Agriculture Committee on Dec. 2nd, 2014

[The Chair, Conservative, Bev Shipley]

Folks, I want to call the meeting to order.

In reference to the order of the House referring back to the first report of the committee, we have with us today, from the Canadian Agri-Food Trade Alliance, Claire Citeau, executive director, and Ron Davidson, director.

We also have, from Alberta Barley, Matt Sawyer, who is chair, and Erin Gowriluk, manager, government relations and policy.

And from the Canadian Meat Council, we have James Laws, who is the executive director.

I'm going to turn it over. Each of you will have 10 minutes to present.

I'll start with the Canadian Agri-Food Trade Alliance.

Claire, please, 10 minutes.

[Claire Citeau, Executive Director, Canadian Agri-Food Trade Alliance]

Thank you, Mr. Chair.

Good morning. My name is Claire Citeau and I am the Executive Director of the Canadian Agri-Food Trade Alliance, or CAFTA. This morning, my director Ron Davidson joins me. He is the Director, International Trade and Government Relations, for the Canadian Meat Council.

Thank you for inviting us today to speak on behalf of CAFTA with regard to the Canada-European Union comprehensive economic and trade agreement, CETA.

CAFTA is a coalition of national and regional organizations that support a more open and fair international trading environment for Canada's agriculture and agrifood. CAFTA's members include farmers, producers, processors, and exporters from the major trade-dependent sectors, including beef, pork, grains, oilseed, sugar, and malt. Together, CAFTA members account for 80% of Canada's agriculture and agrifood exports, totalling $46 billion in exports annually, and directly employ half a million Canadians.

CAFTA was able to immediately and unequivocally voice its support of the agreement in principle that was signed in 2013. Most recently, we were also very pleased by the conclusion this fall of negotiations of CETA.

Fair and free trade is the top priority to ensure competitive access for Canadian agriculture and agrifood products throughout the world. In the current environment of competitive trade liberalization, countries are competing with each other to be the first to secure free, or at least preferential, access to the world's major markets. Today the success of our export market also depends on the timely negotiation and implementation of preferential trade access to the markets that our competitors are after.

CETA secures real and substantial access to one of the world's few multibillion-dollar export markets. Importantly, it does so ahead of our major competitors.

We concur with the observations made by many international trade experts that the Canada-EU trade deal, when implemented, will be Canada's most significant trade agreement since NAFTA. CETA covers a significant range of issues, including tariffs, non-tariff barriers, services and investment, financial services, government procurement, and more.

The European Union includes 28 countries, with a combined population exceeding 500 million. In 2013 Canada's agriculture and agrifood exports were valued at $2.8 billion. This is only 5% of Canada's total agrifood exports. CETA offers tremendous potential for our members, and our exports really should be much higher.

I would like to share with you a sample of CAFTA members' projections of the additional opportunities that are seen to be provided by CETA.

The Canola Council of Canada estimates that the Canada-EU agreement will provide the sector's exporters the opportunity to increase sales by up to $90 million per year.

The Canadian Cattlemen's Association points to new duty-free access for almost 65,000 tonnes of beef at a value they estimate to be nearly $600 million.

Opportunities from CETA for the cereals and grains sector are seen to be both direct and indirect. The grain sector has identified duty-free wheat sales on top of the grain utilized in feed for livestock to meet the increased EU demand for Canadian meat.

The Canadian Meat Council, representing meat processors, has pointed out that the value of EU agricultural imports has increased by some 145% in just over a decade, and sees important export growth opportunities for bison, veal, and prepared meats, in addition to pork and beef.

The sugar industry, through the Canadian Sugar Institute, expects CETA will secure an additional $100 million in exports of sugar-containing products to the European Union.

And the Canadian Pork Council, representing Canada's hog producers, has projected, based on existing market intelligence and the anticipated opportunities for specific cuts of pork, that this deal, in a few short years, could lead to annual sales of up to $400 million per year.

Taken together, we believe the Canada-EU agreement, when fully implemented, could result in up to $1.5 billion in new exports to the European Union.

On the day of the implementation, tariffs on almost 94% of Canada's agrifood exports will be eliminated.

Over the course of the implementation period, virtually all other tariffs, other than for beef and pork, will also be eliminated.

Also important, and contributing to the value of CETA for the Canadian agrifood industry, is the fact that the negotiations have gone beyond tariffs, taking on a wide range of non-tariff issues critical to Canada's agriculture and agrifood exporters. Notably, CETA has included discussion in areas such as technical barriers to trade, sanitary and phytosanitary issues, regulatory cooperation, and export subsidies.

