International Trade Committee on Oct. 27th, 2009

[Sandra Marsden]

I'm sorry, but I don't understand the question.

[Serge Cardin, Bloc, Sherbrooke, QC]

On the one hand, you deplore the fact that...

[Sandra Marsden]

Yes, I got that part. It's the final question.

[Serge Cardin, Bloc, Sherbrooke, QC]

On the one hand, you deplore the lack of new markets, while on the other hand, you are concerned about the Canadian market being swamped. What worries you the most?

[Sandra Marsden]

This is why our industry situation is so complex. We're not looking at a commercially level playing field. There is already significant import competition in the Canadian market, and $30 per tonne is not a barrier. We compete. The problem is the comparison between our import protection versus most other countries in the world. Our tariff is about 8%, depending upon world market prices. The U.S. tariff is 150%. The European tariff is 200%, and so on. If all things were equal, then things would be fine, but they are not. We're dealing with a situation where we lower that already low protection without any offsetting improvement in access.

Yes, we are here largely to serve the domestic market, but we have to be able to fight back. In any competitive environment you can't fight with your hands tied behind your back, which is essentially what we're doing.

Have I answered your question?

[Serge Cardin, Bloc, Sherbrooke, QC]

I realize that my next question isn't really about international trade and free trade agreements, but I was wondering about sugar use. Sugar, as we all know, is used in all types of productions. In an ideal world, the demand for sugar would likely drop because of our society's concerns about health issues such as diabetes and obesity. Soft drinks are getting a bad rap, and their manufactures represent a major client of the sugar industry in Canada.

As such, what would the future hold for the sugar industry if governments started to legislate the amount of sugar in food products?

[Sandra Marsden]

This is another very complex story, and we could have a whole committee hearing on this.

There is a lot of misinformation about sugar consumption. In fact, sugar consumption has been going down. Sugar consumption is not linked to obesity. It is overall caloric intake. There is a lot of focus on sugary beverages, while most soft drinks in Canada don't contain sugar produced in Canada. They contain high fructose corn syrup. It is a very complex story, but yes, there is a problem with obesity in Canada. Statistics Canada has just released a new report that indicates it is not the proportion of carbohydrate—sugar is a carbohydrate—or of fat. More importantly, they have found it is overall caloric intake.

It is a very difficult problem, but there is no simple solution, and certainly targeting sugar would not address the problem.

[The Chair, Conservative, Lee Richardson]

Thank you.

That's a little more than seven minutes. Thank you, Mr. Cardin.

Mr. Allen.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for coming.

Mr. Simpson, you have expressed some concerns around the timing of these FTAs vis-à-vis us and the United States. My colleague has expressed some concerns about their timing. Our sense of the timing is that it's not as imminent in the U.S. as some folks would believe, in the sense that it is hung up in Congress. I'm sure you are following it very closely. Based on your earlier comments, it seems you have kept a good eye on a lot of the proceedings, and I'm sure you're probably aware the FTA to the U.S. is blocked at the moment. It is not progressing, so I hope that will help allay some of your fears that we are perhaps not proceeding as quickly as you'd like us to do with this, but, as you know, this is still before the House here as well. We are still working through that.

Even though we're still doing that, we appreciate your coming, albeit I am not sure why, but then again I'm a new guy so I'm not quite sure of the process all the time. It seems kind of odd that we would have a committee meeting while we are in the House. Someone will help me to learn that one, I'm sure.

When I was scribbling some notes, you talked about your company's belief...and it is a family company, if I remember rightly—the sense of trying to feed the world, if you will. That is a fabulous philosophy, by the way, and I commend you and your family for that sense of what you want to accomplish, because that is eminently important to all of us, to reduce poverty across this world. In the Colombian context, part of the reason civil society groups out there are opposed to us rushing this through is about the human rights complaints, about paramilitary complaints, the deaths of certain groups of people in the country, like trade unionists. Do you see a role for your company? I recognize that your company is in the business of pulses, but based on the statement you made earlier about the philosophy and foundation of the family company, do you see any role for you and your company in that regard?

