International Trade Committee on April 2nd, 2009

[Martin Rice]

I'll put a couple of pork perspectives in there.

On country of origin labelling, I think it's important to remind ourselves that there was no consumer demand for country of origin labelling.

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

I'm not suggesting it's not American protectionism, don't get me wrong. I absolutely understand what it is. I'm just trying to see if there's a silver lining in there.

We end up with some things forced upon us that as a government we have an obligation to try to correct on behalf of industry, without question. I guess my question was about the ability to tell your marketplace that our beef or pork is the best and the safest in the world, and that anytime we do find a problem, we can eliminate that problem from the food chain in a nanosecond. That's what I meant.

[Martin Rice]

Right, but through this integrated market, we don't lose that ability to be able to follow those movements. We definitely have taken advantage of the opportunities that NAFTA and other trade agreements have provided for specialization in areas that we have advantages in. COOL really drives a wedge into that whole thing, and it upsets a huge amount of investment.

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

Yes, I've seen that.

[Martin Rice]

On the flexibility on trade negotiations, Canada did sign on to the 2004 framework agreement, and the rigidities in its current negotiating position really remove it, pull it back, from that commitment that it made in 2004. I think, as Dennis suggests, it hampers our negotiating ability in arguing for the trade liberalization we've been looking for in other sectors. I think Canada has to be able to firmly plant itself on the negotiating commitments that it has made to this point. The negotiations have to move forward, not backward.

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

With the country of origin labelling, and the shifting rules, it's one thing in 2008, in December it's another thing, and in January, we don't know, really; it hasn't stopped moving yet.

When we go to Washington in April, what message would you like to see this committee deliver to our American counterparts on country of origin labelling?

I understand that the preference in an integrated marketplace is to accept that it's integrated, follow the WTO rules, follow the NAFTA rules, and simply not have it. Beyond litigation or costly negotiations, the quick answer would be, I expect, to have allies in the United States, the processors in the United States that are dependent upon Canadian cattle and weaner pigs, to be there lobbying some of the Congresspeople and Senators in the U.S.

[Jurgen Preugschas]

I'll comment on that.

I do believe we passed around to you some talking points for you to use when you go to the U.S. We think they're pretty key. I want to highlight a couple of things for you in that.

There are many small, independent farms in the U.S. that rely on Canadian feeder hogs. I think that's a good example to use for the U.S. representatives. Research has shown that about 1,375 independent farm operations are at risk and vulnerable due to these rules because of the integration with Canada.

Then, of course, in the economic crisis that the world is under right now, for the Americans to put so many of their jobs at risk just doesn't make any sense right now. If we drop 10 million hogs that are being slaughtered in the U.S., they're putting the survival of several hog plants at risk, and all the workers who go with them.

I think those are the types of things that Congressmen and Senators are going to understand. When you show that to them, they will, maybe, eventually see the light.

[John Masswohl]

I was going to add that there are messages for the administration versus messages for Congress. The administration has to implement the law that Congress has given them, and so many of our fundamental problems are with the law itself.

For the administration, I think you can try to move them to understanding what this law is, that it is a marketing initiative and not a food safety issue. Some of the comments we've heard from some of the brand new administration officials, suggesting that this is about food safety, are moving this issue in the wrong direction. We think they need to be brought around on that account.

For the Congress, I think it's fair ball to remind them of what an important customer Canada is for their exports. I certainly agree with Jurgen that this law is damaging them in terms of their production by adding costs that make them less competitive, but we also buy an awful lot of their meat, fruits, vegetables, and other products.

In fact when you go to be briefed by them, the embassy will probably give you some graphs that show that every Canadian eats approximately $470 worth of U.S. agriculture exports every year. I can't recall the number, but I think it's about $55 of Canadian agriculture exports that every American eats every year. So the trade balance is about 9:1, on a per capita basis, in their favour.

Ultimately, I think the only way we will probably get the law changed is through a WTO action and a ruling against them. But it's about greasing the wheels along the way, to help them understand that they will ultimately have to change the law, and to condition them as to why.

