International Trade Committee on March 10th, 2008

[Frédéric Seppey]

I believe that in the area of agriculture it's a clear win for Canada, because we are one of the largest agricultural goods exporters in the world. Our only sensitivity on the agricultural side is very much in the supply management area.

We managed to exclude altogether all the over-quota, as I was explaining to Mr. Julian earlier; we have managed to exclude from the agreement all the concessions on the high supply-managed tariffs. On the rest we are ready to undertake significant concessions, and we managed to grant concessions to countries that have an interest in such things as chocolate and fruit jams, such as Switzerland. We managed to offer them good concessions.

On the other side, we managed to get concessions on products of key export interest to us, such as durum wheat and frozen french fries.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

That's good. I'm glad to see those safeguards were put in place for supply management. You mentioned dairy specifically, but I presume that also means chicken products, because that's also under supply management.

[Frédéric Seppey]

Absolutely, sir, yes. It covers chicken, turkey eggs, broiler hatching eggs, and dairy.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you very much.

Mr. Plunkett, I believe this is a question for you. What are some of the industries that the European countries named here wanted access to, but basically we weren't willing to negotiate? Could you talk on that a bit?

[David Plunkett]

Do you mean outside of agriculture?

Well, we are going to zero on everything immediately upon implementation, except for ships. On that point we had this lengthy discussion. That part of it is fairly straightforward.

If only just to help to explain to people, I'll mention that the tricky part of this is how we ended up with four agreements. As Frédéric said, part of that is because for what are called basic agricultural products--largely in the first 24 chapters of the so-called harmonized system, which is where all the tariffs are found--for whatever reason, the EFTAns cannot negotiate as a group. That's why you have these individual negotiations, as Frédéric was saying; you then end up with different results for different countries, depending on how far each party is prepared to go in exchange.

On the industrial side, the focus was on the ships, obviously, but for the rest it's a blanket coverage.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

To have four different agreements within one had to get pretty complicated.

[David Plunkett]

It's a nightmare for the lawyers.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

I can imagine. I give you credit for that.

Maybe we could just move on. Other than what you've already talked about, what are some of the sensitive sectors, if any, that EFTA was reluctant to put on the table at all? Have you pretty well touched on...?

[David Plunkett]

The sensitivities were largely in the agricultural area.

Everybody has sensitive issues. Frédéric mentioned french fries. If my memory serves, we were the first country ever to get a concession from Iceland on french fries, because for whatever reason, this is a significantly sensitive issue in their market. This was one of the late gains we were able to achieve, but if you go--

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

They grow.... I'm sorry; I didn't mean to interrupt you.

[David Plunkett]

It's obviously a small market. I assume there's not a huge land mass for agricultural products. You can get into questions of food security. I don't want to put words--

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

That's something they must grow there.

[David Plunkett]

Yes, but anyway, you get surprises when you go into this. I would not have expected potatoes in Iceland to be a major sensitive issue, but it proved to be.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Okay.

[Frédéric Seppey]

I could offer one example. In Switzerland, for example, horsemeat is a product of high consumption. We have producers of horsemeat in Canada, especially in Quebec, who are trying to get more access in Europe and are facing high competition from countries like Uruguay. Well, with this agreement, in Switzerland we managed to get the tariff rate on horsemeat cut by half, which placed Canadian producers at an edge vis-à-vis their competitors from Latin America, for example.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you.

Most of the horsemeat, I believe, comes out of Quebec, is that correct? There used to be a couple of plants there.

[Frédéric Seppey]

That's correct.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

There used to be one in my riding, but it's been shut down for a number of years.

I think it was you, Mr. Plunkett, who talked about this deal—and I was having a little trouble with translation at the time—being bigger than with all the 10 countries in South America.

Could you just touch on that again? I wanted to make sure I didn't have my facts wrong on it.

[David Plunkett]

One of the things we have been doing, because there have been questions such as “Why EFTA?”, is to make sure we had gone through and done our numbers to show that these countries, while they aren't necessarily the first countries that spring to mind, are still significant economic players. That was one example.

Another example—and keep in mind that there are no substantive provisions with respect to investment in this agreement, at this point—is that Switzerland, I think, is our fifth largest investor from abroad, through companies such as Nestlé and a couple of the pharmaceuticals. These are highly sophisticated countries with some big name companies.

For whatever reason—we had to redo our numbers in the last couple of days, because the 2007 trade stats came out just a few days ago—when we looked at them, we were quite surprised, frankly, to see that there had been a significant surge in our exports to these EFTA countries. The point was that if our math is right, then the exports to these four EFTA countries were more than to the 10 Latin American or South American countries combined, the ones I listed.

The point is, EFTA matters. This is an agreement that there is some real commercial significance to these countries currently, and we are confident that with the improved trade policy framework, it will grow in the future.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

You mentioned Switzerland as being the number five investor here in Canada. What are the top four, just for my own curiosity?

[David Plunkett]

Well, the U.S., I assume; the U.K. is a major investor—

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Japan?

[David Plunkett]

—the Dutch are usually major, and.... I don't know.

Could somebody help me?

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

That's curious. I would not have thought Switzerland that high.

[David Plunkett]

I'll get the list to you.