Evidence of meeting #4 for Fisheries and Oceans in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was access.
A recording is available from Parliament.
Conservative
The Chair Conservative Rodney Weston
I'll call this meeting to order.
Before we get into the orders of the day, I'd like to take a moment to recognize one individual among us here today who is celebrating a very special occasion. Mr. MacAulay is celebrating 25 years of first being elected to the House of Commons, and I want to congratulate him.
Conservative
The Chair Conservative Rodney Weston
I am circulating an article that appeared in today's newspaper, Mr. MacAulay—it's a bit of a history of Mr. MacAulay's actions over the years—so that you can enjoy the article, as I did.
I want to wish him all the best as he celebrates this important milestone. He was telling me that he had a party last night. Now, I wasn't invited, and I'm assuming you weren't either. But he told me that the former prime minister said this was just the beginning for him.
So we certainly look forward to many more years, Mr. MacAulay.
Conservative
Liberal
Lawrence MacAulay Liberal Cardigan, PE
Thank you very much, Mr. Chair.
I don't know whether it's a wake or a celebration, but it's a wonderful event. And I thank you for this. I didn't even get a chance to read it, but whatever it says, I thank the colleagues who have been decent about the 25 years—and those who were not, look out.
Conservative
The Chair Conservative Rodney Weston
Thank you, Mr. MacAulay.
We have no doubt that you will certainly remember those who took the low shots at you.
To begin with today, I'd like to welcome our guests here. Thank you for coming to our committee. I know you have a brief statement to make before we get started and that committee members have many questions. We appreciate your coming today to talk about some of the work you've been doing and to answer some of the questions the committee members have.
I want to invite you now to make your opening statement, Mr. Verheul, and, if you would, to introduce your associate with you as well. We look forward to it.
Steve Verheul Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
Thank you very much, Mr. Chairman. Good afternoon, everyone.
My name is Steve Verheul. I am the chief negotiator for the Canada-EU comprehensive economic and trade agreement negotiations. I have with me Ana Renart, deputy chief trade negotiator for CETA negotiations.
Thank you for the invitation to appear before you today; I appreciate it.
As you know, the government announced an agreement in principle with the EU on the CETA negotiations on October 18. Although some technical issues remain to be completed, all the key issues have been resolved with the completion of the agreement in principle.
When it comes to fish and seafood specifically, this package of issues was among the most difficult parts of the negotiations to conclude. It was one of the last issues to be resolved. The fish and seafood negotiations covered a wide range of issues including tariffs, rules of origin, export restrictions, services, investments, subsidies, access to ports, and the environment.
The EU is the largest fish and seafood importer in the world at about $25 billion a year in imports. We now export about $400 million a year to the EU in fish and seafood products and clearly have significant room to grow once the barriers we now face under the EU market are removed.
Fish and seafood have been a top priority for a number of provinces and territories, in particular Newfoundland and Labrador, Nova Scotia, New Brunswick, Prince Edward Island, British Columbia, Manitoba for the freshwater fishery, and even the territories have expressed an interest in fisheries issues to a considerable degree.
We worked closely with these provinces and territories to identify priorities in the negotiations on fish and seafood, and they were very helpful in developing the final outcome. We also consulted closely with industry representatives throughout the negotiations. Both the industry and provinces and territories have been strongly supportive of the final outcome.
The issue of access to the EU market was the highest priority among the fish issues, and we managed to achieve an ambitious outcome. Fish and seafood are a sensitive area for the EU. CETA represents the first time that the EU will completely eliminate its tariffs on fish and seafood and all other forms of protection for a country with exports as large as Canada's.
Of the EU tariffs on fish and seafood, 96% will be duty-free on the first day the agreement comes into effect. This is an important achievement when you consider that currently only 3.2% of Canada's exports enter the EU duty-free. After seven years, 100% of those EU tariffs will be eliminated. EU protection levels are also very high in this sector, at an average of 11% for their tariffs, with peaks of up to 25%. Some of our key priorities, such as some shrimp and lobster products, face tariffs of 20%.
The EU also has something called an autonomous tariff rate quota on some of our key interests, including cooked and peeled shrimp, cod, crab, and hake. While these ATRQs provide us with duty-free access within certain limits, the EU could remove these at any time. They have no obligations associated with them. These ATRQs also usually include end-use restrictions, which prevent our exports from being able to be sold directly on retail shelves. These restrictions will all be removed under CETA.
