Fisheries Committee on Nov. 21st, 2013

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Do you have any specific advice for people in the export business? You have been there; you have seen what's going on. What would you say to a small to medium-sized enterprise in the seafood export business about hitting the ground running now that CETA is a reality or will become one soon?

[Steve Verheul]

I think that's the priority we have to turn to now that most of the issues have been settled: getting Canadian industry ready to compete in the EU market. It's not the same market as the domestic market, not the same as the U.S. market, and I think there's an education process that we 're going to need to undertake to ensure that people are aware of the opportunities that are out there. We need to provide information about how to access those opportunities, and if we're going to take full advantage of this, we have to put a lot of effort into making sure that they are ready to hit the ground running and realize the scope of the opportunities that are available there, which won't be available to our U.S. competitors and won't be available to competitors from other developed countries. This is our chance to get in there first.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Mr. Weston.

Mr. MacAulay.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you very much, Mr. Chair.

Welcome. I certainly hope that it's as successful as it's portrayed to be. The fishing industry can certainly stand it, because the lobster industry in particular, as has been stated here, is depressed at the least.

It is of concern to me that there would be a $400 million package put in place in Newfoundland to compensate for processing and that now we're portraying this as a massive asset to the processing industry. I just hope it is; I hope very much that it is.

Do we ship a lot of live lobster to the European market? And with this new deal happening, do you expect that instead of shipping the live product we will ship the processed product? That's what I would gather from what you're saying.

And just as an aside, we are going to treat the EU member states with respect at our Canadian ports. Were we disrespectful up to now, or what? Or did I just not understand this? It seems to be strange language. If somebody is breaking the law, we can deal with them. We could before, and I suspect we will now.

[Steve Verheul]

To start with the live lobster, at the moment we export about $39 million worth of live lobster to the EU. That is something that I think we have the potential to change over time, because we face much higher restrictions on processed lobster in particular. The tariff on live lobster into the EU is 8%; it's 20% on processed lobster. Removing both of those gives us the opportunity to go after the processed lobster market in particular. This is part of what we have to think about: what we need to do in terms of adjustment to our approach domestically.

On the access to ports issue, certainly there has been a bit of history with respect to EU fishing in Canadian waters, and there have been some moments of tension in the past, as I'm sure you're aware. What we have committed to is to address more of an optical issue, I think, than a real one, in that the EU wanted some assurance that we would not unfairly discriminate against them relative to everybody else. We were certainly prepared to make that commitment, because we don't discriminate unfairly against the EU in comparison with others.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you very much.

Also, on subsidies, we have agreed to work jointly to develop a resolution to the fisheries subsidies. I would just like you to elaborate on where that would take us, specifically with some of the subsidies that have been in the news lately.

Number one would be employment insurance, wharf repair and this type of thing that DFO was involved in. As we know, with the WTO, there was a great concern about the subsidies that fishermen received in this country, as in the small craft harbours programs.

If you could, I'd like you to inform the committee where that's going and where you expect it to end.

[Steve Verheul]

Yes, happily.

[Lawrence MacAulay, Liberal, Cardigan, PE]

I'd also like to ask...but likely won't have time. But go ahead.

[Steve Verheul]

On the subsidies issue, we generally don't have a subsidies chapter in most of our free trade agreements. The EU wanted one in this agreement and, at first, I have to say we weren't that interested.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Why aren't we interested? Because I would expect that with the European community there would be something here. We're dealing with subsidies and it's there for a reason.

[Steve Verheul]

Yes. Well, the reason we weren't that interested to start with was because—and the EU actually shares this view—we think the best place to deal with subsidies is at the WTO. Very few countries are going to be prepared to take obligations on subsidies in a bilateral agreement and, in effect, disarm themselves against the rest of the world. So we weren't prepared to do that either.

But the battle we had with the EU on subsidies was that they wanted to exclude the fisheries sector and they wanted to exclude the agriculture sector. We said that if we were going to have any kind of treatment of subsidies in this agreement, it had to include agriculture and fish as well. But at the same time we're not looking at obligations that are going to change the way we provide assistance to the fisheries sector now.

What we've agreed to is that we would have notification requirements on subsidy programs, so if you're introducing a new program, you'd have to notify the other side so they are aware. In the event that a subsidy program from one party or the other is causing damage to the interests of the other side—

[Lawrence MacAulay, Liberal, Cardigan, PE]

That's the one I'm interested in.

