International Trade Committee on Feb. 29th, 2024

[The Vice-Chair, Conservative, Kyle Seeback]

I call this meeting to order.

Welcome to meeting number 96 of the Standing Committee on International Trade. Please note that this meeting has been extended to 6:00 p.m.

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 will make a few comments for the benefit of the witnesses and members. Please wait until I recognize you by name before speaking. For those online, please mute yourself when you are not speaking. For interpretation online, you have the choice, at the bottom of your screen, of either floor audio, English or French. For those in the room, you can use your earpiece. Everybody should know that by now. No one here is new.

Just as a reminder, all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. Members on Zoom, please use the “raise hand” button. If there are any technical problems, please let me know.

For our first panel today, we have, from Université de l'Ontario français, Mr. Thomas Chiasson-LeBel, assistant professor; from the Canadian Pork Council, René Roy, chair; from the Canadian Produce Marketing Association, Jane Proctor, vice-president, policy and issue management; and from Pulse Canada, Jeff English, vice-president, marketing and communications.

Welcome, everyone. We'll have five-minute opening remarks, after which we will proceed to questions.

Monsieur Chiasson-LeBel, I invite you to make your opening statement.

[Thomas Chiasson-LeBel, Assistant Professor, Université de l'Ontario français, As an Individual]

Mr. Chair, thank you for inviting me to speak to your committee. Please convey my gratitude to the committee members and staff.

I'll introduce myself. I'm a Canadian citizen. Before becoming a professor at the Université de l'Ontario français, I conducted research in Ecuador in the political economy of development field, first at the doctoral and postdoctoral levels, and then as a professor at FLACSO‑Ecuador. This university is a graduate and post‑graduate institution in Quito.

I have three observations.

Ecuador is currently going through an unprecedented security crisis. It would be wise to stop the negotiations, or at least postpone them.

Ecuador used to be a relatively safe country in the region. However, in recent years, new tensions have undermined the security of the country. The previous government of Guillermo Lasso declared a state of exception to regain control at least 10 times. Last August, during the election campaign, candidate Fernando Villavicencio was shot dead in the street while campaigning for tighter security. Since January 8 of this year, a state of exception has once again been imposed in order to combat criminal gangs that threaten the country's stability. Canadian parliamentarians who are concerned about human rights should ensure respect for trade negotiations before proceeding.

The reasons for the security breakdown are complex. However, strong signs point to the country's decline in the face of a reorganization of drug production and trade in the area bordering Colombia. According to data from the United Nations Office on Drugs and Crime, 80% of the increase in coca leaf production in Colombia has taken place in the Putumayo and Nariño departments on the border with Ecuador, suggesting that this country serves as a transit point.

Free trade isn't just about Canadian exports and investment. It's also about openness to imports. Parliamentarians who are concerned about security and crime issues may wonder whether a trade agreement would also pave the way for new black market routes into North America.

Second, an agreement shouldn't protect investments through arbitration mechanisms such as investor‑state dispute settlement, or ISDS, especially in the mining sector.

Canada shouldn't champion corporate interests at the expense of democracy, friendship among peoples and the rights of indigenous peoples. A supranational arbitration mechanism whereby corporations can take legal action against governments through ISDS would only serve to undermine Ecuador's sovereignty and the ability of its people to influence their development.

The main Canadian investments in Ecuador are in the natural resources extraction sector. This sector is highly contentious in Ecuador. Last August, alongside the elections, two referendums were held in which local communities opposed industrial or even artisanal extraction of non‑renewable natural resources.

There's little consensus on investments in the natural resources sector. It would be unwise to take advantage of the ongoing security crisis to try to lock in the rights of Canadian investors when local communities are calling for more democracy and consultation and rejecting the extractivist development model of harvesting non‑renewable natural resources for export.

In Ecuador, attempts to convert the oil windfall into a tool for development have been failing for 50 years. It's hard to see how this could be the case with other minerals without a strong local processing component.

Indigenous organizations and environmentalists are among the first to criticize non‑renewable resource extraction projects. The Canadian government, through its inclusive approach to trade, seeks to make trade agreements that show respect for indigenous peoples. It would be unwise to support, through international rules agreed to by economic elites temporarily in power, the actions of firms rejected by local communities.

