Agriculture Committee on Feb. 20th, 2020

[The Chair, Liberal, Pat Finnigan]

Thank you, Ms. Proctor.

Now, from the Grain Growers of Canada, we have Mr. Shane Stokke.

Go ahead for 10 minutes.

[Shane Stokke, Vice-Chair, Grain Growers of Canada]

Thank you, Mr. Chair and honourable members.

My name is Shane Stokke. I'm vice-chair of Grain Growers of Canada. Grain Growers of Canada provides a strong national voice for grain, oilseeds and pulse producers across Canada. As such, we appreciate the invitation to appear before you to discuss the specific elements of Bill C-4 that are pertinent to the grain sector.

I farm at Watrous, Saskatchewan, an hour east of Saskatoon. I grow many different crops, and trade is very important to me to be fluent and real.

Our message regarding CUSMA and Bill C-4 is simple. We want to see it pass quickly. Our farmer members across Canada need certainty to invest and grow. With farmers feeling the effects of global trade wars, diplomatic disputes, increased input costs, higher taxes and challenging weather conditions, the last thing we can afford is uncertainty in trade within our own continent. We need tariff-free access for our export commodities. Canadian farmers rely on stable markets to succeed, and ratifying CUSMA will allow us to capitalize on further opportunities for growth with our closest trading partners.

Mr. Chair, specifically relating to the legislation before us, I'm happy to offer a comment, as per request, to clause 59 and sections under the Canada Grain Act portion of the bill. This section includes a remedy to a long-term trade irritant that both the United States and Canada have had. In essence, these changes allow for a levelling of the playing field. These changes ensure that all wheat varieties registered in Canada can receive a Canadian grade regardless of where they're grown. I should mention that a similar change was proposed by the previous government in Bill C-48 prior to the 2015 election, but it was unable to pass due to the dissolution of Parliament. We supported that change in 2015, and we are very pleased to see these changes being proposed once again. We hope they will be in place soon, with swift ratification of CUSMA through the passage of Bill C-4.

Over the last decade, there have been significant changes to both grain grading and handling systems here in Canada. This remedy is essential to the last remaining cross-border trade irritant U.S. farmers have with respect to grain, and we support this change. Under the current system, registered Canadian varieties grown in the U.S. and sold into the Canadian bulk handling system are automatically given the lowest grade possible. This change will allow grain grown in the U.S. to be graded here in Canada, and graded appropriately. Under the Canada Grain Act, nothing prevents companies such as mills from buying grain on specifications outside the grading system, and that will not change.

Currently a significant amount of grain is not sold in the Canadian bulk system. We would not expect that to increase dramatically because of this change. This change will now make Canada more compliant in providing reciprocal treatment to our trading partners, which we support and expect in return. This also highlights the fact that Canada truly believes in a rules-based system for world trade, and we're happy to show we will walk the talk in that regard. By removing this long-time, last trade irritant, it also assists Canada in growing forward.

While we believe there should be future reforms to the Canada Grain Act, by ensuring we're working on an even playing field with our trading partners we will be more firmly in control of any future changes to the act. This will allow strict Canadian stakeholder engagement for any future changes to the Canada Grain Act to ensure that any changes made are made in the best interests of Canadian grain growers.

In conclusion, CUSMA ensures continued tariff-free trade, establishing processes that help remove technical barriers to trade and maintaining vital precisions to deal with disputes.

I welcome any questions you may have.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Stokke.

Now we will go to questions. Ms. Lianne Rood, you can start with six minutes.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

I'll be sharing my time with my colleague Mr. Soroka. Let me know about half way.

Thank you for appearing today before the committee. I appreciate your feedback and the work you've put into studying this.

Ms. Proctor, you said in your statement that there haven't been any changes to trade laws. I wonder if you could elaborate on whether you see this as a meaningful upgrade. Any of you can touch on that, if there's anything that was meaningful in this for you. I know the grain growers touched on that. Or are there still shortcomings or things that you would have liked to see in this agreement that would put you on a more level playing field, specifically in the produce industry, with regard to grading, regulations or packaging?

