Evidence of meeting #7 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 tpp.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Frédéric Seppey  Chief Agriculture Negotiator, Trade Agreements and Negotiations, Market and Industry Services Branch, Department of Agriculture and Agri-Food
Denis Landreville  Lead Negotiator, Regional Agreements, Trade Negotiations Division, Trade Agreements and Negotiations Directorate, Department of Agriculture and Agri-Food
Clerk of the Committee  Mr. David Chandonnet
Frédéric Forge  Committee Researcher

3:30 p.m.

Liberal

The Chair Liberal Pat Finnigan

Welcome everyone.

I hope you spent a productive couple of weeks in your ridings.

Today we have, for the first hour, people from Agriculture Canada: Monsieur Frédéric Seppey and Monsieur Denis Landreville. In the second hour, we'll move on to discuss the future business of the committee.

Without further ado, I will now turn the floor over to our two witnesses for their opening statement.

You have between 10 and 12 minutes for your presentation. There is no need to worry. When you are finished, we will move into questions and answers.

Mr. Seppey, please go ahead.

3:30 p.m.

Frédéric Seppey Chief Agriculture Negotiator, Trade Agreements and Negotiations, Market and Industry Services Branch, Department of Agriculture and Agri-Food

Thank you, Mr. Chair.

Good afternoon everyone.

I am honoured to be with you this afternoon to discuss the impacts of the Trans-Pacific Partnership, or TPP, on Canada's agriculture and agri-food sector. My name is Frédéric Seppey, lead agriculture negotiator and assistant deputy minister at Agriculture and Agri-Food Canada. With me today is Denis Landreville, lead negotiator for regional agreements at Agriculture and Agri-Food Canada.

As you are no doubt aware, the TPP is an agreement negotiated between 12 countries bordering the Pacific Ocean, representing nearly 40% of the world's gross domestic product and a market of more than 800 million consumers. It brings together countries as diverse as the United States and Japan, the first and third world economic powers, respectively, and developing countries with strong growth such as Vietnam and Malaysia. Other participants in the TPP are Australia, New Zealand, Singapore, Chile, Peru, Mexico and Brunei.

The TPP aims to extend its geographical coverage beyond just these 12 initial signatories, given the interest by certain countries to join.

Let me turn to the impact of the TPP on the Canadian agriculture sector.

Broadly speaking, on market access, a TPP could benefit the agriculture and agrifood sector in three ways. First, it would increase market access in TPP countries, whether we already have a free trade agreement or not. Not only would Canadian exports be on a level playing field with other TPP competitors for products of interest, such as beef, pork, grains, or oilseeds, but they would also have preferential access to TPP markets versus non-TPP members, notably the European Union.

Second, being part of a TPP would consolidate our agriculture and agrifood sector's integration into the North American food supply chain, as well as offer enhanced opportunities to tap into Asia's supply chain. We heard also from industry stakeholders that not being part of a TPP could weaken Canada's attractiveness as an input source for products supplying TPP markets. For example, exports of certain Canadian products to the United States, such as vegetable oils that are used in further processed products exported by the United States, may be put at risk if Canada is not part of a TPP, as the use of such inputs would render those further processed goods ineligible for the TPP tariff preference.

Finally, being part of the TPP could position Canada very well in accessing new markets in countries that have expressed an interest in joining the TPP later.

I will now turn to specific market access openings for agriculture. Overall, we can say that the vast majority of agriculture and agrifood products of export interest to Canada in TPP markets, other than Japan, would be free of duty when the TPP is fully implemented. This would be the case for beef, pork, canola oil, wheat, barley, pulses, and processed products.

In the case of Japan, for products of export interest, Canada would either be on a level playing field with other TPP competitors or have preferential access through tariff rate quotas. Tariff rate quotas are set quantities of a good that are allowed to enter a market at either nil or lower tariffs. If I just take the example of food wheat, we have secured from Japan a 53,000-tonne tariff rate quota exclusively for Canada. In the case of malt, we have negotiated an 89,000-tonne tariff rate quota. For other products, such as beef and pork, feed wheat and feed barley, pulses and oilseed products, all TPP parties would be treated equally in Japan.

In a free trade agreement, there's more than just market access through tariffs and tariff rate quotas. If we now look beyond the market access elements of the TPP agreement, several other chapters and obligations would positively impact the Canadian agriculture and agrifood sector.

