International Trade Committee on March 8th, 2012

[Andrew Casey]

Definitely, for all regions; you have to remember that this is a global market, so when you open up market share in one part of the world, even though it may benefit directly one region of our country, that tends to move product away from where that could have gone elsewhere.

If you look at more product leaving British Columbia and going to Jordan because this makes it more competitive, that product is limited in its supply, so it would be product that would come probably out of the U.S. marketplace, which then opens up the marketplace again for another producer in another part of the country.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Fabulous.

Moving over to the agricultural sector, I agree, Ms. Sullivan, that multilateral agreements are something that we all favour and that make it much easier for our Minister Ritz and Minister Fast and our government to expand on our robust trade agreements that we're implementing across the world, as we are. One in five jobs are trade-related.

Can you maybe expand a little bit on the Canadian International Grains Institute and the potential for cooperation with Jordan's agricultural sector?

Mr. Phillips might be able to enlighten us on that.

[Richard Phillips, Executive Director, Grain Growers of Canada; President, Canadian Agri-Food Trade Alliance]

Sure.

The Canadian International Grains Institute, as you know, does a lot of primary research. It brings in Jordanian flour millers, let's say, and shows them how to work with the Canadian wheats that we export into that area.

They've actually expanded their program recently to work on pulses, and how to process chickpeas, lentils, and peas. This is an important market for us, and I think CIGI can actually play a role here in working with the Jordanians. Currently it is our second most important market for chickpea exports from Canada, and has been for the last several years. It also imports a significant number of lentils—maybe not significant out of the global picture, but we do ship 2,700 tonnes there a year, on average.

So the more we can actually work with them and show them how to use our products better, the more we will then sell into their market. There is good potential for us there.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Speaking of potential, some on the trade committee here travelled three or four years ago to the gulf cooperation states. Right now there are about six million people in Jordan, but overall, in terms of trading, the cooperation counts for about 40 million.

Do you see this agreement as a possible jumping-off point to an expanded market and a potential for the agriculture industry?

[Richard Phillips]

Yes. A lot of trade—and perhaps Ms. Kubba would like to add to this—in some parts of the world, such as the Middle East, comes from relationships. The longer you trade, the better the relationships. A lot of trade happens then through extended families, once you establish the initial trading relationships. We've seen that for many of our pulse exports into the Middle East.

So I think getting your foot in the door in Jordan starts to build those relationships, and then, through extended family, you see trade start to go through other countries.

[Zaineb Kubba]

Morocco as well.

[Richard Phillips]

Yes, Morocco as well; it's similar.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

So that's the mutually benefiting trade relationship as we foster our relationship with Jordan and build on that.

Thanks.

Moving on to Mr. Kirke and the apparel industry, I want to reconfirm, maybe to the disappointment of some folks in the room, that there are caring and compassionate Conservatives who care about the labour force, not only in Canada but around the world. Some think they might have the franchise on that perspective. But I'm really concerned about some of the stories we've heard. We travelled to Colombia, for example, and worked with some of the UN schools on training and helping.

The philosophy I live by is that the better off we are, the better off everybody else can be. So the better off everybody else is, the better off everybody is. You know, a rising tide lifts all boats.

I would like to ask you specifically, Mr. Kirke, about the Nygard company. Are you familiar with it? There's an article that says it's linked to human trafficking, abuse, and Jordanian sweatshops. Do you have any knowledge of Nygard's involvement in this?

[Bob Kirke]

It's very difficult sometimes when you're chasing some of those stories, because the company has a very different perspective from what's reported in the press. It's maybe regrettable that they're always following the story. Nonetheless, when something comes out and is put on the Internet, you have to chase the story.

From what I've seen in statements from the company--again, this is something you can verify with them--they haven't reached the same conclusions that those stories portray. That doesn't mean to say they hide their heads in the sand. They could give better testimony, but the facility we're talking about is a joint venture with IBG, as far as I understand. When it was established in Winnipeg they essentially took a facility from Winnipeg and moved it there. It's a state-of-the-art facility. This is not a run-of-the-mill factory. Nygard International was previously the largest manufacturer of women's wear in Canada, and they brought a lot of expertise to Jordan.