My third observation is the following. Ecuador is led by an unstable and short‑term government, headed by the son of the country's largest banana exporter. He was elected to complete Guillermo Lasso's term. Guillermo Lasso abandoned his presidency to avoid impeachment proceedings. Neither of these two presidents have received strong support from the legislative body. Within the National Assembly of Ecuador, the current leading political force has a clear political history of expressing reservations about free trade agreements and opposition to ISDS. These reservations are enshrined in the Ecuadorian constitution, in particular in article 422. Again, it would be unwise to take advantage of the ongoing security crisis to negotiate a free trade agreement. A certain economic elite in power has close ties to the agro‑exporting sectors, which are among the only sectors that stand to benefit from a free trade agreement in the short and medium term. This agreement may not last.

I understand the desire to protect the environment and include women and indigenous people in international trade through side agreements. However, that isn't exactly the aim of these organizations.

Women's organizations and indigenous organizations aren't focusing on free trade. Instead, they want to protect access to land and food sovereignty. Barring a bold, inventive, creative and innovative agreement that protects small‑scale agro‑ecological production, food sovereignty, the ability of small and medium‑sized businesses to adapt to competition, the local processing of resources that the country chooses to extract, and by determining only truly complementary sectors that protect environmental sustainability—

[The Vice-Chair, Conservative, Kyle Seeback]

Monsieur LeBel, I gave you an extra 30 seconds, so I'm going to have to wrap it up, and we'll have to move to the next opening statement.

Mr. Roy, you have five minutes.

[René Roy, Chair, Canadian Pork Council]

Thank you, Mr. Vice-Chair, for the invitation.

Thank you to the committee members for your work on this issue on behalf of Canadians.

My name is René Roy, and I am the chair of the Canadian Pork Council. I am a producer myself.

As the third-largest pork exporter in the world, trade policies are of the utmost importance to the prosperity and vitality of the Canadian pork industry. Indeed, last week we were in the Philippines with Minister MacAulay and members of Parliament Lamoureux and Mendicino to talk with partners in that country about their needs. It was a great visit, one we appreciated the chance to join.

The Ecuador market is currently not a large market for Canada, but the more Canada can expand the concept of science-based regulation in free trade agreements around the world, the better our global position will be. It increases our position as a global leader and increases our market resilience.

As you may know, Canada exports 70% of its pork production to almost 80 countries in the world. We are believers in and supporters of free and fair trade. That is why we are pleased to be consulted on the Canada-Ecuador free trade agreement.

Ecuador is next door to a growing market for Canadian pork, in Colombia, so geographically it's attractive. We understand that our AAFC officials are hard at work on discussions already.

The Canadian government's trade action plan plays a key role in increasing profits for Canadian pork producers. As an industry, we believe in free trade, and we support the Canada‑Ecuador free trade agreement.

Free trade should, in theory, give us an opportunity to eliminate a majority of agricultural tariffs and have an attractive level of duty-free access. For the hog industry, it is essential that our products benefit from a large, annual duty-free quota that exceeds, by a wide margin, Canada's historical exports to Ecuador.

Some agreements, like CETA, do not meet the necessary standards of open trade and undermine the principle of free trade by the inclusion of non-tariff trade barriers. That's why we urge the committee to be vigilant to ensure the science-based principles that govern our trade agreements, and to remain vigilant against non-tariff trade barriers. You will know that we recently argued publicly against the United Kingdom's ascension to the CPTPP for this very reason.

All forecasts for global demand for pork predict growth in the consumption of our products. Canada's ability to supply the rest of the world with our quality products will play a role in our contribution to Canada's economic growth and to global food security.

We want to feed the planet by providing quality and nutritious products that have one of the smallest environmental footprints in the world.

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

Thank you.

[The Vice-Chair, Conservative, Kyle Seeback]

Thank you very much, Mr. Roy.

We'll now turn to Ms. Proctor for five minutes.

[Jane Proctor, Vice-President, Policy and Issue Management, Canadian Produce Marketing Association]

Good afternoon and thank you for the opportunity to speak to all of you today on the proposed free trade negotiations between Canada and Ecuador.

I'll tell you a bit about CPMA. We represent over 850 companies that grow, pack, ship and sell fresh fruits and vegetables in Canada. In fact, our membership is responsible for 90% of the fresh fruit and vegetable sales in Canada. Our industry supply chain contributes almost $15 billion in GDP. We support over 185,000 jobs in communities from coast to coast.

