International Trade Committee on March 10th, 2009

[Deborah Lyons]

I'm sorry, what was...?

[John Cannis, Liberal, Scarborough Centre, ON]

The question is very simple. We're trying to move forward, for example in the auto industry, to try to turn this around. But there are integrated industries. Automotive is one. There are others, but I'll leave that to you.

Can you help me respond to my constituents on how we are going to work together when we get the impression here in Canada--at least my constituents do--that they are going to look after their own hide first, and justifiably so?

So how can we move forward, and what industries can we move forward on, that are not dependent on what happens with the American decisions first? It seems like they have to decide, they have to make a move, they have to make those investments before we can move, with automotive being an example.

[Deborah Lyons]

The comment I'd make is that you are partners and neighbours in good times and in hard times. These are hard times for everybody. At the same time, because we've been partners and neighbours, we do have a very integrated economy, there's no question. We have integrated sectors and automotive is one of those. They're attempting to address their issues with the auto industry. They're meeting with them regularly, as you know, looking at various types of packages, but they're doing that in concert with us.

Again, I can't speak to that because that's really the purview of Industry Canada and the Minister of Industry. Clearly there have been many meetings with the minister to discuss what the U.S. is looking at and how Canada would respond.

I think it is very much an integrated dialogue for an integrated solution for an integrated sector that is in trouble and requires the attention of both governments. We're seeing the Canadian and the U.S. governments working together on trying to solve that. There are a number of other sectors where, because of how our economy has become enmeshed in the last several years, particularly as the result of NAFTA, a solution for the U.S. is a solution for Canada, and vice versa.

In these economic hard times, there is a sense of everybody having to look after their own. Clearly what we have in a number of the sectors is a business community that works together. Many of our advocacy issues, when we take them forward to the state-level and the federal-level governments, are led by the fact that we don't just export to one another, we don't just to do business together; we make things together. We build things together. We invent together. I'm trying to put a bit of a positive spin on what I know is a difficult situation, and your question reflects that.

In the area of environmental recovery and clean technologies, Canada and the U.S. are looking, with this stimulus package that they have in place and this economic crisis, at how we can be working together to address energy security and to address the environmental issues that are being presented. We're looking at the clean technologies that both countries have through the businesses that are now offering these products and these services. Further to that, we're doing research together on a number of these areas to look at how we can address these issues.

The same thing is true in life sciences and biotech, where we're looking at a number of opportunities for both sides of the border. It is truly a situation where we are part of one another's solutions. I think what we're seeing with this administration, as we did again with the last and with our government, is a real attempt to try to address these solutions together, in the same way that our business community is attempting to do.

[John Cannis, Liberal, Scarborough Centre, ON]

I shall tell my constituents that we are fully and proactively engaged with this concern.

Thank you, Mr. Chairman.

[Deborah Lyons]

If I may, I would really encourage you, particularly with regard to your business community and your constituency, to tell them to get in touch with our missions in the U.S. We're working very hard, particularly at this time, to look at where the opportunities lie in this stimulus package, and to particularly look at where these new sectors are coming on board.

[The Chair, Conservative, Lee Richardson]

Mr. Silva.

[Mario Silva, Liberal, Davenport, ON]

I'll be very brief with my statement and question.

To the witnesses, just remember, it's five minutes between you and me.

[Deborah Lyons]

Oh, yes. I'm sorry. It's my Irish background, I apologize.

[Mario Silva, Liberal, Davenport, ON]

Okay.

[Deborah Lyons]

I was going to say it's my Maritime background.

[Mario Silva, Liberal, Davenport, ON]

Given the fact that we're by now in a terrible economic situation in Canada and the U.S., and of course around the world; given the fact that we're each other's largest trading partners; given the fact that we know that the Western Hemisphere Travel Initiative obviously will create some uncertainty and complicate matters even further economically; and given the fact that, as of June 1 of this year, the initiative comes into place, has the government stated publicly--and also got it to U.S. officials--and asked for an extension beyond the June 1, 2009, date?

[Deborah Lyons]

I very much appreciate your comments this morning on WHTI. Frankly, as I'm sure is obvious by now, I am not a WHTI expert. But what I'm hearing from you loud and clear is a great concern about the June 1 deadline.

