Agriculture Committee on June 1st, 2017

[Brian Innes]

I'd like to start, and then perhaps colleagues would like to add.

On your first question around adequate resources, it's important to recognize that some of the funding for these functions comes through the agricultural policy framework that's now in the course of being renewed and will start April 1, 2018. The message has been put out that there will be no new funding for the agricultural policy framework.

If we think back to our comments about inflation, certainly it hasn't been zero over the last five years. Despite the fact that we have doubled agrifood exports in the last 10 years, that we have an export target of increasing those exports to create more growth in Canada, we're talking about providing the same amount of funding for the policy framework as we did five years previously, despite the fact we all know costs go up and salaries go up.

When we look seizing that opportunity, these non-tariff measures really do require investment and resources across government. I'll give you a specific example. We talked about Health Canada. The Pest Management Regulatory Agency within Health Canada is responsible for regulating pest control products. It also is the regulator that engages with international counterparts to establish common maximum residue limits in our export markets.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Innes. I'm going to have to cut you off here.

Mr. Drouin, you have the floor for six minutes.

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

I want to thank the witnesses for being here. There are three witnesses but two organizations.

To the Canadian Agri-Food Trade Alliance, I think part of your previous testimony is the reason that we're doing this today, if my memory serves me correctly. I could be wrong, but you had mentioned that the market access secretariat had a list of 300 priorities, which to me and probably to all of us, meant they had no priorities. That's part of the reason we're here today.

I'd like to talk about the market access secretariat and your dealings with them. I've heard some great stories, but, Mr. Rice, in the last few seconds of your testimony, you said “adequate funding”. Is that something you'd see for the MAS to address some of those problems?

[Martin Rice]

Indeed, the MAS was an innovation, I'm not sure if it was even as many as 10 years ago, to try to bridge across the different segments of the federal government. I think at one time it was felt that maybe we could have a single department of agrifood, which would bring in the responsibilities of health, CFIA, and agriculture, but that isn't the way it went.

I think they've done, in my experience, a considerable job, but as we have increased the number of countries that we export to—and I think this also maybe addresses Madame Brosseau's question—there don't seem to be the economies of scale in dealing with a lot of these issues, the technical issues. You'd think that maybe, if we doubled the number of countries we export to or doubled the number of exports, we would gain the economies of effort.

Each country has its own issues, and the market access secretariat has to deal with China today and India tomorrow, etc. When we see more progress in this area of harmonization, if we have more countries subscribing to a codex MRL, for example, maximum residue level, then we don't have to deal with each country's issues; we can deal with them through a more collective process.

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

Do you believe that some of the other countries are using.... We'll talk about one technical barrier, but I'm sure they also have some issues with Canada, with some technical barriers their industry is facing. It's just the way it works. Do you think they are using that as leverage, saying, “Sure, we'll do this, but you guys have to do that”? Do you get that sense?

[Brian Innes]

I'll comment from our previous involvement in trade negotiations and from members sharing their experiences in resolving market access issues. Certainly, there is always interplay between different governments. There is an expectation that if we, as Canada, want a government to solve a problem in another market, they are going to want a problem solved for their products coming into Canada, or potentially another interest they have. Sometimes that does enter the equation. It's not always the case.

We have a lot of cases where we have co-operative multi-country discussions. For example, in the crops sector, and generally in the livestock sector, there is a like-minded approach among countries like Australia, New Zealand, the United States, and Canada, which generally try to work together to solve these types of problems.

[Martin Rice]

I would add one quick thing. From my experience in the pork industry—and I know this is in cereals, crops, and other sectors as well—I know that we have this high reputation, deservedly so, for health and safety. We sometimes find ourselves having to show that we have done work to demonstrate that we have freedom from certain diseases. Industry often has to support its government in these discussions, when its industry counterparts suggest, “Come on, you probably aren't clean of that, are you? You're not free of that disease.” Indeed we are, and we need to be able to demonstrate it through surveys and surveillance, and not be shy to say that we are free of those things.

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

The other question I want to touch on is the Regulatory Cooperation Council. I'd like to get your opinion on that and see whether you've had any dealings with them, whether you are content, and whether you believe there could be some improvements in dealing with the RCC.

Dan, feel free to jump in. Francis, Dan—we're on a first-name basis.

[Dan Paszkowski]

Thank you.

We really don't have any experience with the Regulatory Cooperation Council, and that's largely because we participate in the World Wine Trade Group, of which the United States is a member. Together with a number of countries, we've had agreements done, acceptance of winemaking practices, and things of that nature. Given that wine is really a low-risk food product, these regulatory issues have been developed, which has taken care of many of the concerns that other sectors may face. Over the past 20 years, we've attempted to eliminate those.

It's not that we are a large exporter of wine around the world, but roughly 66% of the value of our wines goes to the United States, which represents about 97% of all the volume we export. We've been able to successfully deal with those issues through the World Wine Trade Group developing these types of agreements, the genesis of which was incorporated into an annex in the trans-Pacific partnership agreement. I believe it creates a really good working example for other agreements, including possibly the renegotiation of NAFTA, to get down there in text these types of regulatory harmonization efforts that would support the free trade of wine in the United States and other parts of the world.

