Canada-China Relations Committee on May 27th, 2024

[Tyler Fulton]

Thanks for the question. I appreciate it.

It's obviously a multi-faceted answer. To be clear, the beef industry in Canada has been challenged over the last three or four years at least with some pretty debilitating droughts. That has really commanded the direction of our cow herd, yet we've been able to make advances in the yield of beef per animal. I would say that investing in those very high-quality trade agreements such as the CPTPP.... That agreement has yielded huge benefits to Canadian cattle producers, in particular in markets like Japan and Vietnam, markets with the highest growth potential and ones that we've actually realized over the course of the last five years.

I wanted to just accentuate the fact that it needs to be on the high-quality side. In the alternative, if we don't meet the bar that CPTPP has set, it quite simply amounts to nothing. The details really are critical. I would focus on a science- and rules-based trade agreement.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Chong.

We'll now go to Mr. Fragiskatos for six minutes.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much, Chair. Thank you to the witnesses.

Mr. Fulton, I'm interested in what you just said on trade.

Could you expand a little bit more about how CPTPP has helped your sector?

[Tyler Fulton]

In particular, the Japanese market is number two on our list of high-value markets of export destinations for Canadian beef. It continues to represent one of the top priorities. In particular, the difference that CPTPP made to that market was that it put us in a better competitive position based on a lower tariff rate than our competitors. Then, when our competitors in some instances were able to meet the same tariff rate, we actually grew demand in that country by virtue of the fact that the landed price of high-quality beef is lower. It's really kind of a multi-faceted thing.

Another destination that I would point to is Vietnam. We really had very limited access to and interest from Vietnam before CPTPP. Now I would count that as really one of the top five destinations for our product.

[Peter Fragiskatos, Liberal, London North Centre, ON]

It's interesting. Vietnam is not frequently mentioned when it comes to powers in that part of the world, but they are really an emerging economy that has done extremely well.

Look, I'm just thrilled to hear that this trade agreement has helped you in the way that it has. Can you go back to the point, though, that you made in reference to my colleague Mr. Chong's questions about science?

I didn't quite get it. You were talking about CPTPP, and I think you were talking about it as kind of like the gold standard for your sector. Then you pivoted to talk about science in some way. I just wanted you to repeat it for my understanding.

[Tyler Fulton]

In particular, I referenced in my opening comments the WOAH or World Organisation for Animal Health. It sets guidelines on how science should intersect with trade. Those, along with WTO rules, are really what set the stage for a country like Canada, which, arguably, can't wield the political power to access some of these markets. We rely on those rules that define the playing field to be able to access that. If they don't meet those standards.... For example, the U.K.'s desire to ascend to the CPTPP, in our opinion, has not met that standard. This is why we've been very public in opposing their accession to that agreement, because it would diminish the quality, really, of that agreement.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you.

Mr. Lansbergen, thank you very much for being here tonight.

It's a very interesting list of figures you cited, from a data perspective. That's always very helpful to the committee. China is obviously very important for those you represent, but what would happen...?

I'm offering you a hypothetical. From a political perspective, it's never a good idea to answer a hypothetical, so I'm putting you in a difficult position. I'm sure it's the same in your neck of the woods, so to speak. Regardless, I think it is an important and relevant question.

What we heard from the Cattle Association is that relations are troubled right now. There are difficulties in terms of.... There aren't just difficulties but huge challenges. There's a huge problem for beef exporters with respect to China for reasons that appear to be quite arbitrary, to put it mildly.

What would happen if China did the same thing to your sector? How would your sector respond? Would you look for and are you actively looking for other markets to prepare for that possibility, should it ever arise?

[Paul Lansbergen]

Companies in our sector have been trying to diversify beyond our key markets for quite some time, whether it be in China...or even trying to balance out the importance of the U.S. economy.

When it comes to China, I sympathize with my friends here in the beef sector. During COVID, a lot of our commodity sectors—mine, cattle, beef and pork—were engaged with our government almost on a weekly basis to discuss how China was implementing its new decrees. I think that sets a great example of how we need to respond to circumstances that don't appear to follow the trade rules.

It hasn't worked for beef, unfortunately. We've heard about whether we should file claims with the WTO, but I know from previous experience that it's a long process, and it doesn't yield results right away. The more we can prevent the issues and resolve them through better bilateral relationships, the better—always.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Fragiskatos.

Now we'll go to Mr. Perron for six minutes.

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

Thank you, Mr. Chair.

Thank you to the witnesses for being here today. It's a pleasure to see them again.

Mr. Fulton and Ms. Babcock, to draw a parallel, I'm going to talk to you about your access to the European market. Mr. Fulton, you just alluded to it when you talked about Great Britain and its potential membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which would degrade it. We're talking about non-tariff barriers here. That could happen in Asia as well, if we're not vigilant. You just talked about China, which is still blocking your imports in a totally arbitrary manner, as I understand it.

I would remind you that you were supposed to have significant access to the European market, but that's not working because, among other things, our method of cleaning carcasses is not recognized. When you talk about science, I know that's what you're referring to. There has to be reciprocity of standards, equivalency.

As parliamentarians, what can we do to ensure that developing the Asia-Pacific market will not result in non-tariff barriers? Are there any precautions we can take in that respect?

[Tyler Fulton]

Thank you so much for your question. I'm sorry. I don't understand French well enough to follow you.

