International Trade Committee on Oct. 29th, 2009

[Martin T. Rice]

I see it as being an important bridge to when we get the WTO agreement back on the rails. I mean, even if Doha falls through, I think there will be enough determination to get a multilateral process going again. But it could easily be ten years before we see the results of that. It's ten years now, since Seattle, when we thought we were ready to go on a deal.

Right now we would be able to sell much more product in the European Union if we had the improved access that we would get through the Doha Round but that we are now hoping to get through the EU-Canada negotiations. We were at the Anuga trade show in Germany, and we had a group go down into Italy.

There's definite market interest in Canada pork, and not just certain cuts, as we thought it was; it's much wider than that.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Dhaliwal.

Mr. Keddy.

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

Thank you, Mr. Chair.

Welcome to our witnesses.

This is a good discussion. I think everyone in the room appreciates what you're saying about the Government of Canada negotiating on a multilateral basis. The reality, as I think Mr. Rice just said, is that we've been nearly a decade trying to get the development round moving forward.

We were in India in September. We made a little bit of headway, we felt, but we didn't see the results of that at the G-20 meeting in Pittsburgh. Really, there's been a fair amount of foot-dragging by other countries since then.

So there are some tremendous challenges to getting the multilateral process moving forward and actually working. I don't think the government, either our government or the previous government, had any choice but to start looking at bilateral discussions. If something happens in the future and we actually get a multilateral agreement, that's terrific, but I think you have to understand the challenges there--and we do.

On this whole issue of trading across a wide range of markets, right now, because we don't have a multilateral trading agreement on agriculture, we do have to look at these agreements with Colombia, with Jordan, with Panama, with the European Union.

Quite frankly, Mr. Phillips, with regard to your comments about our dependency on the American market, we're well aware of that. We have to diversify. At this time, we just don't see any other way to do that.

You can comment on that point if you'd like, but really what I want to ask you about is the whole issue of the price band mechanism.

How does that mechanism affect wheat exports and pork exports? If we're not able to get a multilateral agreement, how will that continue to affect us straight across the board--not just on pork, on lentils, on wheat, and other products, but particularly on those products?

Do you want to expand on that a little bit?

[Richard Phillips]

I'm sorry, I missed one word there. It's price...?

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

Price band mechanism, it's called.

Maybe Mr. Rice can start.

[Richard Phillips]

Yes, maybe Mr. Rice can start.

[Martin T. Rice]

The price band is another aspect of the Colombian import system that operates not all the time but at certain times when prices go below a certain threshold or above a certain level.

For one, if we assume that cereal prices will be higher in the foreseeable future than what they were in, say, the 1980s and 1990s, as I think most people would agree because of the biofuel reality, then we'll see less likelihood of the lower level of the price band being triggered, which is what has limited imports at certain times into Colombia. However, what the Canadians negotiated in the agreement for pork, for the elimination over 13 years of the over-quota tariffs, will provide an adjustment over time where the Colombian price and the world price will be less different.

The prices won't be the same. In Australia, for example, where they have free trade agreements with the U.S. and essentially free trade with us in several respects, they still enjoy a very high price level internally relative to the world market.

So it doesn't necessarily collapse the domestic price, but it will cause them to converge to a greater extent. The price band will be much less of a constraint for us than it has been in the past if the Canada-Colombia deal is put into effect.

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

From my understanding of how it works, it's more meant to be a protectionist measure for local product. Wheat in particular suffers about a 15% tariff on that right now. I think the way it's applied is that it can be as much as 124%. It could go all the way up to that.

Again, the intent of it is to level the market, but the reality of it is that it distorts the market. The market's not allowed to work. That's why I raise the issue.

Eventually, these free trade agreements will eliminate that mechanism altogether and allow us to trade at parity. Our farmers have an advantage anytime we are able to do that, because we are very successful and profit-oriented.

That's all I have.

[The Chair, Conservative, Lee Richardson]

Thank you. There you go. You're not going to warn them about FARC going out of Saskatchewan?

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

I think Mr. Brison looked after that.

[The Chair, Conservative, Lee Richardson]

Monsieur Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Thank you, Mr. Chairman.

I am pleased that my colleague finished a little sooner. I will have more time because I will take what time he had remaining.

I would like a clear explanation of the advantages there are to the signing of an agreement with Colombia, both for grain producers and for hog producers.

Indeed, we know that at the present time, in the case of hogs, there is already a loss of $50 per head and that we pay for each hog sold. In the case of grain, we know that in the United States there are two or three times the subsidies there are in Canada for agriculture. Furthermore, you talked about competitive advantages. I believe that the United States have many more competitive advantages than Canada, no matter which country they are exporting to. I would also like to mention the inputs needed in agriculture that are much more costly here in Canada, such as potash, etc. Also, Mr. Julian mentioned that there would be no vote by Congress.

Given all of these ingredients, how can Canada benefit from signing an agreement with Colombia, with the United States having all of these advantages, both moneywise and promotionwise? Indeed, as I saw earlier, they have $100 million and they are not comparable because they already have people who are in the United States. What advantages will our producers get out of an agreement signed with Colombia? That is my first question.

You are also aware that when there is a free trade agreement, it is not just agriculture, but all of industry that is covered. All of the other businesses that are in Canada, compared with those that are in Colombia, could therefore come here for free trade, such that jobs would be lost.

I would like to hear you speak only of your respective industries, that of pork, which has been recently subsidized by the government, and that of grain, which is subsidized twice as much in the U.S. compared with Canada. How can we be competitive compared with the United States as far as access to the Colombian market is concerned?