CETA has also established mechanisms that will promote cooperation and discussion on regulatory issues and non-tariff barriers that impede trade. Through CETA, Canada and the EU have also committed to work together to advance a number of non-tariff issues, including approval of meat processing facilities and timely approval of biotech traits.

To conclude, we firmly believe that CETA will provide the net national benefit to Canada that merits this agreement being implemented, and we look forward to the continued support of the federal and provincial governments in achieving this outcome.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Ms. Citeau.

Now we will move to Alberta Barley, with Mr. Sawyer, please, for 10 minutes.

[Matt Sawyer, Chair, Alberta Barley]

Thank you.

Good morning. On behalf of Alberta Barley, I'd like to thank you for inviting me here to discuss the Canada-European Union trade agreement. As a farmer from Acme, Alberta, I'm here today to tell you what this agreement means for me and the future of my farm.

My family has been farming the same land for over 100 years. I started actively buying my own land over 25 years ago. I've supported myself by work in a variety of jobs in order to be able to farm for a living. As a farmer, I grow barley, wheat, and canola, and I raise Angus cattle.

The reason I'm here today is that I'm very involved in the industry and am currently serving as chairman of the Alberta Barley Commission. Alberta Barley strongly supports increased free trade and the removal of trade barriers in order to expand opportunities in existing barley markets and emerging markets. This work is done largely through our involvement in the Barley Council of Canada, the Canadian Agri-Food Trade Alliance, and the Grain Growers of Canada.

Here with me today is Alberta Barley's government relations and policy manager, Erin Gowriluk. We are both pleased to have the opportunity to share our comments with you as they relate to your committee's report on the comprehensive economic and trade agreement between Canada and the European Union.

Let me start by telling you a bit about what free trade agreements like this one mean for Canadian farmers like me. First, the economic benefits of guaranteed trade with the EU mean that the future of farming in Canada just got brighter. Second, the potential for developing new and value-added markets means that small and medium-sized businesses in Canada can grow and prosper if they're able to break into the European market.

This agreement could be a game-changer for Canada's rural communities if we're able to build the right relationships. This means there's the potential for me to make more money on my farm, which at the end of the day is what needs to happen in order for Canadian farmers to stay in business. Speaking specifically for barley, the potential for the value-added barley production through beer and beef means solid profits for barley farmers. It also means that our excellent products have preferential access to one of the world's most well-heeled customers.

Canada produces eight million tonnes of barley every year, including malt and feed varieties, and it is the fourth-largest producer of barley in the world after Germany, France, and Russia. Canada's main barley-producing provinces are Saskatchewan, Alberta, and, to a lesser extent, Manitoba and British Columbia. However, we grow barley from coast to coast, and it's one of the reasons why Canada is known for excellent beef and premium malt. Barley has a variety of uses, including livestock feed, beer and whisky production, and as an ingredient in the food processing sector.

International trade agreements are integral to the profitability and sustainability of the Canadian agriculture sector. ln 2012 Canada exported more than 1.4 million tonnes of barley. Barley growers like me believe that CETA will enable us to increase our barley exports by opening new markets, which will strengthen the profitability and sustainability of the entire barley value chain.

With over 500 million consumers in the EU, we estimate that under CETA Canadian agrifood exports could increase by $1.5 billion. This amount includes $100 million in grain and oilseed products.

ln addition to these direct benefits, we support the findings outlined in the committee's report that CETA, by providing opportunities for market expansion for Canada's meat industry, will benefit the feed barley industry. With over 80% of the barley produced in Canada going into feed, the barley industry depends on the success of the livestock industry. New market opportunities for Canada's meat industry mean new opportunities for Canada's barley industry.

Alberta Barley supports CETA and other trade opportunities for increased market access, and we encourage the federal government to continue working towards the completion and the implementation of these important agreements. We commend the federal government for their ambitious trade agenda, with both South Korea and the European Union opening up the world to Canadian agriculture exports.

However, I would be remiss if I did not take this opportunity to address one of Canada's greatest challenges when it comes to fulfilling our commitments to international buyers: our transportation system. Unfortunately, shipping and logistical issues are holding us back from maximizing our potential as an exporting nation. We hear about this issue from our international customers and colleagues. We look to the government to ensure Canada's transportation system is able to keep up with our ambitious trade agenda.

Thank you very much.

My colleague Erin will also look forward to speaking.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

Ms. Gowriluk.

[Erin Gowriluk, Manager, Government Relations and Policy, Alberta Barley]

Thank you, Mr. Chairman.

