Evidence of meeting #110 for Agriculture and Agri-Food in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was international.
A recording is available from Parliament.
Liberal
Tim Louis Liberal Kitchener—Conestoga, ON
The best time to start is now, and I thank you for your time.
Thank you, Chair.
Liberal
The Chair Liberal Kody Blois
The chair is going to exercise the right to ask a couple of questions, even if I draw a bit of ire from my colleagues.
The entire concept of what we're talking about here can cut both ways. If Canadian agriculture is properly accounted for in its environmental stewardship, it can be a trade advantage, but only if it is recognized in the international market.
My question would be perhaps for Ms. Govier or for you, Ms. Meltzer.
Who is taking the lead within the Government of Canada to engage with our international partners? I take notice that agriculture is not yet being contemplated for border adjustment mechanisms in the jurisdictions we've talked about. I guess that could be a concern that Mr. Barlow's highlighted or a competitive advantage to Canada, depending on how it's implemented, and a net benefit really depends on how we engage and inform about the evidence that we have in this country on this. We know that there are farmers in other jurisdictions, like Europe, who are saying that they want those mirror clauses, so you could see how agriculture could come down the line.
Who is taking the lead? Is that a GAC lead, is that the Department of Finance or ECCC? How are we engaging? That would be my question.
Director General, International Trade Policy Division, Department of Finance
I would say that it is more of a GAC lead, although we are in very close touch, both ECCC and us. If agriculture were implicated, obviously agriculture as well would be part of those conversations.
As I said, we have been implicated a bit more by learning from the EU and the approach they're taking to help with our thinking internally, but there's a lot of thought also being given to ensuring that other markets are aware of our situation and how our environmental performance should maintain our access.
I would say that there are discussions in international forums and with the U.S. on these issues, among many others that we've discussed with the U.S.
Liberal
The Chair Liberal Kody Blois
I have two quick others.
In terms of clarity for this committee, was it stated that, as it relates to the European Union's CBAM proposal for 2026, it rests on the premise of a carbon price, or is there some mechanism on carbon intensity per unit of cement, fertilizer or whatever that may be? Is it just about having a price that will dictate tariff or no tariff?
Director General, International Trade Policy Division, Department of Finance
I would look to Global Affairs colleagues to confirm that. My understanding is that there could potentially be scope for individual companies to argue that they have a very low footprint, so regardless of pricing they could have access, but things may have evolved since then on that front, so it's probably best for Global Affairs.
Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food
Maybe we can undertake to follow up with Global Affairs colleagues and get as definitive an answer as exists from them.
Liberal
The Chair Liberal Kody Blois
The last piece is around the American position. Some of the members of this committee had the opportunity to be in Congress last spring. I was in Congress in July and tried to ascertain what the American position is, because although it was mentioned in testimony, there is not a federal carbon price in the United States. There are certainly a lot of taxpayers' dollars used through the Inflation Reduction Act, which is incentivizing. That has a true cost in the treasury sense.
Can you explain, Ms. Govier, any of the American position? From what I can ascertain from your testimony, you're responsible for any type of Canadian reciprocity that may come from other jurisdictions imposing this. What is the American view? Do you or maybe Mr. Rosser have any view on agriculture? It seemed to me that it was kind of, as opposed to a pricing approach, more of a club approach. Either you're doing something to be part of the environmental solution or you're not, and there would be a tariff wall or there wouldn't be.
Can you speak to anything that can give us a little more on the American perspective? That is crucially important with the nexus of our trading relationship.
Director General, International Trade Policy Division, Department of Finance
I would agree that that's a critical relationship. Obviously, we want to make sure that trade flows well between our countries.
There have been different legislative proposals that have come out in the U.S. I won't get into the details, because I don't know them off the top of my head, but I will say that because the U.S. does not have federal carbon pricing, it would be looking at something very different from what the EU is looking at, which is a very price-based thing. It would probably be based on emissions intensities.
There could be this concept that cleaner countries are coming together for something, but there are different proposals out there. It's not totally clear yet exactly where things are going to land, including where the administration might want to go specifically on this.
Liberal
The Chair Liberal Kody Blois
Thank you very much, colleagues, for the brief indulgence.
On your behalf, I will thank the witnesses for their testimony here today and their contribution through their various departments. Thank you so much to the witnesses.
Colleagues, don't go very far. I am going to suspend for just a couple of minutes. We're going to get Dr. Webb and our other witnesses from L'Association des producteurs maraîchers du Québec up.
We'll be back in two minutes. The meeting is suspended.
Liberal
The Chair Liberal Kody Blois
I'd like to welcome our second panel today.
First, we have Mr. Steven Webb, who is the executive director of the Global Institute for Food Security.
