International Trade Committee on April 2nd, 2008

[Terry Pugh]

No, I'm not on the board of directors of the Canadian Wheat Board.

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

Are you a paid advocate for them?

[Terry Pugh]

I'm an employee of the National Farmers Union.

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

Thank you.

Now, many industries that are in this EFTA free trade agreement are going to benefit from this EFTA agreement. One of those industries, of course, is agriculture. That's something we've heard about here.

One of those specific commodities, and you did touch on it in your opening remarks, is durum wheat. Has your organization done any math to figure out, in terms of tonnage or dollars or that kind of thing, what benefit it would be to durum wheat growers? I know that a lot of that durum is grown in western Canada.

[Terry Pugh]

The benefit from this agreement?

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

Yes. Have you done any math on what the potential is there?

[Terry Pugh]

If we were to increase, say, and were able to get about 10,000 tonnes into Norway, at the farm gate you'd probably be looking at a fair bit of money--$3.5 million, probably, straight into farmers' pockets, after Thunder Bay storage.

So yes, I'm not denying that there would be a fair amount of money. My point here is that those durum exports, because they're under the Canadian Wheat Board, will go back to farmers' pockets.

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

Well, for any durum wheat that's produced here, it certainly would go back to farmers' pockets. It's not your Wal-Mart store that grows the product.

I have a last statement before I turn it over to Mr. Cannan. On the supply management, which you've touched on more than once, you're absolutely off base on it. It's not true.

I know that my colleague here will have some information to back that up, so I'll turn it over to Mr. Cannan.

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

Thank you, Mr. Miller and Mr. Chair, and thank you to our guests. Mr. McArthur, I'm sorry for taking you away from the poolside. I appreciate your bringing your experience and your wisdom to the table.

For those around the table who have had the opportunity, we've been discussing this for about five meetings, I guess, so far. We've had different witnesses bringing different perspectives. So just to clarify some of the comments for the sake of those who weren't here for the other witnesses, we've had Mr. David Plunkett, who's the chief trade negotiator for this EFTA agreement. He works for the Department of Foreign Affairs and International Trade.

With regard to Mr. Pugh, to respond to your comment about the aspect of supply management, it isn't compromised. It's not affected. I quote Mr. Plunkett's comments, “I should note that Canadian supply-managed programs are maintained under this EFTA and were exempted.” So if there's some miscommunication along the way, those are the comments from the chief negotiator. If there's some other information we should know, then I appreciate that, but that's what we've been told around the table here.

Also, an agrifood negotiator with the strategic trade policy division of the Department of Agriculture and Agri-food, Mr. Frédéric Seppey, says:

We mean that an essential element of the supply management system is the predictability of imports. That is achieved by having low duty apply on the volume coming in that is within the access commitment—which is the tariff quota we have in place—and having very high tariffs on the volume coming in that is beyond this tariff quota. In these negotiations the over-access tariffs are not affected. We maintain our over-access tariff on all supply-managed products. Hence, we are maintaining the effectiveness of import control for supply-managed goods.

Our government's very concerned. I know that negotiators had spent....This agreement started about 10 years ago. It's the first free trade agreement Canada has entered into for the last six years, so it's not that it's taken, I guess, like a storm overnight. There's been a lot of consultation and a lot of toing and froing to make sure we get a fair and balanced agreement.

I know there are some challenges within certain sectors.

The other aspect that needed clarifying was a question Mr. Risser asked about the process, and this is something new that our government brought in. It's a treaties-in-Parliament process. How it works is that basically there's a 21-day provision for any of the opposition parties to use one of its opposition days to debate, in this case, the EFTA agreement.

We're just nearing that 21-day period, and the NDP hasn't exercised that option. They said it was of very significant concern to them. They wanted to have more oversight and input, but they haven't chosen to take that option.

There will be an opportunity to debate this in the committee as well as in the House once legislation is tabled by the government. We'll have a full and open debate both at the committee level and in the House, so there'll be ongoing opportunities for parliamentarians to provide oversight and input. I just needed to make sure that's on the record to clarify the process.