For example, in regard to traded biotechnology products, the parties have affirmed the importance of transparency in each party's science-based approval processes for biotechnology products. We have also agreed to the prohibition on use of export subsidies in TPP markets. In regard to rules of origin—the rules that determine which products are deemed TPP-originating and can, therefore, benefit from TPP preferences—the rules for agriculture and agrifood goods reflect Canadian production realities and methods and minimize administrative burden.

For example, Canadian food and beverage processors would be able to build on existing North American value chains as well as expand the sourcing of their agricultural inputs from a broader range of suppliers. Just to give you an example, chocolate manufacturers, by using cocoa beans from Peru or Mexico, would benefit from TPP preferences.

Similarly, TPP members would also be able to source Canadian agricultural products as input into products that they will further process. For example, using Canadian adzuki beans for processed food products such as bean paste would benefit from preferential TPP trade if exported from the United States to Japan.

With respect to sanitary and phytosanitary measures, TPP obligations build upon the WTO rules where each party maintains the right to take measures necessary to protect against the risk to food safety or animal or plant life or health while ensuring that market access gains are not undermined by unnecessary or unjustified trade restrictions.

Through rules contained in other parts of the agreement, the TPP would also allow for the protection of icewine standards that Canada uses, and the promotion of transparent and fair administrative systems for the protection of geographical indications consistent with our potential commitments under a Canada-European Union free trade agreement.

I will now discuss the impact of the TPP on the productions under supply management.

The first thing to note is that, should the TPP be implemented, the three pillars of supply management—production control, import control, and price control—will be maintained. Throughout the negotiations, we fought hard to limit the impact of new negotiated access to the Canadian market on the supply management sectors.

In the end, these openings will translate into new access to the gradual implementation of tariff quotas spread out over a period of up to 19 years. By year 5 of the implementation of the TPP, the total access volume would represent a low portion of Canada's current annual production: 3.25% for dairy products; 2.3% for eggs; 2.1% for chicken; 2% for turkey; and 1.5% for broiler hatching eggs.

Note that Canada negotiated mitigation terms for these tariff rate quotas, such as access conditions directing volumes of milk, butter, yogourt, and cheese to specific market segments.

Throughout the TPP negotiations, the Canadian negotiating team collaborated closely with representatives of the supply management sectors. The representatives were kept informed, as much as possible, of developments that could affect their respective sectors. Since the conclusion of the agreement, we have held intensive consultations with them to consider the implementation details and supporting measures to put in place if the TPP is ratified.

Although Canada had to grant certain access for its most sensitive agricultural sectors, so did the other countries. Therefore, new market commitments for Canadian dairy products have been negotiated. Thus, in the United States, quotas have been allocated to Canada for cream, yogourt, butter, cheese, condensed milk, milk powder, and other dairy products, as well as a tariff elimination spread out over 10 years for specialty cheeses.

In Japan, our exporters will ultimately benefit from the elimination or reduction of tariffs for certain dairy products, particularly cheeses.

Lastly, in Mexico, new quotas have been negotiated for milk and cream, milk powder, condensed milk, butter, cheese, and other dairy products.

For the next steps, according to the terms of the agreement, the countries have two years to complete their own ratification process. For Canada, the government has committed to consulting the Canadian population, notably through a public and open debate in Parliament about the TPP before considering ratifying it.

Since 2012, the Canadian negotiation team have consulted closely with the provinces and territories, as well as a vast network of sector stakeholders and industry representatives, covering all agricultural interests. We continue these engagement activities.

Last November, Agriculture and Agri-Food Canada expanded its consultations as part of the federal government's engagement to consult with Canadians about the TPP. The department's consultation efforts are led either by the Minister of Agriculture and Agri-Food, or by me and my team.

Reactions to date have been positive from the exporting agricultural and agri-food sectors; as for the supply management sectors, they support the agreement, while highlighting the importance of compensation if the TPP is ratified.

This concludes my presentation, Mr. Chair.

Thank you for your time, and it will be a pleasure to answer any questions you may have. The sector representatives joining me today will help answer questions, if necessary.

Thank you.

3:40 p.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. Seppey.

Mr. Landreville, did you have anything to add? No? Okay.

We're going to start with a question, and the first one will go to Monsieur Gourde.

You have six minutes.

