Agriculture Committee on Feb. 21st, 2017

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Seppey.

Thank you, Mr. Peschisolido.

Now we have Mr. Shipley for five minutes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much, Mr. Chair.

Thanks to the witnesses. It's good to see you again.

I want to go back to country of origin labelling. I think it started somewhere around 2009 and was repealed in 2015. That's almost six years. My math may be wrong, but it was a long time. It came about because of the U.S. farm bill, as you mentioned. Where was the scientific justification for that?

[Frédéric Seppey]

I will defer to my colleagues from Global Affairs to comment, but the measure per se was not based on science but rather on the desire by consumers to have more information on the origin of the products. It was not primarily for sanitary or phytosanitary reasons.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

That's interesting. Does it fall under WTO in terms of the WTO providing predictable science-based trade rules regarding export? This maybe wasn't under NAFTA. This was a U.S. farm bill, and yet it affected a NAFTA partner. It wasn't necessarily science-based, as far as we knew, yet when we were in the United States, we found out that consumer groups, ranchers, truckers, and processors supported our position and not that of the appellant.

It took a long time. It cost our producers billions of dollars. My concern is that we lose some faith in the ability to deal with scientific issues, which I think Canada bases itself on. Our pork and beef industries were dramatically affected. How do we improve that relationship and get respect for our science-based products that are going to our largest trading neighbour?

[Frédéric Seppey]

In that regard, it's an illustration that the trade rules are not sufficient on their own to maintain economic relations. You have to use all the tools in your tool box.

Ultimately Congress had the authority to repeal that legislation, which they did in December 2015. Part of the success was a combination of the full support of our industry and a number of key allies in the United States in the industry, especially in the meat processing sector, in preventing the emergence of issues of that kind. This is why it's important to constantly do what we call advocacy, both at the level of our embassy in Washington and through our network of consulates, to have as much dialogue as possible with policy-makers and decision-makers ahead of decision-making to explain our perspective and why certain measures should not be.... COOL was always intended to serve a legitimate policy objective, but it's had enormously disproportionate impacts on the very well-functioning integrated red meat market in North America.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

We can't neglect to express our appreciation to all those in Canada—the lobby groups, the livestock industry people, the government people—who did a lot of work, which I think had a huge influence on this. We say “thank you” to them.

In terms of the phytosanitary area, I'm just not sure where it is. Is there any concern in terms of livestock and the genetic semen exports? Where do they fall under it? Have we had any non-tariff trade barriers based on that? It would seem to me that it's very closely and easily monitored.

[The Chair, Liberal, Pat Finnigan]

If you can, give just a short answer, please.

[Paul Mayers]

Briefly, yes, there continue to be issues that we work through. I'll use one example.

Small ruminants in Canada being exported to Mexico or to Central or South America currently face the challenge that they can't be transported through the United States because we're awaiting a rule on spongiform encephalopathy. That is one of the examples. We work on these types of examples every day.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Mayers and Mr. Shipley.

Ms. Jolibois, you have three minutes.

[Georgina Jolibois, NDP, Desnethé—Missinippi—Churchill River, SK]

Thank you very much.

I want to spend some time on the non-tariff measures in Canada. With Canadian industries, I'm assuming there are plenty across Canada. Can we spend some more time on having you explain the non-tariff measures? Can you give me examples for cattle, wheat, and canola?

[Paul Mayers]

Certainly. As my colleague noted earlier, we have a number of measures that serve to protect Canadian interests as related to the import of products to Canada that could bring with them pests or diseases. The regulatory framework under the Health of Animals Act prescribes a number of diseases on which Canada places restrictions in terms of the entry of products. The plant health act does the same. Listing individual measures would be lengthy, but suffice it to say that the regulatory framework in terms of the control of imports of food, agricultural products, and beyond serves to provide those protections.

I'll use one example in the plant health context that most people would not anticipate, which is that in returning to Canada as a hiker, if you have dirty boots with soil on them—soil is a significant vehicle of plant pests—our regulatory requirements could then result in those boots having to be decontaminated before they could enter Canada. The examples go from as simple as that one to a shipment of grain coming to Canada with us seeking the assurance through export certification that a number of plant pests are not present before the shipment is offered entry to Canada.

[Georgina Jolibois, NDP, Desnethé—Missinippi—Churchill River, SK]

I'm curious about this per province. There are the national standards for the non-tariff measures and the tariff measures. When we export various products, are the provinces different?

[Paul Mayers]

In terms of products that move internationally, they fall under the federal regulatory framework. Provincial requirements would apply in terms of products entering, but in terms of exports, the products would fall under the federal framework.

[The Chair, Liberal, Pat Finnigan]

Thank you, Madam Jolibois.

Now we'll start the second round.

Mr. Anderson, you have a full six minutes.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you.

I have three questions I'd like to ask, so we'll have to move fairly quickly.

First, we had reports last week that Italy is trying to move towards some sort of country-of-origin labelling on durum. Can you tell us how you will deal with that? How do you deal with a situation like that when it arises?

