Evidence of meeting #41 for Agriculture and Agri-Food in the 40th Parliament, 3rd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was negotiations.
A recording is available from Parliament.
Conservative
The Chair Conservative Larry Miller
I call our meeting to order.
For the benefit of the committee members, we need 15 minutes at the end of the meeting to go in camera to deal with a motion that was passed at the end of the last meeting.
With no further ado we'll move to our witnesses.
Thank you very much, Mr. Gauthier and Mr. Verheul, for being here. We're hoping to hear some details on how the discussions are going between Canada and the EU, and what have you.
Mr. Gauthier, do you want to start?
Gilles Gauthier Director General and Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
I'll leave it to Mr. Verheul, and then I'll speak for a few minutes.
Steve Verheul Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
Thank you, and good morning, everyone.
Thank you for inviting us to speak to you today about the Canada-European Union comprehensive economic and trade agreement, known as the CETA. As requested, I will provide an overview of the negotiations. Then Gilles Gauthier, Canada’s chief agriculture negotiator, will focus on agriculture and agrifood issues implicated by the CETA.
A Canada-EU CETA would provide us with preferential access to the largest market in the world. The EU, made up of some 27 member states with a total population of nearly 500 million, and a GDP of over $19 trillion Canadian, is already our second-largest trading partner. We have many historical, economic, and cultural ties with the EU, so the EU is an obvious trading partner for Canada.
Canada has sought a free trade agreement with the EU for a very long time. After extensive advocacy by Canadian political leaders and government officials, and a significant effort by the private sector, negotiations toward a CETA were officially launched in Prague at the May 2009 Canada-EU summit. There, leaders agreed that we would aim for a high level of ambition in the negotiations and work toward completion of the negotiations within two years.
For Canada, this is by far the biggest free trade negotiation we have undertaken since the Canada-United States Free Trade Agreement, which has been in place for more than 20 years, along with the NAFTA that came after it.
In the CETA negotiations we are aiming to go further than we went in the NAFTA negotiations, both with respect to the range of issues to be covered and with respect to the depth of ambition. On the part of the EU, they too are aiming to go further than they have gone in any previous free trade agreement.
So far, Canada and the EU have held five negotiating rounds, with the sixth to take place in mid-January in Brussels. We have been making progress at a good pace. Even though we have moved past the easy issues and the focus is now on key points of differences, we continue to make good progress.
Key milestones in the negotiations thus far include: we have had a consolidated text covering all 22 areas of the negotiations since last fall. Of these, we have completed or parked four chapters, and expect four more to be parked or closed at the next round in January. In the remaining chapters, issues have been narrowed down to key differences, which are now the focus of our efforts.
We have exchanged initial offers on goods, which would have 90% of all tariffs to go duty-free immediately upon implementation of the agreement. We have also exchanged detailed requests in the areas of government procurement, services, and investment.
We expect to exchange second offers on goods covering the remaining 10% of tariffs and our first offers in government procurement, services, and investment shortly after the next round of negotiations, scheduled for January.
In the area of goods, the remaining 10% of tariffs on which we have not yet made offers contain various sensitive issues, including autos, fish, and various agricultural issues. In particular, a large proportion of the EU’s remaining 10% of tariffs is made up of agricultural products.
Our approach to market access in these negotiations is different from that taken in other negotiations. We are negotiating market access as a whole, rather than focusing specifically on tariffs alone. We want to achieve real market access, and are working on what it actually takes to get into the market. Many of the barriers that our exporters face into the EU relate to barriers other than tariffs.
To achieve the objective of effective market access, we are pursuing the following.
We have attached conditions to our tariff offers, such as negotiating satisfactory rules of origin that take into account the highly integrated North American market. We are also paying particular attention to non-tariff barriers, especially in the area of regulatory standards. Bridging gaps between the EU standards and our standards—whether on a North American basis, a Canadian basis, or a provincial and territorial basis—will be essential to the free flow of goods between our markets. We are also negotiating a chapter on regulatory cooperation to try to prevent problems before they occur. This will be the first time in any free trade agreement that a chapter on regulatory cooperation is included.