[Steve Verheul]

—then there is an obligation to have a consultation about it to see if there is a way to try to avoid that kind of impact on the other's interest.

But there is no obligation to remove any subsidy program; there is no obligation to reduce the level of subsidies. I think that, really, if you compare the subsidies provided in the European Union on fisheries compared to what we provide, we're in a much better position because the EU common fisheries program provides a lot of support to the fisheries sector.

[The Chair, Conservative, Rodney Weston]

Very quickly, Mr. MacAulay.

[Lawrence MacAulay, Liberal, Cardigan, PE]

You indicated, of course, that we're going to respect the environment and we're going to respect the measures to conserve fish. Looking at eco-certification, do you see that becoming a problem?

Let's say, for example, there is a downturn in a certain area, as in the catch of the lobster could be down for a number of years. Do you see this eco-certification having an impact on whether you can fish in a certain area or not?

I'm just thinking of area 26A off Prince Edward Island. The catch was down for a number of years. If there were eco-certification we might be told we couldn't fish there. Last year the catch was very high. That's a great concern to the fishing industry.

Do you see that having an effect?

[Steve Verheul]

No, we're not going into that kind of specific area. Much of that resides either under our domestic policies or under policies of regional organizations like NAFO.

We've agreed to cooperate in regional organizations and we've also talked about effective monitoring control mechanisms that we would both take to ensure that the stocks do remain healthy or become healthy, and that there is not extensive over-fishing.

We're particularly interested in the illegal, unreported types of fishing that occur mostly on the margins, and certainly outside of any officially sanctioned practices. That's really going to be all about how we can jointly try to preserve this very precious stock that we have now, and then use it in generations to come.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Mr. MacAulay.

Mr. Donnelly, we're going to move to a three-minute round now.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Thank you, Mr. Chair.

And thank you to both of our guests for your hard work on the agreement.

I want to pick up where Mr. MacAulay left off on eco-certification. Right now DFO considers the seeking of eco-labelling as industry-lead and voluntary market-driven decisions, but the EU is slightly different. You did touch on it there in the response to Mr. MacAulay's question, and I just wanted you to elaborate a little further on whether this inclusion in CETA and the recognition of the benefits of eco-certification will have implications for Canada?

[Steve Verheul]

We haven't gotten into that kind of specifics. It's more about making sure we have very effective monitoring and control mechanisms, so if we can jointly start to see if there is a problem developing, or if fish stocks are going down and need to be protected in some way or other, or if we're pursuing issues like you mentioned on the eco-labelling, that we try to do that together to the extent we can, because—

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Do you see that coming?

[Steve Verheul]

It's part of the cooperation element we've incorporated into areas like fisheries. We have specific provisions in the environment chapter in relation to fisheries for that purpose, which is something we've never done before, so that we can try to start jointly managing the fishery sector.

I'm sure you're aware that the EU has struggled with its own fishery sector to a great degree because it's suffered from the effects of a lot of overfishing over a very long time and they are still dealing with that. We need to have a more sustainable type of approach to the fishery sector that we could both get on board with, to advance it.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

Is there a sort of single certification program that is recognized by the EU?

[Steve Verheul]

No, and we haven't gone that far either. But that's something that, through the cooperation mechanisms we developed, could certainly be a possibility in the future.

[Fin Donnelly, NDP, New Westminster—Coquitlam, BC]

The government says 95.5% or 96% of tariffs for fish and seafood products will be eliminated when CETA comes into force. On the remaining 4.5% or 4% in seven years, what products will continue to have tariffs and what guarantee is there that these tariffs will be eliminated down the road or in seven years?

[Steve Verheul]

There will be a binding commitment in CETA that those tariffs will have to be reduced in equal annual steps over seven years. So you're going to have a certain reduction every year until the tariff is eliminated.

Now, for some species that we had particular concerns about—and cooked and peeled shrimp was one of them because the EU has put that at seven years—we said that if you're going to have a seven-year phase-out on a tariff for a product that's as important as that one is to us, then we want a Canada-specific quota while that tariff is being phased out. We negotiated a 23,000 tonne quota that would remain in place until the tariff was gone, to provide us with open access to the EU at least up to that level. We've done that in a few cases.