Canada-China Relations Committee on May 27th, 2024

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you, Mr. Chair.

Again, thank you to all of our witnesses for being here today. I'm taking away a lot from your conversation: The idea that we need to invest in our infrastructure, the long-term relationships that we need to build and the idea of how we deal with the sector as a whole are very important for us.

I'd like to give everybody one last chance to tell us what recommendations you need to see in this report. This is ultimately why you're here. Is there anything that we haven't asked you that you want to make sure gets on the record and gets into this report?

Mr. Harvey, why don't I start with you? You didn't get a chance in the last question.

[Michael Harvey]

We just went through the recommendations, so I'm looking for something else. I think one thing that we know is a very difficult political circle to square are the conversations with India, where there have been a lot of barriers over the years. The political relationship is very difficult, but we can't ignore the fact that it's a major market. We'll want to get back to those conversations when we can.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Yes. Certainly, there are human rights challenges that we have there.

Mr. Carey.

[Dave Carey]

It's a great question. I guess I would answer with a comment. Canadian agriculture and agri-food is larger than Canadian auto and aerospace combined economically. However, we do not see agriculture and agri-food get the attention, the spotlight, the investment or the time and attention of the government nearly as much as we see now with critical minerals and electric vehicles. Invest in the agriculture and agri-food sector, and it will pay dividends for taxpayers and global peace and security.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you.

[Brian Innes]

Specifically with the Indo-Pacific strategy, when we look at that strategy as a tool to help us orient our thinking on commerce, completing agreements with ASEAN and Indonesia help establish new frameworks that create more stability. That is an important priority in something that the Government of Canada has control over.

I would also add that, when we look at the investment in the Indo-Pacific office, that is a commitment to stability, investment and presence over time. That's the sort of thing that the Government of Canada needs to keep doing to help businesses and farmers do our jobs to produce efficiently and competitively and to deliver for our customers.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you.

Mr. Kucharski.

[Dr. Jeff Kucharski]

I'll divide it into two—economics and security. We talked about infrastructure. It's critical that we remove the bottlenecks and get things done in a reasonable amount of time. That also means regulatory reform, and we have to address taxes because we compete with other regimes on our tax regime.

On the security side, we need to step up our investments in the military. We need to protect our intellectual property from cybercrime, and we need to get more participation by the Canadian government and others in the regional fora in the Indo-Pacific. Thank you.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you.

[The Chair, Liberal, Ken Hardie]

Thank you very much.

To our panellists, thank you. It's been very enlightening.

That one rail bridge over the Second Narrows that goes up and down to let the tanker from the terminal go through on its way to China is something that does impact the efficiency of the port of Vancouver. That said, come the day that we're not shipping all of that coal out of Roberts Bank, perhaps there is going to be some capacity there to do something more productive for the world. That's something we can think about in the future.

We will suspend while we change our panel. Again, thank you very much for your attendance tonight.

[The Chair, Liberal, Ken Hardie]

Welcome back.

Thank you to our second panel for being here.

From the Canadian Cattle Association—probably the focus of some very serious hat envy tonight—we have Tyler Fulton, the vice-president. The senior director of government relations and public affairs, Jennifer Babcock, is joining him. From Energy for a Secure Future, we have Shannon Joseph online. No stranger at least to some of us here is Paul Lansbergen with Fisheries Council Canada. He is a frequent flyer at our fisheries committee and is here to talk about fish. Imagine that.

We'll start with you, Mr. Fulton. You have five minutes for an opening comment.

[Tyler Fulton, Vice President, Canadian Cattle Association]

Thank you for the opportunity to appear before the committee to discuss the Canadian beef sector's experience with the People's Republic of China.

I'm a beef producer from Birtle, Manitoba, and I currently serve as the foreign trade chair and vice-president of the Canadian Cattle Association.

I can sum up our views on China succinctly by stating that we are dissatisfied with the present situation in which we have no access for Canadian beef exports. It's also questionable whether any future access for Canadian beef exports to China will come with the security that trade rules should provide.

China suspended imports from one Canadian beef exporting facility in 2020, citing COVID concerns. It is important to note that they did not take similar action against beef facilities in other countries that were experiencing COVID outbreaks amongst their employees.

China expanded its action against Canadian beef by suspending all imports in December 2021 following the discovery of an atypical case of BSE in a Canadian cow. To be clear, the discovery of atypical BSE should not be cause for trade restrictions. To quote the World Organisation for Animal Health, “Atypical BSE refers to naturally and sporadically occurring forms, which are believed to occur in all bovine populations at a very low rate, and which have only been identified in older bovines when conducting intensive surveillance.”