I will take it upon myself, Mr. Chair, to go back to the responsible office and confirm what our position is on this. Really, I'm reflecting what I'm aware of from my work with the business community. I do not want to misspeak on a subject that is clearly is so important and that obviously has the concern of this committee.

[Mario Silva, Liberal, Davenport, ON]

It would be important for us, Mr. Chair, as a committee to know what the government's position is on this issue as soon as possible.

[Deborah Lyons]

Yes.

[Mario Silva, Liberal, Davenport, ON]

You'll take it upon yourself to find that information.

[Deborah Lyons]

I will speak to other people in our department who work more closely on this subject and get back to you.

When I did discuss this with them yesterday, my understanding was that they were hearing from their U.S. counterparts that the June 1 deadline was firm; that the U.S. felt comfortable that they were going to meet it; and that we were monitoring it very closely with our business community here and our colleagues in the U.S.

But please allow me to respond back to the chair on that.

[The Chair, Conservative, Lee Richardson]

Great. Thank you.

Mr. Harris.

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

Thank you, Mr. Chair.

I guess, coming from B.C., I have to go back to the softwood lumber issue, lest there be some confusion about the value of that agreement. For a number of years, when the old agreement ran out, we spent several hundreds of millions of dollars, I believe, in lawyer fees and in negotiations. We arrived at this agreement, which guaranteed producers secure access, via the quota system, to the U.S.

I think it's fair to say that even if that quota system were doubled and that Canadian producer could ship twice as much, these days, because there's no market down there, they probably wouldn't be shipping twice as much. As a matter of fact, they're even having trouble shipping what they're allowed right now, because the more they ship, the more money they lose. That's the way the market is right now.

My colleague from B.C. has mentioned that this would be probably in the best interest of softwood producers if we didn't have that SLA right now. It's causing us a lot of grief. Isn't it realistic to consider that, given the very difficult times in the housing market in the U.S. and the starts that are dismal, if there was no softwood lumber agreement, the lumber coalition down there would be working overtime to prevent any softwood going down into the U.S. from Canada? That would be certainly in their best interest that they were able to supply all of what little there is to supply to that market down there. Of course, that's what they're there for. They're protecting their end of the business, but it's more about the market right now than the agreement. The agreement is actually keeping us in there.

Without the agreement, is it realistic to think we would have trouble shipping any wood down there, given the current market situation?

[Martin Moen]

Certainly; without the agreement, the risk to Canadian producers would be substantially greater. Certainly; that's about all I can really say.

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

That's a good point. I thank you for the comment.

That's all I have, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

We are running a little tight on time.

I have time for a very short one from Mr. Guimond.

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

Thank you, Mr. Chair.

We spoke earlier about the COOL Act. It is well known the economy of the agricultural sector is very integrated. A few months ago, members of Parliament looked into the question of labelling Canadian products. The government disregarded the recommendations made by parliamentarians and introduced new labelling rules that displeased a number of sectors, including the agricultural sector. We the Bloc Québécois think that the percentage required in order for a product to be labelled “Product of Canada” is far too low.

Could you give some details about the labelling standards in place in the U.S. at the moment?

[Callie Stewart]

I will answer you in English because I don't know the technical terms in French very well.

The final rule that will come into place in March is the rule that was published on January 15, which allows for flexibility for packers and producers to not have to segregate their animals should they not desire to do so. It should allow a packer the option of running U.S.-product-only animals or the option of running mixed-origin labels, packages, without having to go through really extensive segregation--for example, Canadian-born animals in this pen over there--and in the slaughterhouses, not having to do one day of one slaughter and then one day of another, and so on. The hope is that under the rule that was published, which will be law as of June 16, business practices, more or less as usual, could continue.

The complication is that under the voluntary guidelines that have been provided, Secretary Vilsack has asked for that segregation to be put in place. In fact, he has asked for something that goes beyond what was in the 2008 Farm Bill--as Canada read it--back to what was in the 2002 Farm Bill--which is that not only must you say that this animal is a product of Canada or product of the United States, but also you must say that this animal was born in Canada, raised in the United States, slaughtered in the United States, or whatever it may be. You have to have a narrative history of the animal, which means the animal needs to be tracked from birth onwards. This is much more burdensome for processors, for producers, for packers, and for retailers.