April 11th, 2016 / 3:40 p.m.

Conservative

Jacques Gourde Conservative Lévis—Lotbinière, QC

Thank you, Mr. Chair.

I want to thank both witnesses for being here today. I'm pleased to meet with people who have worked so hard on our country's behalf—negotiating the agreement certainly was a delicate dance. To see our trading partners recognize supply management, both under the TPP and the agreement with Europe, leads me to believe that other countries genuinely recognize the efforts of our farmers to protect their production.

Given that recognition, can Canada and its producers draw some peace of mind about the future of supply management?

3:40 p.m.

Chief Agriculture Negotiator, Trade Agreements and Negotiations, Market and Industry Services Branch, Department of Agriculture and Agri-Food

Frédéric Seppey

Thank you for your question.

I think one of the challenges of the TPP negotiations had to do with the makeup of the participating countries, three in particular that are major dairy exporters—Australia, New Zealand, and the United States. We were in good company in terms of other countries having concerns about their own dairy productions. Japan and the U.S. share those concerns.

Looking beyond the TPP, we see that the WTO Doha talks have moved at a snail's pace since 2008. When we consider the fact that we have negotiated a free trade agreement with the European Union that includes market access concessions, in addition to the TPP, it is clear that Canada has a very active free trade agenda. Canada has free trade agreements with the world's leading dairy product exporters.

When we consider dairy products, although there's no guarantee that other countries won't express an interest in gaining greater access to the Canadian market in the future, the TPP negotiations do show that we have been able to preserve our supply management system and that we should be able to ensure full protection going forward, as well.

The same dynamic applies to the poultry sector, as far as chicken, turkey, and eggs are concerned. The U.S. is one of the world's most competitive poultry-producing markets. There again, under the TPP agreement, not only were we able to negotiate market access conditions that kept supply management intact, but we were also able to achieve mitigation terms that we believe will make it possible for us to work with industry towards a very bright future.

3:45 p.m.

Conservative

Jacques Gourde Conservative Lévis—Lotbinière, QC

The Minister of Agriculture and Agri-Food had planned to give supply-managed producers some compensation. For example, 3.25% of the country's dairy market could be handed over to other countries. Nowhere in the government's budget, however, do we see the amounts that Minister Ritz had announced before and during the election campaign.

Is that money in doubt, or was it simply not a front and centre issue?

3:45 p.m.

Chief Agriculture Negotiator, Trade Agreements and Negotiations, Market and Industry Services Branch, Department of Agriculture and Agri-Food

Frédéric Seppey

You will appreciate that your question has to do with the government's policy direction. As a public servant, then, it's hard for me to answer.

What I can tell you, however, is that the government strongly supports supply management, as you know. As I mentioned, since the agreement was concluded, we have been in intensive talks with representatives of supply management sectors to hear their views on the TPP's potential impact on them, as well as their thoughts on supporting measures and other terms they would like to see in place. All of that input is extremely valuable when it comes to the public service's role of providing policy advice to decision-makers.

3:45 p.m.

Conservative

Jacques Gourde Conservative Lévis—Lotbinière, QC

I'd like to talk about Canadian market access and the percentages of imported goods allowable. Who will be able to obtain and distribute those goods? There may be many processors, importers, and exporters wanting to buy those products and distribute them in Canada.

It's a fact that in Canada right now, some processors think it's perfectly acceptable not to follow the rules and find all kinds of ways to bypass them. Naturally, they will want to take advantage of the deal and the profits to be had. I don't think companies breaking the rules deserve to be first on the list.

Do you have a game plan when it comes to the import quantities coming into Canada from abroad for distribution in the Canadian market?

3:45 p.m.

Chief Agriculture Negotiator, Trade Agreements and Negotiations, Market and Industry Services Branch, Department of Agriculture and Agri-Food

Frédéric Seppey

I'd like to begin by clarifying that a tariff rate quota does not mean we have to import goods. It allows Canadian importers to import products duty-free in limited quantities. For example, in year 5 of the TPP, the volume of fluid milk will reach 50,000 metric tons.

In order to be allowed to import these products, import permits will indeed be required. Under the Export and Import Permits Act, the Minister of International Trade sets the terms and conditions for allocating import permits. She is the one who determines how the tariff rate quotas are administered. A whole division of Global Affairs Canada is in charge of managing that aspect.