I would say unequivocally that the details of these trade agreements matter. Specifically, the dispute settlement mechanisms matter. We've had positive experiences with the WTO's dispute settlement mechanisms in addressing some of these non-tariff trade barriers, and what we have found is that those mechanisms can set precedents that set the tone of trade going forward.

That said, specifically with CETA, from a beef standpoint, that agreement has failed to meet the bar of quality agreements exactly for the non-tariff barriers you mentioned, like carcass washes. We continue to work through some of those details, but to be honest, there seems to be another barrier that comes into play when we think we've just resolved one, so it's frustrating.

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

What more could we do to help you gain access to the Chinese market, among other things?

Do you feel that Canada is defending itself enough under the circumstances? Do you feel that the country is standing strong enough in the face of potentially recalcitrant trading partners? I'm thinking of Europe in terms of non-tariff barriers, and China for its decisions, which seem totally arbitrary.

[Tyler Fulton]

I'll go back to my original statement relating to our suggestion that our industry believes that we should start looking into the possibility of taking trade action against China to address this issue. As I said, we've had experience with this in the past, unfortunately, so we're already starting to have those conversations.

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

If we take measures with respect to China as you suggest, are you not afraid that it will have an impact on other types of production? I'm thinking of the fisheries, for example, which don't have any access problems right now. These are, after all, sensitive issues.

[Tyler Fulton]

Yes, it's very much a sensitive issue. Actually, as part of some of those conversations, we've talked to some of the other commodity groups, agricultural commodity groups, in relaying this concern that we have and appreciating the fact that there is a possible risk associated with that going forward.

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

Thank you very much.

Mr. Lansbergen, you do a lot of exporting, and that's good. That said, it was brought to my attention that it was difficult to get Canadian products on the Canadian and Quebec markets. We were told that it was more profitable to export our products and import products from abroad. Is that correct?

Is there a way to improve the local population's access to your products, which are of very high quality? They're top quality, which is why they sell well.

[Paul Lansbergen]

Thank you for your questions.

Yes, 70% of our domestic market is served by imported product. Salmon is a third of the market, and it's imported farmed salmon. A quarter of it is imported shrimp, which is the larger warm-water species, whether it be wild or farmed. Certainly, on that one, we need to encourage Canadians to eat the smaller cold-water shrimp. Tuna is the next largest product by volume, and we don't have a large tuna fishery in Canada.

Over the last two years, we have had a national marketing campaign to try to encourage Canadians to eat more Canadian seafood and broaden their appetite to include more of the species we have here in Canada. It's a never-ending process.

[The Chair, Liberal, Ken Hardie]

Thank you very much, Mr. Perron.

Let's go, then, to Ms. McPherson for six minutes.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much, Mr. Chair.

Thank you to the witnesses. Thank you for all of your information so far today. This has been very interesting.

There is just one point that I would point out to Mr. Lansbergen. I know that there are some products that are very difficult for Canadians to access. Dungeness crab is one of the ones that I've heard about multiple times from people, from producers on the west coast. They say that it's much more profitable for them to send those products abroad.

I'll start with you on some of my questions. With the Indo-Pacific strategy, we do have an Indo-Pacific agriculture office that has been set up. There are funds that have been allocated to it. It's a five-year agreement that's been put into place. This was just started this February. There is no similar office for the blue economy, which we have as a priority within the Indo-Pacific strategy.

What would it mean to your sector to have that be part of the Indo-Pacific strategy, part of the commitment that Canada is making in the region?

[Paul Lansbergen]

Thank you for that question.

In terms of the Indo-Pacific strategy and certainly Agriculture Canada's role, and with the new office in Manila, it does include all agri-food, including fish and seafood, so we will be benefiting from their activities. Yes, we may be in some ways a poor second cousin, a small part of the broader agri-food. We understand that, but we will have access to their attention and services.

On your point about domestic supply, it is true that we export some of our products to global markets because there's a better price. Unfortunately, Canadians are quite price sensitive when it comes to fish and seafood.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you.

Mr. Fulton, I'll ask you a very similar question on the IP agriculture office. Have you seen benefits from that so far? Do you see that as providing something that you need? As well, what can we do? What recommendations would you make to ensure that it's meeting the needs of your organization better?

[Tyler Fulton]

Absolutely. Just to reference some of our own data with respect to market development, we see that for our own producer dollars put into it, we get a payback of 5:1. The way I think I see it is that we see these offices really as a way to further leverage some of those investments that we're already making and to really help address issues as they come up.

I will say that I think it's critical to view it as access to the whole region. For example, we see South Korea as one of the top priorities in terms of opportunities for expanding the market share of Canadian beef.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you, Mr. Fulton. As you may know, I'm an Albertan. Obviously, beef is a big part of that. I should actually mention that somebody just let me know that the Oilers are up two to nothing, in case anyone is interested in the playoffs.

When I think about Alberta, though, and the involvement of our beef industry, I wonder if one thing that the agriculture office could do better would be to provide more opportunity for provincial governments to engage better across the country, and obviously for those that are more affected, within that office.

Is that something you could see the federal government having a role to play in?

[Tyler Fulton]

Honestly, we're at such an early stage in the announcement of the use of that office that I think it's kind of too early to tell. What I will say is that I'll echo the comments I heard earlier from our colleagues in the canola industry. This region is built on long-term relationships. A term agreement of this office being in place for five years just likely scratches the surface in terms of being able to really benefit from its investment.