[Jane Proctor]

I think it's important to understand that our industry is trilaterally integrated and is becoming more and more so. If you look at the greenhouse industry, for example, you see that we have a very significant industry here in Canada, and a lot of our greenhouse growers will have operations in the U.S. and perhaps in Mexico also.

For us it was important to continue the success of NAFTA as CUSMA, as we will call it. Hopefully, it will be implemented when it's ratified. We see this as just a continuation of what was already a very strong agreement. We were very happy not to see any seasonal provisions in there around anti-dumping and countervailing. As some of you are probably aware, that was a bit of a poison pill for the industry in terms of a relatively smaller pocket of the industry in the U.S. pushing for that, coming from USTR. We were glad that it did not make it into the final agreement.

Overall, we're very pleased with how it has developed. We work very closely with our colleagues, both in the U.S. and in Mexico. We took a very integrated approach to how we developed comments in all three countries and how we participated. Somebody referenced that there was a lot of participation in the negotiations, and we all took a very firm commitment to doing that.

We really see this as a trilateral agreement that's going to continue to benefit the industry. There's nothing we're concerned about at this point—except for the one thing that we won't get into. Some of you know, as you've heard lots of us talk about the PACA-like trust provision. But I won't talk about that today. No, I won't.

I don't know if my colleagues want to comment.

[Claire Citeau]

I would echo the comments on building on NAFTA and the need for certainty. Certainly this is an agreement that helps ensure that the supply chains that have been developed across North America remain in place, and there are some improvements to NAFTA. I mentioned the co-operation forums to further ensure that our trade works better across all three nations. There are some incremental market access improvements that are welcome wins for our sector.

Sugar was, for the most part, excluded from the original NAFTA. It is now included in this agreement. Moving forward, it will be important to ensure that implementation takes place properly. In particular, the sugar sector has identified some potential preliminary concerns when it comes to export controls, something that has been flagged to government officials and negotiators. I believe our member appeared before the trade committee yesterday. It will be important to ensure that those implementation pieces work well.

For the most part, it is time to get CUSMA ratified because it's about certainty in North America and our ability to compete as a North American market globally.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you.

[Gerald Soroka, Conservative, Yellowhead, AB]

I think it was Brian who mentioned that under NAFTA we went from $9 billion to $45 billion in trade. That is pretty impressive. Now with the concessions that we're giving here, do you see a similar kind of growth, or is there even potential for much more growth? Is that even a possibility? I'm asking whoever wants to answer that question.

[Brian Innes]

Yes, we do see opportunity for growth, not just in trade in North America but also in trade from our North American value chain to the world.

On the first part, within North America, expanding access for processed products like margarine and sugar-containing products does represent incremental growth opportunities that weren't available in the original NAFTA. For example, the original NAFTA was created at a time when the way we made margarine worked with the agreement, but now the technology has evolved and we no longer use hydrogenation. It was no longer possible to produce margarine in Canada and trade it to the United States without having tariffs on it.

That was not extended, unfortunately, to other products like shortening, so there are still a number of areas within NAFTA, or the new CUSMA, that are not tariff-free in agriculture, but the areas that were tariff-free remain tariff-free, and that enables us to continue to grow in the world. Being integrated makes us more competitive in exporting, whether it's to China or Japan or elsewhere.

[The Chair, Liberal, Pat Finnigan]

You have about five seconds.

[Gerald Soroka, Conservative, Yellowhead, AB]

I guess I'm done.

[The Chair, Liberal, Pat Finnigan]

Mr. Drouin, you have six minutes.

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

Thank you very much, Mr. Chair.

I would also like to thank the witnesses who are with us. I see several familiar faces. I would like to welcome them back to our committee.

My first question is for Madame Citeau and Mr. Innes.

I think you mentioned predictability in a world that is increasingly closing itself in in terms of trade, and there are a bunch of trade wars happening right now. Had your industry done an analysis in terms of what would have happened if one of the parties had signalled to the others that it was leaving and we got the six-month notice? What would have happened to the industry had we gone back to the old free trade agreement prior to NAFTA? Had you done a certain analysis on the impact to the Canadian economy?

[Brian Innes]

I can start and speak to that. Thank you for the question.

