Evidence of meeting #60 for Agriculture and Agri-Food in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was countries.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Leah Olson  President, Agricultural Manufacturers of Canada
Hans Kristensen  Member, Board of Directors, Canadian Pork Council
Geof Gray  Past Chair, Agricultural Manufacturers of Canada
Gary Stordy  Public Relations Manager, Canadian Pork Council
Martin Rice  Acting Executive Director, Canadian Agri-Food Trade Alliance
Dan Paszkowski  President and Chief Executive Officer, Canadian Vintners Association
Brian Innes  President, Canadian Agri-Food Trade Alliance

11:40 a.m.

Public Relations Manager, Canadian Pork Council

Gary Stordy

It's something we certainly are following. Certainly, our further processors and processors that do, essentially, processed meat and whatnot are paying close attention to that. They're in a much better position to comment directly on that than I would be. I sincerely apologize.

11:40 a.m.

Liberal

Alaina Lockhart Liberal Fundy Royal, NB

No, that's fine. Thank you.

Thank you, Mr. Chair.

11:40 a.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Ms. Lockhart.

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

11:40 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

Thank you, Mr. Chair.

I would like to thank everyone for being here today.

First, I would like to congratulate you on all the measures you are implementing to promote innovation and production in the various sectors of the industry. We know that you face considerable challenges related to overpopulation and that some countries are facing problems related to agriculture. Bravo to you for these initiatives.

Ms. Olson, during your presentation, you identified certain problems related to non-tariff practices, some of which are related to border security. You mentioned a lot of paperwork and tedious customs procedures. You mentioned certain countries in particular. Can you tell us where the main problems are in those countries?

You said it would be easier in certain locations where there are free trade agreements. Can you tell us a bit more about the locations where Canada is facing more challenges that it has to address?

11:45 a.m.

President, Agricultural Manufacturers of Canada

Leah Olson

Thank you for the question.

If I understand correctly, you are asking in which countries we experience problems. As to the international markets to which we have access and to which we can export, the problems always relate to regulations. Issues have to be managed differently from one place to another, which is problematic for us, especially if we are exporting to very small towns. We are not always able to call upon lawyers to help us understand the export rules, to Europe for example, and to tell us how to proceed.

Officials can give us information about the procedures to follow, but sometimes we find they are a bit different when we get there. We would like the Canadian government to gain a full understanding of export procedures and to simplify them. That would help us a great deal.

11:45 a.m.

Liberal

Pierre Breton Liberal Shefford, QC

Mr. Kristensen mentioned pork exports, which are very successful in Japan and China.

Which countries have non-tariff barriers applicable to pork exports?

11:45 a.m.

Public Relations Manager, Canadian Pork Council

Gary Stordy

I'd say each country has its own set of non-tariff barriers. In the global meat trade, meat will be like water; it will follow the path of least resistance. Where it starts encountering resistance, the industry has to decide whether there is enough market potential there to actually absorb some of the costs of managing or dealing with some of these non-tariff barriers.

Ractopamine is one example. It's a product that's available to use, but our industry has decided not to use it so that our industry can access the market that has placed that barrier. Would some of our members prefer it not to be there? Absolutely, but it is there, and we have to make that decision.

It comes down to understanding and knowing what markets are available along with the market conditions, and then moving forward. At CPC, we deal with that, but we also rely on expertise from within the country, as well as the experts in the country that we want to access. Also, the federal government helps us navigate some of the discussions that have to take place between governments about market access or when there is an FTA.

If we look at the EU deal, there was a very strong focus on the FTAs to deal with the tariffs. That was the focus and whatnot. There were processing companies accessing the EU and using those for their knowledge to continue.

When it comes down to the health check mark, frankly, that was something that was discovered as we started moving through the process and started dealing with the market intelligence. However, that particular issue is something that cannot be dealt with through the FDA but could be through government-to-government discussions after the fact.

Some of the issues we encounter include things like, certainly, phytosanitary issues that CFIA has to deal with and explaining the food inspection system that we have in place and how it compares to the market we want to get to. Those are the areas we need to focus on.

11:50 a.m.

Member, Board of Directors, Canadian Pork Council

Hans Kristensen

One of the other things we need to be aware of is that non-tariff trade barriers—this is a bit of a different way to look at this—can also be the result of an attitude. One of the concerns I have both as a producer and as an exporter of product is with the resurgence of protectionism in the U.S. attitude. The U.S. is looking at trade deals and trade negotiations right now in a protectionist way.

Also, my fear is that we might get to a position where we start to get away from multilateral trade deals and we get into more bilateral trade deals. I view that as a strong risk for our industry, because in a multilateral trade deal, we have multiple countries at the table, all benefiting from an agreement and agreeing to different things. That gives us access to a bloc of countries, whereas if we get to a position in which we're doing singular trade deals between countries, it becomes much more difficult for us to gain widespread market access, especially if one dominant player is seen as the hub of the deals, making deals with several different countries instead of one lateral deal.

