International Trade Committee on Nov. 3rd, 2009

[Serge Cardin, Bloc, Sherbrooke, QC]

We won't be here next Tuesday.

[The Chair, Conservative, Lee Richardson]

We'll say one week.

Just to catch up here, because of the way the motion was structured, shall I say “complementary opinions from Monsieur Cardin and Mr. Julian”, and that will suffice for your point as well?

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

Absolutely.

[The Chair, Conservative, Lee Richardson]

Okay.

Let me just reread the motion. It is moved that the committee append to its report complementary opinions from Mr. Cardin and Mr. Julian, provided that they are no more than one page in length—they'll be in font 12 and 1.5 spacing—and submitted electronically in both official languages to the clerk no later than....

Is Friday okay?

[An hon. member]

Next week is a break week.

[The Chair, Conservative, Lee Richardson]

Oh. Then let's say Friday, November 6. So you can work on it during break week.

[Ed Holder, Conservative, London West, ON]

Mr. Chair, when you say “complimentary”, do you mean “heaping praise”, versus...?

[An hon. member]

Yes.

[Ed Holder, Conservative, London West, ON]

Never mind. I withdraw the comment.

(Motion agreed to)

[The Chair, Conservative, Lee Richardson]

All right. We're a happy gang today.

That concludes that. We will revisit the issue with the appendages to the report and probably table it the week after the break.

It is now five minutes to 12. We're going to take a five-minute break and resume discussion of Canada-South America trade relations in terms of Canada and Colombia, and we'll hear from the Canadian Cattlemen's Association.

[The Chair, Conservative, Lee Richardson]

I'll resume the meeting and welcome our first witness, our only witness today, on the consideration of Canada-Colombia trade relations. As I mentioned earlier, our witness today is John Masswohl, who is director of government and international relations with the Canadian Cattlemen's Association. John has been with us before and we're pleased to have him back.

The usual process will apply. Mr. Masswohl will begin with an opening statement, followed by questions from the committee. So without further ado, I'm going to ask John to begin. If you could keep it under 10 minutes, that will give us time for sufficient questions following your presentation.

[John Masswohl, Director, Governmental and International Relations, Canadian Cattlemen's Association]

Good. Thank you, Mr. Chairman. I might even keep it under five minutes for the opening statement.

Again, thank you for the opportunity to appear before you again. The last time I was here to speak on Colombia, I was stressing the importance of Canadian beef being treated at least as favourably in our agreement as U.S. beef is treated under the Colombia-U.S. agreement.

At that time I said the jury was still out as to whether this agreement would satisfy that requirement for the beef industry's support, but today I am very pleased to report that Canadian beef has received very favourable terms in the Canada-Colombia free trade agreement, and the Canadian Cattlemen's Association is very much in support of implementing this agreement.

Initially, we will have annual duty free access for 5,250 tonnes of beef, split equally into three categories, while the 80% tariff is phased out over 12 years. The three categories are high-quality beef, standard quality beef, and offals. In the high-quality category, it was very important to us that trading partners recognized that Canadian prime and all three of Canada's A grades--that's the single, double, and triple A--were recognized as comparable to USDA prime and choice. That recognition was achieved in the Colombia FTA, and we hope that will be a standard in all of Canada's future negotiations.

When the Canadian and U.S. agreements with Colombia are both implemented and fully phased in, both U.S. and Canadian beef will have unlimited duty free access to Colombia, and that's precisely what we were seeking. During the transition period, if both the Canadian and U.S. agreements with Colombia were to be implemented at the same time, the U.S. would enjoy some higher quota limits and slightly shorter phase-out periods. However, it's uncertain at this point when the U.S. Congress intends to ratify that agreement. So our belief is that there's an opportunity for Canadian beef to get a foot in the door if Parliament can ratify our agreement quickly.

To be blunt, the longer phase-outs for Canadian beef are not a concern if Parliament takes advantage of the opportunity to get ahead of the U.S. in the Colombia market. So we do urge you to move quickly on approving Bill C-23.

Another important matter to us, as the committee will be aware from the Korea negotiations, is that any trading partner that wants to reach an FTA with Canada must not retain any lingering BSE trade restrictions. We're pleased that Colombia has lifted all of its restrictions in this regard. In fact, the CCA sent representatives earlier this year to accompany Mr. Ritz on one of his missions to Colombia, and we sense a lot of goodwill on the Colombians' part to remove that impediment, and they have since done so.

So as far as the beef industry is concerned, with Colombia, it's thumbs up and full steam ahead. With those opening comments, I'd certainly be pleased to take your questions, either on Colombia or any other negotiations or trade issues that you want to raise today.

[The Chair, Conservative, Lee Richardson]

Thank you very much.

I think we're going to turn first to the Liberals. Mr. Cannis will begin and share his time with Mr. Bryson. We're going to try to keep it to seven-minute rounds in the first, and then we might get a second round in.

Mr. Cannis.

[John Cannis, Liberal, Scarborough Centre, ON]

Thank you, Mr. Chairman.

Welcome. I'm pleased to hear that now everything seems fine and quota has received very favourable support.

Could you just take us back to prior to being favourable to the agreement, to Bill C-23? What happened? How did we get to a favourable state, number one? Number two, I sense that you're telling us to ratify this agreement, Bill C-23, ASAP, so that we would have an edge on our competitors. Could you walk us through that.