Our produce supply chain is unique. While it is a vital part of the fabric of our rural and urban landscape, supporting the growing and selling of a range of Canadian-grown products, we also rely heavily on our global partners to supply Canadians with safe and healthy products year-round. This includes a diversity of cultures in Canada, which of course drives consumer demand for products that are traditionally not grown in Canada or that cannot be grown in Canada. As a result of our colder climate and shorter growing season, coupled with the demand for this wide variety of products, four dollars out of every five spent on fresh fruits and vegetables in Canada are spent on imported product.

Therefore, to ensure the ongoing viability of the Canadian food system, we need a strong domestic and global strategy. The Government of Canada needs to recognize and prioritize food as an essential item in framing our trade agreements, with the fundamental goal of supporting domestic markets while strengthening food security and ensuring product diversity.

Important trading relationships already exist between Canada and Ecuador when it comes to fresh produce. Overall, we imported $89.6 million of fresh produce from Ecuador last year alone. This represents a 10% increase over the previous year. Canada’s trade with Ecuador also offers complementary export opportunities. As you know, Canada exports lentils, seeds, wheat, barley, peas and oats to Ecuador. Within that context, produce is also imported, including bananas, of course—no surprise—at $65 million-plus in 2023; pineapples at $4 million-plus; salad, beetroot, celeriac, radish and others similar at $2.3 million; and guavas, mangoes and mangosteen at close to $1.5 million. There's a theme there. These are mostly products not produced in Canada.

There is also keen interest among Canadian importers for other fresh produce commodities from Ecuador. CPMA annually surveys its membership to identify the products from new source countries of greatest interest to Canadian importers. This information is then shared, of course, with the Canadian Food Inspection Agency to help them in terms of prioritizing their pest risk analysis resources and activities. Grapes from Ecuador have consistently been ranked among our members’ top priorities for improved market access over the past few years.

As a representative of a highly globally integrated industry, CPMA is strongly supportive of the Canadian government’s progressive trade agenda and its commitment to strengthening our trading partnerships across the Americas. CPMA emphasizes that Canada’s free trade agreements can and should support regulatory harmonization that can lead to the adoption of higher standards and regulations across countries, ensuring that products and services meet the same safety and quality standards we have while also, of course, reducing regulatory burden and associated compliance costs for businesses. Phytosanitary and other requirements that are not science-based or essential to security act as effective non-tariff trade barriers between trading partners and must be eliminated.

As I think this committee well knows, trade flows have fluctuated over the past few years due to escalating geopolitical conflicts, massive supply chain disruptions and ongoing extreme weather events. It is therefore more and more important that Canada enables free trade agreements with countries within a geography that enables importers to pivot and adjust their buying behaviour if these issues impact the flow of fresh fruits and vegetables. A free trade agreement with Ecuador offers one such opportunity to diversify product sourcing for Canadians.

In closing, CPMA once managed the U.S. duties for industry that were phased out under the CUSFTA and then NAFTA, along with the phase-out of duties with Mexico and Chile. Expanding these free trade agreements for fruits and vegetables is vital as we navigate a world of high food inflation and growing production challenges. We experience that every day.

Thank you for this opportunity. I look forward to our question and answer period.

[The Vice-Chair, Conservative, Kyle Seeback]

Thank you very much, Ms. Proctor.

Mr. English, I invite you to give an opening statement of up to five minutes.

[Jeff English, Vice President, Marketing and Communications, Pulse Canada]

Thank you, Mr. Vice-Chair.

Thank you to the committee for the opportunity to appear today.

My name is Jeff English, and I'm the vice-president of marketing and communications with Pulse Canada.

Pulse Canada is the national organization representing the growers, traders and processors of Canadian pulses. Canadian pulse crops include peas, lentils, chickpeas, dry beans and fava beans. On behalf of the over 25,000 pulse growers and over 100 small, medium-sized and large companies that deal in pulses, Pulse Canada works to create diversified, stable and sustainable demand for our products by not only marketing the health and environmental benefits of pulses but also accelerating the research to create incentives to use pulses in food and industrial industries and collaborating with key stakeholders to create food systems that prioritize health and sustainability. At the same time, we also work with governments and like-minded groups to remove barriers to trade by keeping crop protection products available to growers, advocating for the improvement of domestic grain transportation and, of course, ensuring continued and expanded market access in key regions.

