International Trade Committee on Oct. 20th, 2010

[The Chair, Conservative, Lee Richardson]

We have one final question from the parliamentary secretary—no, the Liberal critic for international trade.

[Martha Hall Findlay, Liberal, Willowdale, ON]

We'd have to switch roles to be able to do that. Thanks anyway, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

You're welcome to just come over on your own. We'll trade you for Keddy any day. Just kidding.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Mr. Masswohl, given that you volunteered to add a little bit, given the circumstances and the time, I am interested, and I don't want to keep everybody else, if you could just high level the top key issues that are creating stumbling blocks in Korea for us, from your perspective. That would be great.

[John Masswohl]

With Korea we've been close a couple of times; the market has almost been open a couple of times. Our understanding two years ago, it was February-March of 2008, was that they were going to open to the United States and then within about a month they were going open to Canada and we were going to have the same access the United States had. They opened to the United States and there started being protests in the streets and candlelight vigils. The Korean government basically reneged on the deal to the Americans--they pulled back the access they gave to the U.S.--and they reneged to Canada and gave us nothing.

We had some more discussions over a number of months and we just weren't getting anywhere. The Korean Parliament then passed a new law saying that if they were ever to open to another country that had a case of BSE, that would have to be approved by the Korean Parliament. You can imagine any momentum that there was just completely fizzled out and died at that point, because none of the bureaucrats were willing to put a bill forward. And the opposition in Korea was making some gains by criticizing our product and criticizing the leader for trading off...it was becoming a trade for the health of Koreans. Those sorts of things were happening. Once they created that perception, it became very hard for them to move off of it and say, “We were wrong, Canadian beef is safe after all.”

We've been trying to work through on the technical side to help give the technical people the messaging they need to be able to say, yes, we've spent this extra two years with Canada looking at their systems. Hopefully we'll find they'll conclude that our product is safe.

But in the meantime, we have advanced a WTO case that was launched. Quite frankly, I feel the Koreans believe they're going to lose that case. I believe they are going to lose that case, and, more importantly, I believe they believe they're going to lose that case. If they lose it, the WTO is going say, the OIE standard is this, it's all beef from all cattle of all ages--which is even beyond what they are now giving to the Americans. That's a little bit of a scary prospect for them.

I think if it starts to become, in the Korean mindset, that if they can do a settlement with Canada that's commercially meaningful to us, because most of the product we're going to sell into Korea is from cattle under 30 months, and bone-in product is very important in Korea, ribs, long cut leg bones, and those sorts of things.... If we can get about 80% to 90% of the access we need, and get that now as opposed to going through a WTO process, where we get a first-level decision next spring and then an appeal...they can drag that out for another couple of years. I'd rather have it 80% now than 100% in two or three years. I think that's the dynamic we're at right now.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Right. Much appreciated. Thank you very much.

[The Chair, Conservative, Lee Richardson]

Great.

Mr. Keddy, did you have a small one?

Go ahead.

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

Quickly, Mr. Chairman.

On that very point, Mr. Masswohl, wouldn't it make more sense...? I agree with the bird in the hand theory, absolutely, and we're never sure we're guaranteed what happens at the end of a long litigation period. If that were the case, would we be better off to take 80% or 85%, or whatever could be settled on, with consent that at the end of a three- or four-year period--we're going to win the case anyway--we would have full and complete access? We should throw that in there.

[John Masswohl]

I think we certainly wouldn't give away the rest. We still need to say this is basically the down payment.

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

In five years we want an open market, or four or whatever.

[John Masswohl]

It would be nice to have a timetable on the schedule. I think we probably wouldn't get that.

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

Yes, I understand.

[John Masswohl]

I don't necessarily have all the right legal terminology, but I think we would suspend our WTO case rather than terminate it.

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

Yes, I agree.

[John Masswohl]

If it turns out that it doesn't go as we thought it would, we can reactivate it at the same point.

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

Perfect. Thank you.

[The Chair, Conservative, Lee Richardson]

Great. Thanks, Mr. Keddy.

That will conclude our questions for the witness.

Mr. Masswohl, thank you very much again for coming and providing an excellent background.

[John Masswohl]

Thank you very much.

[The Chair, Conservative, Lee Richardson]

I'm now going to ask the committee to suspend for about two minutes while we bid farewell to our witness and switch to an in camera meeting.

[Proceedings continue in camera]