International Trade Committee on Nov. 23rd, 2023

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I'm calling the meeting to order.

This is meeting number 83 of the Standing Committee on International Trade.

Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Therefore, members are attending in person in the room and remotely using the Zoom application.

I need to make a few comments for the benefit of witnesses and members.

Please wait until I recognize you by name before speaking. For those online, please mute yourself when you are not speaking. As a reminder, all comments should be addressed through the chair. If any technical issues arise, please inform me immediately. We may need to suspend in order to deal with any issues. I ask that all participants be careful when handling the earpieces in order to prevent feedback.

I need to remind members, as well, that the deadline to submit amendments to Bill C-57 is this coming Friday by noon. Amendments must be submitted to the clerk in writing. The legislative counsel, Penny Becklumb, is available to assist members to ensure that the amendments are properly drafted.

Welcome to our witnesses. Thank you for coming in a few minutes earlier. It's very much appreciated.

Today we have, from the Canadian Pork Council, René Roy, chair, and Stephen Heckbert, executive director, by video conference. From Finica Food Specialties Limited, a friend of the committee who has been here before, we have Joe Dal Ferro, the president. From United Steelworkers Union, we have George Soule, legislative staff representative. Welcome to you all.

We will start with opening remarks of up to five minutes and then we will proceed with questions.

Mr. Roy and Mr. Heckbert, I invite you to make an opening statement of up to five minutes, please.

[René Roy, Chair, Canadian Pork Council]

Thank you for the invitation, Madam Chair, and thank you to the committee members for your work on this issue.

My name is René Roy, and I am the chair of the Canadian Pork Council. Joining me is Stephen Heckbert, who is our executive director.

As the third-largest pork exporter of the world, trade policies are of utmost importance to the prosperity and vitality of the Canadian pork industry. As you know, Canada exports 70% of its pork production to almost 80 countries around the world. We are believers and supporters of free trade and fair trade. That is why we are pleased to be consulted on the upcoming Canada-Ukraine Free Trade Agreement, the CUFTA.

Since Russia's invasion of Ukraine, Canadians have felt a significant impact on their exports, putting the food security of both our countries at the forefront of conversations. The Canadian government's trade action plan plays a critical role in securing benefits for Canadian pork producers. As an industry, we believe in free trade and we support the Canada-Ukraine Free Trade Agreement.

CUFTA gives us an opportunity to eliminate a majority of Ukraine's agricultural tariffs and have an interesting level of duty-free access. For the hog industry, it is essential that our products benefit from a large and duty-free tariff rate quota that exceeds, by a wide margin, Canada's current exports to Ukraine.

Some agreements, like CETA, do not meet the necessary standards of open trade and undermine the principles of free and fair trade. That's why we urge the committee to be vigilant to ensure the science-based principles that govern our trade are protected should Ukraine ever be invited to join CETA. As it stands, the CUFTA allows the Canadian pork industry to benefit from competitive access to this international market.

All long-term projections of global demand for pork meat indicate long-term growth. Canada's ability to supply quality pork to the world will be part of our contribution to the growth of the Canadian economy. We know that the future of Ukraine is uncertain, and we are proud to support Ukraine with our government. Pork producers have been among the most affected, as Russia had been a growing market for our products in recent years. We want to make sure that we support Ukraine by providing quality, nutritious products that can help Ukraine feed its people.

We hope that the committee continues to ensure that food security is a key part of our free trade positioning as it previews this and all trade agreement files.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir.

Mr. Dal Ferro, please, you have up to five minutes.

[Joe Dal Ferro, President, Finica Food Specialties Limited]

Thank you, Madam Chair.

Good morning, members of the committee. My name is Joe Dal Ferro, president of Finica Food Specialities Limited.

Founded in 1968, we were one of the leading importers of gourmet foods from across the globe, including cheeses from the U.S. and much of Europe, including Ukraine.

First and foremost, I'm here to express my support for the Canada-Ukraine Free Trade Agreement. If Canada is to aid in Ukraine's reconstruction, it is imperative that we foster and grow our trade relationship; however, while we at Finica are very interested in doing our small part to try to support Ukraine's agricultural sector, I'm also here to provide the real-world perspective on the obstacles we have faced trying to import agri-food products from Ukraine, despite the clear consumer demand in Canada.

With that in mind, I will offer some recommendations on how Canada can address the barriers we have faced either through this bilateral trade agreement or through some other mechanisms.

Finica accepts the rationale underlying Canada's supply-managed dairy sector. While we certainly have raised objections to some of the ways in which the system is administered, we are not advocating for its dismantling.

Earlier this year, Finica and its parent company were approached by the Ukrainian dairy company Piryatin, which was looking to export to Canada. We were and continue to be thrilled at the prospect of helping a company break into the Canadian market. Since it was clear that there exists a demand among Ukrainian Canadians who are looking for a taste of home despite being thousands of miles away, Finica agreed to import a small quantity of two types of Piryatin's cheeses.