Also, thank you to the committee for the opportunity to review and provide comment on the report on Canadian agriculture and the Canada-European Union comprehensive economic and trade agreement.

We appreciate the fact that the committee has provided a synopsis of the comments received from stakeholders at the meetings that were held in November and December of last year. Lisa Skierka, general manager of Alberta Barley and president of the Canadian Agri-Food Trade Alliance, and Brian Otto, the chairman of our national organization, had an opportunity to provide comment to the committee at that time as well.

World demand and trade in barley is growing. Demand is being driven largely by countries with rapidly expanding beer production, including China and Russia, and countries in Eastern Europe, South America, and Africa. Some 25% to 30% of Canada's barley production is used in the malting industry, both in Canada and overseas. About half of this barley is exported unprocessed for malting. The remaining product is malted in Canada and then sold either to the domestic brewing industry or to international customers around the world.

ln 2012 Canada's malt exports were over 595 million malt tonnes valued at $382.6 million. Canada is the largest individual country malt exporter in the world, after France. The EU member states together house 40% of global malt production capacity and are responsible for over 50% of world trade in malt, exporting over 2.2 million tonnes every year. The elimination of tariffs on Canadian barley into the European market will allow us to be competitive in that marketplace for the first time. The European Union is not currently the largest market for Canadian barley, but due to its size, consumption patterns, and generally high income per capita, we believe the EU shows a great deal of potential.

Tariffs have been an issue for agriculture and food exporters. EU tariffs on agriculture and processed food products have been high, particularly on products such as beef, pork, and grain. We know that under the agreement in principle the EU will eliminate all duties on 94% of agricultural tariff lines, and that tariffs on grains, including wheat, durum, rye, barley, and oats, will be eliminated over a seven-year period.

This agreement is also significant for Alberta's barley farmers because up to 80% of our crop goes into livestock feed, creating the high-quality products that Canada is known for worldwide. As you will hear from our colleagues at CAFTA and the Canadian Meat Council, the impact on our beef and pork sectors is significant.

This is why Alberta Barley supports the committee's first recommendation that would see the approval of the comprehensive economic and trade agreement in Parliament and that all provincial and territorial governments work “to expedite the economic benefits it will bring to Canada's agriculture and agri-food sector”.

Further to Mr. Sawyer's comments regarding the challenges faced not only by Canada's grain sector but by all sectors that rely on rail transportation to bring their products to international markets, we have to ensure that we address any barriers that could prevent this free trade agreement from reaching its full potential.

ln addition to eliminating the tariffs that currently serve as barriers to trade, CETA will also help to ensure that unnecessary or discriminatory regulatory requirements do not diminish the value of new market access for Canadians. While regulations are required for the establishment of safety measures, they can become problematic if they are overly burdensome or discriminatory.

CETA is the first bilateral trade agreement in which Canada will include provisions on regulatory cooperation. Alberta Barley is pleased to learn that a forum will exist whereby stakeholders in each country can work with the government not only to address issues relating to non-tariff trade barriers, but to work together towards regulatory cooperation between the two countries.

To reference stakeholder comments in the committee's report, some witnesses indicated that Canada and the EU should take advantage of this agreement to implement a synchronized approval process for new agricultural technologies and innovations. Witnesses confirmed that harmonization of the maximum residue limit, or MRL, for pest control products is an issue of critical importance for Canadian producers. We agree that producers need to be able to continue to use safe and effective pesticides approved by Health Canada without worrying that the EU will block their exports. It is for this reason that we support the committee's recommendation for the Government of Canada to take a proactive approach and to use CETA “to move toward harmonizing and synchronizing approval processes for new agriculture and agri-food technologies”.

As the first country in the developed world to enjoy preferential access to both the American and the European markets, Canada's agriculture and agrifood sector is in an ideal position to grow and prosper in the years ahead. That is why we support the committee's fifth and final recommendation “that the Government of Canada continue to pursue additional comprehensive trade agreements”—worldwide—“to open new markets and provide opportunities for growth” for Canadian agriculture and for food exporters.

On behalf of Alberta Barley, I would like to thank the committee for the opportunity to contribute to the process that ultimately led to the development of the agreement in principle that exists today and to review the recommendations brought forward by our industry colleagues as part of your consultation process.

Thank you.

[The Chair, Conservative, Bev Shipley]

Thank you very much.

Now we will go to the Canadian Meat Council and Mr. James Laws.

[James Laws, Executive Director, Canadian Meat Council]

Thank you very much.