[Frédéric Seppey]

Thank you.

Very briefly, this is a measure that is in a relatively early stage of development. We are aware of it. We're working closely with the industry.

Essentially, we are using two mechanisms. We're engaging directly through our embassy in Rome with the Italian government. We are raising it as well with the European Commission in Brussels, because any measure of that nature needs to be confirmed or vetted at the European Union level.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you.

I have a question about us. How are we keeping from overregulating ourselves and making ourselves uncompetitive?

We have two or three regulatory proposals before us. One of them has to do with transport. I guess I'll use that as an example. We've heard from some people that we need to have the same standards as the Europeans do on the transport of animals, which is ridiculous, given the differences in our countries.

Can you talk a bit about how we can make sure we're not overregulating and driving ourselves out of the market?

[Paul Mayers]

Quite simply, it is the commitment to science-based, risk-based regulation. We focus on the risks that Canadian agriculture faces and apply a science-based approach—measures we can defend in the science—in order to provide assurance that we are not overregulating or regulating spuriously, but instead regulating in response to the outcome we collectively desire.

The second element is consultation. We are very committed to a very significant engagement with stakeholders before we move to regulate. Of course, stakeholders are very quick to share with us any concerns when they believe we're going further than necessary.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I think one of the things this committee is focused on is making sure our farmers are defended with science and not put under any other types of pressure.

There is another aspect of non-tariff trade barriers, and that's subsidization. I'll just use the example of the United States. The U.S. farm bill dwarfs our bill. The U.S. is now trying to convince us that we should be changing some of our farm systems. How do you deal with that as a non-tariff trade barrier? They're not going to change their subsidization; they expect us to change our systems. Why would we do that?

[Frédéric Seppey]

These issues are very important for Canada. It's a long-standing position of the Canadian government to address the issue of both domestic support—subsidies that countries pay to their farmers—and export competition—subsidies that are provided to help the farmers of a country be extra-competitive in the foreign market. It is a long-standing position of the government to address these issues in trade agreements.

The issue of domestic support is very challenging to address in a bilateral trading context, because it's a measure you apply.... Why would you subscribe to specific rules with only one of your trading partners? You're ready to do it if all your other trading partners are obeying the same rules. This is an issue that we're advancing, for example, in the context of the World Trade Organization. That said, the negotiations at that level are a so-called revolving door. Let's just say they have been proceeding at a very slow pace over the past few years.

This is definitely an objective we are encouraging, short of trade negotiations. We're encouraging our trading partners to take the same approach we do in Canada, which is to apply strict discipline in the introduction of new programs that may have a trade-distorting effect.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I have one last question to follow up on what Mr. Peschisolido said. How do you deal with conflicting agreements?

He talked specifically about EU members and the EU itself, but in terms of other places where we may find a conflict between trade agreements...or do they all agree at every point?

I'm just wondering what has priority. Is WTO kind of seen as the overarching agreement? If NAFTA disagrees with WTO—and something else may disagree with the TPP, if we get there—how do you resolve those conflicts?

[Frédéric Seppey]

For example, when we negotiated the trans-Pacific partnership agreement, we were very careful not to introduce disciplines that would contradict. In fact, in trade negotiations, usually one agreement would perhaps go further than another one, so rather than conflicting, they supplement each other. I will limit myself and not go too far in terms of providing a legal interpretation, but generally the agreement that is the most ambitious or succeeds the others in time is the one that would probably prevail.

COOL is a good illustration. We had the possibility of using either NAFTA, which was negotiated and came into force in 1992, or the World Trade Organization, implemented in 1995, to bring our concerns and to invoke the dispute. We chose to use the WTO, for a number of reasons. We had that possibility of choosing our forum.

Once you choose a forum where you want to settle your dispute, you have to stick to it. In the case of COOL, we went with the WTO, in part because we knew that if we were bringing it in the WTO, we could have other countries join the dispute as a third party if they were interested in the same legal question.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Anderson.

Thank you, Mr. Seppey.

Mr. Drouin, you have six minutes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

I would also like to thank the witnesses who are here today.

My question is along the same lines as those of my colleagues opposite.

At a committee meeting a few months ago, we heard that the Market Access Secretariat had a priority list of 300 barriers to foreign markets.

How do you set priorities within the secretariat?

[Frédéric Seppey]

Thank you for your question.

Basically, this is the result of requests from the industry. We work closely with the industry. We apply different criteria using a mathematical scoring system. One of the criteria that plays a major role is when it is a priority for the industry in a particular sector. Another factor that plays an important role is the relative importance of a market for Canada, for the sector. I will use an example from the past. The mandatory country-of-origin labelling policy imposed by the United States has had a severe impact on the beef industry. Mr. Shipley said that the industry had estimated that the impact of this policy on beef products was more than $1 billion a year. Naturally, this became a very high priority.

By applying criteria of this type, we can establish priorities.