International Trade Committee on Nov. 15th, 2011

[Jacques Pomerleau]

Yes.

[Wayne Easter, Liberal, Malpeque, PE]

That leads me into my next question. I was intrigued by the Europeans' amalgamation of meat. They're amalgamating meats. Could you expand on that somewhat?

I am concerned, from Canada's perspective, that as we go into these negotiations, they've admitted that there hasn't been a net benefit analysis done, that it's kind of a wish list. But when I look at how the U.S. is becoming more restrictive and how the Europeans...we met with European parliamentarians and learned more there than we learned from our minister, it's sad to say. The Europeans obviously set the stage in other ways to protect their interests, which we don't do.

Could you expand on that amalgamating of meats? Also, from your perspective, will that change in this negotiation or not?

[Jacques Pomerleau]

After the Uruguay Round, everybody was talking about giving 5% access to their markets. Because they were net importers of beef, horse meat, and others, the Europeans put all the meats together, and the share that was left of the total 5% was only 36,000 tonnes for pork. That's how they did it, because there were no rules on how to define the 5% access at that time.

[Wayne Easter, Liberal, Malpeque, PE]

But in this negotiation, will that change the way it should actually be done for each commodity--where beef is beef, pork is pork--instead of for all meats?

[Jacques Pomerleau]

Yes.

[Wayne Easter, Liberal, Malpeque, PE]

Then the objective is to change that so you have an import amount for each specific commodity? That's your understanding?

[Jacques Pomerleau]

Yes, and it would be for each cut. It would be not only pork or beef, but each line in the tariff line.

[Wayne Easter, Liberal, Malpeque, PE]

Okay, good. Thanks.

With regard to South Korea--and I know Korea and Japan are extremely important--what would be the cost to us if we were forced out of that market because other countries had managed to get trade agreements and we hadn't? We don't seem to be on the table--the parliamentary secretary is not here--and we just do not seem to be in that discussion with South Korea now. I don't know if we've given up or what. What will be the cost to the industry?

[Jacques Pomerleau]

It will be $300 million in sales per year. The duties are between 22% and 25%, and the Americans and Europeans have managed to get the duties eliminated within two or three years. So we will be at a 22% to 25% price disadvantage.

[Wayne Easter, Liberal, Malpeque, PE]

That's within two years?

[Jacques Pomerleau]

That's within two years.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you.

Coming back to forestry, Mr. Casey, I'm sorry I missed your presentation; I was at another event.

Not so much on CETA--and I know the CETA agreement is extremely important--but where is the lumber industry at now vis-à-vis the United States? The softwood lumber agreement, which came about whether we liked it or not, is one thing, but are we expanding in the U.S. market? Are there more restrictions? We're finding with the U.S., on everything we do these days, that there are new fees. There's Buy American. Where are you at on the lumber industry?

[Andrew Casey]

The U.S. market has been a very difficult marketplace for us for the past couple of years, for obvious reasons. The housing market has sort of gone in that tank, and that was our mainstay. Our share of the U.S. marketplace used to be well up over 75%. It's down to about 65% now, and that's mostly because the market has shrunk, not because we've pulled out.

[Wayne Easter, Liberal, Malpeque, PE]

It's not because of political reasons?

[Andrew Casey]

No. In fact you could make the case that the softwood lumber agreement, while not the most perfect agreement by any stretch, actually helped us during the recession because it guaranteed us a market share, and we were able to keep selling into that marketplace. But I think it does illustrate the importance of deals like this, and also of the market diversification strategy that the industry has undertaken, because when you become too beholden to one particular marketplace, you are subject to whatever happens in that marketplace.

Obviously our industry was one of the first to feel the impact of the economic downturn. As we talked about earlier, in Quebec they felt the shrinking and the loss of jobs. They felt them in B.C. as well. So finding new markets for the products to lessen our dependence on that marketplace remains an important objective.

The U.S. will always be our most important marketplace simply because of proximity. We have a relationship with them. They build with wood, which is not a culture that is prevalent in all other countries, but I think if we can get that number down, share that, diversify that, and spread out to other countries, it would help the industry greatly.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair. Thank you to the witnesses.

I want to just go to Canada Pork International and Mr. Pomerleau for a minute. In your comments, you talked about—I appreciate the confidence that you've given to the Canadian negotiators. Quite honestly, that's something that we've been hearing. I think that Canada is recognized in terms of the development of free trade agreements, that we are fair, and that we deal with a win-win so that these agreements are seen as good for both countries.

I think you would agree it's important that we have that analogy as part of it. I'm wondering if you could help me just a little bit. In one part of your presentation, you talked about the Canada-EU Veterinary Equivalency Agreement, which is there for pork plants to become EU-approved. We now have three, and there are some sitting in the wings.

For us to market—and they have to be EU-approved—does this agreement also then reflect that their plants also have to meet conditions for imports of EU pork into Canada?

Could you comment on that, please? Often, we hear that they put the barriers up. Is this one of those non-tariff type barriers that are there?

[Jacques Pomerleau]

The Europeans are like the Americans. When they develop their own regulations, they don't think of their trade partners. They develop the agreement for their own purposes.

There aren't too many who export to Canada, and they do have to meet Canadian requirements.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Are our standards much different to meet from theirs? If so, Canada is always recognized as a very high-quality product country.

[Jacques Pomerleau]

Yes, but the problem has to do with—I'll give you a couple of examples.

The Europeans require plastic pallets. Our plants are using wooden pallets. They require a wall between the packing line and the boxes. That's what we're talking about—structural changes. At the end of the day, they all meet the same safety standards. That's what we mean by getting a “true equivalency”, when you recognize the results rather than the means.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I think that is important, at least on the record, to understand. They're basically structural and infrastructural items, not food safety-related items.

There was some comment about non-tariff barriers. Can you talk about any that we may need to be talking about—which ones we need to overcome?

[Jacques Pomerleau]

The non-tariff barriers.... The third-country directive, which has to do with the agreement on the plants, is the major one. For some others, we decided that we will live with them, such as the issue with Paylean or ractopamine. We'll never be able to convince the European public or the European authorities to drop their ban on those products. Our industry will adapt.

Europe requires that every pig be tested for trichina, which is a worm that has an impact on human health. Again, we would like to get the Europeans to recognize that Canada is free from trichina in its commercial herds. That is a process that we need to develop with them, but at least they're willing to discuss a protocol by which we would recognize that.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

When we had the Canadian cattlemen in—just to have it on the record—their concern or objective was to create new market access for beef exports.

When you were talking in your presentation—and my colleague touched on that and asked a very direct question about you wanting to be in the top ten, or maybe one of the top five areas. I'm wondering if you can—and I know it must be hard to project.... But if you're so supportive of this agreement, there has to be some significant market access for your industry.

As you mentioned earlier, the whole objective when we market livestock is to market 100% or as close to 100% of that animal as we can. One, can you give us some expectation of what this would actually mean to you in market access? Two, do you see the EU as helping to market 100% of the animal, or is it your advice to us that we need to continue to grow these market agreements in countries where we have products that we see as not usable in Canada, and yet will draw a premium price in some of these other countries?

[Jacques Pomerleau]

If we want to have the EU in the top five, it means we would need to have in excess of over 100,000 tonnes per year. That's a figure--

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Do we produce that much pork?