We were just hearing stories that part of the problem is that the machines that run labels in grocery stores don't actually have the space to type up the number of characters required to have this narrative history. So that's going to have to take place.

That's one of the elements of the Secretary Vilsack voluntary guidance. Another has to do with ground-meat regulations. Under the final rule that was published in January, processors are allowed an inventory of 60 days, meaning if they've had meat in their inventory from Canada or Australia or New Zealand within the last 60 days, they may label it mixed origin--Canada and the United States, Australia and New Zealand. But under the voluntary guidance it goes back down to 10 days. You must have had product from those countries within the last 10 days in your inventory in order to use that country's name on a label.

Finally, the voluntary guidance proposes to expand the definition of what must be included under country-of-origin labelling to include more processed products, more cured and smoked products.

Essentially, the voluntary guidance goes back to COOL at its origins in 2002, which many parts of the industry in the United States were very unhappy with as well. But it's not legally binding. Perhaps the industry can speak to it better than I, but what is going on now is that people in the United States and in Canada are really trying to understand how they're going to deal with this very novel approach that the United States has taken where they have a rule that is legally binding, and voluntary guidance that is not, but that comes with something of a threat hanging over it.

It's not clear to anybody right now exactly what country-of-origin labelling is and what it means, and how it's going to be enforced. A telling date will obviously be March 16, when the final rule comes into force. And we will start seeing

Then we will see what the COOL really is.

[The Chair, Conservative, Lee Richardson]

Thank you very much, and thank you for that answer.

We have run out of time for this portion of the meeting. I do appreciate the answers today from all of the witnesses. Again, thank you, Mr. Stephenson, Ms. Lyons, Ms. Stewart, and Mr. Moen for your appearance.

I'm going to move on now. We'll just take a minute to distribute a draft schedule that we had talked about last week, and then we'll move on to committee business.

[The Chair, Conservative, Lee Richardson]

Gentlemen, we're going to have to return to our agenda here. We have a couple of items to discuss. There were two items distributed while we were at break. One is a notice of motion from Mr. Julian, which I will have him speak to in just a moment. The other one is the draft committee schedule.

I'm thinking that because of the time here, we may not get through this draft committee schedule, but I want to make a couple comments before we proceed.

One is that, as we saw today, a discussion of Canada-U.S. relations is such an enormous topic that I think it's going to be imperative that we define the focus of this discussion. Otherwise we'll be all over the map. I don't wish to restrict committee members in any question they want to ask at any time, but in terms of our specific study this time around, I think there was some suggestion at the previous meeting when we discussed agendas that we would focus on perhaps four areas of Canada-U.S. relations. I thought that before we proceeded further with Canada-U.S. relations, we might want to define that and come to an agreement that we are going to limit our discussion to perhaps four areas.

I'll just run by the areas according to my recollection. And when we get into discussion of the draft committee schedule, I will ask for some consensus on that.

Those areas were the Western Hemisphere Travel Initiative; country of origin labelling; northern border and security; and, although somewhat tangential to the WHTI, the 2010 Olympics and related matters vis-à-vis the United States.

It was my thought that there had been some consensus that we were going to pursue those four areas in our discussion of Canadian-U.S. relations, and I think to go beyond that would just widen the scope to a point where we don't really get anything done.

I'm not asking for a decision right now. I just want the committee to consider that and also to consider this draft committee schedule. When you do so, may I again suggest to the committee that it was my suggestion, and obviously that of the analyst, to put together this draft committee schedule based upon a consensus of the views of the past meetings. Also, the points that I have just raised with you--those four areas of consideration for the agreement--were also based on that consensus. If there is any dramatic difference from that, I would welcome discussion of it, but we could go a long way to try to define the agenda and not get any business done. I would hope that we could stick to some consensus.

In any event, those are merely to try to save time later for the committee. We will turn to the draft committee agenda, and specifically the boundaries of our Canada-U.S. trade relations discussion, following discussion of Mr. Julian's motion.

Did you want to say something before that, Mr. Julian?