International Trade Committee on Feb. 4th, 2008

[Edouard Asnong]

But a free trade agreement with Korea won't aggravate the current situation. The problem exists in any case.

[Raymonde Folco, Liberal, Laval—Les Îles, QC]

Yes.

[Martin Lavoie]

In the past, we've also asked that products like refrigerated pork—we're not talking about frozen pork here, but rather refrigerated pork, which has a very limited shelf life—be on the list of products essential to the continuation of exports. However, it costs $40,000 per shipment to send the product to Japan by air, for example. We don't want to break agreements with suppliers, but if only for the margins—

[Raymonde Folco, Liberal, Laval—Les Îles, QC]

Pardon me for interrupting you, but I have very little time. That means there should be a provision in some subdivision of the agreement dealing with refrigerated pork, in view of the little time you have from slaughterhouse to table.

[Martin Lavoie]

I don't know whether that should necessarily be included in the free trade agreement or managed separately, but, in the case of grain, for example, we're talking about an essential product. We think that the shelf life of frozen pork and beef is the same. It's shorter than that of other products.

[Raymonde Folco, Liberal, Laval—Les Îles, QC]

Since we're talking about beef, Mr. Masswohl, I'd like to hear your comments.

[John Masswohl]

When I think about infrastructure and the many things Martin has mentioned that are common in shipping red meat, whether chilled or frozen, around the world, I don't really see them as being issues related to the Canada-Korea free trade agreement or any trade agreement per se. I also don't see them as being issues where government involvement would really be required. They are business issues.

If it were a matter of building a port, rail lines, or roads, I would perhaps see more government involvement. But on making containers available, these seem to be more business issues.

[Raymonde Folco, Liberal, Laval—Les Îles, QC]

Let me ask you a question then.

[The Chair, Conservative, Lee Richardson]

Excuse me. I'm sorry, Madame Folco, we're at six minutes.

Monsieur Cardin.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chairman.

Good afternoon, gentlemen. Earlier we talked about the agreement and the fact that the United States hasn't ratified it yet. I imagine you've examined that agreement negotiated by the United States. What is your view, if any, on the United States and the orientation they adopted in those negotiations? Here we're talking about a set of goods negotiated by industry sector. What direction did the U.S. negotiations take? As regards the tariffs charged in the various fields of your industries, what is the trend? Does Korea significantly favour the United States in a number of production sectors?

[John Masswohl]

I have the schedule of the United States-Korea free trade agreement, and for beef cuts--steaks, roasts, and those sorts of things--the 40% tariff will be eliminated in 15 equal annual stages. There will be what they call a trigger volume that starts at 270,000 tonnes the first year and gradually increases to 354,000 tonnes. If the quantity of U.S. beef exceeds that amount, they go back to 40%. On things like stomachs and livers, there's a 15-year phase-out of the 18% tariff without that volume.

I think we need to be careful, because we do participate in these consultations and have all signed confidentiality agreements. We're not at liberty to discuss things in a public forum. But as for the gist of what we're hearing--and I'm sure the Koreans are good, tough negotiators--we're not seeing that same level of access yet for beef or pork. Perhaps I'll let you speak to pork, but on beef, I wonder if the Koreans are perhaps saving this for one of the last details right at the end. Certainly it's extremely important to us. I want to be very optimistic that this is achievable, but I'm not hearing it yet.

[Serge Cardin, Bloc, Sherbrooke, QC]

In the other sectors—

[Martin Lavoie]

I can just say quickly, for pork, what they're looking at is

a reduction. The tariff for frozen products is currently 25%. The reduction relative to the U.S. agreement is approximately 3.1% per year over seven years until the tariff is completely eliminated. So we're definitely talking about 3% for each year. We're giving ourselves one year, but if the percentage is subsequently 6%, it will really be very hard to be competitive.

For us, it's not necessarily the figures that are in question. We know we can be competitive in terms of products. What is important is equality with our competitors.

[Robert J. Keyes]

Korean tariffs on U.S. wine are to be eliminated virtually immediately. Our goal is that ours on table wine will be eliminated over three years. But our big one is icewine, and the hope is that they will be eliminated immediately. That's where 96% of our exports are, so we're satisfied with that outcome. We hope to have the gains, then, on the other side, on our definitions and on icewine and GIs. It's equally important for us to see progress on that.

