Agriculture Committee on Feb. 21st, 2017

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Mayers.

Thank you, Ms. Lockhart.

It is now Mr. Gourde's turn for six minutes.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you, Mr. Chair.

My question is for Mr. Seppey.

During the portion of your presentation on bilateral and technical co-operation with regulatory authorities, you said that the goal of the Canada-U.S. Regulatory Cooperation Council was to facilitate closer regulatory co-operation between the two countries and enhance economic competitiveness by aligning our regulatory systems where appropriate.

Does the phrase “where appropriate” suggest something negative? How is Canadian co-operation with the Americans perceived? Do the Americans see us as very co-operative? Conversely, do we see the Americans as being very co-operative towards us?

Our relations with the Americans haven't always been positive. On the issue of meat traceability, for example, we had to bring a challenge before the WTO. Do we have to watch out for the Americans? Can we rely on them? Can we look at them as dependable partners, or should their attitude really concern us?

[Frédéric Seppey]

I will let my colleague, Mr. Mayers, give you some specific examples of regulatory co-operation between Canada and the U.S.

Even though we have different legal systems, we certainly share regulatory objectives and outcomes that are very similar on a number of elements. Given the closeness between our two countries, it's natural for us to co-operate very closely with the U.S. Clearly, with the volume of trade that flows between the two countries, issues can always arise. However, in most cases, if not the vast majority, things run fairly smoothly. Mr. Mayers can give you some examples of that.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

That answers my question.

My next question is this.

As the chief agriculture negotiator, you are no doubt concerned by what is coming.

In future agriculture negotiations, would Canada do well to deal with the Americans bilaterally, rather than trilaterally with Mexico and the U.S. under NAFTA?

[Frédéric Seppey]

It's hard for me to comment on a political direction that really flows from cabinet and ministers.

What I can tell you, though, is that, theoretically, when it comes to trade negotiations or foreign trade policy, Canada has always favoured a multilateral approach as much as possible. When the maximum number of players all follow the same trade rules, it gives rise to synergies and cross effects.

In the case of NAFTA, the fact that three countries represent a very significant economic mass means that Canadian exporters can source inputs from the U.S. and Mexico. For example, a Canadian business can export a product to the U.S. and enjoy the benefits afforded by NAFTA because the product includes inputs from NAFTA countries.

If you were to reduce the number of countries making up that whole, and suddenly, you could no longer source inputs from Mexico, it would certainly have an impact on your operational effectiveness and efficiency. That was one of the advantages of the Trans-Pacific Partnership, whose 12 members represent 40% of global gross domestic product.

The more member countries in a free trade agreement, the more you can source inputs from those countries. By and large, the more countries there are in the free trade agreement, the more flexibility our exporters have in terms of sourcing inputs within that zone.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Several bilateral agreements have been signed with some countries in the past decade, and the experience has been fairly successful. Actually, it is easier to achieve a successful marriage of two than a marriage of 12. If there are 12 parties, and we are able to sign the agreement, all the better, but the fact is that the Trans-Pacific Partnership Agreement has yet to be signed.

If it isn't signed, will we opt for a bilateral agreement with countries that interest us?

[Frédéric Seppey]

It's a possibility. If the Trans-Pacific Partnership Agreement isn't signed, Canada may want to ensure that every opportunity is taken to promote the growth of its trade. As for the question you asked at the outset, I would say that ideally, the best rules in the world would be within the WTO, which has 160 member countries.

There is a limit to what can be achieved under the WTO. That's why, starting with the Canada-U.S. Free Trade Agreement, Canada has begun to add bilateral free trade agreements as a complement. In each of these cases, it helped to create a bilateral relationship that went beyond what was possible within the framework of the WTO. Indeed, it is always a matter of determining to what extent agreements with a large number of countries can be profitable. You asked if there was another solution when the first one proved impossible. I would say we should keep all options open.

For example, we are currently negotiating bilaterally with Japan, but should we also engage in bilateral negotiations with other countries in the Asia-Pacific region?

That is one of the options that could be considered.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Last week, the media reported that Mexico was calling on Canada to maintain its presence in NAFTA and the negotiations that will take place under that agreement.

