Evidence of meeting #3 for Canada-China Relations in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was chinese.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Marta Morgan  Deputy Minister, Foreign Affairs, Department of Foreign Affairs, Trade and Development
Paul Thoppil  Assistant Deputy Minister, Asia Pacific, Department of Foreign Affairs, Trade and Development
Steve Verheul  Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development
Fred Gorrell  Assistant Deputy Minister, International Affairs Branch, Department of Agriculture and Agri-Food
François Rivest  Executive Director, Greater China, Department of Foreign Affairs, Trade and Development
Duane McMullen  Director General, Trade Commissioner Service - Operations, Department of Foreign Affairs, Trade and Development

10:40 a.m.

Conservative

Chris Warkentin Conservative Grande Prairie—Mackenzie, AB

Thank you, Mr. Chair.

Thank you, Mr. Verheul. I appreciate that you and your team are here. I know this is a difficult time for you, as it is for every exporter in the country that exports to China.

Could you quantify the current trade deficit between Canada and China? Do you have those numbers?

10:45 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

We have the current trade deficit. At this point in time, if we look at 2018, our exports to China were worth about $27.6 billion. Our imports from China were $75.6 billion. Obviously, the difference between the two is the deficit.

10:45 a.m.

Conservative

Chris Warkentin Conservative Grande Prairie—Mackenzie, AB

Right. Those are the 2018 numbers.

10:45 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

That is 2018.

10:45 a.m.

Conservative

Chris Warkentin Conservative Grande Prairie—Mackenzie, AB

Maybe you don't have the current numbers, but I'm wondering, with the current strain in the relationships, specifically with regard to canola, if those have significantly impacted that global number.

10:45 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

Yes, we have seen some drops. We do have data for January to November 2019. We have seen a drop in our merchandise exports by 14.7%. Imports from China have decreased by 0.4%. Our overall bilateral trade has seen a decrease of 4.4%.

10:45 a.m.

Conservative

Chris Warkentin Conservative Grande Prairie—Mackenzie, AB

Obviously, the issue with regard to canola is of major concern to the people I represent. The issue with regard to pork was also a concern to pork producers. The pork issue seemed to be resolved almost magically. It all of a sudden was no longer an issue. I'm sure we didn't see what happened behind closed doors, but it's a lot of people's sense that to fill the consumer market in China, it was necessary for the Chinese to reopen that pork market. It was necessary to meet the demand of the Chinese people. Is that the view of the department?

10:45 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

I think the issue on pork and beef was more of a legitimate issue surrounding export certificates. We did not see any kind of political interference in that particular issue.

I will ask my colleague Fred Gorrell if he has anything to add to that.

10:45 a.m.

Fred Gorrell Assistant Deputy Minister, International Affairs Branch, Department of Agriculture and Agri-Food

Thank you, Mr. Chair.

I think it's important to note, as Mr. Verheul said, that there were illegal, illegitimate certificates being used that were not from the Canadian Food Inspection Agency and were not relative to Canadian product. Over a period of four months, we provided an exhaustive amount of information to the Chinese to make sure they had complete confidence again in the Canadian system. On November 5 they removed all of the barriers.

Just for context, I think it is important to recognize, as I think people are aware, that China is also working with the African swine fever that has devastated their pork industry there. So there is a huge demand. Clearly, Canadian product is of very good quality and has a very good reputation. They normalized the trade as of November. I can say that since that time, the exports of pork have gone up significantly. It's a very healthy trade.

10:45 a.m.

Conservative

Chris Warkentin Conservative Grande Prairie—Mackenzie, AB

That's very good. That is good news.

In regard to canola, obviously canola seed has been identified by the Chinese as being a concern because of an alleged pest. Obviously, that pest wouldn't have an impact on processed canola products. Is there any current limitation on the export of processed products—oil, etc.—from Canada to China?

10:45 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

I will let Fred respond to that as well.

10:45 a.m.

Assistant Deputy Minister, International Affairs Branch, Department of Agriculture and Agri-Food

Fred Gorrell

Thank you.

