International Trade Committee on May 7th, 2009

[Laurent Pellerin]

Yes. You are also right that it is not because we have to pay a duty that our product will not go there. We have to keep that in mind also.

As I already said to Mr. Julian, because our product is of very high quality, it is very well recognized everywhere in the world.

I will use a very easy example. The malt barley that we produce in Canada is in demand everywhere in the world. I don't know exactly why. It's probably because people like beer.

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

I think so.

[Laurent Pellerin]

Also, the hard wheat that we have in Canada to produce pasta is the best in the world. It is not the Canadian farmers who say that. Everybody in the world, including the Italians--I was in Italy a month ago--recognizes that the durum wheat from Canada is the best for pasta.

So if the Peruvian people want to eat pasta, they will probably go with Canadian wheat. And if they have to pay a duty, they will pay the duty whatever the case is for wheat. There's no doubt about that. So we have to keep that in mind also.

We also have to recognize what we put on the table. Because there is no tariff or there is a faster reduction in the tariff on the U.S. product than there is on the Canadian product, there is a risk that the market will shift a little bit and we will lose some, because the quota is there, but there is no obligation to fill that quota. It can go beyond the quota.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Mr. Pellerin, I'm so happy to hear what you just said, because we're talking about how much the Government of Canada invests in promoting our products, including our egg products, around the world. The fact is that we have a huge advantage already because of the high quality of our products and the demand for them out there.

It would probably be overkill if we even dreamed of spending as much money as do some countries that have a product to sell that is far inferior to ours.

I'm sure Mr. Julian knows that. However, his point was taken, and I'm glad you made ours. Thank you.

There's another thing about the beef and pork. It's not going to affect the supply management. The fact is that what we're exporting now in beef, for example, to Peru--around 5,000 tonnes a year, give or take--will immediately become duty-free. Over the 10 years, that will allow us to increase that export by 50% or so, which will be duty-free as well.

I'm not sure exactly what our shipments on pork are at this time. Is it in the neighbourhood of 325 tonnes or somewhere around there?

[Laurent Pellerin]

Yes.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

So we have the same situation, growing about another 50% over the 17-year period.

[Laurent Pellerin]

It's growing to 500.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Right. That's good.

As far as an agreement that is fair to everyone in any country is concerned, that is certainly a utopia that we would like to find someday, but I doubt if it'll be in my lifetime or Mr. Julian's. But do you agree that in order to be able to negotiate a free trade agreement between any country and Canada, it has to be essentially a very broad-based agreement that tries to be general and tries to cover as much as we can?

In this day and age, any bilateral trade agreement is based on that initial premise of “let's try to accomplish that and then we'll try to streamline it in some areas if we can”. But if we get a good general agreement, then it's good for both sides, and while we'd like to live in a perfect world, it's just simply not a reality. We do the best we can, particularly when we're competing against the U.S., which has that huge market on their side when they go into an agreement. We're doing pretty good. Can you comment on that?

[Laurent Pellerin]

I have two or three comments.

First of all, you are right, and that's the reason why I would suggest that it's a good idea to sign and accept this agreement as soon as possible. Overall, it's there, with a little plus and minus here and there, with some risks and with a need for a close follow-up, but then you have to write that into the agreement somewhere.

It's disappointing because Canada will not automatically obtain better conditions than the other countries will, including the U.S. That's bad for us. If you look at this in the future, it's possible to include that in the agreement.

As well, probably it's better in negotiations to be seated in the U.S. chair than in the Canadian chair, but I prefer to be seated in a Canadian chair anyway. There's no doubt about that.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Thank you.

[Ed Holder, Conservative, London West, ON]

What's our time, Mr. Chairman, if I may ask?

[The Vice-Chair, Liberal, John Cannis]

It's exactly seven minutes, but we'll go to you, Mr. Holder, and then to Mr. Guimond.