[The Chair, Conservative, Lee Richardson]

We're going to go now to Mr. Cannis.

[John Cannis, Liberal, Scarborough Centre, ON]

Mr. Chairman, thank you very much.

Let me also welcome our panel. I found this very interesting. All somebody like me, growing up in downtown Toronto, cares about is whether I can go to my store and buy something that is quality and that looks fresh. We grow up in total ignorance, I guess, of what exactly goes on behind the scenes.

Some years ago, the Cattlemen's Association, when we were going through the BSE issues—I think it was our good friend Peter Goldring who brought them by—stopped in my riding. We had a barbecue, and hundreds of people showed up. They wanted to learn, they wanted to know, they wanted to understand what this issue was all about. The more I hear, the more I am able to speak to my constituents and understand this issue.

First of all, let me say, Ted, you do a terrific job on their behalf. If I'm sitting on the other side, listening to your presentation...you know, you're full of enthusiasm. Keep up the good work.

I've heard a combination of things today, and I don't know where to start, Mr. Chairman. I think I'm going to go with the last one.

You talked about WTO action. That's a time situation. It's an expensive process. We just went through the softwood lumber issue: years and time and moneys. I would like to know if you could suggest whether there's any way of speeding this up, any way we can, not circumvent, but.... Financing, of course, has to be one issue as well, I guess. As I remember, the softwood lumber people came before this same committee years ago and said, “We're there; we just need some more funds to see it through.” Maybe you can suggest ways we can address the issue of the WTO.

Concerning the list, I'm looking forward to seeing it, if we can, John. Why? Because it's a matter of votes for those Congressmen and Senators down there as well. Maybe the Americans don't know the entire story. Maybe we can be a little more proactive. Sometimes, yes, we can go and see the Congressmen and the Senators, but maybe we should readjust our strategy to go down to the home front and talk with the Governors, for example, or state representatives, etc., and make them aware of it. This is a suggestion; I don't know.

I'd like to get a little bit more into the question of support. When I chaired this committee some years ago, we talked about PEMD. It was a program years ago. In my report, I recommended that we look at possibly bringing that program back, because I'm hearing, Jurgen, what kind of dollars you talk about, and when you look at the industry as a whole, it's sheer nonsense.

Ted, you talked about the support that exists, the infrastructure we don't have that other countries have. I ask, why? We have embassies, we have infrastructure.

I'd like you to comment on other markets. Are we on the right track with the European free trade agreement? You talked about diversifying. Can you add something to that?

I'd like you to comment on whether we are going in the right direction by signing free trade agreements like the one with Colombia, for example. It's not that I'm saying we should get away from a strong market like the U.S. one; on the contrary. But are we on the right track? Should we pursue bilateral agreements?

If I may quote, somebody said we “need a stronger commitment”. Can you be more specific when you say “stronger commitment”? Does that mean infrastructure, as Ted suggested? Does it mean more money from...? You referred to the Canada export corporation.

By the way, I'd like you to comment on that organization. Are they cooperative? Do you have access to it? Or is it difficult to get support from the Canadian export corporation or Export Development Bank? In what other ways is the federal government supporting your initiatives? And if there aren't any ways, what other suggestions would you have specifically for what the government can do, whether it's in money, infrastructure, or whatever else?

I think I've asked enough questions.

[The Chair, Conservative, Lee Richardson]

Yes, you've probably asked enough to get us through till noon.

I think everybody would like to comment on this one.

Do you want to start, Mr. Laycraft?

[Dennis Laycraft]

Sure. I'll touch briefly on COOL.

We all agree that the problem with WTO or NAFTA is that it is a protracted process, and then you can get into everything from appeals to different rule-making.

At the end of the day, we'll end up with changes to the COOL requirements. I don't believe they're going away. They're going to remain on fresh beef products.

While you initiate a case, you always have the question whether that impedes or improves your ability to negotiate at the same time. I think what we found in this first one was U.S. interests were pushing at the same time as we were. Working with those allies is extremely important, particularly with a new administration and Congress.