It's a good question. I'll give a little bit of the context. As Mr. Verheul said, two of our major exporters have been suspended from exporting canola to China, but other companies are allowed to export. When we talk about canola, the key thing is that we're looking at oil, seed, and meal, the three constituents of it. All of them are down, for a number of the reasons that we talked about. They're looking at various pests. We've had a number of visits. I was with the delegation in December. As Mr. Verheul said, we went through what they're looking at from a pest point of view. Our position is as you've identified. Through the processing of canola seed at a processing plant, it would significantly, if not completely, reduce any of the risks they're discussing.

10:45 a.m.

Conservative

Chris Warkentin Conservative Grande Prairie—Mackenzie, AB

The government has tried to assure Canadians that the quarter-billion dollars they sent to China for the Asian infrastructure fund would open new export opportunities and investment opportunities for Canadians into China. Does your department have any evidence that there has been an increase in investment or openness to Canadian investment or exports because of the gift that the Government of Canada gave to China in the form of the quarter-billion dollar investment or gift to the Asian infrastructure bank?

10:50 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

I'll ask my colleague François to respond to that.

10:50 a.m.

François Rivest Executive Director, Greater China, Department of Foreign Affairs, Trade and Development

We don't have any specific examples, but we know that Canadian companies are actively looking at opportunities that might be available through the AIIB, as well as, obviously, the other international financial institutions and the belt and road initiative. Canadian companies are looking for areas where they can benefit from what China is doing to build infrastructure in the region.

10:50 a.m.

Conservative

Chris Warkentin Conservative Grande Prairie—Mackenzie, AB

But there's no evidence of any expansion of investment?

10:50 a.m.

Executive Director, Greater China, Department of Foreign Affairs, Trade and Development

François Rivest

Well, we're speaking to companies that are pursuing opportunities, but I don't have any specific examples.

10:50 a.m.

Liberal

The Chair Liberal Geoff Regan

Thank you, Mr. Warkentin.

Monsieur Dubourg.

10:50 a.m.

Liberal

Emmanuel Dubourg Liberal Bourassa, QC

Thank you, Mr. Chair.

I would like to welcome our guests and thank them for their presentation.

Mr. Verheul, you talked about the difficulties Canada faces in its relations with China. You also said that, in trade, the number of food inspections is much greater. You added that those inspections are not only of Canadian products but also of products from other countries.

In the wake of the agreement signed with United States, is China keeping up those same inspections with American products?

10:50 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

Fred, can I ask you to respond to that?

10:50 a.m.

Assistant Deputy Minister, International Affairs Branch, Department of Agriculture and Agri-Food

Fred Gorrell

Thank you for that question.

My feeling is that inspections are increasing for all products from all countries, mostly because of the African swine fever. The same may not go for every country.

10:50 a.m.

Liberal

Emmanuel Dubourg Liberal Bourassa, QC

Okay, thank you.

We have just been talking about canola, and we know the difficulties we are having there. Is there an increase in the trade with China with other products?

Could you talk a little about wood? There is also lobster. Are our wood exports increasing steadily?

10:50 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development

Steve Verheul

We have not seen any real impact on our exports of wood and most other products. In fact, we've seen some gains in some products in modest ways. However, out of the ones that have been mentioned, we have not seen a significant drop.

10:50 a.m.

Liberal

Emmanuel Dubourg Liberal Bourassa, QC

Okay.

We are talking about trade here, and, as we know, the coronavirus problem is very recent.

Does that have any repercussions on our trade and our dealings with China? Can you give us a few words about that?

10:50 a.m.

Executive Director, Greater China, Department of Foreign Affairs, Trade and Development

François Rivest

It has only been a few weeks since the coronavirus began to become a very significant problem for China. Measures to prevent the spread of the coronavirus are increasing each day. Neighbouring countries are closing their borders and flights are being cancelled. The markets are closed in China and movement there is restricted.

Clearly, that will have an impact on international travel, on the ability of Canadians specifically to go to China on business, and on the normal functioning of the Chinese economy. There will indeed be repercussions.