[Ed Holder, Conservative, London West, ON]

Thank you very much, Mr. Chairman.

I had the privilege to be in Peru two months ago on behalf of FIPA, the Foro Interparlamentario de las Américas, for a different reason, insofar as we were encouraging the Peruvians, through this organization that we in Canada feel strongly about, to work together as democracies in the Americas.

When I was there, I had the opportunity to meet with the president of the Congress, with the president of the Chamber of Commerce, and with many legislators, and it quickly changed from a dialogue around FIPA to a dialogue around free trade. Every person I met asked when Canada was going to move on free trade. As we know--and I want to put this on the record to remind the committee--on February 1 of this year, the Americans had free trade with Peru. I will say this to all our committee members: to the extent that we are not part of that, we suffer a serious disadvantage with respect to the Americans in trade with Peru.

I would also remind the committee that, as a result of this, 95% of our exports go immediately tariff-free. We've talked about a few today that go immediately tariff-free, including wheat, barley, and peas. We didn't talk about wood, forestry products, cotton, fabrics, machinery, and even better access for our mining and energy, which is huge for Canada. It just shocks me when different parties take a different position on this, because I think it's so good for Canada and it's such a great opportunity.

While this agreement may not be perfect, I would submit to you that it is as you said, Mr. Pellerin, when you came back, and your first comments were, “I urge you to pass the free trade agreement with Peru immediately.” I can't be clearer than that.

We had a representative of the Bloc there who saw what it was like in Peru. There were representatives of the Liberal Party there. I was there on behalf of the Conservative Party. We can see the impact that Canada is making.

So I'm shocked--and I say this again--when parties don't appreciate its impact, even an impact on changing lives in other countries and making them better. I would also remind you that the economy grew by almost 10% in Peru in 2008. That gives us even better access into an economy that's growing and into a country that is trying to promote democracy within its own realm.

So I would ask you, sir, what do you believe is the disadvantage to us of delaying? Knowing that the Americans have this in place already, what is the disadvantage to Canada of delaying?

[Laurent Pellerin]

I will come back to what I already said. Overall we agree, and we think we have to sign this agreement. We all have to keep that in mind. That's our basic position.

But on the other hand, you have to recognize that there are some risks for Canadian agriculture in that agreement. Despite the fact that the Peruvian economy is growing 10% per year, if they want to buy something from somebody, the U.S. will be in a better position than us.

[Ed Holder, Conservative, London West, ON]

But would you not agree that they're already in that better position?

[Laurent Pellerin]

Yes.

[Ed Holder, Conservative, London West, ON]

So I come back to your point about the whole principle that putting the free trade agreement in place now, versus delaying, has a much better impact for Canada, knowing 95% of our exports will go in tariff-free.

We don't have the same market as the United States, but I would submit to you that all the levels—even in beef and pork production—are set at the highest level we have been, in terms of dealing with Peru.

So do you sign the free trade agreement?

[Laurent Pellerin]

We sign the agreement. There's no doubt about that.

[Ed Holder, Conservative, London West, ON]

Thanks very much.

[The Chair, Conservative, Lee Richardson]

Mr. Ed, you did it again.

Monsieur Guimond.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Mr. Chair.

I would just like to say, Mr. Pellerin, that you should not always listen to the Conservatives.

I will turn the floor over to my colleague, Mr. Cardin, who is more experienced than me, and who will ask you the questions that are of interest to the Bloc Québécois.

[Serge Cardin, Bloc, Sherbrooke, QC]

A little earlier, you spoke about world trade frameworks. We're talking about fairer markets, and so on, and I understood—and correct me if I'm wrong—that all the bilateral agreements that have been signed result in a frenzied race because of competition. Soon we will have at least 200 partner countries, 200 bilateral agreements, and conditions that fluctuate a great deal based probably more on policies between the countries than on considerations that have to do with trade and fairness.

