International Trade Committee on April 30th, 2008

[John Masswohl]

They actually have excess production. They are exporting some to Venezuela. In fact, there were border problems with Venezuela the week we were there. Venezuela had closed down the border, and they were wondering what they were going to do with this extra million pounds of beef that gets exported. That was an issue of concern for them.

You're right that they talked about wanting to position to play in the export markets but worried about the timing: how much beef was going to come into their market versus the uncertainty of knowing when they would be able to export. They are definitely positioning.

Another thing they are very aggressive about is improving their genetics. It has been an important genetics market for us for the last few years, sending semen and embryos, more on the beef side but some on the dairy side as well. They have developed a brand they call Brangus, taking the Brahma and crossing it with Angus to try to get a better—

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I'm picturing that in my head.

[John Masswohl]

I would say we're not concerned about being able to compete with them on quality. I think we'll still compete pretty well on quality.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Excellent.

I'm going to give Larry the next question, because otherwise I'm going to take all the time, and then I'll have another problem on my hands.

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

Thank you very much.

Thanks, guys, for coming today.

You've all talked about the importance of this, and, Bob, you really stressed that this is the right way to go, and John and Bruce have both said to make sure we get a good deal that suits both industries.

We've had a number of witnesses here, and I believe it was one of our government representatives who said “the U.S. has negotiated the immediate elimination of the wheat tariff” with Colombia, and that works out to about “$100 million of wheat exports”. They said they had talked to importers in Colombia who said it's a lot cheaper to buy wheat out of Houston than from the west coast of Canada. They say they're willing to pay a premium here—this is what Colombia is telling us—but at 15% they'll stop buying wheat. It really implies how vital it is to basically gain that kind of access.

Bob, I'm sure you are already aware of this, as are most of your stakeholders. Could you comment on that particular quote and really what it's going to mean, not only to wheat growers but also to other sectors of agriculture that you represent?

[Bob Friesen]

You're absolutely right. Right now there's a 12.5% applied tariff on wheat. For barley it's 10%. But for wheat and barley they have a bound tariff that floats somewhere between 90% and 248%. So if we suddenly bring wheat into Colombia and they think it is too low a price, they can lift the tariff up as high as the bound tariff. It's a really strong safeguard mechanism for that, and we'd just simply like the elimination. You're right. Colombia's tariffs on wheat and barley will be immediately eliminated to zero effective January 1, 2009, and then they won't have to grapple with that sort of tariff.

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

In that quote that I talked about, that it's basically worth about $100 million to the wheat industry, have you any figures, Bob, on what this might mean to durum, to barley, maybe canola? Are there any other opportunities there that you're aware of, and do you know what the dollar values of those might be for our producers?

[Bob Friesen]

No, I don't have the dollar values. All I have is that our major exporters now are the peas, lentils, beans, barley, and wheat.

But you know, it's not just about increasing the volume, although one would hope that as we compete against other countries, especially the U.S., we could increase our volumes. It's also about more profitable market access. So if we can eliminate those tariffs, even though for a while we may not increase our volume, at least we'll become more profitable in that market at the onset and then have the opportunity to continue to grow the market.

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

Okay, that's the end of it.

Thanks.

[The Chair, Conservative, Lee Richardson]

Thank you very much, Mr. Friesen.

And thank you, Mr. Miller. I appreciate your keeping it tight. That was good.

We're going now to Mr. Julian.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair.

Thank you for coming forward today.

I have two comments to start.

First off, as I'm sure you're aware, in the U.S., the situation around the U.S.-Colombia trade agreement is by no means set. In fact, Congress has rejected fast-track approval for the U.S.-Colombia agreement. I just came back from the United States a few days ago. It is quite likely that it is stalled now. It's quite unlikely that that agreement will be ratified under this president. I wanted to make sure that was on the record.

My other comment is around the fact that you're speaking to the commercial aspects of the deal, but those are overshadowed to a significant extent by concerns around the human rights situation in Colombia. But we certainly appreciate your coming here today to address the commercial aspects, and I think the cautions you're offering are very important ones.

I'd like to start with you, Mr. Masswohl.

You mentioned that the Canadian government should not be too eager to sign a deal. I gather from your comments that what you're saying is that even under the commercial framework, setting aside human rights concerns and concerns around labour rights, right now the composition is such that it isn't something the Cattlemen's Association would be prepared to support. Is that true?