I want to say that our embassy in Washington is exceptional. All the names and the contacts do a great job, and we work closely with them. Whether we provide or they provide, we have full confidence in the work they do. They do some great work.

The alternative is to negotiate, and I think as part of that we haven't done a very good job as a country and as industries. We're spending a lot more doing it now, but I think we've neglected telling the story about the trade relationship we have with the United States. I suspect, on the numbers John gave, very few Canadians would have any idea, either, that this was the significance of the relationship.

We're meeting every three to five weeks with U.S. Congressmen, with their staff, and with others. We're very pleased to hear that you're going down there. Any messaging we can help with, we'll be delighted to do.

I saw a picture here recently. It showed someone moving a product between France and Belgium. Then it showed a picture of moving a product from Canada to the United States through Windsor. One had a sign and an empty highway in front of it. The other had a mile of trucks.

The more we can do...and it's more than just COOL. It's this whole establishment of a restored and improved ability to move products and services back and forth that is really important. It's going to take, I think, a lot of legwork from a lot of people to convince a lot of people down there that there is a lot of value in this for both countries.

I'll stop on that.

[Jurgen Preugschas]

I won't touch the COOL side. There are so many questions in that, and Dennis has covered that.

Certainly, as to whom to talk to down there, I agree; if you're talking to the state reps, I think that's critical. We're taking an initiative whereby we've identified the people involved with us, dependent on our live trade. We're working with them to create an American advocacy group with our support. They talk to their Congressmen, their Senators, their state representatives. We feel this has to be a multi-pronged approach. You can't just go in one direction. The more we can get our tentacles out to people who are affected by it, the more important it is.

You asked if we feel that we need more dollars, or what sort of resources to develop.

We feel, and our--

[John Cannis, Liberal, Scarborough Centre, ON]

Jurgen, don't be shy to ask. Just say you need financial support. The lumber industry did.

[Jurgen Preugschas]

Well, there's no question we do. We believe very strongly in diversifying our markets. As Ted has said, on some of the products, the loins go one place, the hams go somewhere, the bacon and offal go somewhere else. It's really important that we have many markets. It's costly to promote those markets. As you see, our budget is very small.

We have asked the Minister of Agriculture, and we would certainly ask you to support that, about developing a legacy fund, if you will, where the pork industry does have access to significant dollars to help diversify. Then even something like COOL won't be quite as damaging as it is today. We think that's really important.

On the bilateral agreements, the EU, you mentioned, and others--Colombia, Peru, Korea--absolutely we need to push them. I know it's been said before, but we cannot be shy there as well. We have to understand what beef and pork and grains do for the developing of our GDP in Canada. We can't let some of the industries that want to limit access to trade harm our interest.

We don't want to harm supply management, but we can't be harmed at the same time, so it works both ways. You have to fight for us--those of us who create jobs in this country--and what we do. So I think that is really important.

Then, of course, the money crunch is a bit of an issue. It has been for people trying to export out of Canada right now. If we can help, especially in developing countries, for the Canadian Export Development Bank or whatever group that is, so that they do give access to funds, we can continue to market around the world.

[John Cannis, Liberal, Scarborough Centre, ON]

That's wonderful.

Thank you, Mr. Chairman.

I thank them because they've identified one other thing--namely, that investment needs to be done in the infrastructure. They talked about border services and the efficiency of movement, and I thank them for adding that.

[The Chair, Conservative, Lee Richardson]

Good.

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you, Mr. Chairman.

I would have shared my time with Mr. Keddy, but we don't have that much time.

I'd like to acknowledge our guests. I think this is exceptionally informative, and I appreciate your coming here today and presenting your comments to us.

In particular, I was going to ask just a fast question because it does relate, at one level, to our upcoming meetings. You're talking about free trade and being free traders and looking for more pork and beef exports. You know that we've introduced enabling legislation regarding FTAs with Colombia and Peru, but those are small markets. Our biggest market is south of the border. I'm trying to understand, from your perspective, why these free trade agreements are so critical to you. I'm not trying to get off the other topic, but I'd really like to get a sense of that as it relates to free trade here.

