Agriculture Committee on May 30th, 2017

[Ron Bonnett]

I think the other thing, too, that is affecting some of the discussion right now—

[The Chair, Liberal, Pat Finnigan]

Mr. Bonnett, I'm going to have to move on.

Madam Brosseau, you have six minutes.

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

Thank you, Chair.

I'd like to thank the witnesses for their participation on this important study. As was mentioned earlier, we did have some members of the committee go to Washington. We had some very interesting discussions. We met with people from different parties. We talked a lot about, obviously, supply management. We explained the situation here in Canada that the federal government did nothing to limit diafiltered milk coming into Canada. It was a negotiation that was done among processors.

I was wondering, Mr. Bonnett, if you can talk about your experience in Washington and what the feeling was because we are going to go into a renegotiation of NAFTA. A lot of people whom we met with, especially the farm groups, did not want many changes, just harmonization. I think our emphasis should be on dealing with non-trade tariff barriers, and maybe on the importance of moving forward when we negotiate trade deals. We would deal with the importance of eliminating and reducing trade barriers at the beginning instead of having to, after the fact, have a trade deal; and then spending countless hours in time and money on trying to resolve these issues that really hold up trade.

[Ron Bonnett]

Yes. We have travelled to Washington and to California, Iowa, Kansas, and Wisconsin. Across the board, we heard that the trade deal that is in place has been working extremely well. The back-and-forth trade between Canada and the United States in total is almost balanced. There is a huge benefit to producers on both sides of the border on dealing with trade. It was also interesting to note that there wasn't the anti-Mexican message coming out of agriculture discussions because they have the same type of relationship back and forth. Even on the milk issue, they realize that this was a bit of a side issue with diafiltered milk. The real issue is a surplus of milk production in the United States and figuring out how they deal with that.

The farm groups we met with were worried about things like country-of-origin labelling being put in place. They would like further harmonization. Some of the issues of inspection at border points, again, were raised by them. I think there's a lot of common ground.

I think the key, when we go into NAFTA negotiations, is both government and industry talking to our respective partners in the United States and really reinforcing what has worked well and where there needs to be some tweaking. There does have to be some tweaking. Electronic certification and all those types of thing didn't exist when NAFTA was signed. There can be discussions around that, but the idea of just interfering with the trade routes that have really developed and worked well for both us, I think, is unrealistic.

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

Mr. Lemaire, do you have any comments?

[Ron Lemaire]

I concur fully with Mr. Bonnett, and Mr. Drouin noted, I think, the integration between our North American markets, not just Canada and the U.S., but Mexico included.

Similar to CFA, the CPMA is directly engaged with the United States, with the key states within the fresh fruit and veg industry. We know that, at the state level, there is concern that the administration may take this in a direction that could impact the fresh fruit and veg sector, and they are willing to work to find solutions that keep us aligned with that opportunity of tweaking. The question is, what does “tweak” mean? We'll see when intent comes out from the U.S. government, but I'm confident that we have allies in the U.S., and I know the activity at the federal level and within the association market is aligned, and we'll continue to try to make sure we find the solution at the end.

[Ron Bonnett]

I should mention that one of the other issues that came up in our discussions was this whole concept of a border adjustment tax that's proposed. I think there was a lot of concern there that, if that was implemented by the U.S., immediately everybody else would respond, and you'd have a full-blown trade war going on.

One of the things I think it does signify is how easy it is to focus in on trade and using some type of attacks or a tariff to solve problems, when the real problems may mean regulatory harmonization and ensuring that the border can flow as smoothly as possible. It's very popular to jump on the tariff issue and the barrier and think that will solve the problem, but when you walk through the discussion, which we did with some of our American counterparts, they realized that in many cases they would be hurt worse than we were by a border adjustment tax, especially if there was an immediate response.

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

Mr. Lemaire, I know PACA was mentioned earlier by my colleague Mr. Anderson. I've been on the committee since 2012. We were the official opposition back then. We had a Liberal member, Mark Eyking, who was very vocal on the issue of PACA and the importance of the government at the time, the Conservative government, acting on it, and I've had discussions with other members on the importance of implementing PACA. As you said, it would take some investment for research at first, but finally there would be no cost, really, to government, and without PACA being in place, it has significant impacts on Canadian producers.

I talked to the minister when he was in committee for a budget matter a little while ago, and he said he couldn't comment because it was going to be shared with Minister Bains.

Do you have any idea when this would come about and why is it so hard?

[The Chair, Liberal, Pat Finnigan]

Sorry, I'm going to have to.... Maybe you will be able to answer it with another question, but time is up.

Ms. Lockhart, you have six minutes.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

I'll give up a minute of my time, Mr. Chair.