I know our individual CAFTA members all have their internal analysis. There was an analysis that was done in a place to publish and share the figures. What I would share is that what we know from a number of sectors is that we used to face tariffs on products going both to the United States and to Mexico. Getting rid of those tariffs allowed us to expand our exports.

Take canola, for example. Prior to the implementation of the Canada-U.S. agreement, there was little trade and high tariffs applied to certain canola products. Now the U.S. is the largest export market, and Mexico is the fourth. It's the same situation for the beef and pork industries, where we've become much more competitive internationally. Severing that supply chain would have devastating impacts on the pork industry that trades live animals back and forth, that trades cuts back and forth, and it's the same for the beef or the cattle industry.

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

I recall Canada using a hamburger, for example, just to demonstrate how integrated our supply chains were with our U.S. counterparts.

While those negotiations were happening, what was the consultation process with government? Ms. Proctor, you mentioned that you were dealing with other stakeholders down in the U.S. How integrated was that approach to the lobbying, if we can call it that, with our trading partners and our natural allies, whether it's Mexico or the U.S.?

[Jane Proctor]

I can certainly start and speak to our industry.

As I said and keep reiterating, it's a very integrated industry. Of course, we work very closely, not just with the industry members themselves, but with our colleagues in other associations.

We made sure we were present at every NAFTA negotiation. I was in Mexico and in Montreal, and some of my colleagues were in other parts. What we found, especially as the ag sector, was that we were very good at being very strong in our presence. We had an excellent negotiator, and certainly, Frédéric Seppey, our negotiator specific to ag, did a splendid job. For us, in being present and working with our colleagues in other associations, we were always trying to make sure that we went forward with a trilateral message. For us, that was very successful. I mentioned the potential problem that it helped to alleviate.

For us it was a very positive experience. It was a very integrated experience. Our negotiators did a great job. Maybe some others were at the negotiations. I certainly appreciated the attention the negotiators who were there gave to the ag sector. They did daily briefings with us, and that was very much appreciated.

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

Ms. Citeau, would you like to add anything?

[Claire Citeau]

I will say that, overall, it's very much a two-way dialogue, two-way street communication. We also attended every single round of negotiations and were in regular contact with the negotiators. We never see any of the text and we are not in the negotiating rooms, of course, but we are in close communication.

It was similar with our counterparts from both the U.S. and Mexico. On several occasions we did events with them, tri-national round tables with industry and officials and press conferences to advocate for the importance of the supply chains across North America and to advance shared priorities.

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

I have one last point. How do you see that working group and the importance of that working group with our partners on biotech? I've heard from many stakeholders about the trade irritants that develop from that. Do you see that as a good body and a good vehicle to deal with those particular issues, or is it “We'll see”?

[Brian Innes]

Well, we always reserve judgment and encourage co-operation from both government and industry to make these working groups effective. The biotechnology working group established under the Canada-United States-Mexico agreement is helpful and it builds on what was negotiated in the trans-Pacific partnership. This is an area where we use technology in crop production, but if the regulatory systems are different in our countries, it means that we can't just grow it in Canada—even though it may be approved—if it's not approved similarly in the United States and Mexico.

By working together at this working group, we can co-operate on plant-breeding innovation technologies so that when we have an ability to grow something with improved technology we can actually export it from Canada to the U.S. and Mexico and work together as three countries. It would help us, as a bloc, to regulate similarly and to have the ability to export around the world.

[The Chair, Liberal, Pat Finnigan]

Thank you, Mr. Innes.

Thank you, Mr. Drouin.

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

Thank you.

[The Chair, Liberal, Pat Finnigan]

Mr. Perron, you have six minutes.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Good afternoon. Thank you very much for being here to meet with the committee. We greatly appreciate it. I enjoyed your statements. We understand very well how important the new agreement is to you and your industries from a business perspective.

You may have heard the questions we put to the senior officials of the previous group, particularly on the delays and their effects on the dairy sector. We were talking about August 1st.

Could you explain what difference it would make to your industries if the agreement comes into effect on August 1st instead of July 1st or June 1st?

[Claire Citeau]

Our position is, the sooner the better.