We also have Ms. Catherine Lefebvre and Mr. Patrice Léger Bourgoin, from the Association des producteurs maraîchers du Québec.
Thank you very much for joining us again today. I also want to thank you for your work in the sector in general.
So I—
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
I'm sorry to interrupt you, Mr. Chair, but can you tell me whether the sound tests were done for the witnesses who are taking part in the meeting by video conference?
Liberal
The Chair Liberal Kody Blois
Yes, they were well done by our team, as is always the case. Rest assured, Mr. Perron.
Each organization will be given up to five minutes for an opening statement, after which we will have a round of questions.
We're going to start with Dr. Steven Webb. It's over to you. I suspect you're coming in from Saskatchewan today.
Dr. Steven Webb Chief Executive Officer, Global Institute for Food Security
Good afternoon, Mr. Chair, and thank you for the invitation to be here today.
My name is Steve Webb. I'm the CEO of the Global Institute for Food Security, or GIFS, at the University of Saskatchewan. GIFS works with partners to discover, develop and deliver innovative solutions for the production of globally sustainable food.
Serving as agriculture's innovation catalyst, GIFS is connecting the agri-food ecosystem, advancing innovation and bridging the gap to commercialization to deliver resilient and sustainable food security for all stakeholders.
There's a gap between our investments in research and in delivering market-impacting innovation. We know this because both the Conference Board of Canada and the global innovation index highlight the gap between our innovation input, or investment, and our innovation output, or performance. This simply means we don't receive a commensurate value from what we invest. GIFS functions to help bridge the gap through solutions that accelerate innovation.
On today's topic, a border carbon adjustment is essentially a tax, or a fee, placed on imported goods from another country that may not have as stringent a carbon pricing system. The theory is that all goods in a country, whether domestic or imported, are subjected to the same carbon pricing system. The fee will be based on the carbon footprint amount regarding the production of a good.
The intent behind the border carbon adjustments is to level the playing field in international trade and incentivize the reduction of greenhouse gas emissions globally. However, there are a number of factors to consider with border carbon adjustments, so that they are not ultimately a barrier to Canadian trade and do not negatively impact productivity.
One important consideration is, how are we going to align on measurement, reporting and verification protocols that reflect the regional differences of agriculture when measuring carbon emissions in production? It's important to note that the border carbon adjustment has been designed around built industries, like electrical, aluminum and steel, cement and other defined controlled work processes. Agriculture is different. Given the natural environment where agriculture takes place, it varies not only from year to year but from location to location, making measurement, verification and reporting more challenging.
Canada's agriculture is in a position of strength. As mentioned in the last session, a study commissioned by GIFS demonstrates that major crops that we produce, particularly in western Canada, like canola, non-durum wheat, field peas, durum wheat and lentils, all have the lowest carbon intensity compared to other regions, especially when we include the impact of agronomic practices on soil carbon emissions.
However, we need to ensure that we're harmonizing measurement, reporting and verification standards for agriculture across the world. We're not there yet. This challenge needs to be addressed first.
Another consideration is competitiveness. Our agricultural exports could be subject to additional costs in other regions that deem our carbon regulation less stringent than theirs, increasing export costs and reducing our competitiveness on a global stage.
One other consideration is how this would impact trade agreements such as the Canada-U.S.-Mexico agreement. These adjustments could hamper these agreements or support them, based on how we and our partners align. The intent is to ensure a degree of fairness in trade, and this could be seen as an advantage for Canada.
The caution would be to understand the issue of fairness for exports, not only from Canada but also from low-income countries. How fair would it be to level the same fees on exports from low-income countries without enabling them to be as efficient and effective as Canadian producers?
Finally, while the adoption of a border carbon adjustment may lead to a levelling of the playing field in carbon pricing, this would potentially enable the creation of new revenue streams for Canadian producers by sequestering carbon and producing some of the least carbon-intensive crops in the world.
We need to understand the following. Foundational to the implementation for ag are global harmonization and support. Less than a quarter of the countries that have signed the Paris accord have implemented carbon pricing. Given the potential impact on international trade, organizations like the WTO need to align on a framework where border carbon adjustments are not seen as either a non-tariff trade barrier or an unfair government subsidy.
Agriculture is different, and we need time and investment to align on measurement, reporting and verification protocols to successfully implement a policy, understand the cost to implement and understand how the cost and potential revenues can be shared.
In closing, the one thing I think about when discussing this topic is that if you can measure it, you can improve on it, and innovation is key.
Thank you, Mr. Chair, for the opportunity to comment on this topic. I welcome questions from the committee.
Liberal
The Chair Liberal Kody Blois
Thank you very much, Dr. Webb.