[Dave Hickling]

In terms of canola, we often feel like a poor cousin to the United States. They seem to get better tariff treatment in many countries. Our position is very clear here: we want as good as the U.S. got. Under the current situation we wouldn't reach the same level of zero tariff until a much later date than the Americans would.

[Serge Cardin, Bloc, Sherbrooke, QC]

You're obviously very much aware of many details concerning the free trade agreement between the United States and Korea. However, it hasn't been ratified yet. Is there a major problem on the whole?

Earlier you said that the Koreans were tough negotiators, but, if the agreement isn't yet ratified in the United States, are the losses in a number of other sectors, be it the agriculture, agri-food or even manufacturing sectors... Are the demands, requirements or negotiations of the Koreans...

Pardon me?

[The Chair, Conservative, Lee Richardson]

We're out of time. Sorry, that's five and a half minutes.

[Serge Cardin, Bloc, Sherbrooke, QC]

Already?

[The Chair, Conservative, Lee Richardson]

Yes. Maybe try to keep the questions a little tighter, and we might get some answers out.

We're going to have to move on.

Mr. Cannan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair. I'll try to be very quick.

Keeping with the metaphor of football that my colleague Mr. Bains alluded to, timing is crucial. Some would say when there's less than a minute left in the game, the underdog could score. That's a reflection of yesterday's results.

Canada needs to really strike this deal. I think the timing is very important. If we can resolve this agreement and sign it before the Americans, we can have a better agreement. It's also, in a lot of ways, the door opener for other Asian markets. I think timing is of the essence. I appreciate all the witnesses' comments, talking about free and fair trade and looking forward to getting this agreement ratified, hopefully sooner rather than later.

Coming from the Okanagan, my colleague Mr. Allison and I, between the two of us, have probably 80% to 90% of the wine industry. We have eight out of the ten top Canadian wineries in B.C. The value-added that we do offer is government.

I know the Governor General was in my riding just a couple of weeks ago, and we had that opportunity. She was in the Okanagan, Similkameen, in Mr. Day's riding, for about three days. I had never been out to see the product in the valley. Canadians are just discovering the incredible resource we have in the wine industry.

Mr. Keyes, I'm concerned about counterfeit products, of course, the icewine. I was with one of the owners of a winery on Saturday night, and he had his pickers out. He's very concerned about trying to get a definition federally.

How do you think we can get our negotiators to resolve this issue within your own industry and ratify the terms?

[Robert J. Keyes]

Well, it's one thing to get a definition, something recognized in the trade agreement, but what we really have to do is get something into federal legislation and rules and find the best way to do it, whether it's under the Food and Drugs Act, whether it is comprehensive alcohol legislation, which defines things. We do define other alcoholic beverages quite precisely under the Food and Drugs Act regulations.

We had hoped we were going to be able to achieve national wine standards. That has proved a difficult balancing act for a variety of both government and industry reasons, so it's time to change tack, and that's what we're going to be looking for in the coming months. We've started discussions with colleagues at CFIA and Agriculture Canada as to the best way to accomplish that.

But having something referenced in a trade agreement, as we have done under the Canada-EU wine and spirits agreement and in the labelling agreement under the worldwide trade group, that is a way we can go in the agreement, and that's what we're looking for and would like to see.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

We look forward to helping, because HACCP was announced, and that's one step in developing these national standards.

[Robert J. Keyes]

Yes, we're moving into phase three of HACCP this summer with a whole bunch of projects with wineries from coast to coast, and that's a demonstration of food safety and quality, which is all very important in this export marketing game we're talking about. The Koreans put it very high on their list.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I have one quick question. With regard to the pork industry, one of the challenges is the Koreans' concern about a scientifically sound growth hormone they've had some problems with in the industry. Is that something you see as a roadblock, or is there some way of getting around that to convince them?

[Martin Lavoie]

If we're talking about paylean, that was in China. There's no issue at this point with Korea. It was a very big story in the fall. A lot of U.S. plants, some in Canada also, have been banned. If we're talking about this situation, there are some political motives behind the Chinese decision. They're currently doing a risk assessment of the product, and the insider information I got is that it's going in the right direction.

I'm not aware of a specific issue for pork.