Notably, provinces and territories are closely engaged, with some 50 to 60 representatives joining us at the negotiating rounds and attending negotiating sessions in areas wholly or partially under their jurisdiction, the only time they have been so closely involved in an international trade negotiation. As the EU’s top interest in this negotiation is sub-federal government procurement, provinces and territories are aiming for a very high level of ambition in their government procurement offers and are asking to get paid in other areas. Agricultural market access is a very high if not a top priority for many of them, particularly for Alberta, Saskatchewan, and Manitoba.
It's not just the provinces and territories that have made their priorities very clear. Our consultation process in this negotiation has been the most extensive and open process we've ever had in a trade negotiation. We consult regularly with industry and with civil society in a variety of formats, from large groups to individual meetings. Some of the most active and vocal participants include agricultural stakeholders, who have been very clear in setting out objectives for this negotiation and the areas in which they would like to see real gains.
Of course, there are gains beyond goods' market access. We have been pushing the Europeans hard in other areas, including services, investment, and labour mobility. The Europeans are pressuring us on government procurement and intellectual property, including geographical indications, and while we already have a wine and spirits agreement with the EU that recognizes certain geographical indications, the EU is pressing hard for the recognition of GIs for other agricultural products and foodstuffs.
The CETA is a unique and important opportunity for Canada, and we are committed to an ambitious agreement. Our Minister of International Trade, Minister Van Loan, will meet with his EU counterpart, Trade Commissioner Karel De Gucht, to take stock of progress in the negotiations in mid-December here in Ottawa. We will then have a sixth round of negotiations in Brussels in January followed by a further round in Ottawa in April.
I will now turn the floor over to Gilles, who will provide an overview of sector-specific issues within the CETA negotiations.
Gilles.
Director General and Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
Thank you Mr. Chair.
It is a pleasure to here today for the first time in my capacity as Chief Agriculture Negotiator.
From the perspective of the agriculture sector, the Canada-European Union Comprehensive Economic and Trade Agreement, commonly called CETA, negotiations offer unique opportunities in terms of enhanced market access for our producers.
As you are aware, Canada is a major player in agriculture world trade. Canada is the fourth largest agri-food exporter and sixth largest importer. Our sustained growth and prosperity depends on our ability to compete effectively in global trade and to penetrate new markets.
More specifically, a large segment of the Canadian agricultural sector relies on access to foreign markets. This is especially true for the livestock, grains, pulses, and oilseeds sectors. So trade negotiations, such as the CETA negotiations, are important for creating new market opportunities for our farmers and exporters.
The EU represents a large and valuable market for Canada's agriculture and agri-food products. It is the largest agri-food product import market in the world, absorbing 13% of the world agriculture imports.
In 2009, agri-food trade between Canada and the EU was worth over $5.6 billion. Over the last three years, EU purchases of Canadian agri-food products have represented 19% of our pulse exports, more than 18% of our durum wheat exports, roughly 7% of our common wheat exports, and 7% of our oilseeds exports.
There is no doubt that an agreement with the EU holds great potential to deepen this already significant trade relationship. Canada's objective in these negotiations is to achieve an ambitious outcome that will advance the interests of Canadian farmers and that will provide clear benefits for our agriculture sector.
This means achieving important market access improvements for our agricultural products, in particular for beef, pork, grains and processed foods. And, of course, Canada will continue to defend the interests of the supply-managed sectors in these negotiations, as it has done in all other trade negotiations.
Here are some examples of trade barriers we aim to address in the Canada-EU negotiations.
While the recent agreement will enable Canada to obtain access to a new EU duty-free quota for hormone-free beef, our beef exports will still be subject to a quantitative limitation, above which tariffs equivalent up to 142% are applicable.
Despite being a world leader for pork and pork products, we have currently minuscule exports of pork entering the European market, because we face significant in-quota and out-of-quota tariffs that range from 32% up to 70%, and currently, only two Canadian pork processors are certified to ship into the EU market.
Our durum wheat enjoys a solid reputation among European consumers, especially given its high quality for bread and pasta production. While our exports generally enjoy duty-free treatment, they are still subject to quantitative restrictions.
Many other Canadian agrifood products could benefit also from a more liberal access to the EU market. I refer to such products as berries, potatoes, and maple syrup, to name only a few.
In addition, these negotiations also present an opportunity to tackle non-tariff barriers, notably in the area of sanitary and phytosanitary issues, as well as other technical barriers to trade that limit our access for agricultural products.