We will now go to our friends from the Association des producteurs maraîchers du Québec.
Ms. Lefebvre, you have the floor.
Catherine Lefebvre President, Association des producteurs maraîchers du Québec
Mr. Chair, members of the committee, thank you very much for the invitation.
All issues related to the reciprocity of standards continue to be at the heart of our concerns. The globalization of markets has picked up since supply chains recovered from the pandemic. More than ever, Quebec vegetable producers are competing with their counterparts in the United States, but also with those in Latin America, Europe and even Asia.
In this context, the transition to a low-carbon economy raises many questions. Given the importance of international trade, differences in carbon pricing can be problematic. We must avoid having these differences lead to an increased imbalance in the competitiveness of vegetable producers.
The issue of border adjustments for carbon is complex. It should not be taken lightly. There has to be a symmetry of standards so that Canadian producers don't have to pay regulatory fees. In other words, local vegetable producers must achieve parity with imported produce. It is also imperative that serious consideration be given, in collaboration with the provinces and in light of international developments, particularly in Europe, to the opportunities and threats associated with the creation of a Canadian carbon border adjustment system.
Our various analyses show that production costs are already higher in Quebec than among our main competitors because of strong provincial and federal regulations. This situation is putting pressure on the profit margins of our farms, which is becoming increasingly unbearable, to the point of jeopardizing the survival of our sector. We must not exacerbate this already problematic situation.
With regard to the quality of local products, Canada has safety and traceability rules to ensure that they are safe for human health. In addition, the use of crop protection products is highly regulated. In our view, regulatory authorities must be unyielding. All imported fruits and vegetables must meet the same requirements as those applied here in Canada. No compromise can be acceptable. That is not the case right now.
Patrice Léger Bourgoin General Manager, Association des producteurs maraîchers du Québec
Take, for example, the famous carrots from China. In this case, production conditions remain largely unknown. Are the crop protection products used allowed on Canadian soil? Do they pose a danger to human consumption or to the environment? In our opinion, these questions should concern you. The explanations we were given earlier today didn't convince me.
Chinese carrots don't end up on the shelves of American supermarkets. China, along with 180 other countries and territories, is not authorized to export carrots to the United States. The criteria used are soil control and protection against the spread of diseases that can travel across the border through root vegetables.
Canada is moving aggressively and quickly to close its territory to Chinese electric automobiles. Yet it refuses to apply the same treatment to Chinese vegetables, while its American neighbour does. We have to ask ourselves whether this is a two-tier approach. To ask the question is to answer it.
The presence of Chinese carrots in Canada while local stocks are still available is putting downward pressure on Canadian carrot prices, since wholesalers and retailers use them as substitutes to increase their bargaining power with local producers.
So in answer to your earlier question, Ms. Taylor Roy, I can assure you that the good environmental and social practices of Canadian producers have no impact when it comes to selling products to wholesalers and retailers, where the sale price at the farm is proof of everything.
When it comes to mirror clauses—we talked about that earlier—regarding the reciprocity of standards, production methods are practically not regulated in international agreements. The requirements for how products are grown are generally not imposed on imported products. This is becoming increasingly problematic.
This is just one example from earlier this year, in 2024. The Ministère de l’Agriculture, des Pêcheries et de l’Alimentation du Québec, supported by several other Canadian provinces, submitted an application for the registration of a product that substitutes another commonly used product, but that the manufacturer had decided to stop marketing. In the application for registration, the Quebec department argued that the application was necessary for the production of beets in the absence of effective options at a reasonable cost. In support of the request, it was estimated that the financial losses associated with the refusal of registration would be $15 million per year, or half the value of the Quebec crop. The Pest Management Regulatory Agency has refused to register this product, which is widely used by our American competitors. Under those circumstances, how can you compete on a level playing field with our neighbours just south of the border?
In closing, the vegetable industry is under tremendous pressure on its ability to compete. This pressure is caused by a demanding regulatory environment without a reciprocity of standards to force competitors to meet equally high standards.
Thank you for listening.
Liberal
The Chair Liberal Kody Blois
Thank you very much, Mr. Léger Bourgoin and Ms. Lefebvre.
Colleagues, we'll now turn it over to questions. I am going to try to get two rounds in. We owe it to our witnesses.
I'm going to start with you, Mr. Barlow, for six minutes.
Conservative
John Barlow Conservative Foothills, AB
Thank you very much, Mr. Chair.
Thank you to our witnesses for being here today and providing your insights.
My questions are for Mr. Webb.
First off, thank you very much for the work GIFS did on some of the analysis of Canadian agriculture and our carbon footprint compared to other parts of the world. I think those results are staggering in terms of showing the global standard that we've set in Canada compared to other jurisdictions.