11:50 a.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. Kristensen and Mr. Breton.

Mr. Anderson, go ahead for six minutes.

11:50 a.m.

Conservative

David Anderson Conservative Cypress Hills—Grasslands, SK

Thank you, Mr. Chair.

I want to thank our witnesses for being with us today.

Mr. Kristensen, you just mentioned the result of an attitude, and that's actually a place I want to go with a question. I want to talk a bit about promotion in terms of dealing with non-tariff trade barriers. I had a chance to go to the Tokyo food fair a few years ago, and I saw the incredible work the Canadian government and the Canadian pork industry had done in Tokyo in convincing the Japanese that we have a high-quality product. When it came to COOL and the United States, one of the reasons we had success was that we had a good section of the American industry convinced that Canadian product is good product. They wanted to work with us, and the American Meat Institute was onside.

This is perhaps more for the manufacturers, but those are both joint government and producer initiatives. Do you have anything in terms of equipment manufacturing on which the government has been working with you in order to promote our products? What are we doing to convince other countries that they need to integrate our small-line manufacturers into their agricultural scene?

I wonder if the Pork Council has something to say on that, too, because you guys have done a good job of this. Can we use promotion to push back non-tariff trade barriers? How are you doing that?

11:50 a.m.

President, Agricultural Manufacturers of Canada

Leah Olson

Thank you for doing a good job on working with the government on that one.

I think when it comes time for Canadian-made farm equipment, the farmers are the pullers. When you look at the different countries where a seeder that is made in Saskatchewan will show up, it's typically the farmers who are going to international farm shows such as Agritechnica. They'll see it and they'll say they need this on their land.

In terms of promotion, we're an industry. We're not a part of that $56 billion that we're going to push up to $75 billion by 2025. I just verified with Ag Canada that agricultural equipment products are not within that. That's okay, but our products are always sold to farmers, so if the farmers are doing a really good job and they're prosperous, we too will benefit from that.

11:50 a.m.

Conservative

David Anderson Conservative Cypress Hills—Grasslands, SK

I'm going to interrupt you for a second.

Would you suggest that be included in that?

11:50 a.m.

President, Agricultural Manufacturers of Canada

Leah Olson

I think we have a very good Canadian story in farm equipment that has not always been told. When I took over as AMC's president in 2015, I had a couple of meetings here in Ottawa and in some of the provinces. I was asked if agricultural equipment was manufactured in Canada. We operate a large farm in Saskatchewan. It shocked me, but I'm also very appreciative of the question because absolutely, it's not just farm equipment that's made here, it's some of the best equipment. We're not like the auto industry where we're playing a bit of catch-up. We set the standard in many realms. Geof has talked about the expansion of their organization.

I think the federal government does a very good job, and I hope they will continue to showcase us at places like Agritechnica. We as an organization are in the midst of doing an international business development strategy, working with Global Affairs to increase exposure and an understanding of just how great Canadian agricultural equipment is. I think we don't have the same sort of financing structures as other not-for-profits whereby we've worked a lot with government, so that's on us. I think that would be a very good job for us to be doing and working with some of the farm groups to access international farm machines.

11:55 a.m.

Conservative

David Anderson Conservative Cypress Hills—Grasslands, SK

I have another question, but if you guys have something to say....

11:55 a.m.

Member, Board of Directors, Canadian Pork Council

Hans Kristensen

Yes, really quickly, one of the things we've done very well as an industry is we've promoted our product. I like to think that my competitors in the United States and Brazil sell protein. I sell a product. I sell Canadian pork, and we've created a demand for that product in our marketplace. The wholesalers will always buy what the market demands, so we've positioned ourselves as a wholesome premium product. We raise the product and we supply the protein. We protect the environment. We uphold animal rights. We have fair labour practices. It's one of the things we do well.

The agri-marketing program has helped us and Canadian Pork International do that. That's one federal program that can help with those barriers. It's oversubscribed and underfunded, so anything we can do to help that program would be hugely beneficial as well.

11:55 a.m.

Conservative

David Anderson Conservative Cypress Hills—Grasslands, SK

Mr. Gray, you mentioned Brazil, South America, being a huge market. You said there were a variety of impediments. I'm wondering if you could cover a couple more of those. Ms. Olson mentioned financing being one of them. Is that the main one? Are there other things? If so, can you give us some suggestions for recommendations for our report on how we might recommend to the government that they deal with that?

We want to be able to open markets. We see what Europe has done with unnecessary over-regulation. We want to be able to provide some good recommendations. Do you have any suggestions for us?