We have also negotiated temporary Canada-specific quotas on some products to allow us duty-free access within agreed limits during the transition period. This includes a 23,000-tonne quota on cooked and peeled shrimp, and a 1,000-tonne quota on cod.
The final package also includes flexibilities to allow our exporters to import raw product from outside Canada, process it in Canada, and ship it to the EU as Canadian product. We have negotiated specific quantities for processed salmon, shrimp, crab, halibut, lobster, herring, and sardines. This will allow the domestic industry to fill in gaps when domestically sourced product may not be available.
With respect to other elements, the EU insisted it could not accept an outcome that would provide completely open access to its market but allow us to maintain export restrictions. As a result we reached an agreement that Newfoundland and Labrador would remove its minimum processing requirements on exports destined to the EU three years after the agreement comes into effect. This is not expected to result in any significant impact as these restrictions have not been targeted toward the EU.
We also agreed to provide most-favoured-nation treatment to vessels of EU member states with respect to access to Canadian ports. This simply means that we will treat EU vessels no worse than we treat vessels from any other country. It does not mean that we have any obligation to provide preferential treatment when it comes to safety, environmental, or any other requirements we may wish to impose on access to our ports.
On subsidies, we have agreed to work jointly to develop resolutions to fisheries subsidies, and there are specific provisions related to consultations if subsidies or support provided by one party to the fish and seafood sector is adversely affecting the interests of the other party.
Finally, with respect to the environment, we have agreed to take specific measures to conserve fish stocks, and to adopt actions and cooperate to combat illegal, unreported, and unregulated fishing. That's a summary of the outcome of the fish and seafood negotiations in the CETA. We would be happy to respond to any questions you might have.
Thank you, Mr. Chairman.
Conservative
The Chair Conservative Rodney Weston
Thank you very much, Mr. Verheul.
We're going to start off with a seven-minute round and we'll start with Mr. Kerr.
Conservative
Greg Kerr Conservative West Nova, NS
Thank you, Mr. Chair.
Thank you very much to the both of you for coming in today and it's a job well done as far as many of us are concerned. I know it's still early stages in terms of the final deal and so on, but there's a lot of enthusiasm. I come from Nova Scotia, and certainly on the Atlantic coast I'm running into a lot of people asking very good questions about where do we go from here and we do that. Obviously the tariff is a big part of it.
But I would like to start on the lobster part. Being down in the western part of Nova Scotia, it's a huge part of our fishing industry. We are at the point of receiving a panel report looking at marketing and price problems, etc., and it seems to me a very timely opportunity to bring up the fact that government can't fix prices, but can provide opportunities. I wonder as we look at that whole issue of pricing whether you have a sense of opening the market up, and I'll just use lobster as an example. What kind of growth might one expect over the next few years from this opportunity?
Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
I think it's really a bit of a challenge to estimate that. We have seen estimates of more than 20% growth with respect to the fishery sector across the board, but I think that's considered to be an increase in growth in the volume of the exports. What I think is more important is the opening up of the EU retail markets... and we're doing that on lobster as well because the EU tariffs on lobster products are much higher for the processed products than for the raw product. So I think that once we are able to start putting our products directly on grocery shelves, and starting to market them under Canadian brands, then we can really start to get full value for our exports into the EU for those products.
Conservative
Greg Kerr Conservative West Nova, NS
Many of us have been involved in a lot of discussions with the fishing industry in the last few years, and there's what we think of as an ample supply—some call it a glut—of lobster that has to be moved somewhere. Of course, having depended on the American market for so long with their economy the way it has been has opened up a lot of conversations. I get the sense then that we're talking about value-added, that if there's more processing taking place in our jurisdiction it not only adds jobs but also adds value to the product. Do you see where this could be heading?
Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
I see that as one of the main benefits of the outcome we've negotiated; we have removed those restrictions to the retail sector that are in place right now. By doing that I think it does allow or provide us with an incentive to do much more of that processing at home. I think on lobster specifically the prices have been somewhat depressed in large part because of the reliance on the U.S. market. I think that having another market to ship to, the largest market in the world where prices are generally quite high, gives us an another opportunity too to look at other possibilities for getting more out of our exports outside of the country.