I have one specific question for Mr. McArthur. You've been in the industry for a long time. Have you been involved in these ongoing discussions over the years this EFTA agreement is taking to come to fruition?

[Andrew McArthur]

I've been at every meeting the association has had.

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

So there has been—

[Andrew McArthur]

There have been quite a number of meetings.

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

So as far as the industry is concerned and you yourself, you've come to this point where the 15-year phase-out wasn't satisfactory from an industry's perspective?

[Andrew McArthur]

No, we came to it reluctantly.

Could you indulge me, Mr. Chairman, and I'll tell a story for 60 seconds, which tells you how Norwegians think.

We did a large job for a Norwegian company, funnily enough, and Mr. Bjarne Skeie, the owner, came over and I took him in to meet the Premier of Nova Scotia. I think it was John Hamm or John Savage at the time; I forget.

Mr. Skeie said to the premier, “I can't understand you Canadians. You pussyfoot around with oil companies.” And he told us a story.

The vice-president of Exxon came over to Norway to talk about the entry to the North Sea. He met the Prime Minister of Norway, and he said, “We want into the North Sea. We own all this acreage, and we're going to build all the equipment in Houston, Texas. They know how to do it.” And the Prime Minister said, “No, you're not. You're going to build it here.” He said, “You've got no facilities. You've got no knowledge.” The Prime Minister said, “I'm going to build them here. We'll build the facilities.” And he said, “No, if you tell me that, I'm going to walk out the door.” The Prime Minister said, “On your way. It's in the ground and the storage is free.” Six months later, the vice-president of Exxon came back and said, “Okay, we'll build them in Norway”, and that was the start. That's where they started.

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

With regard to the specific agreement, Ms. Cherniak, a respected lawyer who presented here, said she looked at over 100 different free trade agreements with respect to shipbuilding, and that 15 years in certain cases for phase-out to occur is abnormally long in the context of free trade agreements. She went on to say that for the next three years we are today where we were yesterday. It's a great plus in the sense that we have three years of phasing in to the program. That's unusual in a free trade agreement. Normally reductions start immediately. We have things that remain the status quo for three years and then we start the phase-out. Making the best of a situation is challenging for an industry, I agree, but I think the negotiators have been able to get some wins in that situation.

One last clarification was on the issue Mr. Pugh talked about, butter and importation with agriculture products. The WTO has a restriction of 4,000 tonnes, so we're committed to allow up to 4,000 of butter into Canada at the low rate of duty. Over that it's a WTO issue, and I believe it's 299% after that. So again, I think the element with the supply management is protected fully. That's something our government is very concerned about. It is standing up and making sure that agriculture and the farmers are protected.

Thank you, Mr. Chair.

[Terry Pugh]

Could I respond to that?

[The Chair, Conservative, Lee Richardson]

If you could be brief, I'd appreciate it. Go ahead, Mr. Pugh.

[Terry Pugh]

Sure. This is actually another quote from Mr. Seppey, which is from that same exchange. I wasn't suggesting that there was a change in the amounts of butter coming in; it was simply on the rate of the tariff. This quote is from Mr. Seppey. He says:

The concession we have exchanged with Switzerland vis-à-vis the butter coming from Switzerland is that instead of applying a tariff of 7%, which is what we exchange with all the WTO members for up to 4,000 tonnes, we allow them to export their butter subject to no tariff.

That sounds to me like it's a drop in the rate.

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

You should keep going:

However, the over-access tariff—whatever amount is exported beyond the 4,000 tonnes—is still subject to a 299% tariff, and we are not, as a result of this agreement, allowing entry of butter beyond 4,000 tonnes at a low rate of duty.

[Terry Pugh]

I wasn't saying that there was no difference in the amount for the over-quota tariff. It's that within the amount allowed in you're reducing it from 7% to zero.

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

There is one last statement, though:

So the 300% rate, which is in fact what is ensuring that we maintain supply management with respect to butter, is unaffected by this agreement.

[Terry Pugh]

No, that's still the same.

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

That's his quote right here. You have to carry the whole quote through. You need to finish it off.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Cannan.

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

I just want to make sure that everything is put into context--