[Greg Simpson]

I feel that our role here in Canada, number one, is to have a standard, and I think wherever we go, we have a standard that a lot of people in the world can look up to. The similarity we have around this table is that we're proud to be Canadian. Many times, with those Canadian pins on our lapels, people recognize us and know that there's something we stand for.

Yes, I think our family, our business, can have a positive influence on other nations. As we engage with people in Colombia we can help to bring about change and be effective agents of change.

[Malcolm Allen, NDP, Welland, ON]

I appreciate that comment.

Ms. Marsden, I've heard here and at the agriculture committee about rules-based systems, and the FDA is supposed to be one. I'm sure the rules are there. That's why we have agreements--to establish some form of rules.

If I've heard you correctly, it seems you've entered the game with rules that are almost stacked against your industry in the sense that the intent is to open.... And I take the word “free” literally, in the sense that both sides are free to do what they need to do and then go ahead and compete head to head.

For some reason this doesn't seem “free” to the Canadian refined sugar industry in this country. Maybe I misunderstood, but what's your sense of that rules-based system? Does it help you or hurt you?

[Sandra Marsden]

We need a rules-based system; there's no question. Our view is that the WTO is the best mechanism to ensure that the rules-based system is most equitable for all. The problem at a bilateral or regional basis is that it doesn't deal with all the rules. It leaves out domestic support, export subsidies, and a lot of elements of the rules. That exacerbates the inequities that are already there.

[Malcolm Allen, NDP, Welland, ON]

If I heard you correctly, your preference would be for a WTO round versus continuing to make bilateral agreements with the southern hemisphere, where they grow sugar cane--for your industry, specifically, obviously. We don't grow sugar cane in Finland, but we certainly grow it in Guatemala, Costa Rica, and other places that would compete with you.

Is the WTO the only place you would like to see us go? Do you see any bilaterals at all, or has it simply been all uphill for your industry?

[Sandra Marsden]

In the case of the southern hemisphere, it's largely uphill, by the nature of those sugar economies. They are very large producers. They're very efficient and very well resourced, at least in the sugar sector of their economies. That doesn't necessarily flow through down the way, but certainly from the exporting point of view, their ports, their systems, are extremely sophisticated.

There are small niche opportunities in some markets. I mentioned the Caribbean. We do export some, so if there's a CARICOM agreement, for example.... We already have a full open market for CARICOM countries in Canada. There may be some small export opportunities, but it won't offset the damage as long as that U.S. market is closed.

Our preoccupation is clearly the United States, and that's why we focus on the WTO. We're not controlling that agenda, of course. We get involved in every FTA that's being discussed, and there may be some that do provide some modest opportunity. The problem with those agreements is that the rules of origin are such that the only sugar that qualifies for preferences is beet sugar from Alberta. So if it's an agreement with Jordan or Morocco, it's not going to provide a reasonable opportunity for us.

[Malcolm Allen, NDP, Welland, ON]

It's kind of strange; it's almost like we should have sugar as the next currency. Every market you've indicated to us seems to have protected itself. The U.S. has protected itself. We, in a sense, have tried, but we're less protected. The European market has protected itself.

It reminds me of an old history class I was in once, about the spice trade and how it was used as a form of currency. Perhaps if the dollar goes too high we should trade sugar.

[Sandra Marsden]

Sugar was considered a spice many years ago.

[Malcolm Allen, NDP, Welland, ON]

It's unusual to hear that sugar in this country would have been a huge trade irritant between us and the United States. It's actually sugar that's the trade irritant in the agricultural sector, albeit not downplaying all of the other pieces. In a sense, you're not able to export. The others have been able to export and then have found some things happen. I find that a strange piece.

You talked about the jobs in the west. What numbers would we be looking at if you were to lose both plants in the west?

[Sandra Marsden]

It would be 500 employees and 250 beet growers.

[Malcolm Allen, NDP, Welland, ON]

So it would be a significant piece of the refining capacity.

Okay, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Allen.

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I'd like to thank our guests for attending this morning.