Trade is the lifeblood of Canada's pulse industry. In fact, Canada is the single largest exporter of pulse crops in the world, accounting for roughly one-third of the global pulse trade. We export high-quality pulse crops—about 85% of what we grow—to over 120 countries, meaning that our industry is heavily reliant on predictable market access.

Market diversification remains a priority for our industry. Like most commodities, Canadian pulses have a handful of key markets that are responsible for a significant portion of our exports. That is exactly why exploring new trade deals with countries such as Ecuador is of great importance to Canada's pulse growers, processors and exporters. As the global leader, having access to new customers not only helps drive demand for our products but helps drive economic growth across the sector and beyond, throughout Canada.

In the last year alone Canada exported roughly 28 million dollars' worth of lentils and $4.2 million of dried peas to Ecuador. This made our country the lead in export market share in that country, with Canadian lentils and peas accounting for the overwhelming majority of Ecuadorean imports. In 2023 we supplied over 90% of lentil exports and 80% of pea exports, and while there were no sales of pulse ingredients made in 2023, we know that pulses are growing in popularity and use worldwide. This includes the inclusion of pulse ingredients in products ranging from baked goods to snacks, dairy alternatives and beyond. This means that as these products become more adopted throughout South America, exports of pulse ingredients from Canada will become a serious growth opportunity for our sector.

As Canada formulates its negotiating objectives, Pulse Canada's trade priorities are threefold. First is the elimination of applied and bound tariffs for pulses and pulse products. Any deal signed should and must include the lowering of tariffs for Canadian pulses, giving our growers and industry a competitive advantage over our key competitors.

Second is a robust sanitary and phytosanitary chapter that delivers predictable, transparent and, importantly, science-based requirements. As we have seen time and time again, to be effective, a modern-day trade deal must go beyond tariff reduction and include provisions that ensure trade is not held hostage by non-tariff barriers. The signing of a deal is an important step, but the implementation of that deal is even more important to those on the ground who rely on it to facilitate trade.

Thirdly, a functional dispute settlement and co-operation mechanism is important to ensure proper implementation of the agreement and to provide a recourse should a disagreement arise. We know and we have seen that countries will not see eye to eye all the time, and when disagreements happen, a strong dispute settlement mechanism can ensure that differences are settled in a professional manner while trade continues to flow.

We ask that these priorities be carefully considered when negotiating any free trade agreement, including that, as I mentioned, with Ecuador. As a sector that relies on trade for our success, we remain supportive of the government's willingness and ambition to increase trading ties with new regions and new markets around the world.

Thank you very much for the opportunity to outline a few of our priorities, and I look forward to any questions you might have.

[The Vice-Chair, Conservative, Kyle Seeback]

Thanks very much, and thank you to all the witnesses for your opening statements.

We're now going to turn to our rounds of questioning. We will turn to the Conservative Party, and Mr. Jeneroux, for six minutes.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you, Mr. Chair.

Thank you, witnesses, for the opportunity to chat about this pending free trade agreement.

I'll start with you, Mr. Roy. Some of your comments at the beginning were that a big benefit of the free trade agreement is the geographical proximity with Colombia. Can you expand on what then is...? Why even go down the Ecuador path if your focus is really Colombia? I also hope you can touch a bit on the 2019 blockade and give the committee a bit more information on that as we go into some of the deliberations on whatever sort of final report or statement comes out of this study.

[René Roy]

Thank you, Mr. Jeneroux.

Let's start with access to Colombia and access to the region in general. As mentioned, it's not currently a large market, but to help out in building up this market, having access to the region also helps our processors and our exporters to reach out. It's generally organizations or trade organizations or consumers that are related from one country to the other. If you are able to sell to Colombia, the types of products and also the proximity of the ports from one country to the other help our traders to sell to the other countries. This is one major advantage for our industry.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I'm sorry. How does that work? I'm just trying to visualize it. You sell to Ecuador. There's access to, say, the ports in an easier way. Then there's infrastructure put in place that would enable you then to deal with Colombia.

Is that...?

[René Roy]

Yes.

The infrastructure is close from one to the other, but also the types of products tend to be similar from one region to the other. This helps when it's time to do the processing. We know how valuable our labour is. If we can be more efficient in the cuttings that we are doing, so that they are going ion more than one region at once, it helps our industry to be nimble and be more competitive.

