International Trade Committee on April 15th, 2010

[John Masswohl]

Now, that's what we spend in Canada and the U.S. Getting into comparing the rest of the world and what the U.S. spends in the rest of the world, our Canada Beef Export Federation is not part of the Canadian Cattlemen's Association. We are one of a number of members. If you want to explore what their budget is, you'd probably want to talk to them directly as to how that compares.

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

Okay, but you're aware of the United States' promotional budget. We can certainly ask them for the proportion of beef export sales that they're involved with. But we've talked previously of figures upwards of $50 million or $60 million in support from the U.S. government. Is that accurate?

[John Masswohl]

I personally don't know what the U.S. Meat Export Federation spends. I imagine that the Canada Beef Export Federation has some estimates of what they spend. I think the numbers you've quoted in the past were from Ted Haney, from the Canada Beef Export Federation, so I would probably encourage you to follow up with Ted.

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

Fair enough. Thank you.

Mr. Phillips.

[Richard Phillips]

The Grain Growers of Canada is a coalition of commodity associations that would be more directly involved themselves. So Pulse Canada, for example, which would be made up of all the pulse associations and the industry, would have their promotional budget. I don't know the exact numbers of these, unfortunately. But they will sit down at the start of the year and say, what are the key target growth areas? Is it more growth in India? Is it more growth in the Middle East? And they'll make those determinations.

They do receive some money. Again, I don't have the exact figures, but I'll make a commitment on record to get those numbers for you, for what the pulse growers would do.

Likewise, the Canola Council of Canada, when I sat on the board there, we had a market development committee and we would prioritize certain markets. When it did come to the Middle East, which is such a price-sensitive market, at the Canola Council we would discuss whether we would spend money to develop a price-sensitive market or should we go where there is a premium price paid and do further development there. We always tended to lean towards whether we could do more market development within the United States or within the European Union or places where people will pay for the healthier oil aspects versus a lower price market, which you're in one day and then if olive oil is cheaper the next day, you're out again. So we tended not to prioritize some of the really price-sensitive markets. I suspect--I'll just speculate here--that Jordan would probably fall into that. It's a place where if you can meet the price at certain times, you will make a sale, but it's maybe not as long term a development on some of those issues.

The Canadian Wheat Board may very well be doing some market development if they're doing a trip through that area. They may stop in and see them.

The other thing we have in Canada that does promotion for Canadian products, though, is the Canadian International Grains Institute, where we have full-scale sample milling labs and pasta plants and there is some pulse processing in there now. What we would do there, if we thought Jordan was a key market, is we'd invite one or two of the milling companies, one of the big bakeries from Jordan, to send somebody to Canada. We'll take them through the Canadian wheat and show them how we'd set up their mills, the products that would be made, and how our product would make the exact breads they want and the quality they can expect from Canadian products. Or they'll do that with the durums for the pastas as well to show the quality of products we can make.

This is an excellent tool that maybe a lot of people don't even know about that we use in Canada.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Phillips.

I'm sorry, that's eight minutes. They were great answers but they just got a little long, unfortunately.

We're going to have to go over to this side, to Mr. Keddy.

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

Thank you, Mr. Chairman. I'll be sharing my time with Mr. Trost.

Welcome to our witnesses.

Mr. Phillips, I just want to pick up where you were leaving off, on how we actually do our promotion in foreign lands. I want you to expand a little bit on the fact that you're obviously concentrating on countries where we have trade agreements in place. I would expect the reason for this is that we're not already at a 15% or 25% tariff, which puts us in a deficit position before we even begin to trade.

Do you want to expand on that?

You're shaking your head “yes”, but....

[Richard Phillips]

No, no, I think that's true. If you had to focus somewhere, why would you start off with a 15% tariff barrier in any of your market development work? That's why the trade deals and the negotiations are important to move forward. Certainly the government has been very aggressive on these deals, and as agricultural producers we are very supportive of that and very appreciative of it.

To go back to promotion, we can go overseas and promote our products there. There is money available from the federal government. I don't know how much uptake there was to show up at major food fairs in Europe, for example. The beef and the pulse people have some government support to go into the major food fairs there, where the buyers and all the food companies are, and show them what Canadian products look like. There are various supports available. I just don't have all the numbers on what each of these groups is taking advantage of.

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

I appreciate that. I was more interested in the reasoning behind where you actually market, and it makes perfectly good business sense to me.

I appreciated your comments earlier, when you said you would prefer that we pursue more multilateral deals, such as the WTO, and try to get this uniform trade deal worldwide. The difficulty is that we're stalled, and we're seriously stalled. We certainly made overtures to try to get those trade talks moving and we have some small success there, but in the meanwhile I don't think we can stop. That's the whole point of the bilateral discussions, whether with Jordan or Colombia or Panama or other countries around the world. Otherwise, we don't find new markets for our agricultural products or manufactured products, and essentially we're sliding backward every day instead of moving forward. I thought that needed to be said.

I appreciate your comment, and I agree with you, but if we're not moving forward in those directions, we have to--we have to--look at bilateral discussions.

I'm going to turn the rest of my time over to Mr. Trost. Being a prairie boy, he wants to get at you guys.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Keddy.