Given that it was to address a very specific need and a demand that could not be met through domestic production, this small quantity of cheese, barely the equivalent of 20,000 kilograms, is by no means any threat to Canada's domestic producers. Almost a year has passed since the start of this project, and we continue to face significant delays, some of which can be attributed to the trade barriers inherent to Canada's quota system.

Indeed, given that no additional market access for Ukrainian cheese is provided through the 2017 and 2023 Canada-Ukraine Free Trade Agreements or through the 2023 Ukraine goods remission order, we've had to rely on the non-EU reserve of the WTO cheese of all types TRQ. This quota, which is small, already has a very high utilization rate. This high utilization rate is no surprise, given that the quota is shared with the U.S., Switzerland and Norway, and perhaps will also be shared with the U.K. as soon as January 1, 2024, if the cheese letters are not extended.

The uncertainty surrounding the United Kingdom's situation has led several businesses across the country, including mine, to try to bring in as much British cheese as possible by the end of 2023. Unfortunately, because of this planning decision, we had to delay our plans to import Ukrainian cheese.

Let me be clear. Had industry been provided with more advanced certainty with regard to the cheese letters and the U.K.'s standing within the WTO TRQ, we most certainly would have been able to have Piryatin's cheese on Canadian grocery store shelves by Christmas.

While we are disappointed that the 2023 Canadian-Ukraine FTA does not address the trade barriers we have faced, we want to provide two recommendations to this committee to help SMEs like Finica avoid the barriers to trade outlined above.

First, if the government opts not to include an agriculture chapter with market access concessions in the Canada-Ukraine agreement, it should reconsider its decision to exclude supply-managed sectors from the goods remission order that was issued. The inclusion of Ukrainian products in the goods remission order would constitute a very small demonstration of Canada's willingness to put Ukraine's wartime needs ahead of the needs of Canada's thriving domestic sector. Let's keep in mind that the small quantity that Finica has been planning to import should by no means be considered a threat to supply management.

Second, Canada should use the TRQ review as an opportunity to revise its quota allocation and administration policy to ensure that Canada is honouring its trade agreements so that we can maximize the existing promised access and ensure that import programs like these are given the best chance of success.

Thank you, and I look forward to your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Dal Ferro.

It's on to Mr. Soule for up to five minutes, please.

[George Soule, Legislative Staff Representative, United Steelworkers Union]

Thank you, Madam Chair.

Through you, thank you to the clerk and all members of the committee for the opportunity to join you here today.

The United Steelworkers Union is the largest private sector union in North America, with over 225,000 members in Canada and 850,000 members in North America in virtually every economic sector, including, for the purposes of this discussion, energy, potash, and steel.

We are committed to ensuring that our members, as well as all workers in Canada and around the world, are treated with dignity, respect and fairness. Today, in my brief remarks, I'm here to join our voice with those who have already shared with you concerns with the investor-state dispute settlement. I would also like to raise some concerns regarding labour-specific issues within the agreement.

As others have said, the committee should recommend the removal of the investor-state dispute settlement process, or ISDS, from chapter 17. While some will argue that Ukraine is not opposed to it—in fact, it may have requested it—context, as always, is important. Ukraine is a country understandably in great need of foreign investment, but experience and, frankly, common sense show that ISDS would likely hinder, not help, the goals of sustainable reconstruction and economic development in Ukraine. It's also unnecessary for attracting Canadian investment.

By design, the investor-state dispute settlement process hinders the ability of states to regulate and govern for the common good. They are expensive for governments as well. Tribunals far too often side with corporations, awarding huge settlements that Ukraine can ill afford now or in the postwar period.

Further, in this treaty, states have no ability at all to file counterclaims against corporations. The entire process is only accessible—

[The Chair, Liberal, Judy Sgro]

Excuse me, Mr. Soule. Can I just interrupt you? I apologize.

A vote has been called. It's 29.25 minutes away. Is it the approval of the committee to continue until approximately 10 minutes before the vote? Is that okay with everybody?

[Some hon. members]

Agreed.

[The Chair, Liberal, Judy Sgro]

Fine. Thank you.

I apologize. Please continue.

[George Soule]

Further, in this treaty, states have no ability at all to file counterclaims against corporations. The entire process is only accessible to foreign investors.

For example, from a worker's perspective, foreign investors can bring their own dispute directly to tribunals, but the labour chapter explicitly notes that workers are dependent on the state to bring claims forward to uphold their rights. This is concerning for some obvious reasons, not the least of which for us—as the union that led and won, thanks to this government, the fight for unions here in Canada to have the right to file our own trade complaints on behalf of our members, but also in general—is when we see some of the recent and deep restrictions in Ukraine on workers' rights. The labour rights of 94% of Ukrainian workers have all but been abolished, including the elimination of their right to organize.