Ms. Marsden, I feel somewhat guilty. I take my coffee black, but my mum always had four sugars in hers. I was pleased to hear that sugar does not relate to obesity. It must be true, because my mother was about 90 pounds with her four sugars a day. So it must be true. That's a story for another time. It's history.

It's clear that I obviously feel a divergence of views on these issues between Ms. Marsden and Mr. Simpson. One of you—Mr. Simpson—clearly is promoting more active open markets. In fact I would call you a capitalist with a heart. That's how I would define you.

Ms. Marsden, with respect to your industry, obviously you have some deep concerns about the preservation of Canadian sugar. What's clear to me is that your focus is on the United States, and quite appropriately so, because of the amount of business that goes between...or could potentially go. Could you elaborate a little bit on your dialogue with the United States thus far? You said you just came back from Washington. That's an important issue relating to this committee, because the notion of protectionism in the United States is a big concern to us as well. So could you just elaborate for a moment as to some of the dialogue you've had with your American counterparts, perhaps as recently as yesterday, just to give us a better sense of how the discussion has flowed?

[Sandra Marsden]

We spent a lot of time dialoguing with the food processors, the sweetener users in the U.S., because they're our allies. Obviously they have interest in sustaining access to imports when they need them. We meet quite regularly with the United States Department of Agriculture and perhaps less frequently with the U.S. Trade Representative. Those are the two agencies that affect our access.

Most recently, since the Farm Bill.... I mentioned we lost access for beet thick juice. We tried to avert that. It started out as a bill and then it got incorporated into the Farm Bill. We were unsuccessful. So then we looked for other avenues to offset that. That was about a 35,000-tonne sugar equivalent, which was very significant for the Alberta plant. So we looked for other opportunities to offset that loss. I mentioned that the plants in the west are under capacity, so it's very important.

We were meeting with the USDA and USTR yesterday to talk about their administrative management of their import quota. They're under more restrictions now with the Farm Bill, which is making it more difficult to import sugar when they need it. They have a pretty serious shortage in the market, a temporary shortage in the market that is likely to be seen more seriously in the spring. So we're there in advance to try to encourage them to look at mechanisms to import high-quality sugar from countries like Canada. We're not asking for a special privilege for Canada, but just to enable the imports, to bring them in where they need to go. We have had some proposals, and we're going to be looking to the Canadian government to give us more support in pressuring those U.S. agencies to use some of those mechanisms.

[Ed Holder, Conservative, London West, ON]

I might even suggest that you bring forward to this committee any of the overtures you've made to that extent. That helps, because when we make our representations in the United States, in Washington, that's useful. So to the extent that we can support your industry that way, I think that would be a very positive thing.

You mentioned, though, as well one of the catastrophes they had in the United States recently. You were looking to try to fill a void that was there. Could you just elaborate a little bit more? That response was not very positive, you say?

[Sandra Marsden]

The problem is that they increased the quota, but it was filled with a low-quality sugar that had to be processed by U.S. refiners. So it didn't get to the market that was needed. Customs and the various agencies were trying to come up with some mechanisms to ensure that the right sugar came in and it got to where it needed to go. We've been trying to come up with some creative ideas to push that forward. I would say that we could certainly use more support from our own government in advocating for that, so I appreciate the suggestion that we raise this with this committee.

[Ed Holder, Conservative, London West, ON]

That would be helpful. Those communications could be forwarded to our committee, and that would help support your industry.

Mr. Simpson, as the owner of a first-generation family business, I salute the owner of a third-generation one. That's what's great about Canada—the sense of pride you can have. When I called you a capitalist with a heart, I was also going to call you the prince of pulse. I believe you are an effective ambassador for your industry across the world.

You talked about the access you have to 70 markets worldwide. I was quite struck by that. I guess there's a yin-yang effect with respect to what would happen if we don't sign this agreement. We know the United States has to resolve some problems with Colombia, just as we do. But we are directing ourselves, certainly the government is, to put this free trade deal forward, to move it along. What would happen if the United States was to put their agreement in ahead of ours?