You made some remarks about price sensitivity, and I can understand that with raw markets. Looking at the data of top exports to Jordan, I see there doesn't seem to be very much in beef. You mentioned it was one tonne of exports. Has it just been price that's been keeping our products out? Why haven't we been able to sell more agricultural products to the Jordanian market?

I'm getting an “I don't know” look.

[Richard Phillips]

No, I'm looking to see if John wants to answer first.

[John Masswohl]

Sure.

You know, kind of coming around that question, one of the things that I constantly hear from people who do business after a free trade agreement has been established is, “What was it in the free trade agreement that really opened up that market to you?” Yes, lowering the tariff helps, but often they say that just the fact that we signed an agreement means there is an opportunity. It raises awareness of the market and bumps it up the priority list.

There are some 180 countries around the world, and we can't be in all of them all the time. As I said, we're probably interested in Jordan because we're interested in Saudi Arabia. We're interested in the United Arab Emirates. We have sold a lot to those countries. If we're in the neighbourhood anyway, let's have a look at Jordan.

Also, Jordan has had a trade agreement with the United States for almost 10 years. I don't know that the U.S. has sold a lot of beef in Jordan, but if you're on the Jordanian buyer side and you can buy duty free from the United States or pay a 5% tariff if you buy from Canada, why would you buy from Canada?

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I'm hearing basically price and awareness.

To follow up on where Mr. Murphy was going with some of his questions earlier and the remarks about strategic location and a strategic plan for the future, how do you suggest that the Government of Canada strategically approach trade relations in the area, using Jordan to leverage into the Saudis or the Kuwaitis? Iraq is starting to have more money in that neighbourhood, and Syria, etc. Have you any suggestions on what we should prioritize strategically in that region?

[Richard Phillips]

Let's look out one year, two years, three years and let's just presume that there's been an excellent relationship and maybe a growing trade relationship between Canada and Jordan and that we've always met the specifications: they're happy with the quality, happy with the products. I would say that if you were to go into that area, you would first approach the Gulf Cooperation Council, which is the group of nations with 40 million people. If you can go into a larger group like that, it saves having to negotiate the individual agreement with each of Bahrain, Kuwait, Oman, Qatar.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

So we would use this as a template: we've culturally done fairly well with one Arab country, so let's work toward the big market.

[Richard Phillips]

Yes.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Go ahead; finish. We have about 40 seconds.

[Doug Robertson]

I think it's similar to the reason the EU is looking to do a free trade agreement with Canada, only in reverse. They're looking to see whether they can make it work with somebody who is very similar to the U.S. They really want to get into the United States. It's rather the same thing here: if we can prove our worth and prove that we can do things well and show the cleanliness of our products...

There were a lot of questions before about products that could be upgraded, value-added products, cheeses, and all kinds of things such as jams and sugar, confectioneries, and all those kinds of things. Those are all value-added things besides beef that we have a possibility to get into as well and that are presently tariffed.

[The Chair, Conservative, Lee Richardson]

Fair enough; thank you.

We're going to have time for another round.

Mr. Julian, it looks as though there's time to complete your response to the other one, if you wanted to conclude your question on—

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

Thank you very much, Mr. Chair.

The two questions I'd asked Mr. Phillips were on consultation: whether there has been any consultation around the Jordan agreement, and secondly whether you're aware of how much funding and support other countries, our competitors, provide to their pulse growers, to their grain growers.

[Richard Phillips]

To the first one, I'm not aware of consultation with the grain growers on this. It may have happened, because it was about the time I came to the Grain Growers of Canada. It was my understanding that the King of Jordan was coming for a visit and that this was the impetus to move a little more quickly to put this one together. I think that's what got it started, that the King was coming. There might have been other diplomatic reasons, even, for their wanting to put this together.

But I'm not aware of consultations with us in advance. I would say that in other trade agreements, the larger trade agreements—for example, the Canada-EU agreement—there has been substantial consultation with most of the commodity groups in advance of it. On this particular one, I'm not aware of any.

We don't actually track what other countries are doing, in terms of the dollars or the percentage. You can hide money so easily in promotional budgets that you never know for sure where it's coming from. Is it coming through an embassy? Is it coming directly to the industry association? Is it flowing somewhere else? It's hard to track all that. We don't have a firm number on it.

We don't feel that we're being badly outdone. To a large degree, and maybe the beef people feel differently, I think Canada has done... Through the quality of our products over the years, I think we have a very good reputation out there. When we talk about expanding our markets and about other value-added products, if we're doing a good job and the chickpeas and the canary seeds and the beef are meeting the specifications, then maybe if someone is importing and is bringing a container load over there, well, if there's room for other value-added products, there's a better chance, once you get your foot in the door, to make those other value-added sales.

It is due to our reputation, I think, that we do so well, quite frankly.

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

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you very much.

I'd like to thank our guests for coming in today. In the case of a couple of you, it's nice to have you back. Mr. Masswohl and Mr. Phillips, it's good to have you here.

I've been thinking about this deal, and I'm getting a sense around the table that we're getting closer to general support of this free trade deal.

Mr. Phillips, I'm encouraged by your support, along with Mr. Robertson's.

I noted, Mr. Masswohl, what you said--I'll try to quote you correctly, but I'm sure you'll correct me if I don't--that in terms of an FTA, it just doesn't “get any better than this”. Thank you for that.

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

I knew you would pick up on that.