Thank you very much, Mr. Chair.
Good afternoon, everyone. I am pleased to be here this afternoon to discuss an important issue impacting the agriculture sector that you will be examining in further detail. I will be speaking to you this afternoon about the trade in agriculture and agrifood products within Canada for internal trade.
A better integrated internal market supports a competitive and innovative agricultural sector, in addition to reducing costs of production and increasing productivity. It is a natural complement to Canada's intense involvement in international trade.
Trade flows between provinces are very important and have been growing in recent years. In 2011, the latest figures we have available, total interprovincial trade reached $716 billion. Of this trade, interprovincial trade of agriculture and agrifood products represented $82 billion in 2011, or 11%. Interprovincial trade of food and non-alcoholic beverages represented the largest share of interprovincial trade in agriculture and agrifood products at $64 billion, or 78%.
The fact that agriculture is a shared jurisdiction plays an important role when examining internal trade in agricultural and agri-food products.
The federal government is responsible for interprovincial and international trade, while provinces are responsible for production and internal marketing of agricultural and agri-food products. For example, certain products like meat must meet the federal regulations in order to be traded between provinces or internationally. If those products do not meet the federal regulations, they can only be sold within the province where they are produced, as long as they meet that province's standards.
Similarly, on food safety in general, the federal government is responsible for national regulations that apply to interprovincial and international trade, while provinces can have their own complementary provincial regulations. My colleague from the Canadian Food Inspection Agency will provide more details on this issue in his presentation.
It is in this context that the government has established a number of mechanisms to ensure close cooperation and coordination of efforts with provinces and territories on issues of interest to the agricultural and agri-food sectors.
The internal trade of agricultural and agri-food products is largely governed by the Agreement on Internal Trade, or AIT, which came into effect on July 1, 1995.
Overall, trade in agriculture is subject to the general rules set out in the AIT, such as reciprocal non-discrimination, no obstacles—that is, provisions requiring that parties to the agreement not create obstacles to internal trade—and transparency.
A more robust agricultural chapter of the AIT was negotiated between the federal and provincial governments beginning in 2008 and came into effect on November 8, 2010. This revised agricultural chapter ensures that technical measures adopted by federal and provincial governments do not restrict interprovincial trade more than is necessary to achieve legitimate objectives, such as the protection of human, animal, or plant life or health.
While the AIT has marked major progress towards fully liberalized interprovincial trade, a number of measures that impede the free flow of goods across interprovincial borders continue to exist. These include regulatory differences, inconsistent standards, and restrictions on the free movement of goods.
With the conclusion of recent trade negotiations with Korea and the European Union, for example, there is a perception that internal trade is lagging behind international trade liberalization and that Canada's market should be open internally as it is to our external trading partners. As a result, in June 2014 the Government of Canada called for the modernization of the Agreement on Internal Trade through an announcement by the Minister of Industry. In addition, at the August 2014 Council of the Federation meeting, provincial premiers committed to renew the Agreement on Internal Trade with the goal of concluding negotiations with the federal government by March 2016.
At the federal level, the process to renew the Agreement on Internal Trade will be a whole-of-government initiative led by Industry Canada.
As the department providing leadership in the growth and development of a competitive, innovative, and sustainable Canadian agriculture and agrifood sector, Agriculture and Agri-Food Canada strongly supports this process. Agriculture and Agri-Food Canada, along with other federal government departments and agencies, is currently working with Industry Canada to develop the government's approach for a modernized and ambitious Agreement on Internal Trade.
It is important to point out that most of the levers to facilitate internal trade belong to provinces and territories. The federal government has few policy, legal, or regulatory mechanisms at its disposal that can affect internal trade relative to the provinces and territories.
Agriculture and Agri-Food Canada is strongly supportive of the joint federal, provincial, and territorial efforts to address internal trade measures in the context of further enhancing Canada's agricultural competitiveness domestically and internationally, as well as strengthening Canada's internal market. Addressing measures inhibiting internal trade can contribute to creating the right environment to increase exports, stimulate innovation, and enhance competitiveness.
Thank you very much, Mr. Chair.