In other words, every country that is undertaking proper surveillance should expect to detect an atypical BSE case. While a few countries briefly suspended imports, China is the only trading partner that did not quickly restore Canadian beef access. It is further galling to us that China has singled out Canadian beef for such trade restrictions. The U.S.A. has discovered a number of atypical cases, including a case in May of last year, yet China has not suspended U.S. exports. I want to be clear that China did act appropriately toward the U.S.'s atypical BSE cases. Atypical BSE cases do not warrant trade restrictions, and China should have treated Canada in the same manner they treated the U.S.

Brazil reported two atypical BSE cases in 2021 and was suspended by China for 13 days. It is inappropriate that China took trade action against Brazil, but at least they moved quickly to restore trade, proving that they can do it when they want to. It has been over 29 months since China suspended Canadian beef with no apparent interest in restoring trade. Our analysis is that China has violated at least two fundamental provisions of the WTO agreements.

First, they have violated the sanitary and phytosanitary provisions by imposing a trade-restricting measure in contravention of the relevant international standard without any risk assessment or scientific justification.

Second, they have shown discrimination by treating Canada more restrictively than they have other trading partners. We had hoped that China might lift these sanctions through constructive dialogue, but our frustration has grown these last two-plus years as China has refused to engage with Canadian officials. Despite some recent meetings, no results have been achieved, and none seem likely in the near future. Given this experience, we have serious concerns that even if—or when—China resumes imports of Canadian beef, we will not be able to rely on the access being secure for the long term.

With the lack of action and movement on China's part, our sector has started to raise the concern that Canada should start a formal process to exercise our WTO rights. We need to send a strong signal to China and all of our trading partners that Canada will always stand up for science-based and rules-based trade.

Thanks.

[The Chair, Liberal, Ken Hardie]

Thank very much, Mr. Fulton.

We'll now go to Mr. Lansbergen for five minutes.

[Paul Lansbergen, President, Fisheries Council of Canada]

Thank you, Mr. Chair, for the invitation to testify today.

Before I get to my specific comments, I would like to spend a few minutes to give some additional context on the council, our sector and our trade.

The Fisheries Council of Canada is the national voice for our wild-capture fisheries across Canada. Our member companies are processors who process the majority of Canada's fish and seafood. Our members include small, medium- and larger-sized companies along with indigenous enterprises who collectively harvest in Canada's three oceans. The Canadian seafood industry employs 72,000 in direct jobs, mainly in coastal and rural communities. In essence, the sector is the beating economic heart of these communities. The sector accounts for $7.6 billion in exports to over 100 countries. The largest export markets are the United States at 64%, China at 19%, Hong Kong and Japan both at 2.5%, and the U.K. at 1.6%.

Growing global demand for protein, including fish and seafood, points to growth opportunities for our sector. FCC and the Canadian Aquaculture Industry Alliance, our counterpart on the farming side of the industry, have developed a joint 20-year vision to be a global top-three best quality and sustainable fish and seafood producer, not the largest but the best. With this vision, we have three aspirational goals. We want to double the value of the Canadian industry, double economic benefits to largely coastal communities and double domestic consumption of fish and seafood. These are definitely ambitious goals, but if you don't aim high, you don't achieve high.

The last and most important backdrop for our conversation today is our sustainability performance. Canada is a global leader in sustainable fisheries management with a robust regulatory regime, and DFO reports that 95% of our fish stocks are harvested at sustainable levels. In addition, Canada's adoption of independent third-party certification for sustainable practices is in the top five in terms of percentage of landings certified. We should feel proud of our collective stewardship of our fish resources.

All of this is important context for my remarks today, and now I'd like to move on to the specifics of the Indo-Pacific strategy.

Last year, we exported $1.9 billion to 15 countries in the region. China is by far the largest destination, receiving $1.4 billion, representing 77% of our exports to the region. Japan received $188 million, representing about 10%; South Korea, $94 million or 5%; and then Vietnam and Taiwan rounded out the top five.

Our imports total $1.6 billion from 20 countries in the region, leaving us with a trade surplus of about $300 million. The top countries for our imports are China, $517 million or 32%; Vietnam, $307 million or 19%; India, 274 million or 17%; Thailand, 256 million or 16%; and Indonesia at $91 million or 6%.