[Ron Lemaire]

Very quickly, we have the slow pay, no pay in place, but the bankruptcy component still eludes us. The Minister of Agriculture must champion this with cabinet to move this file forward. It is not the responsibility of Minister Bains at this point, and that is my understanding. There has been thorough research done, a clear understanding of the ease...and also a recognition that this committee and all three parties fully support this. We're all shaking our heads, and we're looking to the minister for leadership to move this forward.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Thank you.

We've been talking a lot about the Canada-U.S. trade relationship, obviously. It's a very important one for us. As we look to diversify in other markets as well, are there any specific trade barriers you see that are going to be an issue coming up that we should really be focused on?

[Ron Lemaire]

We know China and the work towards creating an agreement with China. There's business currently happening with China. Being paid in China is a challenge. We have member companies that are buying Chinese companies because of their secured customer list. Industry is finding a way to move around the mechanism. This is why the dispute resolution model is so important in foreign countries. If you ship a boatload of cherries into China, and you're not getting paid, it's a significant loss to the domestic industry, potentially bankrupting. That opportunity of ensuring that we have the appropriate models in place in China to deal with disputes is key. Industry is being creative right now, but that won't last forever, as an example. Of course, we have phytosanitary and other components that come into play with China, as we all are aware.

[Ron Bonnett]

The only thing I'd add is that China and India in particular have a tendency, when they need your product, to have one set of rules, and when they don't need your product, there's another set of rules. That's why it's important that if trade deals are going ahead, it is clearly identified what types of things are acceptable for domestic interest, while for other things, such as some of these non-tariff barriers we're talking about, we need to adopt international and science-based standards. Otherwise, you run the risk of building up a market, building up the whole infrastructure to supply that market, and then all of a sudden—boom—it's gone, and everybody's in a bit of a hole. It hurts not only the exporter, but it's not good for the importers in India or in China either.

If there was one message for the negotiators it would be that we have to go beyond a trade deal that just says we have free trade. Well, free trade isn't free trade. It has to be a trade deal that really spells out the conditions of trade.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Do you see CETA as an agreement we can model on? Does it do a good job of addressing some of those issues?

[Ron Bonnett]

It's something we can model on, although I must say there were some regulatory issues that were sort of punted off, with a process defined as to how to deal with them.

I'm a cattle producer. The hormone use in cattle was an issue. Some of the processing regulations are different in the two countries, and it's taken some negotiation to get through some of those. I think it's a model, likely the first step in trying to tackle these issues. The trans-Pacific partnership also looked at those types of issues. I think we just have to continue to build on it. It's like anything else. I would say the first one that started to tackle some of these issues was CETA. It likely sets a model, but it can be built on, because there's some work that can be done to improve on it.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

It sounds to me that relationship building among these countries is key as well.

[Ron Bonnett]

It's key.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

We've talked about labelling a little bit, and I want to come back to that. One of the things we talked about is the number of initiatives going on within government right now on labelling. Are you hearing any concerns from your members about competitiveness in regard to changing labels, and the process?

[Ron Lemaire]

In the labelling modernization work that's currently under way, there are actually a few wins for the fresh produce sector. We're very happy with some of those components on a domestic level. I know there's no intent on creating a non-tariff trade barrier with the regulations. The challenge that comes into play is how to recognize the science for that label. I always look at the EU. I can walk into a shop in France and then walk into a shop in Germany. I see product flow in packaging from multiple countries. I understand the package and I can generate the right information out of it, but they're not the same labels. It's a regulatory model, an acceptance of equivalency that enables the flow of product. That is an ideal scenario for us.

How do we create that acceptance of equivalency so that we can ship...? Is it legible? Is it in a common language or tongue? Those elements are fundamental. I'm being very general. Of course, there's more complexity and science behind that, but how do we get there? The challenge is that our current model is extremely complex to bring it back.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Okay.

[Ron Bonnett]

I attended the beef processing round table late last week. This was one of the issues that was brought up. Health Canada and CFIA both made presentations. They're moving forward with a front-of-package labelling initiative that from the food processing perspective could really put Canadian processors at a disadvantage. I hope the conversation that took place at that table gets followed up on, with Health Canada wanting to work with the sector a little more clearly. They've moved ahead with developing some of the labels without really engaging with the people who have to implement them. When the government is moving ahead with initiatives such as the healthy food initiative, make sure you get the people who are producing and processing that food at the table to understand some of the ramifications of the decisions.

This is likely what you've been hearing at the local level. There's a lot of concern.

[The Chair, Liberal, Pat Finnigan]

Thank you.

Mr. Longfield.

[Ron Lemaire]

Sorry, Mr. Chair, may I make one quick comment to that? It will be very fast.

[The Chair, Liberal, Pat Finnigan]

Yes.