Agriculture Committee on April 11th, 2016

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

You hadn't. Let's go back to you.

Mr. Shipley is going to take it first. I do apologize. I didn't communicate that well.

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

Thank you so much for coming out.

One of the things Canada is clearly recognized for around the world is the standards we set. I believe that is why Canada is such a magnet in terms of negotiations for trade. We set the standards, not only in terms of quality, but in terms of food safety. I don't ever want to leave the impression that the trade agreements don't deal with food safety issues; that any trade agreement does not lower any health standard, either for food that we have in Canada, or for food that would come into Canada. Canada has one of the highest food standards in the world. Through the Ministry of Health, through PMRA and CFIA, those standards are maintained and, in fact, many countries have to enhance some of their production to meet the standards for Canada. It wasn't a hit at you; it's just that we need to make sure that somebody else doesn't read these minutes at some point and think, well, my God, our standards aren't important, when they are.

Second, as I mentioned, Canada is a magnet for trade, and that is because of the things we've talked about. When we had agriculture committee meetings prior to the previous government, we met with many of the commodity groups, agriculture organizations, and the industry. Once they talked about their issues, it was very hard to find anyone who would not be supportive. Obviously, supply management always seems to float to the top of every agreement, at least it seems to in the media. It seems to me that those countries that have walked away from supply management have changed their focus on agriculture. Supply management, in terms of its production and trade, is really about the producer providing to the consumer the best quality product at a fair price, and making sure that they have a strong industry within their country. What I am finding in some of the other countries is that now the farmer gets less to produce, the consumer pays more, and the processor gets more. I am not sure that's the article that we want to follow in terms of supply management in Canada.

I was wondering if you could help a little bit. When we talk about pork—as I know it's with beef and with the other ones—can you explain the benefits of the tariff rate quota? Not just in terms of the tariff rate but in terms of the quota, what benefit does that have, or is it a disadvantage?

[Frédéric Seppey]

May I seek a clarification?

When you're talking about a tariff rate quota for beef, do you have a specific market in mind?

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

You mentioned Japan, and you were talking about pork, so let's deal with that one right now.

[Frédéric Seppey]

In Japan, we have a number of products where the market access improvement will take the form of tariff rate quotas. This is the case in grains, for example. I was mentioning food-grade wheat and barley. With respect to beef and pork, in terms of the market access, we'll not proceed within tariff rate quotas. It will proceed through a fairly complex system because the current tariff structure of Japan on pork, for example, is very complex. Suffice to say that they have a different tariff depending on the value of the products that are coming in. They have what they call a gate price system.

We will not have, in terms of the pork, more flexibility within this gate price system. There will be a reduction of these tariffs under the gate price. With respect to beef, the system is slightly less complicated, but we would have a reduction of the tariff over time. It will not go to zero; it will go down to 9% over a number of years.

I just want to clarify that with respect to beef and pork, the market access that we negotiated in Japan will not be subject to a tariff rate quota, and therefore it will be a reduction of tariffs, and all the TPP countries will be treated the same way.

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

In terms of 2012 to 2015, there was a lot of discussion. We're talking about agriculture across the country, in the vast discussion around the TPP. I know, Mr. Landreville, you were the regional negotiator, or that's part of what your mandate is, I read. All the provinces were engaged. Were they very much engaged in the discussions in the TPP?

[Frédéric Seppey]

Agriculture is an area of shared jurisdiction, and we established a long time ago, in the context of the negotiations on NAFTA and the World Trade Organization back in the early 1990s, a mechanism called the agricultural trade policy federal-provincial trade groups.

After each of the negotiating rounds we had conversations with the provinces. Each province had its own provincial trade representative who was the contact point to express their views. Often, when we were negotiating abroad, we had delegations of provincial representatives that were not at the negotiating table, but were nearby so that if there was an issue of specific importance to a province, we could consult immediately with them, and they could ask questions directly as the negotiations were proceeding.

We had fairly close co-operation with the provincial governments.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Shipley and Mr. Seppey.

Mr. Breton, you have six minutes.