If Mexico is asking for our help, is it because it fears a complete dissolution by Canada in this regard? Is it afraid that the agreement will then become bilateral?

[Frédéric Seppey]

It is difficult for me, in the office I hold, to make assumptions about what is perceived by a foreign government. On the other hand, it is important to note that NAFTA has worked very well for Canada over the past 20 years. We have a very rich relationship both with our American neighbours and with Mexico, whether on a bilateral basis or in a trilateral integrated framework such as NAFTA.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Seppey and Mr. Gourde.

Mr. Longfield is next. You have six minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Mr. Chair.

Thank you all for being here and for the great discussion so far.

Back in October I had an opportunity to sit in on a round table in Guelph that Ontario Agri-Food Technologies put on. There were two things that were discussed at that round table over and over. One was public trust and how we make decisions through CFIA based on science versus some of the things that go out there to the public trust, in particular looking at European standards versus Canadian standards on some issues that don't have as much science behind them as what Canada would be putting forward.

Could you comment on public trust as one of the barriers that we're working on?

[Paul Mayers]

Thank you for the question.

It certainly is a complex area when in addition to managing the technical aspects, issues of consumer perception and public trust are brought into the mix. We know that they are quite divergent views from time to time.

My colleague pointed to biotechnology. This is an example that's often raised of where the scientific review of products demonstrating their safety has been the hallmark of decision-making in Canada, while in the European Union, in addition to the scientific review.... I note that when products are reviewed, our colleagues in the European Food Safety Authority who carry out the risk assessment reach the same conclusions we reach in Canada, but there is an additional step in the European approval process that includes consideration both collectively and on an individual member state basis, and that has resulted in many fewer approvals in Europe.

That has presented for Canadian businesses a tremendous amount of uncertainty. It is an area around which we have continued to work closely with our European counterparts. In particular, when products are approved in one jurisdiction, we work to facilitate continued trade in that particular commodity while respecting the fact that an approval is not yet in place, in order to create a more predictable trade environment as it relates to low-level presence.

These are areas that represent significant challenges for Canadian businesses. We certainly will continue to advance a view that we believe a science-based, risk-based regulatory system to be the most effective in terms of trade facilitation, but we do recognize that these differences exist and will continue to be areas of debate.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks. We just don't have time to get into the progressiveness of that agreement and those dispute mechanisms for when these issues come up. I know that's something we continue to work on.

You mentioned low-level presence, and domestic versus international low-level presence was also a point that was brought up continually in our discussions. We don't have standards, sometimes, across Canada, let alone between us and other countries. On canola with China, dockage became part of the discussion. Where are we in terms of low-level presence, and what do we have to do to be more effective internationally?

[Paul Mayers]

Perhaps I can start, and my colleague may want to add.

We've been working very closely with stakeholders to look at the issue of our domestic position with respect to low-level presence and to advocate in an international context for a predictable approach to the management of low-level presence. There is a draft policy position that we have consulted on with Canadian stakeholders. As mentioned, because we have been very active with a number of trading partners in establishing an international group within which we can have these discussions, we've been sharing our perspective through that forum in the interest of continuing to advance this position, but there is much work yet to do.

[Frédéric Seppey]

If I can add very briefly to what my colleague said on low-level presence, the leadership of the Canadian grain and oilseeds sector is to be praised, because often we can discuss government to government how we can address these issues, but we are able to count on the support of importers in foreign countries.

Especially in Europe, it is the importers of Canadian grains and oilseeds who often are able to influence and to supplement our efforts and to raise the importance, from an importing perspective in Europe, of addressing this issue. One illustration is that in 2009, the trade between Canada and the European Union on flax, which is used in Europe for industrial purposes among other things, was halted overnight because there was one very small quantity of genetically modified product that was approved in Canada but not yet approved in the European Union. Seventy percent of the trade was halted. That's an illustration of the type of issue we're trying to address.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Seppey.

Thank you, Mr. Longfield.

Next we have Mr. Peschisolido.

You have your six minutes.

[Joe Peschisolido, Liberal, Steveston—Richmond East, BC]

Thank you so much for the presentation.