I would like to know what you think is preferable. The Bloc Québécois thinks that we should be devoting more energy to multilateral agreements than to bilateral agreements. However, we do understand that some conditions require us to enter into agreements, but we think that every country on the planet should focus much more on negotiating multilateral agreements, precisely to make things fairer, to make sure the rules are the same for everyone.

[Laurent Pellerin]

Without repeating what I said earlier, the Canadian Federation of Agriculture has clearly been arguing for a long time as to the need for a global framework trade agreement that is fair to all agricultural producers throughout the world, one which does not exist right now.

Unfortunately, I have been following all of the WTO meetings for the past 15 years, and I have observed that we are unable to draft a text that meets this objective of creating a fair world trade framework for agricultural producers. Nobody can say whether or not the WTO will manage to conclude an agreement within three or six months' time, and it is even more difficult to say how attractive this agreement will be. We simply have no idea, things are progressing so slowly and there are so many vested interests.

If we are unable to establish a more equitable international trade agreement for producers, I think that, in the meantime, it would be a good strategy to give some thought to reaching bipartite or tripartite agreements. We have to at least ensure that we have trade agreements with countries throughout the world. At a minimum, I think that over the next period we should achieve this, while waiting for some real will to reach an international agreement that is more equitable, and, for producers, more humane as well.

The major proponents of world trade discussions, during the current negotiations, are talking only about business, and business for business' sake. So there is no discussion about business to achieve a better life for citizens or business designed to enhance the welfare of states. It is as though we had delegated our powers to somebody who is dealing with the trade issues of the entire world from Geneva. These trade issues have to have a little dose of humanity.

[Serge Cardin, Bloc, Sherbrooke, QC]

This is particularly true in the agricultural sector, because we have the issue of food sovereignty and safety. So it is important that we have a framework that is adequate in terms of importance and equity. This would help all farmers because, in many countries, this is the most important industry.

I would like to ask you a final, more general question. Do you get the feeling that a window is opening to this possibility of establishing fairer trade, either in agriculture or other sectors, given what occurred, particularly in the United States—the financial crisis and the very greedy multinationals? I get the feeling, globally, that there is a desire to open the door to multilateral agreements that are much fairer for all people.

[Laurent Pellerin]

I think you are right, the times are conducive to the progress of new ideas on the international scene. It is clear that the financial crisis had an impact , but if we think about the situation that existed scarcely 12 months ago, we will recall that we were dealing with a world food crisis or, at the very least, a crisis involving the cost of food. This crisis gave many people pause for thought.

Here in Canada, we can discuss these matters from a very comfortable, serene place, because few people in Canada cannot afford to eat. I visited certain African countries on several occasions, and, last fall, I travelled to India, China and elsewhere in Asia. You can see that, for some countries, feeding their people is a daily concern, a daily challenge.

Last year, I participated in several meetings of experts in Europe. I received several invitations as a guest speaker at the European Parliament and elsewhere. I repeated, every time I spoke, that during this time of food crisis—last winter—we should all be aware of the fact that we were lucky not to have known such a food crisis during all of the previous years.

There is no world plan to ensure that we will have enough food on the planet. We have left it to market forces to ensure that there is enough food to go around to all the people on the planet. Last winter, people woke up and realized that we were running the risk of not having enough food for the entire world and that we needed a plan.

I hope that, when we discuss trade issues in future in Geneva, we will also include the need to develop a strategic plan to ensure that, year after year, we will have enough food to feed the world's population and to create a reserve, because we need one. If a few countries in the world suffered a poor harvest for one year, it would result in stock shortages everywhere. You saw what countries did when they had shortages: they put restrictions on exports. They kept their food, which was quite understandable. A billion people live in India. You can understand why the president of India decided that he would not export rice. He preferred not to export because he was facing problems with his own people. Farmers were not happy because they had an opportunity to sell their rice at a higher price, but they were unable to do so.

We need to have a trade discussion that will include other parameters, and not just business for the sake of business.