Canada is also seeking to address key concerns in relation to biotechnology, including greater timelines in the EU regulatory approval process for genetically modified organisms--GMOs--as well as greater predictability for our trade in cases of low-level presence of GMO organisms in agricultural exports from Canada. This is particularly important for all our grain sectors.
Finally, Canada is seeking strong commitments in relation to export subsidies, and this issue has been a long-standing problem for Canadian agricultural exporters. The European Union has the capacity, by far, to be the world's largest provider of export subsidies.
We are moving forward, working closely with provincial governments and in consultation with the full range of Canada's agricultural and agrifood industry stakeholders in order to advance Canada's interests in these negotiations.
Mr. Chairman, I would be pleased to address any questions you or members of the committee may have on the agriculture file in these negotiations.
Conservative
The Chair Conservative Larry Miller
Thank you very much, gentlemen.
I want to remind members that the obligation of witnesses to answer all questions put by the committee must be balanced against the role that public servants play in providing confidential advice to the ministers. The role of the public service has traditionally been viewed in relation to the implementation and administration of government policy, rather than the determination of what that policy should be. Consequently, public servants have been excused from commenting on policy decisions made by government.
We now go to Mr. Easter for seven minutes.
Liberal
Wayne Easter Liberal Malpeque, PE
Thank you, Mr. Chair.
As Steve would know, that statement of the chair provides good cover for the minister. We understand it.
Conservative
Liberal
Wayne Easter Liberal Malpeque, PE
Thank you, anyway, Mr. Chair.
Welcome, folks, to the Standing Committee on Agriculture and Agri-Food.
There's no question that the Canada-EU FTA is something worth pursuing. There seems to be relatively general agreement on that. As you mentioned, Steve, in your opening remarks, followed up by Mr. Gauthier, one of the key areas that is still in dispute, certainly, seems to be the agriculture side. One of the key areas of concern is with supply management.
On June 15 you were before the international trade committee, Steve. You said at the time, and I quote:
At the time the negotiations were launched, there was an agreement that there was to be a no-exclusion a priori... That essentially left it open to each side to make proposals on anything of interest to them.
It's up to the European Union to make proposals that may relate to products under supply management.
I think the literal interpretation of this is that supply management is on the table, in the beginning. Is that correct?
Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
I think it's quite true, and it was said publicly on many occasions, that everything was on the table when we began these negotiations. We have a lot of sensitive issues on both sides, so I think neither side is under the illusion that entirely everything will be on the table at the end of the negotiations. But we've got a ways to go between here and there.
Liberal
Wayne Easter Liberal Malpeque, PE
So then what concerns me on the supply management side...and you know, it's interesting; I tabled some information the other day from Peter Clark relative to the U.S. subsidies. They are massively supporting their industry, while we continue to play the boy scout. In fact, on the supply management side, his figures would lead us to believe that in the United States, they are actually subsidized to the tune of 32¢ per litre in Canadian dollars.
Yet we have to compete against that. We're under pressure from processors in Canada that claim they can bring in, cheaper, cheese products, etc., for their pizzas. But they are being subsidized at 32¢ a litre in the United States when you take all into consideration.
I make that point because we have a free trade agreement with the United States, and we find our supply management industry under attack by them, but yet they are highly subsidized.
So in terms of going forward, what concerns me about the current government is that they did make this statement in 2004 in their policy position, and I wonder if you could outline to me if this is where we're going or not.
It stated as follows:
A Conservative government will ensure that any agreement which impacts supply management gives our producers guaranteed access to foreign markets, and that there will be a significant transition period in any move towards a market-driven environment.
My question to you is this: in terms of the negotiations, are we looking at keeping the current supply management system, or are we to negotiate a transition period that would eventually move us toward a market-driven environment?
Director General and Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
Mr. Chairman, I think the government has made it clear that we will defend the interests of the supply management sector in all our trade negotiations. That's the position that we have taken in all the negotiations, including the Canada-U.S. free trade negotiations, and subsequently in the NAFTA.
I think at this point it is a hypothetical question to refer to whether there would be any transition period here. In fact, the instruction that we have been receiving from the government is to continue to maintain our position on supply management, which is to defend the integrity of the supply management system in all our trade negotiations.