For the blockade, I just want to make sure here that you're talking about the question of the infrastructure blockade we had in 2019.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Yes, I mean in 2019, the CFIA 2019 blockade.

[René Roy]

Yes, it was a challenging one. We were talking with some of our Asian partners in the last weeks. They were mentioning that having a good product is great, but it must be reliable. It must arrive on time. This is another challenge for our industry. It's a perishable product. It cannot wait. It's an on-time product and value chain, so we cannot have delays in our industry.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

It was about the predictability, then, of your product coming into Ecuador, or vice versa? I'm trying to understand a bit more the details behind the blockade.

[René Roy]

Do you mean the fact that we are not able to ship anymore, right now?

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I mean the fact that you just said it was more about the predictability. That's my word, it wasn't your word.

Predictability was the concern in 2019, was it?

[René Roy]

Absolutely. Yes, it was, not only for our importers but also for our producers, because it can also create backlogs, and we cannot wait with our pork in our barns. They grow and we have no space for them for a long period of time.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I'm just curious on that then. How much time are you talking about in terms of storage?

Is it that it has to be 24 hours after it gets through the port to any sort of cold storage?

Do you have a better way of handling that?

[René Roy]

In terms of pork products for our producers, when it's time to ship our pork, we have a little flexibility. I will talk in terms of days, sometimes weeks. It's relatively limited. We're not talking about months here. We are talking sometimes in terms of weeks. When it is shipped to the processor, then it depends on how it is used. If it's for the fresh market, you have a 60-day period for the perishable good to be delivered. It's quite short, especially if you send it to ports that are far.

[The Vice-Chair, Conservative, Kyle Seeback]

That's five seconds, so I will say that's that.

We'll now turn to Mr. Arya from the Liberal Party for six minutes.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

I thank Jeff English and René Roy. I welcome them to the committee.

The Canadian agricultural producers and agri-food exporters, this small band of Canadians and small Canadian businesses, have made Canadian exports in that sector the fifth largest in the world. For our pork exports, I think we are third in the world, and for pulses, if I am not wrong, we are second in the world. Because so much of our GDP is dependant on international trade, and as 67.4% of the GDP comes from international trade, trade is fundamental for our prosperity, for our economy and businesses, and for all Canadians.

I want to ask both Mr. English and Mr. Roy about a couple of things that I want to get straight. I want you to confirm whether I am on the right path or not.

Number one is that the market in Ecuador is growing, obviously. Last year, in 2023, we had bilateral trade of $1.36 billion and investments of around $2.6 billion, which makes us the single-largest investor in Ecuador. Basic economics says that trade will always follow investment.

Though the investments are not in your fields of pulses or pork, there is still a good relationship between Canada and Ecuador. Whether the market is big or small, in my view we should always have a free trade agreement wherever possible, in whichever part of the world it is possible, because if we don't have a free trade agreement, our competitors for pork, pulses or any other exports possibly may enter into a free trade agreement with Ecuador and put us at a disadvantage. That is my number one contention.

Number two is that an agreement with Ecuador—as, Mr. Roy, you briefly mentioned—also could act as a springboard for the market in the entire region.

Those are the two points. I just want you to confirm whether you agree with me on these two things.

Mr. Roy, you can go first.

Mr. English, you can go next.

[René Roy]

Thank you, Mr. Arya.

Yes, it is a market that is growing in Ecuador. I will be straight on that one. It's a market that interests us. Our processors have applied to have access to this market. In addition to having access to a larger region, that also places us in a leadership position to help with science-based principles and non-tariff trade barriers or the absence of non-tariff trade barriers. As much as we put ourselves on the map, we increase our influence in these free trade agreements.

[Jeff English]

I would agree with that sentiment.

As was mentioned, Canada is the world's largest exporter of pulse crops. Any time that our members—Canadian pulse growers and exporting businesses—can have another market, another bidder on that product, we see a rise and an increase in demand. Generally speaking, in terms of the region, I think it's an important signal to show Canada's willingness to do business and be open for business.

Certainly, any time we enter into an agreement or a proposed agreement with a new market as the world's largest exporter of that crop, there remains tremendous potential, specifically as we continue to see food patterns evolve and the inclusion of pulses and pulse ingredients into more foodstuffs and onto more plates around the world—