Conservative
Greg Kerr Conservative West Nova, NS
I mentioned lobsters to start because of what we're going through right now, but I assume that the benefits can pretty well be seen across the seafood industry. It's to varying degrees of course, but the opportunity has opened up for all kinds of value-added additional processing and so on because of the retail opportunity. It's really a challenge for the industry itself to look at how to become a little more innovative and perhaps a little more sophisticated in how it deals with it. Would you say then that it's fair to apply that opportunity right across the industry?
Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
Yes, I think it's probably more important for some species than for others, but if you take some of the main species we have of interest, lobster being one of them, shrimp, crab, and various others, the EU does actively discourage further processing in terms of imports. They have outright prohibitions to get to the EU retail market shelves. All of that will be removed under CETA. So we will have that market entirely opened to us. I'm certainly hopeful that it will provide a strong incentive to do a lot more of that marketing and that processing out of Canada directly.
Conservative
Greg Kerr Conservative West Nova, NS
We're surprised that I haven't used up all my time right off the bat, but I'd just like to stick with that part of it because obviously you made a note of the fact that the seafood sector is one of the more difficult parts of the negotiations overall. Here I must say that after watching this potential over the years, I marvelled that they would agree to the processing opportunities taking place in Canada, to go into that $500 million market.
Do you want to just expand a bit as to what that reaction was? I'm not looking for details about the debate, but to me, to reach that is one of the greatest accomplishments in this arrangement because I think the opportunities for us are huge.
Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
No, I entirely agree with that.
The discussions on fisheries were difficult from the beginning. This is a sensitive sector for the EU. Even though they are the world's largest importer, they have a lot of sensitivities with specific member states that rely, to a considerable extent, on the fisheries sector to provide economic support within their own areas. And they have the same kind of situation that we have, where they have a lot of ports and fishing villages that are dependent on the industry. So they were lobbied hard not to open up the fisheries sector to Canada.
In terms of the agreements that the EU has done before, this is the first time they have opened up their entire fisheries market to a country that's a significant exporter, as Canada is. For the most part, they have excluded at least some of the fisheries sector from liberalization under previous agreements. And that really played into part of the broader package of the negotiations. This was one of our key offensive interests. So we pushed very hard on it and that balanced off against our accommodating some of the EU interests in some other areas.
But this is one area where we thought there were significant gains to be made and we exerted a lot of leverage behind this issue and I think it came out in the best way we could have hoped.
Conservative
Greg Kerr Conservative West Nova, NS
I just want to finish by saying that we are very, very appreciative of the efforts made, because we think there's nothing but good opportunity, provided we manage it correctly and invest correctly and do the things. So there would be a lot of information that has to flow, I assume, in the next few years as we reach that market potential.
Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
Yes, if I can briefly respond to that, that's a point we've been making in various places lately. We're on the verge of completing an agreement that will provide us with a lot of opportunity in the EU market.
But it's opportunity. It's Canadian business that's going to have to take advantage and be able to hit the ground running to be able to take advantage of those openings, and that's the next step we have to focus on.
Conservative
NDP
Robert Chisholm NDP Dartmouth—Cole Harbour, NS
Thank you very much, Mr. Chair. Hopefully, I won't take all of the seven minutes. I'll share it with my colleague Mr. Cleary.
Thank you very much to our guests. I appreciate your being here.
As you know, the New Democratic Party is certainly well aware of the potential value of this particular trade deal. Working with a country like Europe, in terms of standards and values and principles, is something about which we're very interested in trying to find out all the details, so we know exactly what it is we're working with.
We certainly, from my perspective as a Nova Scotian member of Parliament, have paid a lot of attention to potential positive impacts as they relate to the fishery and other sectors. But I want to also add that we're all aware of the history over the past 100 or so years of the difficult relationship between European fishing nations and Canada, our coastal communities. So there are some questions we need to explore a bit further.
I would also add, as Mr. Kerr has talked about, regarding the lobster industry and the maritime panel report that just came down, that if we have more opportunity out there to market the product, now's the time for the industry, with the help of governments, to figure out how best to access that in a way that's sustainable for the resources and that benefits coastal communities.
Anyway, I wanted to ask you one specific question, and that was regarding access of fishing vessels to our ports and the question we've had over the years of monitoring vessels suspected of fishing illegally in international waters. I wondered if you could just expand a little further on what it is we've agreed to.