Generally speaking, the minister's decisions regarding the terms and conditions governing the allocation of permits are based on the advice provided to her by public servants, who consult extensively with all the interested parties. For instance, in the dairy sector, they consult with the following stakeholders: dairy producers and processors, food processors, and any retailer or party that might have an interest in obtaining an import duty.

The government intends to conduct the most extensive consultations possible. They will be led by Global Affairs Canada and will take place well before the Trans-Pacific Partnership agreement potentially comes into effect. The consultation framework has yet to be determined. The Minister of International Trade will consult with her cabinet colleagues, the Minister of Agriculture and Agri-Food, in particular, in order to determine the best way to meet Canadians' agricultural and agri-food interests.

3:50 p.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. Seppey and Mr. Gourde.

Mr. Peschisolido.

3:50 p.m.

Liberal

Joe Peschisolido Liberal Steveston—Richmond East, BC

Mr. Seppey and Mr. Landreville, welcome. Mr. Seppey, thank you for your comments.

My riding is Steveston—Richmond East, and I have a whole lot of farmers in the east part of the riding, just like myself, who are trying to figure stuff out. They have questions. They're excited about certain parts of what they read and hear about the TPP, but they also have some concerns.

I have three groupings of farmers. First, I have dairy, chicken, turkey, and hen farmers. You touched on what will happen. Thank you for that, but I won't get into it now.

I want to discuss the opportunities. My riding is in the Metro Vancouver area. Are there opportunities in the Japanese market? Will this TPP open up opportunities in the American market for eggs, milk, turkey, and chicken?

3:50 p.m.

Chief Agriculture Negotiator, Trade Agreements and Negotiations, Market and Industry Services Branch, Department of Agriculture and Agri-Food

Frédéric Seppey

I don't know the exact limits of your riding but I'll describe what—

3:50 p.m.

Liberal

Joe Peschisolido Liberal Steveston—Richmond East, BC

It's East Richmond. Steveston has other types of farming but it doesn't have what we talked about.

3:50 p.m.

Chief Agriculture Negotiator, Trade Agreements and Negotiations, Market and Industry Services Branch, Department of Agriculture and Agri-Food

Frédéric Seppey

When we think of B.C., for example, we think a lot about the fruit sector and horticulture, and as I indicated, the default in the TPP would be in other markets that, upon either entering into force or after a short period of time, there would be full elimination of tariffs, complete access for many products. To give you an illustration there's a tariff of 15% for fresh apples in Vietnam and that can really injure the trade. The 15% tariff will be eliminated within two years of the entry into force. For fresh and frozen cherries, blueberries, cranberries, it's a tariff of 30%, which will be eliminated within two years.

In markets like Vietnam or Malaysia, where you have high tariffs, this is the type of opportunity you would have.

In terms of the other sectors that you describe, in many Asian countries you have a change in the pattern of consumption. When we negotiate your agreement, we negotiate for the long term. We may not have an opportunity to export right now but what about in 10, 15, 20 years? Recently we marked the 20th anniversary of NAFTA and we still build from that advantage.

In the case of the TPP, for example in dairy, over a period of 13 years from the entry into force, Japan will eliminate all its tariffs on most of the cheeses, including many of the cheeses we're producing in Canada from cheddar to the most refined artisanal cheeses, the production of which is expanding fast.

These are illustrations of market access opportunities beyond, of course, what I would call our landmark export commodities such as beef, pork, grain, and oilseeds.

3:50 p.m.

Liberal

Joe Peschisolido Liberal Steveston—Richmond East, BC

One other fruit product that is very big, not only in my riding but all across Metro Vancouver, is berries: blueberries and cranberries. Ocean Spray is based in East Richmond. I tease other MPs that I think the best blueberries come from East Richmond and others quibble with that.

3:50 p.m.

Voices

Oh, oh!

3:50 p.m.

Liberal

Joe Peschisolido Liberal Steveston—Richmond East, BC

We also have a fruit sector, blueberry wine, which some people say is fruit and some others say is more than just fruit.

Are there opportunities in that field? The big market obviously is Japan. Are there opportunities for us in Japan for blueberries and cranberries and wine and fruit?

3:50 p.m.