Also, how does our agreement today with Colombia, the FTA with Colombia, compare to what we had before? Has it been enhanced? Where has it been enhanced and what kind of plateau have we set for future negotiations with other countries?

Thank you.

[John Masswohl]

The process of how we got from where we were during the negotiations is basically the story of the negotiating process. The last time I was here the details were still subject to negotiating confidentiality, but at that time, what Colombia was offering was certainly much less favourable for Canadian beef than for U.S. beef.

We actually went down and visited with the Colombian cattle producers association. We established a relationship, a dialogue back and forth. We told them what was important to us, and we really sensed that getting an agreement with Canada was a high priority for Colombia. So I think they got the message that beef was a deal breaker and that certainly helped out.

Of course, we had very close contact with the negotiators, at the Department of Agriculture, at the Department of Finance, and at the Department of Foreign Affairs, and they were certainly very eager to understand what it was.

The point about explaining why Canada has different quality grades--the double A, the triple A--and why they were comparable to USDA prime and choice was a very technical and very difficult one to get through. They initially said, for the U.S. it's only two grades, so how come it's four for Canada, and we had to explain our system. I guess I'm only pleased we were successful, and now that we've gone through that effort, we certainly hope that's the bar to meet in future negotiations.

In terms of getting the edge over the U.S., as I compare what Canada and the U.S. got in their agreements, with the U.S. agreement their phase-outs are 10 years. The Colombian tariff is 80%, so their tariff at 80% will go down over 10 years for the Americans.

For Canada, the 80% will go down over 12 years. But if we can get our agreement implemented sooner than the Americans, that's not as much of a concern. There's also a provision in our agreement that if the U.S. implements within two years of Canada, then we get to catch up with the Americans. There's an acceleration clause in there, and that was something that was important to us.

It was a perceptual thing for the Colombians, because they knew it was going to be a slow process in the U.S. Congress, and they didn't want the Americans to get too far behind. So those dynamics certainly came into the thing.

Comparing with some of the other agreements, I think we've not made a secret in the past that we don't blindly support just any agreement. I guess we've had some discussion before about the EFTA agreement, that there really was nothing for beef in there. But I think we've made those comments, they have been heard, and I guess we see with Colombia that the outcome was very much more favourable than previously.

[John Cannis, Liberal, Scarborough Centre, ON]

That's good news, and I thank you for the excellent responses.

In order for us to overcome that two-year gap, it's up to us as a government to move ASAP on Bill C-23.

[John Masswohl]

Absolutely.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Brison, for three minutes.

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

Thank you, John, for being with us today.

I have a couple of points. One is that Colombia's agricultural industry is primarily horticultural. There's not a very significant beef industry in Colombia at this time, but it represents a growing market for exports of beef to Colombia. It strikes me as another example where there are synergies between comparative advantage of what Colombia does well and what we do well. We're stronger on livestock and beef and they're stronger in some areas of horticulture. So there does seem to be a synergy.

Number one, does your counterpart organization, the U.S. Cattlemen's Association, support the ratification of the U.S.-Colombian agreement? Number two, if the U.S. gets an agreement first, what will be the effect on the Canadian industry?

My understanding is that the Democrats in the U.S. have moved quite significantly on this, particularly on the administration side of Pennsylvania Avenue. What would be the effect on the Canadian opportunity in Colombia if the U.S. were to ratify their agreement before ours?

[John Masswohl]

It may just be terminology there, but both Canada and the U.S. have agreements. Neither of us have ratified them yet. And because of that we know what's in both of those agreements, so this bit of lag in the transition period can be overcome if we move fast.

As I looked at the U.S. agreement, theirs was concluded while we were still negotiating. We were somewhat concerned that they were going to get too far ahead of us, because it's the first one in there who makes the contacts and starts to deliver the product. Then you have to not just walk in and take advantage of the opportunities, you also have to take someone else's business away. So if we can be the first ones to get the foot in the door, the onus is on the Americans to try to take away from what we've established. We'd rather be in that position of being first.

When we went down to Colombia last year, it was not long after Congress had used some mechanisms to delay activity in Congress. That certainly made it more difficult for our negotiators, because that spread out the timeline somewhat for the Colombians--for some of them; for some it speeded it up. So you had conflicting things going on.

Because a lot of U.S. groups have started to notice that Canada has an agreement now and Canada is moving forward, that has started to put pressure on the U.S. Congress. And the National Cattlemen's Beef Association is one of those organizations that is very much in favour of getting that access for U.S. beef into Colombia.

So you're right. I have noticed over the last couple of months that maybe it's working its way up the radar screen, and I think that says to us that we really need to get moving and not miss this opportunity to get in there first.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Brison.

Monsieur Cardin.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chair.

Good day and welcome to all of you.

I know that I have already met you, but I'm drawing a bit of a blank. What are the current figures in terms of overall beef and beef product exports?

[John Masswohl]

Well, we haven't shipped any since before 2003, because of the BSE restrictions. We've been shut out of that market since that time. Before that our shipments were fairly minimal. You can imagine the effect of an 80% tariff. So that's one thing we're looking forward to.

But the other thing that's happened in those six years is that the Colombian market has changed considerably; there is a growing middle class. So our estimate right now is that we expect to be able to ship about $6 million worth of beef and another $1 million worth of cattle genetics. Then once the FTA gets fully implemented, we expect that to roughly triple to about $20 million per year.

[Serge Cardin, Bloc, Sherbrooke, QC]

What are the current numbers?

[John Masswohl]

Right now it's zero.