Good morning. My name is Jim Laws and I’m the executive director of the Canadian Meat Council, which is based here in Ottawa.

Thank you for inviting me here today as part of your review of your first report, from March 2014, on the Canada-European Union comprehensive economic and trade agreement.

Canada's meat processing industry adds value to the live animals born and raised on Canadian farms, providing a critical market outlet and supporting the viability of thousands of livestock farmers. With annual sales of $24 billion, beef exports of $1.3 billion, pork exports of $3.2 billion, horsemeat exports of $80 million, bison exports of $5.7 million, and 65,000 jobs, the Canadian meat industry is the largest component of this country's food processing sector.

We believe that the CETA, when implemented, will permit a major increase in Canadian meat exports to the European Union. With a population of 500 million, the European Union is by far the largest importer of agricultural products in the world. In 2013, the 28 countries of the European Union imported agricultural products valued at $139 billion; however, many agricultural goods, including meat products, continue to confront significant tariff and non-tariff barriers.

When implemented, the Canada-European Union comprehensive economic and trade agreement will provide for duty-free exports to Europe of 81,000 tonnes of Canadian pork, 65,000 tonnes of Canadian beef and veal, 3,000 tonnes of Canadian bison meat, an unlimited quantity of Canadian horsemeat, and an unlimited volume of Canadian prepared meats. In turn, the European Union will retain unlimited duty-free access to the Canadian market for pork, obtain unlimited duty-free access to Canada for beef, and receive reciprocal unlimited duty-free access for prepared meats.

While our initial hope for completely open, duty-free, and unlimited trade in meat products between Canada and the European Union was not achieved, we welcome the movement in that direction. Compared to an average value of only $52.6 million in meat exports from Canada to the European Union during the past three years, the results of the CETA negotiations will offer export opportunities with potential annual sales of up to $1 billion for beef, pork, horsemeat, bison, and prepared meats.

In addition to the agreement on import quotas and tariffs, Canada and Europe exchanged very important side letters, which were signed in March 2014. The letters state:

Canada and the European Union share a commitment to the determination of equivalence of their respective sanitary measures, including controls on microbiological criteria, and stress the importance of finalizing negotiations on meat inspection systems, in order to facilitate trade in meat and meat products.

The letters go on to state that “our services are fully committed to giving high priority to this work in order to finalize the equivalence determination on meat products within one year”.

So that livestock farmers and meat processors may undertake investments in their businesses with confidence while preparing to take advantage of the trade benefits promised by the agreement, it is critical that the technical barriers be resolved well in advance of the CETA implementation date. Accordingly, the meat industry looks forward to a successful and early fulfillment of the commitments contained in the side letters.

With regard to the administration of the European quotas for Canadian beef and pork, our original hope was for a completely open first-come, first-served option. Although this was not the end result, we are grateful that Canada's negotiators did consult with us, and they did listen to our concern.

The consolidated CETA text in article 37, “Declarations on TRQ Administration”, includes the European tariff rate quota administration for imported beef, veal, and pork from Canada. It outlines the structure of the import licensing system, the eligibility criteria, and the securities.

It should provide the framework for the EU tariff administration that is conducive to trade. I quote:

More specifically, it must not impair or nullify the market access commitments negotiated by Parties, it must be transparent, predictable, minimize transactional costs for traders, maximize fill rates and aim to avoid potential speculation.

Another concern we had is addressed in article 7 of section 22 of the agreement, where it outlines the rules for geographic indications, defined as:

an agricultural product or foodstuff as originating in the territory of a Party, or a region or locality in that territory, where a given quality, reputation or other characteristic of the product is essentially attributable to its geographical origin;

Annex I, part A, lists the geographic indications identifying a product originating from the European Union. I count 172 names, 33 of which are classified as fresh, frozen, and processed meats and dry-cured meats.

Annex I, part B, lists the geographic indications from Canada. There are none: zero.

Article 7.6 of the agreement provides for exceptions. With regard to meat, for the term Nürnberger Bratwürste, a processed meat geographic indication from Germany, those who have been commercially using it here in Canada for at least five years prior to the October 18, 2013, can continue to use the term. Those producing it for less than five years since then have a transitional period of five years from the entry into force of the article to comply.

For another product, Jambon de Bayonne, a dry-cured meat geographic indication from France, those who have been commercially using it here in Canada for at least 10 years prior to October 18, 2013, can continue to use the term. Those producing it for less than 10 years have a transitional period of five years from the entry into force of the article to comply.

In addition, there are exceptions under article 7.6 that do not protect the translation of a specific term. For instance, the German geographic indication Schwarzwälder Schinken is protected, but the English translation, Black Forest ham, is not. So that's good.

