Agriculture Committee on Nov. 7th, 2013

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Thank you very much.

Mr. Groeneweg, Madam Krayden, you talked about canola exports to Europe, which is a good thing. We know there might be certain obstacles. We know, for example, that Germany is one country with a ban on the cultivation and sale of GMO maize. I'm not sure about other grains. There is a stronger feeling against genetically modified organisms in Europe, and whether we agree with that or not, I think that exists.

Because of a low-level presence, we've seen flax shipments stopped and farmers take a hit in Canada. Yet our government...and you agree that we should be having a policy of low-level presence to assist farmers.

The question is this: what do we do if Europe does not agree to our demand for low-level presence? If they basically say, look, folks, this is the way it is here, and if you don't have zero tolerance, then we don't want to accept your shipments, how should we react to that?

[Franck Groeneweg]

Basically, we're excited to see that there is an opening for dialogue on low-level presence with the European Union. That is a good first step to go that route. But I will also point out that as far as canola is concerned, when we look at exporting oil to Europe, the oil doesn't have protein. The meal is the genetically modified part of it. The oil is not a genetically modified product that's going into Europe.

Plus, part of that market is for biodiesel use. At that point, I think the cars will be okay with a little bit of—

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

They probably won't mind.

[Franck Groeneweg]

They may run better.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

You also mentioned UPOV 1991. You were in agreement with that.

Is it not true that plant breeders' rights might then trump farmers' privileges every time, and make it more expensive for farmers, if we introduced UPOV 1991?

[Franck Groeneweg]

What it does is give the possibility to invest in better genetics, which gives us the possibility to have better production. At that point, farmers are still able to get the previous genetics for less money, if they so wish.

But as we see in the canola industry, it seems that farmers will always go to the more expensive seeds, because they see the higher levels of productivity from it. They still have that choice. I believe they would have the choice with wheat or any other crop under UPOV 1991.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Atamanenko.

I'll go now to Mr. Benoit.

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

Thank you very much. I wasn't expecting to have an opportunity here.

First of all, thank you to the witnesses. Thank you very much.

Dr. Kunin, you mentioned that Canada is the only country on earth that has open access to Europe and the American markets, and there's an advantage in that.

I was recently in Europe at a meeting of the economics committee of the NATO parliamentarians. The trade expert there from Europe said that there's only about a 10% probability of the European Union and the United States signing a substantial agreement within the next 10 years, and a 15% probability of Europe and the United States signing any trade agreement in the next 10 years.

If that is the case, could there be an added advantage to Canada, and to Canadian agriculture in particular, with American companies and American business people coming to Canada to get access to that European market?

I'd also like the other witnesses to answer that later, if they could.

[Dr. Roslyn Kunin]

Very, very definitely; if there is no direct free trade between Europe and the United States, and Canada has access to both, we can look for even more investment, business opportunities, markets, and exports coming, being developed, and operating in Canada to gain access to both those markets.

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

To the Grain Growers, do you have anything to add?

[Franck Groeneweg]

There's not a whole lot to add. Tariff reductions are good for our grain exports. There are secondary benefits as well through livestock. So that's a very good possibility.

Whether we have the European market or the U.S., we're in a great position.

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

The Canada-Europe free trade deal is obviously very beneficial on its own. I was talking to the Turkish ambassador just in the last week. Of course, Turkey is going through all of the processes to become a member of the European Union. Whether they actually do or not isn't that important, but they want to synchronize everything so that they can. One of the things the ambassador said is that with this deal between Canada and Europe signed, Turkey will want to sign a parallel agreement with Canada with exactly the same terms. They'll want to be able to synchronize, which will help them move into the European Union should they choose to do that.

So not only is the European Union a market that will be available to Canadian farmers—better access—but Turkey may well be a new market that's outside the European Union now but is becoming a more important market all the time, with 80 million people.

Do you think this is a side benefit that hasn't really been talked about? At least, I haven't heard it talked about.

[Dr. Roslyn Kunin]

This is the first I have heard of that. I think it would be a very good thing. Eighty million people is around the size of Mexico. Canada's agriculture industry would be very complementary to that of Turkey. I think that would be a very significant boost. It would be the equivalent of adding Mexico to the U.S. free trade agreement.

[Franck Groeneweg]

You raise a very interesting point, because any country that joins the EU right now would enter into these trade agreements the same way. In 1992 there were 12 countries, and now there are—I'm not exactly sure how many—27 or something like that. That's a huge and expanding market.

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

Those were the two questions I had.

[The Chair, Conservative, Bev Shipley]

Thank you.

We'll go to our last speaker, Mr. Davies, for five minutes, please.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chairman.

There's one thing that Mr. Benoit just said that I wanted to correct.

I believe, Dr. Kunin, you didn't say that Canada is the only country with a trade agreement with Europe and the United States; you said Canada is the only major developed economy with one. I happen to know that South Korea has an agreement with both Europe and the United States.

Is that correct?

[Dr. Roslyn Kunin]

Thank you for catching that. I did say “major”, yes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Dr. Kunin, one thing you said intrigued me, and it jibes with something that former Bank of Canada governor Mark Carney said. He estimated that there is at present $500 billion in idle Canadian capital right now in Canada that is not being productively invested. Do you see that pressure of European competitiveness coming into Canada serving to motivate some of those Canadian companies to get that capital more active in our country?

[Dr. Roslyn Kunin]

Yes, indeed, because we will have bigger export markets, more opportunities for investment. Then there will be a higher cost to leaving your money sitting idle and more chances to put it to productive use to help feed the growing markets that we can now serve, and to improve productivity amongst Canadian producers to maintain their home markets as well as foreign markets.

[Don Davies, NDP, Vancouver Kingsway, BC]

Yes. I've also read from a few sources that compared to European countries, Canadian companies don't have the most enviable record in terms of investing in research and development or in employee training or other aspects of investment in their enterprises.

Do you foresee CETA having a positive impact in that regard?

[Dr. Roslyn Kunin]

I think so, because to meet the special challenges with respect to GMOs and some of the other factors that have been discussed here, it is going to be technology that will help us find suitable answers. And of course research is the way to develop those technologies.

[Don Davies, NDP, Vancouver Kingsway, BC]

I have a final question for you.

One thing that I think is an important missing component of trade deals is that there are a lot of other factors that go into a country's trade performance, including currency. I'm just wondering if you have any thoughts to offer us about the euro versus the Canadian dollar and the impact that currency may have on our trade flows.

[Dr. Roslyn Kunin]

Right now, the Canadian dollar is of course significantly lower than the euro. I'm afraid that I am not in a position to project what's going to happen to our currency as this agreement takes place. If there's more demand for Canadian products, then of course our dollar strengthens.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Maybe I'll go to the Grain Growers.

One thing we know about trade is that the best trade agreement in the world is only as good as the willingness of the countries to conform to it, and the presence of non-tariff barriers can be a big problem. I was talking to some American business people this week about their agreement with Korea. They're extremely frustrated, because the amount of non-tariff barriers that they feel the Koreans are throwing up completely eliminates the benefits they thought they'd get from the Korean free trade agreement.

One example of this is the presence of low-level GMOs. I'm actually a little bit worried that we signed an agreement with the EU without actually having that issue resolved. All that really has been committed to—and you point out that you think it's a positive step—is that there's a committee to look into the presence of low-level GMOs. But wouldn't you agree with me that resolving this issue so that trace elements of GMOs do not result in Europeans sending back shipments of grain to Canada is an essential component to actually taking advantage of that benefit?