Let me begin with the European Union, and congratulations on your work in the ratification of the EU deal. I'd like to follow up on what both Mr. Gourde and Mr. Longfield were discussing on the theoretical and then the practical implications.

I forget who mentioned this, but we have a deal with the EU that hasn't been ratified by a variety of countries, and we have 300 or so non-tariff measures or barriers. Who do you deal with when you're dealing with the theoretical? Are you dealing with the EU bureaucrats, or are you dealing with the local guys, let's say, from France, Germany, or Italy? I'm just trying to wrap my head around how it actually works practically.

[Frédéric Seppey]

When we conduct the negotiations on the Canada-European Union comprehensive economic and trade agreement, we are negotiating with the European Union, and their representatives are part of the European Commission, the various departments that they call directorate-general. That's the level at which we're negotiating; however, as in any negotiations, we both need to operate within negotiating mandates and the directions of the appropriate political authorities, and when it's time to try to close the negotiations, as we have seen last fall, then the involvement of the minister is important. That's why Minister Freeland spent a lot of time in the European Union at the time.

At one point it leaves the realm of what falls under trade negotiators, and in the case of the European Union, for example, you have to seek not only the support of the European Parliament but also support at the national or even the regional level in some European Union member states. That's when the political engagement on both sides is important.

Mr. Mayers can add to this in terms of the importance of regulatory contacts beyond the trade negotiations.

[Joe Peschisolido, Liberal, Steveston—Richmond East, BC]

Mr. Seppey, thank you for that. On the nuts and bolts, the CFIA are the feds, and the provinces basically allow you to come in and deal with the regulatory side, and if you're there, we can export our products. May I ask how it works in the European Union? Let's just take Germany, Italy, and France. Are they the guys who determine what hogs come in or what beef comes in, or is it bureaucrats from the EU?

[Paul Mayers]

My colleagues may want to join in on a bit of an EU operations 101.

Our trading relationship is both with the individual member states and with the European Union as an entity. We pursue, to the extent that we can, recognition of equivalent outcomes in terms of the regulatory system on an EU-wide basis, because for a product to be placed on the common market in the EU, the expectation is that the product meets the EU regulatory frame. However, delivery is done by the member states.

If we take a meat product as an example, we will review the common EU legislative and regulatory requirements, but we will audit the application on the part of individual member states, as does the EU as well, so our counterpart, the Food and Veterinary Office of the European Commission, carries out audits of the member states as well. We will take advantage of its reports as well as our own audits to confirm that an individual member state, in its independent application of the EU requirements, is meeting that effect, because it is on that basis that we provide import access.

[Joe Peschisolido, Liberal, Steveston—Richmond East, BC]

You're saying the equivalent of our CFIA in, let's say, in Germany, France, or Italy can keep pork out of Italy, France, and Germany.

[Paul Mayers]

They could raise their concerns with, for example, the emergence of a disease in Canada, and they would raise that with the European Union as well as with us.

[Joe Peschisolido, Liberal, Steveston—Richmond East, BC]

Earlier on in the questioning, the TPP was brought up, and let's assume that there are going to be renegotiations or a new approach taken, given the change in government in the United States. I'm from B.C., so there's as much of a focus on, let's say, Korea and Japan. I know hope springs eternal, but are there legitimate opportunities for us, taking into account the cultural and historical differences in Korea and Japan, that we can sell a whole lot of beef, hogs, eggs, and milk in those two huge markets?

[Paul Mayers]

We've had tremendous success in resolving market access issues in Asia, but let's be realistic: that has been the result of some tremendous work and effort.

The same principles apply in our approach, but the value proposition in addition to that bilateral interaction of FTAs is significant, which is why we were so active in support of our AFC and Global Affairs colleagues in TPP negotiations.

In looking forward, I'll turn to my colleagues.

[Frédéric Seppey]

You're absolutely right that these countries have huge potential to increase our exports. Japan is a market that is ready to pay a high price for high-quality products, but they are very demanding in terms of food safety. That's why one of the biggest assets for exporters is the quality of our food safety and animal health.