11:55 a.m.

Past Chair, Agricultural Manufacturers of Canada

Geof Gray

Everybody understands the difference between China, India, and Brazil. They're the three biggest agricultural sectors, but China and India are all small farms. North American agricultural manufacturers can't compete with Chinese and Indian small manufacturers working one- and two-acre plots. So Brazil and Argentina are the next biggest markets, as is Russia where there are large farms.

Brazil is the largest sector. That's where our big customers are, the big farmers. You can't get into the country without being a manufacturer there. The tariffs are over 35%.

11:55 a.m.

Conservative

David Anderson Conservative Cypress Hills—Grasslands, SK

Are those primarily tariff barriers that are keeping you out, or are there non-tariff issues as well?

11:55 a.m.

Past Chair, Agricultural Manufacturers of Canada

Geof Gray

There are all kinds of attitudes. Your container will get held up. You just can't. No one even tries anymore. You cannot get into the country without.... Basically it's about a $10-million price tag to get into the country. You have to set up a partnership with a local manufacturer. Unless you're John Deere or Case, you stay out of it. You have to have $1 billion in sales.

11:55 a.m.

Conservative

David Anderson Conservative Cypress Hills—Grasslands, SK

I've seen the corruption that's working there too.

11:55 a.m.

Liberal

The Chair Liberal Pat Finnigan

This is going to end our portion of this panel.

Everybody will agree that you did a fantastic job in being concise and precise in expressing your views. I want to thank all of you, Mr. Gray, Ms. Olson, Mr. Kristensen, and Mr. Stordy.

We'll break to change panels.

12:05 p.m.

Liberal

The Chair Liberal Pat Finnigan

We're going to get the second part of our committee meeting going.

I would like to welcome our witnesses. With us this afternoon, from the Canadian Agri-Food Trade Alliance, we have Mr. Brian Innes. We also have Mr. Martin Rice, the acting executive director. From the Canadian Vintners Association, we have Mr. Dan Paszkowski.

Please start with an opening statement for up to 10 minutes.

12:05 p.m.

Martin Rice Acting Executive Director, Canadian Agri-Food Trade Alliance

Thank you, committee.

I'm very pleased today to be joined by our president, Brian Innes. We're here to address the subject of non-tariff import barriers facing our agriculture and agrifood exporters and how those are linked to free trade agreements.

I would like to begin by commending the committee for undertaking this study. It is a highly relevant topic, given the current focus on trade negotiations.

The existence of an agreement by itself will not ensure the desired increase in trade if the reduction in tariffs reveals technical and other non-tariff measures that prevent exporters from taking advantage of the new opportunities that the FTA was expected to provide.

I'll say a word on CAFTA. We are a coalition of organizations that have a major stake in international trade and seek a more open and fair international trading environment for Canada's agriculture and agrifood exports. Our members represent producers, processors, and exporters from the beef, pork, meat, grains, cereals, pulses, soybeans, canola, as well as the sugar and malt industries.

Together our members account for over 80% of Canada's agriculture and agrifood exports, which last year exceeded $55 billion, and support hundreds of thousands of jobs in communities across the country. As has already been noted this morning, the agrifood sector has been recognized for its potential for growth in the 2017 federal budget, being designated as a supercluster with a target of $75 billion in exports by 2025.

Competitive access to international markets is critical for our sector as 90% of Canadian farmers depend on world markets to sustain their livelihoods. We export over half of the agrifood products we grow, which makes Canada one of the most trade-dependent agricultural sectors in the world.

There is a widespread perception within the agrifood export community that over the past couple of decades, a period of significant tariff reductions through trade agreements, WTO, and regional deals, there has been an increased incidence of non-tariff measures. There is evidence to support this notion. The number of notifications under the WTO agreement on technical barriers to trade more than doubled in the past 20 years. Perhaps more telling is the number of new trade concerns raised with the WTO related to the technical barriers to trade agreement, which more than tripled from the years immediately following the implementation of the last WTO Uruguay round to the most recent period for which statistics are available.

There has been a substantial amount of economic analysis on the cost implications of non-tariff measures with estimates of the sum effect of non-tariff measures for our agrifood exporters being the equivalent of a tariff of 25% to 30% in Asia and 30% to 40% for the European market.

The committee has already heard from CAFTA members several examples of non-tariff barriers and their impact on export access. I won't repeat them here, but Canadian agrifood exporters have experience with virtually every category of non-tariff measures, which include restrictions on the use of pathogen reduction treatments, restrictions on the importation of agricultural products benefiting from biotechnologies, differences between the exporting and importing countries in maximum residue tolerances, and lengthy import approval measures of new types of plants and animal feed ingredients.