[Pierre Breton, Liberal, Shefford, QC]

Thank you, Mr. Chair.

Thank you for being here today, gentlemen. Your expertise will certainly help us make progress on such an important issue to the country.

In my riding of Shefford, farming is clearly the dominant industry. It is home to many dairy producers, and they are concerned about the market openings for dairy product imports from signatory countries.

By the way, the entry of milk proteins from the U.S. has increased fivefold in the past five years, under the previous government's watch.

What efforts have been made over the past five years to, at the very least, mitigate the impact of those milk proteins coming in from the U.S.?

I know that isn't necessarily part of the negotiations you took part in, but surely, you must have some insight into the matter.

[Frédéric Seppey]

Thank you for your question.

Under NAFTA, the product in question is allowed into Canada duty-free provided that it meets some very strict criteria, mainly, a milk protein content of 85% or more by weight, calculated on the dry matter. That's an international obligation under NAFTA.

The product you are referring to, which often meets the requirement of having a milk protein content of 85% or more, can be imported into Canada without restriction. It's covered by NAFTA. There are no restrictions on that, and therefore, there really isn't anything that can be done about it. In our discussions with dairy sector representatives, especially those in Quebec, it was evident to us that they were very clear on that point.

But the issue that gives rise to numerous concerns is compliance with the cheese compositional standards. That's a separate issue. The standards codify the proportional content of the ingredients that can be used in cheesemaking. The sector's concerns in that regard are well-understood, as the Minister of Agriculture and Agri-Food mentioned. The standards were never designed to allow the unrestricted use of, what is known as, diafiltered milk in cheese. Its use is allowed but in limited quantities.

The government is working to make sure the rules are clear to everyone.

[Pierre Breton, Liberal, Shefford, QC]

Very well. Thank you.

You took part in the TPP negotiations. Can you tell us which agricultural and agri-food sectors are most likely to benefit under the deal?

[Frédéric Seppey]

As I mentioned earlier, we can consider how Canada's current export sectors will benefit from the TPP, but we also need to look ahead. That's why our negotiations target the long term.

In the short term, we think our main exporting sectors will benefit from market access openings in Asian countries. One example is the canola sector, and the Prairies are home to very significant canola production. Canada is a very competitive exporter, internationally speaking. Our beef and pork sectors are also well-positioned.

Some sectors are generally not too vulnerable as regards other countries. They will be able to benefit from an elimination of tariffs immediately or in the very short term. Processed products come to mind, fruits, vegetables, and maple products. As Mr. Shipley mentioned, those sectors are all well-placed, given Canada's reputation when it comes to food safety, a powerful tool in promoting our exports. All of these sectors should be able to benefit from the market access openings.

Other sectors that export less today may eventually be among the country's most competitive exporters. That's why I talked about the market access openings negotiated for dairy products in Japan. Our sector isn't that competitive today, but cheese production, particularly specialty cheese production, is on the rise in Canada. In the medium and long terms, Canada can expect to increase its exports of high-quality cheeses to markets like Japan's.

[Pierre Breton, Liberal, Shefford, QC]

Thank you.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Breton.

Now again, Mr. Shipley, for five minutes.

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

I want to go back in terms of the negotiations and the involvement of the provinces. I was a member at the time of the committee studying CETA, on international trade, and also on agriculture. We wanted significant input. In fact, during CETA that was part of the template that had to happen. Are there any provinces in Canada that are opposing TPP at this time?

[Frédéric Seppey]

I was recently invited by a number of provincial governments to participate in their TPP consultations. I can say that, within my area of jurisdiction in agriculture and agrifood trade, we have not heard from any government an expression of concern or opposition.

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

It's significant to have the ability to negotiate a compensation package for supply management that will make a difference in supply management. This pertains to all areas, whether it's dairy or the feather industry. We want to make sure that we encourage that discussion.