I think the position for leadership and government in Canada should be to be encouraging the rest of the world to get to where Canada already is when it comes to fertilizer use, efficiency, precision agriculture and all those things. We have an incredible story to tell, and your work is certainly helping us to do that.
In regard to your testimony, you said that agriculture is different from the “built industries”, as you put it, which are going to be under the jurisdiction of a new CBAM in the EU and perhaps in other jurisdictions. My questions for you are going to be similar to those I had for our department heads.
My concern with a CBAM is that although there may be the best of intentions—we've all heard the analogy of how the road to hell is paved with the best of intentions—this could be another example of a non-tariff trade barrier, where there's going to be that protectionism in other jurisdictions. In your opinion, what are the potential detriments to this if there is not a very clear standard or regulation outlined in terms of what other jurisdictions would be asked to meet to access those markets?
I know that agriculture is not included in the EU plan that is coming out in 2026-27, but if that were to be expanded to include agricultural products, how critical is it, first, that there's a very clear set of regulations or set of criteria and, second, that those jurisdictions make science-based decisions so that if we do meet those criteria we access that market?
Chief Executive Officer, Global Institute for Food Security
First of all, as one of the other witnesses said, the devil is in the details. In the case of agriculture, and even pointing to GIFS' own study, we ran a carbon life-cycle analysis from end to end in terms of the impact it had. We followed the accepted international rules, and one of the things that does not measure is the impact of agronomic practices on the contribution the soil has on the carbon footprint.
When you follow the “accepted practices”, it misrepresents Canada's footprint. It actually also misrepresents the United States' and Australia's footprints relative to France and Germany. When you look at agronomic practices and consider the impact on soil carbon sequestration, you see that Canada pulls further ahead of everybody else, and the Americans and the Australians actually outperform their European peers.
Now, we did that to make a juxtaposition with what the standard international rule is, which is based around stick-built industries, or built industries, versus agriculture. I think it points to the need to have an international agreement on what are we measuring and how are we counting it.
Our study also pointed out...because remember, we looked not only at Canada relative to our trading peers, but also at various regional breakdowns of Canada, of western Canada and Saskatchewan. Again, this reflects the differences of agronomic practices in the region. We can't have a one-size-fits-all on how we measure. We need to have a one-size-fits-all on the criteria we're measuring but to optimize the measurements and the models that would go into a carbon footprint analysis for a good under a border carbon adjustment process that reflects the performance in the region. Again, I think it really gets complicated.
I will be honest. It worries me a bit about the added cost on producers and on the entire value chain to implement such a process unless there are additional benefits, which would be increased trade opportunities and more export opportunities for Canada. That, I think, is the biggest challenge.
The other challenge is that I don't know if the international organizations that would have to implement it are prepared to deal with this, because it could be very much perceived.... Remember that in the context of the Paris accords only about a quarter of the countries have actually implemented a carbon price. Again, if you can't get agreement at that level on a carbon price, other countries might perceive—
Conservative
John Barlow Conservative Foothills, AB
I have only about 30 seconds left. I do want to ask one more quick question.
Conservative
John Barlow Conservative Foothills, AB
That's okay. I appreciate your insight.
That is my concern. If we meet this international standard, and I think of Canadian cattle and durum wheat.... The EU has a standard, but then every country implements its own little niche issues that block Canadian products. In your opinion, is it possible to have an international standard that everyone would adhere to, and how difficult would that process be in terms of how you measure emissions or the carbon footprint of agriculture?
Chief Executive Officer, Global Institute for Food Security
We're not there yet, on an international agreement, and I think it's an opportunity for Canada to lead the way, because, again, one of the things people talk about is this idea of a sustainable ag system, and we have it already in Canada. We have a very good sustainable ag system based on the principles of regenerative ag at scale. I think this is an opportunity for us to lead the way.
Liberal
The Chair Liberal Kody Blois
Thank you, Mr. Barlow.
Thank you, Dr. Webb.
I'll turn it over to Ms. Murray for up to six minutes.
Liberal
Joyce Murray Liberal Vancouver Quadra, BC
Thanks, and thank you to the witnesses for being here.
I loved that last comment, that this is an opportunity for Canada to “lead the way”, just as we have done through the Powering Past Coal Alliance and through working to assist other countries in reducing their emissions from the coal industry. We've heard a number of comments on worries about added costs and worries about the costs to farmers, and about benefits, if any, from a border carbon adjustment. What I'm hearing is that it's complex. There are a number of departments working together to identify those complexities. There are organizations such as GIFS feeding in.
Are there other things that the witnesses are recommending, so that this inevitable process is as complete and fair as possible for Canadian farmers?