[Jurgen Preugschas]

Certainly, the EU one is not a small agreement. That would be very significant. We're talking about Colombia or the CA4, or Peru, or Korea. They are maybe not huge, but they are significant markets for us for specific products. The CA4, as an example, buys a lot of fat, and not everybody wants fat. The CA4 also buys skins. There is a limited market, so it is critical.

We have to understand that for each of those, although the tonnage may be small, they're pretty important to be able to sell the whole animal.

[Ed Holder, Conservative, London West, ON]

Thank you.

Would yours be a similar response?

[John Masswohl]

Yes, but I guess I would make a distinction. I just want to make sure about what we mean when we talk about the Europe trade agreement. There's the EFTA free trade agreement, already working its way through Parliament, which, as far as we're concerned, was a disaster. It's a good example of how not to negotiate a trade agreement. There's nothing in there for beef. We have no access for beef or cattle to Liechtenstein, Switzerland, Iceland. Under Norway, I think, we got the ability to ship some genetics. There's nothing for beef in that agreement.

Now, with the European Union trade negotiations--they've not started yet, but are in developmental phases--we want to make sure that the government starts with a negotiating mandate that ensures we get the ability to ship unlimited quantities of duty-free beef into Europe. That has to be the objective. It's a huge market. They eat eight million tonnes per year and we ship them almost nothing. That's what we're looking for in that mandate.

Thank you.

[Ed Holder, Conservative, London West, ON]

Thank you.

Go ahead.

[Ted Haney]

The WTO focuses on common rules, whether or not the members or participants bring to the table a great deal of economic power in a particular negotiation or whether they are relatively less powerful in negotiation. That's the primary difference between the process of FTAs and the WTO. For Canada, the common rules and our subsequent willingness to go and clarify our rights and our partners' obligations through dispute settlement processes, which are there to be used, very much speak to the benefits of Canada.

FTAs have been for Canada somewhat defensive. The United States, Australia, and others have typically cut their FTA deals with countries such as Colombia, Peru, the Central American four, or others prior to Canada's engaging. Our goal in the FTA world is to ensure that our relative smaller level of power and ability to exert power in these bilateral negotiations doesn't result in institutionalized discrimination against Canadian products. And that has happened in the past. That doesn't necessarily speak to our advantage as a country like Canada, which must first depend on common rules of trade.

There are potential advantages in FTAs. When they're negotiated, when there's a great deal of consultation and communication between the negotiators and the affected sectors, we can achieve some interesting and positive breakthroughs, but there's risk. The WTO will always usurp the potential benefits of individual FTAs.

The one potential exception to that rule is a trade accord with the EU. This is a very wealthy market of a half-billion people, a market with limited competitive forces that put us at risk, while at the same time it's consumers who have the money, willingness, and attention to pay for the high quality that is Canadian products.

[Ed Holder, Conservative, London West, ON]

You know, it's my belief--I'm going to change back to more of the style around our Washington trip--that a good negotiation is one where you deal from a position of either strength or knowledge.

Mr. Preugschas, I appreciated your talking points, the seven deadly steps to being effective with these folks, but what would be helpful in this kind of dialogue is if we could be specific in terms of sources.

You indicated in here that “agriculture research analysts estimate”. You gave some good statistics in this, but if we could cite the source, we could say, “This is where this comes from”, so that it's very credible. I would say that from the standpoint of beef as well. Help us be as credible as we can be with very specific sources for your information. That would help us.

One thing I would say is that whenever I've been involved in a negotiation, the question they'll ask on the other side is what's in it for them. Of course, in dealing with the Americans, we know it's clearly going to be that. So part of it is education. But also, there's our lost market potential, and their loss in the United States because we can't provide them with the live cattle or the live hogs. That is useful for us to have when we go forward. Anytime you do that, citing your sources would be useful.

That's more of a comment, Mr. Chairman.

Mr. Benoit, I don't know if you have any last comment. I don't know if I have any minutes to share with you.

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

How much time is left, Mr.Chair?