When we walk away from science, when we get political override that persuades us, I get concerned. We've had that happen in certain provinces, certainly in Ontario, in terms of some of the neonic issues, without having the due diligence of all the science being included. I want to raise this as an issue. It doesn't matter whether we're talking about the growing of crops or the product used to grow the crops that we import. We need to make sure that science-based evidence is used and that political push gets left out of it. This is the way to support our agriculture industry. My riding of Lambton—Kent—Middlesex in Ontario is all agriculture and all small business. Many of those small businesses rely on the health of agriculture. The diversity within my riding covers all aspects of agriculture. I raise this as a point of discussion, because it is so important. It's one thing to say it, but it's another thing to make sure that we act on it and use it as our benchmark.

Mr. Warkentin, you must have the last say.

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

I appreciate that, thank you.

We appreciate the work that you gentlemen have done, as well as the team. It's an incredible deal that has taken a lot of time and effort to undertake. It's my view, and I think the view of many Canadians, that it's a very good deal.

I've been meeting with stakeholders across the country. Today I met with the Prairie Oat Growers Association. They're excited about the prospect of additional market opportunities, especially in the Asian market, which is an important market for Canadian agriculture.

Can you talk a little bit about access to the Asian market through the TPP and how this is a game-changer for Canadian agriculture?

[Frédéric Seppey]

Thank you.

If you allow me, I would like Mr. Landreville to answer that. He negotiated most of the market access in Asian countries.

[Denis Landreville, Lead Negotiator, Regional Agreements, Trade Negotiations Division, Trade Agreements and Negotiations Directorate, Department of Agriculture and Agri-Food]

The TPP is an opportunity for us to broaden our exposure and access to the Asian market. Vietnam, Malaysia, and Japan are three of the TPP members that we do not currently have trade agreements with, and this is an opportunity for us to gain a preferential access to those key growing markets. These are markets that have significant agricultural tariffs, and this is an opportunity to lower those tariffs for a number of key products. Japan is a significant and important agricultural export market for Canada, and so having preferential access relative to non-TPP members is important.

Some countries currently have trade agreements with Japan. Mexico, Chile, and Australia recently negotiated agreements. We heard throughout the negotiations that it was important for us to be on an even playing field in those markets, relative to TPP countries, and to ensure that we don't lose ground to other exporters that already have trade agreements with those key markets.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Landreville, and thank you, Mr. Warkentin.

Ms. Brosseau, you may go ahead for three minutes.

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

Thank you, Mr. Chair.

I have some questions about the pork industry.

My riding is quite active when it comes to pork production. When the trade deal with the EU was announced, pork producers thought they would be able to export ham and other pork products. But questions emerged around the differences in Canadian and European practices, in terms of gestation crates and genetically engineered growth drugs.

Could you comment on what Canadian pork producers will gain from market access openings? What challenges will they face in taking advantages of those openings?

[Frédéric Seppey]

Are you referring mainly to the trade agreement with the EU?

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

I'm referring to both.

That will probably take longer.

[Frédéric Seppey]

I will talk about the European Union, and Mr. Landreville could talk about the Trans-Pacific Partnership countries, as he spent a lot of time negotiating market access for the pork industry.

When it comes to the agreement with the European Union, we negotiated market access for approximately 81,000 tonnes of frozen or fresh pork, which is considerable. However, exportation to the European Union presents some challenges. As I was saying earlier, Denmark is one of the most competitive pork producers.

As you mentioned, the pork industry consists of a certain number of players. One example is duBreton, which is a key certified stakeholder in the European Union. So that company already has some ideas on how to take advantage of the situation.

Our responsibility was to negotiate market access, and that is a good start. However, I can assure you that constant efforts are being made by veterinarians at the Canadian Food Inspection Agency, our representatives in Brussels and in European countries, as well as the trade commissioners of the Department of Global Affairs. We are trying to ensure that, when our companies comply with existing measures, those measures are also respected by European health authorities, which should recognize that our exporters are following the rules. Science is evolving, and Canadian pork producers are always using new techniques, be it in terms of carcass decontamination or other considerations.

It is important for us to ensure that science and regulations in Europe are keeping pace with the changes in the industry. We are working closely with them to obtain recognition and import conditions reflecting the reality of production in Canada, as well as a high standard in food safety, which is so important for Canadian exports. So that covers the European aspect.