[Richard Phillips]

I would say that Canada has an extremely good quality control system for the export of our grains, oilseeds, and pulses. People want to buy Canadian wheat, and whether you're in Morocco or Colombia or China, Canadian wheat is of premium quality because we have a lot of segregation. Segregation means having different classes of wheat. There are spring wheats, winter wheats, hard white wheats, and all kinds of wheats. Within that, there are different grades, like number 1, number 2, and number 3.

In Canada we can segregate very well, and we ship to the exact specifications. The U.S. has just this huge bulk—I don't know what the French word is for “morass”—this huge pile, and they can't provide the same quality standards that Canada does. When you are a flour miller, you know that when you mill a bushel of flour and it comes out the other end, and when a baker bakes it, whether it's a flat bread or regular bread, you want it to be of a certain quality all the time. Canada meets those quality standards regularly. Other countries don't do that. The field is level right now with the U.S. We have roughly the same challenges going into Colombia. That's why today we're shipping over a third of a million tonnes of wheat into Colombia, competing against U.S. farmers. We're number one.

[Martin T. Rice]

We've seen some decrease in our Canadian pig production due to the economic circumstances we have had, but we still look at ourselves as having some major advantages. Rick has already mentioned quality standards. Those have also been in place for Canada. We have a very competitive feed grain production sector. Western Canada is always going to be an important source of feed grain that is better to utilize and better to process in value-added products here in Canada if we can. Unless we want to undertake a 50% to 60% or greater reduction in the size of our industry, we need to find ways to keep the Canadian output and sales abroad alive and growing.

We see the U.S. as being a major competitor, but it's not the only competitor. One of Colombia's next-door neighbours is Brazil. It's a massive exporter itself. We're looking for conditions under which we can compete against not just the U.S. but also the other major competitors.

[Robert Vincent, Bloc, Shefford, QC]

Mr. Phillips, you spoke a little bit earlier about quality control. You have better quality control, a better product. When we start getting products from Colombia, will their quality be as good as that of ours?

The fact that we are prohibited from using certain pesticides increases the cost of our products. It seems to me that the standards are not the same in Colombia. We therefore have higher standards even for what we export to Colombia, but everything that will be coming from Colombia and entering this country will have been subject to lower standards. We will have to be happy with that, but we will be exporting higher quality products.

Could there be an agreement between equals? The quality of the products would have to be the same for both countries. Some Colombian products will be competing against products here, but the price will be lower because the quality will be lower. In this agreement, have you thought of including this reciprocity aspect between the two countries?

[Richard Phillips]

Thank you. That's a good question.

In terms of shipping them the quality wheat, the 360,000 tonnes of wheat, just to put it in perspective, our estimate this year for wheat is over 24 million tonnes in Canada alone. So it's only a small part of all of our wheat. There's lots of quality wheat for all of our other markets as well.

In terms of what comes up here in the quality standards of Colombian products, again, the advantage for us in doing a trade deal with a country in a more temperate climate is that they're not shipping the same products to us. It's bananas, it's coffee--things that we don't grow here.

I can't comment on the quality standards we would be negotiating. I presume that the Canadian Food Inspection Agency has minimum standards for health and safety of products coming into Canada that have to be met. I don't know what those regulations would be. For example, I can't comment on the thresholds that coffee and bananas would have to cross. I'm pretty sure, though, that they won't let in substandard products that would cause health risks for Canadians.

[Robert Vincent, Bloc, Shefford, QC]

Canada still imports products that have been sprayed with DDT, and this despite the fact that the use of this chemical has been prohibited in Canada for the last 40 years.

[The Chair, Conservative, Lee Richardson]

We're over time.

Mr. Keddy.

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

I have a quick question, and then perhaps Mr. Holder will finish the time.

Tom Vilsack, Secretary of Agriculture in the United States, is announcing today that China has lifted the pork ban on American pork products. They don't have a date on that yet. But we still have in place a pork ban with China for Canadian product, at least product in Quebec, Manitoba, and Alberta.

I would like your comments on the need to move quite rapidly, I think, and even urgently, on continued bilaterals. I know it's not the preferred method, and I'm not disagreeing with what you're saying about the multilateral method, but it's the only method we have that's working right now.

Obviously we don't have a free trade agreement in place with China, but it certainly shows the need to diversify and open up new markets in other countries.

That news is just coming in now. I don't know if everyone is aware of that or not, but it's not great news for us.

[Martin T. Rice]

No. China is quite a case to deal with, even though it's in the WTO.

Certainly we don't favour any trade agreement whether it's in our favour or not--I think we look at each one on a case-by-case basis--but certainly we would look at this one as being one of those that would be favourable to Canada's economic interest.

[Ed Holder, Conservative, London West, ON]

If I might continue--

[The Chair, Conservative, Lee Richardson]

Mr. Holder, that's it.

[An hon. member]

I think we're out of time.

[The Chair, Conservative, Lee Richardson]

Mr. Brison, you'll have to conclude.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you, Mr. Chair.

I just wanted to read into the record some facts on the Awa aboriginal group massacre in Colombia during the last week of August.

The Attorney General's office is still investigating the case. They are working with Christian Salazar from the UN office of the human rights high commissioner. They are partnering on the investigation.

In the department of Narino, where the Awas were victims of two massacres over the past six months....

Peter, you might listen. This is actually factual, so it may.... Well, it may offend you, because it's new information.

In the department--