International Trade Committee on May 7th, 2009

[Laurent Pellerin]

When I was with the UPA, and now, as part of my duties with the Canadian Federation of Agriculture, we agreed and agree on the idea of a world trade framework that is fairer for everyone. So we support WTO negotiations seeking to implement fairer trade conditions.

Unfortunately, in the documents submitted to the WTO and in private contracts of this type, the results are not always very positive. We can see that trade for trade's sake is becoming more and more prevalent. We can easily imagine that there is pressure being exerted in this regard. Large multinational corporations are specialists in this type of trade, which is not always fair or profitable for producers. These people exert a great deal of pressure to promote agreements like the one currently being presented.

That is probably why the WTO said that it is so difficult to agree on a document that suits everyone. Ideally, there should be a world trade framework in place that is fairer and more acceptable to farmers. That way, we could do business differently. These bilateral, trilateral or multilateral agreements, in the case of contracts signed between several countries, for example, Canada, Mexico and the United States, are a sort of substitute for a world trade contract that would suit everyone. That is why I am not really surprised to see that, in contracts of this type, signed between two countries, we do not succeed in achieving all our objectives.

Despite the risks inherent in a contract like this one with Peru and the fact that the improvements with regard to duty-free access are not very significant, we feel that it is worth it in some cases. There are improvements with respect to products exported to Peru, especially grain products like wheat and barley. With time, things will get better. In this way, at least we can stabilize this sector. Moreover, when there is no trade agreement with a country, there is always the risk of losing ground, that is, markets. At least this agreement establishes a foundation with Peru on which we can build access to these markets.

We tried to draw your attention to the following two points: There needs to be follow-up concerning the impact of this agreement, but especially concerning the quantities that will be exported or those that we will lose. If we do not achieve the results we are hoping for, I think that Canadian negotiators should quickly become party to the negotiations that are currently being held with other countries.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Julian.

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

Thank you, Mr. Chair.

Thank you, Mr. Pellerin. Your testimony is very interesting.

I would like to come back to the question of tariff lines. We obtained conditions that are better than those that the United States managed to negotiate. We are talking here about garlic, peas and frozen spinach, among other things. What amount are we talking about? One or two million, perhaps?

[Robert Godfrey, Director, Trade Policy and International Relations, Canadian Federation of Agriculture]

I don't have an exact figure, but the garlic production in this country isn't grand.

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

If I understand correctly, in the vast majority of other areas, what the federal government negotiated is not as good as what the United States got. I do not know whether you have done an in-depth analysis, but I would like to know whether you can say in what percentage of the cases the results of the negotiations is not as good as what the United States got. Is it 90%, 95% or 99%?

[Laurent Pellerin]

Generally speaking, the United States did better with respect to the length of time it will take for the tariff to be reduced to zero by a ratio of 4 to 10. In other words, the reduction is faster for the United States: four years compared to ten years.

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

Yes, I understand, but overall...

[Laurent Pellerin]

If you want a percentage, I would say it is 40% faster.

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

I am looking at the overall situation. With respect to the tariffs established in agriculture, I want to know in what percentage of the cases Canada's conditions are poorer under this agreement.

[Robert Godfrey]

Just so I understand your question, you're wondering what percentage of this agreement did we do better than the United States...?

[Laurent Pellerin]

Only on the tariff lines.

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

I'm asking what percentage of the agreement are we clearly inferior, in the negotiation that was undertaken, to the United States?

[Robert Godfrey]

I don't have a percentage.

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

It is quite substantial. We did significantly poorly in areas such as pork, potatoes, French fries, beef and beans.

[Robert Godfrey]

To a point, yes, absolutely. But--

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

We need to know these things. Since I have a number of questions, I am going to move on to the next one. This is an important point. We saw this in the case of softwood lumber and a number of other areas: this government seems unable to promote Canada's interests in bipartite negotiations.

In that regard, we had a number of forecasts in the past regarding the impact of these negotiations on agricultural exports. In a number of cases, our exports were reduced as a result of bipartite agreements, for a number of reasons.

Has the federation tracked that, and has it noted the difference between the forecasts made by the Department of International Trade and the actual results during the first and second years following the signing of these bipartite agreements?

[Laurent Pellerin]

We have not tracked that systematically, no, and we do not have the resources to do that sort of follow-up. Agriculture Canada does some of this. Some of our federations have done some tracking as well, for example with respect to the quotas or the 5% tariff line with respect to the entry of tariff-free products, to determine to what extent the forecasts were accurate. So for some of our products such as milk and poultry, in particular, people measured whether the forecasts were achieved and to what extent.

Generally speaking, these people told us this: Canada met its obligations, that is when it agreed to open up 5% of its market to foreign products with no tariff, it did open the border and the products came in. In other cases, for example the United States or Europe, when 5% of the market was open, that figure was generally not achieved.

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

Exactly. Ultimately, we are at a disadvantage, if we compare what was signed and what actually happened. It is important to know that.

In this committee, we are having a debate about the best approach to international trade. A number of witnesses have told us that Canada invests less than other countries such Australia, the United States and the European Community in export support, and in the export of our agricultural products in particular. Those other countries invest hundreds of millions of dollars to support their agricultural exports. In Canada, the amounts invested are ridiculously low—a few million dollars compared to the hundreds of millions of dollars spent by other countries.

In your opinion, does Canada really have a robust export strategy when it invests $1 million while other countries invest hundreds of millions of dollars?

[Laurent Pellerin]

I hesitate to say yes or no in response to this question, because the answer is probably neither yes nor no.

Here is the answer: we have to take into account the export strategies of all Canadian industries. We must certainly keep in mind Canadian agricultural products—I'm not familiar with the other areas. And we must also keep in mind that the areas in which we are most active include wheat, pork, beef and a few others.

Let us also look at the sales argument that is being used throughout the world. Probably because of it, it takes less money to promote our product. Our sales argument is that we have a very high-quality product and a reputation in Canada that has never been found lacking. That is our sales pitch throughout the world. Of course, it takes less money when you have that.

However, some other countries have chosen to engage in dumping strategies. For example, some European surpluses were dumped throughout world markets at very low prices. There is no doubt that eliminating these surpluses costs more than using our sales strategy here in Canada.

Should Canada be earmarking more money to promote its exports? As a producer and partner of the people who export our products, we obviously think that there should be improvements in this area. There is no doubt about that. We could do an even better job if there were more money, but it is not just a question of money. We must remember that as well.

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

I have two other questions.

[The Chair, Conservative, Lee Richardson]

I'm sorry, that's over seven and a half minutes so far.

Mr. Harris.

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

I think Mr. Keddy was going to go first with a short one.

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

I will be short. I know we have two other questions.

Specifically on beef and pork, because those are the two issues that we seem to be coming back to all the time, it's my understanding that the way that quota was set was based on what we've demonstrated for export capacity in past years.

So our duty-free--where we will start off--is based on the maximum amount we've ever shipped into Peru up to this point. I just think that needs to be said. It still allows for the market to grow.

The other issue--and you might want to comment on it--is that when you are comparing Canada's market with the American market, the Americans have an advantage when they negotiate because they have that huge market that's ten times larger than ours, which other countries want to get into.

I don't know if you have a comment on that or not.

[Laurent Pellerin]

Yes, you are right. We stopped where we were.

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

At least we're duty-free and equal.