[The Chair, Liberal, Pat Finnigan]

Thanks, Mr. Paszkowski.

Now we go to Mr. Longfield for six minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Mr. Chair, I'll be sharing some time with Alaina.

I want to focus on the wine a bit. The 32% number hits you: Canadians aren't drinking Canadian wine. I'm reading a book right now by Terry O'Reilly, This I Know, which says that, to increase VQA wines, the strategy was to have each person have one extra VQA bottle a year. That was a very successful marketing effort to increase the consumption of VQA wines.

This has nothing to do with trade barriers, but I'm wondering whether the external market or the internal market is where we need to be. We touched on that a bit. Would we have success in CETA? Is Europe something that the Canadian government should be focusing on? Where does the industry want us to be spending our time?

[Dan Paszkowski]

I alluded in my remarks to the 32% market share in our country as compared with Argentina, let's say, which is at almost 100%. Of that 32%, our super-premium wines are roughly 10%. Our other ones are blended wines, at typically less than $10 a bottle. We produce those because 85% of the Canadian population drinks wine under $10 per bottle.

There are opportunities in the export market. It is important to get your brand out there to get the global recognition, which will build your brand. Only about 50 wineries right now are in a position to export. The whole wine-producing world is looking at Canada because of the large growth in interest in wine. We can't turn our back on the domestic marketplace. We have to grow the domestic marketplace and slowly enter into the export market.

If we took full advantage of what the European Union had to offer—that's not to say we could sell all of our wine there—we'd be turning our back on the domestic marketplace, and all the Europeans and the Americans would be hovering to capture more shelf space from us. It's important to grow domestically and then grow into the export market. It won't work the other way around, because we'll continue to lose market share in Canada to the point where we have nothing left.

[Lloyd Longfield, Liberal, Guelph, ON]

So distribution restriction is something to focus on in terms of our report, but then the timing is one of the subtleties that we have to consider as well.

[Dan Paszkowski]

Yes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

Over to you, Alaina.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Thank you.

In terms of processes, Mr. Rice, you mentioned the importance of transparent, predictable, and science-based, with a few other adjectives in there. As we're looking for these things from our trading partners, how are we doing with regard to having processes that meet these qualifications?

[Martin Rice]

Brian, you've maybe had more experience with this.

[Brian Innes]

Sure.

I think it depends on which particular instance we're looking at. There are some great examples of where Canadian regulators have worked very well with their international counterparts around alignment. One example in the case of a trade agreement is NAFTA. We have a technical working group on pesticide regulation, for example. It's been one of the most successful examples in a trade agreement of solving non-tariff barriers by aligning our regulators. In that case, the Canadian regulator is meeting those standards that you describe.

When we look at other trade agreements, I think there's a real question in there, coming back to the earlier question about the Regulatory Cooperation Council, about how we can encourage that type of interaction between regulators in countries that are party to a trade agreement. What we've seen in the 20-plus years of NAFTA is that alignment has really prevented, to go back to Dan's comments, a lot of those trade barriers, because they've been interacting closely.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Okay.

I'm not sure if you'll be able to answer this, but I have a really specific question. It's about the peanut quota. Is that something you're familiar with, the peanut quota system in Canada and how that's divvied up?

[Brian Innes]

I am not.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Okay. It's an issue. No, it isn't a joke.

I will ask you about labelling though. We know we have several initiatives going on through Health Canada and CFIA. I've heard from some food processors that the timing of those initiatives could be costly if they are not aligned properly so that they are having to print multiple different labels over time.

Is that something you're hearing as well, and does that have any trade implications?

[Brian Innes]

That's not something our membership has been engaged in, so it's not something I can comment on.

[Alaina Lockhart, Liberal, Fundy Royal, NB]

Okay.

[The Chair, Liberal, Pat Finnigan]

Do you want one quick question, Mr. Shipley?

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

In terms of the agricultural policy framework, we spent time on that, and it carries a lot of significance. We all agreed with some of the additions, particularly those around the further processing and our industry taking it right through and including the processing. The other large part has to do with how we work with that industry to develop public trust. I think we agreed that if we don't have public trust with regard to what we produce, then some of the other issues to do with the agricultural policy framework and the business risk management lose their effect.

You made the comment that it's a big concern because now we've added a whole new dimension of three or four components to it with the same number of dollars. We have the Barton report which says that by 2030 we're going to produce, I think, a 75% increase. It's a huge issue. I think we're concerned that it's talked about, but we don't have any money or resources.

That takes me to the question. My colleague talked about the human resource requirement. The other thing we're hearing about is the expertise. That has come to us three or four times—having not only the resources but also the expertise in it. What areas of the expertise are we missing or do we need to focus on more?

Martin, Brian or Dan can answer.