Chief Agriculture Negotiator, Trade Agreements and Negotiations, Market and Industry Services Branch, Department of Agriculture and Agri-Food

Frédéric Seppey

Absolutely. For example, in Japan when we talk either fresh or frozen blueberries and cranberries, the opportunities will be significant in the reduction of barriers. For example, right now in Japan, there's a tariff on frozen blueberries. There are different tariffs but the highest one is 9.6%. That one will be eliminated upon entry into force. As soon as the agreement comes into force, it goes to zero. On fresh blueberries there's a tariff of 6% that will also be eliminated immediately.

In terms of alcoholic beverages, in Japan there's a tariff and sometimes, depending on the value of the wine, it's either a tax of 125 yen per litre or a tariff of 15%. That will be eliminated over seven years.

As I said, generally for products like fruit and vegetables, products that aren't sensitive in an import market but where there may still be very high tariffs relatively speaking compared to Canada, these would be eliminated either immediately or over a short transition period.

3:55 p.m.

Liberal

Joe Peschisolido Liberal Steveston—Richmond East, BC

There's a great company, a great farm. It's called Rabbit River Farms, but it actually produces eggs and they have a bit of concern, as do others, about the investment portions of the TPP that we've heard about. There's the notion of the restraint on trade, the panels. Could you tell us how that would work and whether these concerns are proper, just to start that conversation so that when I go back into the riding and I'm sitting down with them, we can have a solid conversation?

3:55 p.m.

Liberal

The Chair Liberal Pat Finnigan

Please keep your answer brief, Mr. Seppey, if you wouldn't mind.

3:55 p.m.

Chief Agriculture Negotiator, Trade Agreements and Negotiations, Market and Industry Services Branch, Department of Agriculture and Agri-Food

Frédéric Seppey

Very well.

In short, these concerns are legitimate. If they're expressed by community groups, they're always legitimate. This is why we have consulted extensively with them during the negotiations and since then. I think that in the sector of eggs, for example, we negotiated an access that is not insignificant; it is a significant access.

However, we think that the mitigation measures we have negotiated on behalf of the agriculture sector would allow community groups such as egg producers to maintain their investment and, looking at the future, be able to at least maintain their activities at the current level, and to expand in the future, we hope.

3:55 p.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. Seppey.

Thank you, Mr. Peschisolido.

Ms. Brosseau, you may go ahead.

3:55 p.m.

NDP

Ruth Ellen Brosseau NDP Berthier—Maskinongé, QC

Thank you, Mr. Chair.

Thank you, Mr. Seppey and Mr. Landreville. It's always a pleasure to have you with us.

I'm not sure whether you are aware, but I represent a Quebec riding, Mauricie-Lanaudière, that is home to a significant number of supply-managed dairy farms. The provisions in both the EU and Trans-Pacific Partnership agreements affect those farms and will have a negative impact on them. Last year, Quebec lost 250 dairy farms. People think these imports will seriously disturb the market balance and cause dairy prices to drop, which will hurt producers.

I gather, from your answers to Jacques Gourde's questions, that the government is in the midst of consultations. The previous government had pledged to give producers compensation. The current government, for its part, has opted to openly consult Canadians and various interest groups.

Do you think the government will decide to offer similar compensation, or will measures be taken once the consultations are over?

3:55 p.m.

Chief Agriculture Negotiator, Trade Agreements and Negotiations, Market and Industry Services Branch, Department of Agriculture and Agri-Food

Frédéric Seppey

I'm sure you can appreciate that I can't really answer that. It's a cabinet decision. What I can tell you, however, is that we are in frequent contact with dairy producers all over the country, including those in Quebec. We also take into account the interests of both processors and artisanal cheesemakers in Quebec.

Throughout the consultations, producers and processors have made it clear that compensation is very important to them. The minister, then, does take that feedback into account when considering the matter.

3:55 p.m.

NDP

Ruth Ellen Brosseau NDP Berthier—Maskinongé, QC

Another important issue that needs to be addressed is the milk protein coming across our borders from the United States. In New Zealand, before the government signs a trade agreement, it must, by law, conduct an economic impact study and make the findings available to parliamentarians as well as the public. I know the current government is endeavouring to be more transparent than the previous one. Its officials tour the country, consulting with Canadians to do good work on behalf of the international trade committee. We, on our end, will then see what we can do to help.

Do you think that would be a good approach?

In Canada, are economic impact studies conducted before trade agreements are signed?