Our exports over the last 10 years have grown 78% in the region, while imports have grown more slowly at only 14%. Of our top export markets, we are net exporters to China, Japan and South Korea. We are a net importer from Vietnam, and we're essentially balanced in Taiwan. While we agree with the strategy of diversifying in the region, it is difficult to do. There is ever-growing demand for fish and seafood in China, and it is critically important to our sector. For some species, China is our primary or even our only market.

Having said that, we see growth potential in the region, as it has a large population and a strong seafood culture. FCC partnered with the Canada brand program in Vietnam to have our seafood consumer guide translated into Vietnamese and promoted in-country. We partnered with the consulates in Ho Chi Minh City and Hanoi. This was the first time FCC had done something like this, and it was a good experiment.

Another thing that's important is that I'm a member of Agriculture Canada's Indo-Pacific industry working group. We provide input in how the department actions its role in the Indo-Pacific region as part of the strategy, and our initial discussions revolved around the location and the operationalization of its new office in Manila. I'm happy to be the lone seafood representative in that group.

We are also pleased to see that EDC is expanding in the region. It has new offices in Jakarta and Seoul and added staff in Singapore, and this year it is opening new representations in Ho Chi Minh City, Tokyo and Manila.

With that, feel free to ask me any questions regarding the free trade negotiations in the region and trade missions and opportunities for specific species. I welcome questions.

Thank you.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Lansbergen.

We'll now go to Shannon Joseph, who's chair of Energy for a Secure Future.

Ms. Joseph, you have five minutes, please.

[Shannon Joseph, Chair, Energy For A Secure Future]

Thank you very much.

Energy for a Secure Future, or ESF, is an initiative focused on building a new conversation about the future of energy in Canada and our potential global role in supporting our international allies with energy security and sustainable development. Our national network includes unions, indigenous leaders, farmers, mayors, industry leaders and others who share a vision for this role for Canada.

I would like to propose three themes for the committee to consider as foundational to Canada's Indo-Pacific strategy. The first is energy security, which is a top priority for our allies. The second is environmental performance and the role of Canadian LNG, and the third is economic growth for our own country.

Since our founding in early 2023, ESF has produced two discussion papers related to our potential global energy role. One focused on how indigenous ownership in the energy space has evolved and is playing a role in a secure energy future. The other was on the value proposition of Canadian LNG export opportunities. Following the launch of these papers, ESF has engaged with members of the diplomatic community in Canada. This includes ambassadors or consuls general of our G7 allies as well as key G7 and G20 partners, including India and South Korea.

What we've heard is that many of our Indo-Pacific allies continue to rely on energy from Russia, despite their desire for alternatives, and all see the potential reliable supply of Canadian liquefied natural gas as beneficial to their long-term objectives around energy security and democratic co-operation.

Here are some figures to consider. Two-thirds of South Korea's electricity generation is provided by fossil fuels, of which 98% are imported. Coal represents 40% of that electricity generation, of which 81% is imported from Russia. India is the third-largest energy consumer in the world and gets roughly three-quarters of its primary energy from coal, petroleum and natural gas.

In the past two years, India has increased its imports of price-discounted Russian energy. What we have heard from them is that buying LNG from Canada is desirable and would be a lower-cost alternative to many, including the United States. This committee has already heard from Japan's ambassador on this subject. They, too, see important value in Canadian LNG for meeting their energy needs.

Today, Canada is not a global security player, and we are excluded from many major initiatives, including AUKUS and the quadrilateral security dialogue. If Canada truly seeks to be a strategic ally in the Indo-Pacific, energy is one of our most potent cards, and it is vital that we listen to our friends in the region when they describe their needs and priorities.

On environmental performance, Canada's climate change objectives, specifically our Paris target, are often used as the reason our natural gas production should not grow or our domestic manufacturers must bear higher energy or carbon costs. While responsive to the Paris Agreement, this target does not move the needle on global emissions, which is the meaningful goal. Papers from the Canadian Chamber of Commerce, the National Bank of Canada and others have highlighted the important environmental role of increased LNG exports from Canada.

The chamber's paper highlights that displacing 20% of Asia's coal-fired electricity with Canadian LNG would reduce global emissions by more than Canada's total GHG emissions in 2021 annually. Analysis from the National Bank of Canada shows that, if Canadian LNG were an alternative to India's current plans to double coal production by 2030, the equivalent of three and a half times Canada's total 2021 GHG emissions would be reduced annually.