Liberal
Wayne Easter Liberal Malpeque, PE
Okay. That's good, I appreciate that.
Turning to page two of your remarks, Steve, you go into the “barriers other than tariffs”.
I believe, Mr. Gauthier, you mentioned in your remarks the latest agreement, which I think was a good agreement--I believe it's 20,000 tonnes of non-GMO or hormone-free beef into to Europe--but we still face the equivalent of a 142% tariff on other beef exports to the EU.
I wonder if either of you could expand on those barriers other than tariffs, because I think that's what is not often understood. Most people think it's just tariffs, but there are a lot of issues, such as hormones in beef.
Could you just expand on those?
Director General and Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
You're quite right that in order to successfully access markets, tariff is only one part of the equation. There are many other conditions to meet the sanitary or phytosanitary standards of the importing country.
In the case of the EU, hormone-treated beef was a matter of long-standing dispute. This matter is now behind us given the recent agreement to provide for new access. That access is limited in quantity, as you mentioned. It's 20,000 tonnes, which will increase to about 45,000 tonnes in a few years' time.
But even if you have access to that volume, you still need to have a certificate to guarantee your export, which means you need to have the approval of the plants that are eligible to export into Europe; you need to have attestation that they are meeting the quality standards that are imposed by the importing country, in this case the EU; you have issues related to how the carcasses are washed, whether it is done using chlorine or whether it's done using recycled water; you have all these production processes that need to be vetted by the importing country; you have issues related to the use of ractopamine in pork; you have issues related to trichina protocols. You have all these things that need to be certified.
Conservative
The Chair Conservative Larry Miller
Wayne, you're out of time. You can come back to this.
Mr. Laforest, go ahead for seven minutes, please.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Thank you, Mr. Chairman.
Good morning Mr. Gauthier and Mr. Verheul. I would like to ask Mr. Verheul some technical questions.
Earlier, you said that 22 areas were under negotiation here. You said that more or less four chapters had been resolved and that four others were to come. You also mentioned the presence of the provinces and the territories at the negotiations.
If there are 22 areas under discussion, are there 22 negotiating tables? Do the provinces participate in all of the negotiating tables?
Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
Yes, that's correct. There are 22 negotiating tables that we've been running since the beginning of the negotiations.
The provinces are involved in those tables that affect areas under their jurisdiction, so they're not in all 22. They are in about, I think, seven or eight. Certainly government procurement services, investment, technical barriers to trade, environment, and labour are the key ones they're involved in, and there are others like cooperation, monopolies, and state enterprises. So they're very active in some of the most central issues we're discussing in the negotiations and some of the EU's strongest priorities.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
The provinces are participating in 22 negotiating tables. I assume that the provinces are at the negotiating table when it comes to agriculture issues, for example.
Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
The agriculture issues are discussed at the goods table, and since that primarily deals with issues at the border that's an exclusively federal responsibility, so the provinces are not involved in those tables. But because that's part of the overall picture of the negotiations, we have been consulting them very closely on what happens at those tables so they have an intimate knowledge of our strategies going in, on what happens, and we debrief them afterwards. So they're fully apprised of what happens in those tables.
Bloc
Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
On financial services, the table has been exclusively federal so far, because they've been talking about issues that relate to financial services measures at the federal level--banking and those kinds of issues--and have not got into any kind of detailed discussions of financial services measures at the provincial level, such as insurance and those kinds of things.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Will the provinces be invited to participate in discussions, namely at the negotiating table on financial services? When areas are under their jurisdiction, are they invited to participate?
Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
If we get into those issues--and whether we will is yet to be determined--we'll have to make that assessment. At this point, in previous agreements we have traditionally carved out the provinces from having any involvement in those areas; we've never negotiated that.
The Europeans have expressed an interest in some of those financial services issues at the provincial level, and some provinces have expressed an offensive interest with respect to the EU on those issues. So we've begun to consult the provinces intensively on what kinds of positions would be taken on those issues, but we have yet to take a decision on whether they would be inside those negotiating rooms.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Have you begun discussing the issue of resolving disputes—perhaps that will happen only at the end—and the kind of mechanism will be put in place? If there is an agreement, at the end of the day, I assume that you have already begun thinking about dispute settlement mechanisms? Will there be a permanent tribunal, or something else?