The increase in non-tariff measures and how they take on importance as potential barriers to our agrifood exports has occurred in different ways. One of these is the increasing importance people all around the world place on their food, not only on its safety, but increasingly, how it is produced, the result of which is a greater number and complexity of regulatory requirements that our agrifood exporters must adapt to in order to take advantage of the increased commercial market opportunities forthcoming from a newly implemented free trade agreement.

A second situation we are experiencing is where non-tariff measures have been in place in the importing country for some time, but whose existence or significance may not become apparent until tariffs or other border measures in that country are eliminated or reduced through a free trade agreement. An example of this would be European Union meat inspection requirements such as anti-bacterial treatments that differ from those in Canada.

Most countries Canada exports to recognize our system as being at least equivalent to their own such that a Canadian plant approved by the Canadian Food Inspection Agency is automatically accepted for imports to those countries. The EU, however, does not recognize equivalency of results of inspection systems as a basis for allowing imports. Instead, the Canadian industry is expected to adjust its operating procedures to conform to EU regulatory requirements before it can take advantage of the new market opportunities created under CETA.

A third scenario for non-tariff barriers, which can be the most disruptive for our members as well as for our government, are those that appear without warning and often with little or no scientific rationale. They are usually in response to internal pressures, such as a domestic industry seeking relief from import competition or to non-science-based movements protesting innovations in food production. This is the category of non-tariff barriers which seems to be occurring more often as tariff protection declines following a trade agreement, and when there is a domestic industry accustomed to protection from imports.

We should point out that not all regulations and technical measures act to restrict trade. Many of them, when properly designed and implemented, address legitimate health and safety objectives. These generate consumer confidence and support the growth of the markets into which we sell our products and for which we have obtained preferential access through free trade agreements. In addition, Canada's internationally recognized superior plant and animal health status can provide our agrifood exporters in some export markets with competitive advantages over other competitors, even those with their own free trade agreements. This is as a result of freedom in our own country from certain animal and plant diseases.

Of the scenarios described earlier, the first, that of increasing public expectations and demands, exists in Canada as well as most other jurisdictions. Our main concern here is that any new regulations and standards are no more trade discriminatory than is necessary to satisfy the regulatory objective, and thus do not risk provoking a trade challenge under either a free trade agreement or through the WTO.

Those barriers that are established with little or no consultation, or that do not have a rigorous scientific basis are, in our view, the most detrimental, as they often occur after exporters and their import customers have made substantial investments in developing new markets. The experience of losses from often highly perishable food products being held at the border due to the imposition of a non-tariff barrier can be severe enough that exporters lose interest in the market, viewing it as too risky such that the expected gains from a trade agreement are forgone.

We offer the following to the committee for its consideration in respect of non-tariff barriers and free trade agreements.

There need to be undertakings in the trade agreements that commit each of the parties to having in place science-based, transparent, predictable, and timely regulatory approval processes.

Similarly, the WTO-recognized international standard setting bodies, including Codex Alimentarius, the International Plant Protection Convention, and the OIE, the World Organisation for Animal Health, must stick to evidence-based processes such as those of establishing maximum residue limits and not be allowed to become politicized in their decision-making.

We need to start early in a free trade negotiation to clarify the regulatory requirements for Canadian agrifood export products of interest. This requires co-operation between industry and government involving the expertise and intelligence available from Canadian embassy staff, regulatory and trade policy officials in government, and industry associations and their members. Working groups such as those now in place for implementation of CETA need to be established at the earliest opportunity.

Another suggestion is that opportunities for co-operation between trade partners in regulatory standards and approval processes should be encouraged within our FTAs. Harmonization of standards is an example of that. This can also include approvals of animal health products and pest control tolerances.

Human resource requirements of our regulatory and policy agencies increase with each new trade agreement given differences between countries as well as the ever-increasing expectations placed on food producers in virtually all countries. As our dependence on trade increases, Canada must recognize that sufficient investment in staffing and expertise in our regulatory, policy, and diplomatic personnel is essential to take advantage of trade agreements.

More specifically, we would stress the need for adequate funding for several different components of the federal government with key roles in achieving market access for agrifood exports, including the market access secretariat, our diplomatic posts, and departments and agencies including Agriculture and Agri-Food Canada, the Canadian Food Inspection Agency, Global Affairs Canada, and Health Canada.

Thank you for this opportunity. We look forward to your questions.

12:15 p.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. Rice.

Now, from the Canadian Vintners Association, we have Mr. Paszkowski, for up to 10 minutes.

12:15 p.m.

Dan Paszkowski President and Chief Executive Officer, Canadian Vintners Association

Thank you, Mr. Chair. Good afternoon, everybody. I'm sure you'd enjoy a nice glass of wine with the meal you're having right now.