This brings me to the third theme, which is domestic economic growth. An effective Indo-Pacific strategy means more high-income jobs for Canadian workers. Earlier this year, I, alongside our partners in Canada's building trades, met with the federal labour minister to convey the importance of LNG jobs to Canadian workers. These are some of the biggest job contracts in the country, and these jobs underpin social mobility in Canada.

Indigenous nations are owners and partners in the export facilities, pipelines and upstream gas production of Canadian LNG. The Cedar LNG project will be the first majority first nations-owned LNG project in Canada's history. Canada's role as an LNG player will meaningfully create prosperity and advance reconciliation for these nations.

Finally, if we want to address the productivity and investment gap in Canada, then we need to be a place that gets things done. Showing focus and commitment in our approach to the Indo-Pacific and delivering for our allies can be an important part of this demonstration.

Thank you.

[The Chair, Liberal, Ken Hardie]

Thank you, Ms. Joseph.

We're going to our rounds of questioning. We have, for our first round, Mr. Chong, and then Mr. Fragiskatos, Mr. Perron and Ms. McPherson.

Mr. Chong.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Mr. Chair, I think Mr. Perkins is going to go first.

[The Chair, Liberal, Ken Hardie]

We had Mr. Perkins going second, but if he wants the extra minute then he can go first.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'm easy either way.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

I'm happy to go first.

Thank you, Mr. Chair.

Thank you to our witnesses for their opening remarks. I wanted to ask Ms. Joseph some questions. She talked about coal-fired electricity plants in India. We know that the world is burning more coal than ever, particularly in the Indo-Pacific region. China burns more coal than all the rest of the world combined.

The International Energy Agency said about a decade ago that coal burning for electricity production had peaked. They obviously were way too early, because we saw a record high two years ago and a record high last year. On the data I've seen, it looks like 2024 will smash through all records in terms of coal consumption for the production of electricity.

We also know that a kilowatt-hour of electricity produced from natural gas has half the GHG emissions of a kilowatt-hour produced from coal.

Could you tell us a bit about your organization's view as to the importance of exporting LNG from Canada's west and east coasts so that we can displace more coal-fired electricity generation, which accounts for more than a fifth of all the world's GHG emissions?

[Shannon Joseph]

Thank you very much.

Yes. Since, in particular, the invasion of Ukraine and the disruption and embargoes on Russian gas supply, the world has been scrambling for natural gas. Part of the driver of that was underinvestment before that invasion happened.

I think there were lots of assumptions about when the use of natural gas or other fuels would peak, but at the end of the day, countries were looking for sustainable baseload, countries in the Indo-Pacific were trying to give more of their citizens access to low-emission...or just energy, period—electricity, period. There are still many countries in the Indo-Pacific with rolling blackouts, India included. That is the role coal has come in to fill. As gas has become less available, coal has gone up.

I think it's a high priority, both from a security standpoint of who's going to be a friend to these countries and from an environmental standpoint, to get more LNG to them.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

I note that countries throughout the Indo-Pacific region have increased coal burning to produce electricity. I think of countries like Taiwan, which currently burns coal to produce electricity. I think of Japan's energy challenges. I know that the Government of Japan recently instructed large LNG purchasers, I believe Mitsubishi, to secure long-term LNG contracts.

Do you think it should be a foreign policy priority of the whole of the Government of Canada to make the export of LNG to allies and partners across the Indo-Pacific region, such as Taiwan, Japan, Australia and others, a priority?

[Shannon Joseph]

I do, and I think it's a priority because the alternative is a rapprochement of those countries to other jurisdictions and a diminished influence for Canada in those regions.

At the end of the day, we have the resource and the capacity as a country to fill those needs, and those countries know it. We don't really have a good reason for not coming in and playing that role, especially when we look at the domestic benefits that include those important reconciliation and job benefits in Canada. There are 77,000 jobs if we build the majority of those projects that we have under construction right now—well, they're not all under construction but in development, such as Ksi Lisims, LNG Canada, Cedar and Woodfibre.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you.

I have a question for the Canadian Cattle Association, formerly the Canadian Cattlemen's Association, about what we need to do. What are your recommendations for us to increase beef exports to the Indo-Pacific region?

I referenced in the earlier panel how the Dutch are almost exporting double the number of agriculture and agri-food exports that we are. According to the data I have, they exported 15 billion Canadian dollars' worth of meat last year. We exported $9.3 billion in meat last year.

What do we need to do to catch up and exceed the Dutch when it comes to exporting meat products like Canadian beef?