So I am aware of those stories. The take of the company on them and the testimony I believe they would provide to this committee would reach quite different conclusions. But they are involving that factory in Better Work Jordan. They have subsequently been given accreditation through the ministry of labour, as have others.

I think you have to appreciate that there are certain things that are facts of life in Jordan that are a little unusual to people, like migrant labour. These things have the potential to give rise to abuses. But migrant labour is a fact of life in the world. There are internal migrants in China, and they are the Chinese labour force. There are migrant labourers in other areas. They are not to be treated in a cavalier way, but they are a fact of life.

Some of the circumstances regarding these facilities give people pause. I come back to my statement--and I think you mentioned bringing people up--that you deal with what's going on in Jordan by reinforcing what the ILO is doing. You are building infrastructure to maintain a viable marketplace and a viable industry, and it's a massive industry to Jordan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you very much for that.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Valeriote.

[Frank Valeriote, Liberal, Guelph, ON]

Thank you all for coming. We've talked before on the agriculture committee, a number of us.

I have three areas I wish to cover. One is food safety.

Kathleen, when we were talking about access to markets at the agriculture committee several weeks ago, we said that food safety was very important in the industry. We learned that while we inspect 100% of our food products that go out, only 2% or 3% of everything coming in actually gets inspected.

I'm just wondering to what extent we need to be concerned. While we might be exporting to Jordan and they may enjoy the security of our food safety regime, is that reciprocal? Does the agreement provide for issues relating to food safety, and if not, should it? In other words, they have to examine 100% of everything leaving their country before it gets here.

[Kathleen Sullivan]

I'm not sure if it would actually form part of the text of the agreement, but when we're looking at trade relations with countries, whether we have an FTA with them or not, there are very serious protocols that are established by CFIA and Canada Border Services Agency on import permits and phytosanitary permits.

We expect that CFIA would apply the same rigour in the context of Jordan, with or without an FTA, as it would for any country we are dealing with. So I don't think we would see a difference with Jordan, and I don't think that we would see heightened food safety or food security just because we had an FTA with that country. I would expect CFIA's standards to be of the same rigour no matter who we were importing from.

[Frank Valeriote, Liberal, Guelph, ON]

Okay. You said we export $40 billion per year in agricultural and food products. You made reference later to 70% of that being essentially in pulses. I notice an exclusion for poultry products. One of the previous witnesses in our first panel explained what those products were in poultry, some chicken and some turkey, but implied that it wasn't of great concern to the poultry industry. Can you confirm that? Can you tell us how much poultry goes out and whether it's a concern that it's been excluded in this agreement?

[Kathleen Sullivan]

I don't represent the poultry industry. I represent Canada's agriculture exporters, so by definition, the supply management industries aren't in my membership.

I'm not sure what the previous witness was referring to. I will say that in the past there has been a tendency in trade agreements to exclude our supply-managed commodities from negotiations. I would say, though, that going forward—and certainly we've seen it in the context of the Canada-EU negotiations—the federal government has adopted a different approach, which is to have no exclusions from its negotiating mandate, and we would see that as a very favourable development.

I don't think that means for a second that the federal government is going to negotiate away our dairy or poultry sectors, but it certainly allows.... To Bob's point, our standing in international trading circles has been eroding for years. We need to get on with closing some trade agreements. Although the government has had many trade agreements since the NAFTA, the trade agreements we have so far represent all of 2% of our agriculture trade. The trade agreements we're currently looking at, CETA, TPP, Japan, are 70% of our agriculture trade. It's the future we're looking toward in trade, and we need to get on with closing these trade deals.

If we can signal to other countries that we are open for trade and we are willing to sit and negotiate, then I think that can't help but benefit us in the long term.

[Frank Valeriote, Liberal, Guelph, ON]

Okay, thank you.

I have a third question, to whoever might be able to answer this.

I heard somebody imply in their question that Jordan might be a clearing house for commodities that go to Jordan and then go to other countries. I'm wondering to what extent that happens, going through Jordan and getting into Canada. I recall a program where they were talking about truffles being made in Italy and in France, and the next thing you know China is in on making truffles and sending them to France, then France packages them and exports them as a product of France. Is there any way of dealing with that in these kinds of agreements, that what is coming from Jordan is actually from Jordan, or is it originating from other countries?

