doubt in my mind, but more than that, I think Honduras is only the stepping stone. I think once the other Central American countries see that there is a free trade deal being done with Honduras that has been implemented, then the rest will also accept that kind of thing.
Noon
NDP
Laurin Liu NDP Rivière-des-Mille-Îles, QC
The fast food restaurants are already buying your products in Honduras, so I suppose you're worried that—
Noon
Vice-President International, International, Cavendish Farms
No, they are not buying it now. I said we lost it all; because the U.S. came in in 2005, they have a 15% duty improvement over us. We've got a 15% duty, they've got zero duty. So they're not buying from us, but we know the market, and we had the market before.
Noon
Director, Latin America, Canada Pork International
I'd say that in the case of the pork meat industry, you're right. When you think about pork chops and loins and high-end items, the market is not there: right. But there are items in this market that we don't sell domestically, and we have to look for an option. We have to look for an export market for these items. That's what Honduras is initially for us, an exit for these types of items that we can make profit on and for which there is actually room for us to sell in the Honduras market.
As I said, in 2004 we probably had 2% of the market, that's what Honduras represented for us, and we could expand probably to 6% to 7% in—
12:05 p.m.
NDP
Laurin Liu NDP Rivière-des-Mille-Îles, QC
Relatively, because the market is so small, is that actually a significant gain if we move from 2% to 6% in a market that's already so insignificant? Honduras is our 104th trading partner. The economic gain that we'll take from this free trade agreement is almost negligible. Even if we do increase market share, is that really significant?
12:05 p.m.
Director, Latin America, Canada Pork International
I'd say it's significant for the type of items we could sell over there, yes, and pretty much as for the potato industry, we would like to see this effect being expanded all over Central America. We have already an agreement with Colombia, with Panama. CA4 didn't go through, but again, if we continue to develop this work on a bilateral level, we could achieve even more, and not just based on the specific country case that we're analyzing right now, but more on a regional scale.
12:05 p.m.
NDP
Laurin Liu NDP Rivière-des-Mille-Îles, QC
Thanks.
I just want to move on to the issue of human rights. We had PEN International come in to speak to us a few weeks ago, and also Bertha Oliva, who is a Nobel Peace Prize nominee. My colleague Mr. O'Toole quoted her I think in a bad context in which she said that, yes, we do need engagement, but not isolation, although I don't think she was advocating for a free trade agreement that honestly doesn't have any enforceable environmental or labour regulations, so—
12:05 p.m.
Conservative
The Chair Conservative Rob Merrifield
You'd better put a question, because I'm going to cut you off, and I don't want to do that.
12:05 p.m.
Voices
Oh, oh!
12:05 p.m.
President and Chief Executive Officer, Aura Minerals Inc.
From my perspective, I totally agree, and I reiterate that engagement is the best policy. We have the standards, we have the products, the systems, and the processes on CSR. If there's nobody to talk to, if there's no forum to speak to people, if we're not engaged, we can't spread that faith.
12:05 p.m.
Conservative
Devinder Shory Conservative Calgary Northeast, AB
Thank you, Mr. Chair.
Thank you to the witnesses for coming and for sharing your experience with the committee. My colleague is right; when you look at the witnesses, we have investors, we have producers, we have everyone. What else can we ask for? It's a good meeting today.
Let me start with you, Mr. Bannantine. Your corporate responsibility policy contains a reference to community development, to the sharing of benefits with communities in terms of education, health, poverty reduction, and environmental protection. Can you give us some example of how these policies have been put in practice in Honduras? And can you comment on whether a free trade agreement with Honduras would have any impact on these practices?