Moves like these, as well as others endorsed by the ISDS, push Ukraine further away from the principles and norms of European legislation and ILO conventions, as well as the conclusions of scientists and experts. The often lauded conditions within the agreement promoting human rights and environmental due diligence have no teeth.

I hope we can all agree that, when engaging in bilateral agreements, Canada should be looking to improve human rights, including labour rights and working conditions.

As it has been noted by many other witnesses, there is still time to get closer to that goal and remove the ISDS. With CETA and CUSMA as recent examples, we know it's possible. Besides, why else are we all here if not to make this agreement as strong and as good as possible?

Thank you very much.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Soule.

We'll go on to the members for their questions.

We have Mr. Baldinelli for six minutes, please.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

I'd like to thank the witnesses for being with us today.

I'm going to begin with Mr. Dal Ferro from Finica Foods. Thank you so much. It is very good to see you again here today.

I find it interesting that in your comments you were talking about how some of the obstacles you face for increasing trade with Ukraine are government-imposed. Some are government problems. You're looking at bringing in a small quantity of two cheeses—you're saying at 20,000 kilograms—and you're talking about the TRQ process, which hasn't been updated.

I believe the last time we spoke, which was the last time you were here delivering testimony, it was you who talked about how the TRQ system had undergone a review process, beginning in 2019. Is it your comment and testimony that we still have yet to get to that updated TRQ process?

[Joe Dal Ferro]

Thank you for your question.

The process began in 2019—that is, the TRQ review—but it's been stalled due to numerous reasons. That said, it makes it very difficult for companies like mine to import cheese due to the complexities of the TRQ allocation models.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

That's despite the fact that there are no Canadian processors that can provide that type of cheese. Is that correct?

[Joe Dal Ferro]

Again, sir, it has to do with the Canadian allocation model. Had we been able to have supply-managed sectors reinstated in the goods remission order, we could freely bring in some cheese from Ukraine. Unfortunately, it's been removed so that we have to use the WTO non-EU quota, which is already the most utilized of all the quotas in the TRQ system.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

If you had to make a recommendation.... For example, earlier, you said perhaps we could follow up on your first recommendation that, if the government opts not to include agricultural chapters, specific mention should be made with regard to the remission order.

Can you provide a little more detail on that? If we make some recommendations, it could assist. If we're trying to facilitate trade and enhance the ability of Ukraine to trade, if we could make changes, that's something we could recommend.

[Joe Dal Ferro]

In the immediate short term, it would be removing the supply-managed sectors from the goods remission order. That way, Canada can gain access, again, to small quantities of cheese from Ukraine.

The second one would be a full TRQ review, whereby we revisit the allocation models of the tariff rate quota on cheese and make them more conducive to trade in Canada.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

That's the disappointing thing. You talked about a full review of the TRQ process. Again, that was initiated in 2019.

What are the results of that? Where is that report?

[Joe Dal Ferro]

Unfortunately—great question—it has stalled. It's still in the stalled process, and we're awaiting its outcome.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Therefore, we're hurting Canadian businesses, and we're hurting the ability of Ukraine to trade at the same time.

I found it interesting when you were talking about what's hindering your ability to trade with Ukraine. It's also the whole situation with the United Kingdom and its leaving the CETA agreement. There are no formal negotiations or agreements between Canada and Ukraine. That then leads to this whole WTO issue and all the quotas contained within it.

Could you give me a bit more detail on that?

[Joe Dal Ferro]

Thank you.

It certainly adds to the complexity. Your outline did it very well. Essentially, when the U.K. Brexited from the EU, the Canadian government adopted.... Let's call it a stop-gap measure, whereby U.K. cheeses were allowed to be imported into Canada under the WTO EU quota. This was for a defined period of time, which expires in about six weeks—December 31, 2023.

The mechanism used to grant this extension is called “the cheese letters”. In essence, it gives importers of U.K. cheese the opportunity to import cheese from the U.K. using the WTO EU quota. Effective January 1, 2024, if we do not get an extension of these cheese letters, the importing model for cheeses from the U.K. will revert to the WTO non-EU quota, which, again—as I mentioned earlier—is the most utilized of all the TRQ quotas. We are now joining the company of the United States, Switzerland and Norway—very large cheese exporters to Canada. Now we have to deal with the U.K. entering that fold. It's going to force companies like mine to make very difficult decisions in the next few months.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

As of January 1, your company could be hurt even further by government inaction.

[Joe Dal Ferro]

That's very much so. I'll have to make some very difficult decisions with my business portfolio and my employees.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Madam Chair...?

[The Chair, Liberal, Judy Sgro]

You have 50 seconds.