[Richard Phillips]

Our experience is the pulse industry, and one of my closest neighbours in Tisdale is a huge pulse exporter.

Most of the product going over there is consumed there. There might be some re-exporting to the EU, but to a large degree there'd be very little export coming back, just because of the economics of the distance and freight and everything like that.

There's a lot of North American processing for the North American market on that.

I guess the rules of origin is your solution in those things, and we face that in all other trade agreements as well, even for our own exports. Sugar is a good example of an export processed food. We don't grow a lot of sugar in Canada, so it always affects us in rules of origin.

Rules of origin would cover those off.

[Frank Valeriote, Liberal, Guelph, ON]

Do you know the volume in dollars of what we get from Jordan as far as agricultural products are concerned?

[Richard Phillips]

I only focus on our exports. I'm sorry.

[A voice]

We can make a commitment to get that.

[The Chair, Conservative, Rob Merrifield]

Just for the committee's information, I asked the clerk that because I wondered what kinds of foods were coming from Jordan—some dried dates, figs, and some mushrooms and cucumbers. It's a very small number.

We now move on to Mr. Shipley.

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

Thank you very much, Chair, and thank you, witnesses.

I want to go to Madam Sullivan and certainly over to Mr. Phillips for a second.

In your presentation, when you talked about CAFTA's representation, it certainly is pretty broad across the agriculture sector, including producers, processors, and exporters. That gives a pretty broad sense of what you do. When we're talking about free trade agreements, do you get an opportunity for input into any aspects around agriculture?

[Kathleen Sullivan]

Yes.

My full-time job is to provide input on trade agreements as they relate to agriculture, and I'd say I'm always frustrated. Last week I was at a conference on Canada-EU, and somebody said the consultations weren't very transparent. I stood up and quite vehemently defended the negotiators, because I think that consultations on trade agreements, particularly for our sector, are incredibly inclusive.

We have opportunities to provide input both through the Department of Foreign Affairs and International Trade and also through Agriculture Canada. It's not just CAFTA that provides input. I sit on many panels with my supply-managed colleagues, who also have a viewpoint on trade, as you know. We differ in opinion, but it's very collaborative and very transparent and very comprehensive.

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

That would be a fair comment to have from Mr. Casey and Mr. Kirke. It doesn't mean we all have to have the same message. There's always a concern about each of the industries, but there is a consultation process your industries are involved in.

Thank you very much.

Because I come from agriculture, I'm going to focus a little bit, but I can tell you the direct ties between the forestry and agriculture as primary producers and then the value-adds that we just continue to need to support to make these more credible products that we have to export around the world....

In your “Trade Must be a Priority”, your third point, “addresses market access issues”, could you just expand on that a little bit? We've talked about Jordan. I believe it was Madam Kubba who talked about the gateway in. Can you talk about the access, a little more about those issues, what they are and how we can fix those?

[Kathleen Sullivan]

Sure. I'll do it perhaps a bit generically but give you some specific examples.

Whether we have a trade deal with a country or not, we often face market access issues, and country-of-origin labelling in the U.S. would be a good example of that. We often have market access issues with China.

Perhaps Andrew has the same problem, but in addition to non-tariff barriers—just differences in testing methods or testing standards—we face sanitary and phytosanitary issues that have to do with the fact that we have a biological product, an organic product. Often different countries apply different tolerance levels for pests or pesticides or a low-level presence of genetically modified materials. To the extent that those different approaches reside in another country we're trading to, they pose a trade barrier for us. Whether we have a trade deal or not, often the text of a trade deal doesn't deal with those. Those are the issues that—really, probably more often than not—stop us from trading.

Our negotiators know how to deal with tariffs. They know how to deal with quotas. There are formulas. There are different ways of approaching it. But it's the non-tariff barriers that really cause the major market access issues, because you can be very creative in how you decide to stop another country's product from getting in.

That's why I made one of the other points: we really need to be negotiating 21st century deals that start to get our head around the complexity of these non-tariff barriers and how, perhaps, we start to put in processes and formulas for dealing with those. Really, they have to take place on an international basis.