Three companies, though, currently own the trademarks for meat in Canada—the Parma design with the crown, San Daniele, and Szegedi salami from Hungary.

Paragraph 5 of article 7.6 provides an exception for trademarks:

Where a trademark has been applied for or registered in good faith, or where rights to a trademark have been acquired through use in good faith, in a Party before the applicable date set out in paragraph 6, measures adopted to implement this Article 7

—which provides geographic indications—

in that Party shall not prejudice eligibility for or the validity of the registration of the trademark, or the right to use the trademark, on the basis that the trademark is identical with, or similar to, a geographical indication.

This effectively means that these Canadian trademark holders will have to coexist in the Canadian market with European meat products using those named geographic indications. We are concerned that this may effectively expropriate their intellectual property rights with measurable commercial harm but without any compensation.

In conclusion, we believe that, when implemented, the Canada-European CETA will permit a major increase in Canadian meat exports to the European Union, create jobs, provide higher incomes for Canadian farmers, and grow the Canadian economy.

Thanks very much. I would be happy to answer your questions.

[The Chair, Conservative, Bev Shipley]

Thank you very much, Mr. Law.

Now we'll go to our rounds with colleagues.

We'll start off with you, Mr. Allen, for five minutes, please.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Mr. Chair.

I want to thank our guests, some for returning; and for those who've gotten the first opportunity to kick at this one, welcome.

Actually, Chair, I do have a question for you and the clerk. Apologies for missing the meeting, but I'm looking at the motion put forward that talks about—it helps me sort of define the questions—what we're actually doing. Are we studying an amendment, or are we studying the report that may contain a new amendment or contain something else?

If I could get clarity on that, that would be helpful.

[The Chair, Conservative, Bev Shipley]

I'm going to take the time off yours, and I'll ask the clerk for clarification.

The motion is fairly straightforward. It's Standing Order 66(2), that the House proceed to the putting of the question on the main motion, as amended by Madam Brosseau and Mr. Chicoine, that:

...the First Report of the Standing Committee on Agriculture and Agri-Food, presented to the House on Thursday, March 27, 2014, be not now concurred in but that, in view of the subsequent conclusion of negotiations on the Comprehensive Economic and Trade Agreement and its final text having been published, the Report be referred back to the Standing Committee on Agriculture and Agri-Food with instruction that it amend the same so as to recommend that...opportunities for agricultural and food exporters and maintaining the system of supply management and, therefore, Canada's free trade agreement with the European Union should be implemented as negotiated.

Madam Brosseau, what did you mean by it?

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

I did not add the amendment.

It is not my motion.

[The Chair, Conservative, Bev Shipley]

It's not your motion.

Well, as amended—?

[Malcolm Allen, NDP, Welland, ON]

You amended it.

Mr. Lemieux amended it, not us.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

It isn't mine. They're not my words.

[Malcolm Allen, NDP, Welland, ON]

Mr. Chair, on a point of order, if you are going to use my time to talk to Madam Brosseau, I don't think that would be within the boundary of the rules, quite frankly.

[Ruth Ellen Brosseau, NDP, Berthier—Maskinongé, QC]

Maybe we can get clarity from—

[Malcolm Allen, NDP, Welland, ON]

The motion I'm looking at is actually one that the House directed us to take back that the government voted for. It was actually Mr. Lemieux who amended the concurrence motion. It was the government who then voted non-concurrence, in their very own report that this committee sent to the government. I'm not sure why my colleagues on the other side would have voted with the government against their own report, since it was theirs, but they did. However, that's neither here or there; they can decide how to do that.

My question is pretty simple: Are we talking about the report that we presently have in front of us, which we did before? Or, are we only talking about the amendment to the fact that we didn't concur? If it's the report, it opens up everything. If it's not, it narrows the scope quite closely.

[The Chair, Conservative, Bev Shipley]

My understanding is that it's the narrowed one, not about the whole report. The whole report will not be coming back. It will be the part of it that is dealt with in the motion.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

As a clarification, are we talking about a point of order? Like, this is a question that's—

[A voice]

The question.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Okay, then I do have a comment, Chair.

[The Chair, Conservative, Bev Shipley]

It wasn't brought up as a point of order?

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

It was not brought up as one, but—

[Malcolm Allen, NDP, Welland, ON]

You can deal with it as you wish, Chair. You can deduct my time.

I'm happy to let Mr. Lemieux explain it to me inside of my timeline. I don't care, as long as I understand it.