[John Masswohl]

Yes. We're certainly supporting their continuing to negotiate, but you're right, what we've seen so far isn't good enough.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

So if things don't change...?

[John Masswohl]

We wouldn't want to see the agreement that's before us be the final agreement.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you.

Now I'd like to go to you, Mr. Webster.

You mentioned that your experience with free trade agreements to date hasn't been good. Certainly, you're joining a lot of other folks. There's the softwood industry--the softwood sellout that was signed by the Conservative government and has led to thousands of jobs hemorrhaging out of western Canada. There's the shipbuilding industry, which has been touched by the EFTA agreement. So we're seeing lots of problems with trade agreements generally and how this government approaches them.

Have you been consulted on an ongoing basis about the commercial aspects of the deal, particularly related to the sugar industry?

[Bruce Webster]

Yes. Agriculture and Agri-Food Canada runs a service called the Agricultural Trade Negotiations Consultative Group, and we're in numerous conference calls with them. We belong to the Canadian Federation of Agriculture, so on a quarterly basis we meet with the trade negotiators through the CFA trade committee. We do e-mails with trade negotiators.

So yes, we have a lot of contact with our own negotiators. As well, the Alberta government has been very supportive of our aims. So we do make an effort, and the negotiators do know what we want. It's just that they've not been able to get it.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

So again, currently you would not see this agreement as being advantageous--as it is currently constituted, from what you know now?

[Bruce Webster]

From what we know, it is not to our satisfaction.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Friesen.

[Bob Friesen]

First of all, on your first point, we've always said that if you do a trade negotiation, it has to be good for all of agriculture. To that extent, I'm certainly not here saying let's sign the deal because it might be good for wheat or peas or lentils. We're saying it has to be good for cattle, it has to be good for sugar, so work harder or work a little longer and make sure it's a win for all of agriculture.

On your second point, the officials consult with the industry on an ongoing basis, and when they negotiate and it's not a win for a sector, that doesn't slip by them. They are very familiar with what it is the industry needs, what the dynamics are. When they did the Costa Rica agreement and they negotiated for french fries at the expense of sugar, they knew very well they were doing it. In fact, it was the minister of the day who came out and said they had just decided they were going to negotiate for french fries instead of for sugar.

So they're well aware of the dynamics, and that would never be an excuse--that they're not familiar with the industries.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Friesen, I'd like to come back to you, because a lot of concerns have been raised in the House of Commons and across the country about the dismantling of single-desk selling at the Canadian Wheat Board. What do you think the impact would be, putting aside all the human rights and labour relations considerations, which are pretty fundamental? Let's for the moment pretend those issues aren't out there and we're dealing purely with the commercial aspects of the deal. With the dismantling of the Canadian Wheat Board, if the tariff level was lowered to that of the U.S., and let's say both deals were ratified, with the ending of single-desk selling, would that have an impact on the prices farmers would be able to get in exports to Colombia?

[Bob Friesen]

On the specific market in Colombia, that would be a question better posed to the Wheat Board. Our position has always been that the volume the Wheat Board can negotiate with around the world very often gives them a leg up in a market because they have the sheer volume, so they have a stronger negotiating hand than just one farmer. There are those farmers who are saying they need the Wheat Board because it does give them a competitive edge because of the volume, and then there are those farmers who say they could find spot markets that would serve them better than selling through the Wheat Board. But typically the Wheat Board would be in a much stronger position in the international marketplace than individual farmers would be.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you for that.

I just have time for a final question, and that's related to the WTO and its supply management discussions. Are you concerned about negotiations around supply management at the WTO?

[Bob Friesen]

The negotiations on sensitive products at the WTO are difficult. I do know that farmers are looking at those negotiations. They are looking at single-desk selling and they're wondering if there's a link between the two and whether deregulation of single-desk also means that supply management would be deregulated in the future. But at the WTO, certainly the sensitive product negotiations are going on with difficulty. On some issues I believe the officials are done, so most likely certain issues will have to be taken up by our ministers at a ministerial meeting to get a satisfactory conclusion.

As far as bilaterals are concerned, typically when Canada does a bilateral, when it comes to supply management, what they offer--and I'm a bit surprised by what FEDEGAN said as far as dairy access is concerned, because when Canada does a bilateral, it does offer zero in-quota tariffs. So if this agreement goes through with Colombia, Colombia would have better market access into Canada, say, than New Zealand would because the input of tariffs would go to zero. That's been the position on bilateral negotiations for supply management.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you.