International Trade Committee on May 17th, 2012

[Paul Slomp]

I do work with farmers who are working with export-driven commodities. I do think they might see some gains in this trade agreement with Japan. The reason I'm so hesitant, though, is that I think these benefits to farmers will fluctuate. For example, one year they might see benefit, but the next year they might not. If you look at the overall general trend, because of the market concentration of key players in each of these agricultural sectors.... I talked about it briefly in the beef and pork packing sectors. Also, if you look at the grain trade, there are very few very large corporations that are actually responsible for shipping this grain. The key to their operation is making money. For them to make money, they need to buy their input—whatever the farmer is producing—at the lowest price they possibly can, and sell it for as much as they possibly can. Individual farmers really don't have the market power or market share to be able to really get the full potential from a trade agreement. The people and players who do have that market power and the resources to do that are the larger players.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Wouldn't that apply no matter whom the farmers sell their grain to, whether it's export-driven or domestic?

[Paul Slomp]

What we've seen with these trade agreements is a real trend to internationally competitive businesses. That means for Canadian companies, or companies that are working on an international scale, to be competitive, they virtually need no competition in Canada. If there is too much competition in Canada, then they can't be competitive on an international scale.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

I'll pass my time to Devinder Shory.

[Diana Bronson]

Could I just add something briefly to that, please?

[The Chair, Conservative, Rob Merrifield]

Perhaps you can in the next question. We only have two minutes left, and we want to give Mr. Shory an opportunity to at least have a crack this.

[Devinder Shory, Conservative, Calgary Northeast, AB]

I'll only be a few minutes. Thank you, Chair.

Thank you, witnesses. I won't waste much time.

Mr. Boutziouvis, you talked about the importance of food security in Japan. You also said it's a very important opportunity we have before us this time. The most important comment you made, which caught my attention, was when you talked about diversification. You said that even though our largest partnership is with the U.S., Canada needs to diversify its trade relationships and build stronger partnerships in Asia. Why do you think it is so important to diversify our markets at this time? If we do not do that, what is there to lose—if there is anything?

[Sam Boutziouvis]

Just in macroeconomic terms, over the past two years 80% of global growth has been attributed to emerging markets, including a lot of Asia, versus several years ago when it was less than 40%. Growth increasingly is coming from emerging markets. Wealth and prosperity is increasing dramatically in these emerging markets, in particular in Asia. For example, in China, we all know the story about 400 million people being lifted out of poverty—I'm not saying that they're out of poverty, but they've been lifted out of poverty. When that happens, the demand for protein, other cereals and other products increases, and the demand for energy increases. The demand for all sorts of goods for what is hopefully going to be a rising middle class will increase dramatically.

So Canada can play a role in energy, food products, other commodities, and manufactured goods, as these input into supply chains as the middle class in Asia rises, and as growth shifts more dramatically to these emerging markets.

[The Chair, Conservative, Rob Merrifield]

Okay, the time has gone.

We'll move to Mr. Easter for seven minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

And thank you to all the witnesses for their presentations.

Mr. Slomp, you referred to a joint study quite a bit in your presentation. Do we have a copy of that? I don't think we have a copy.

[Paul Slomp]

It's a joint study, actually, on this free trade agreement.

[Wayne Easter, Liberal, Malpeque, PE]

Oh, okay, it's the Government of Canada one.

[Paul Slomp]

It's on the DFAIT website.

[Wayne Easter, Liberal, Malpeque, PE]

Okay. I thought you were talking about a different one. Then that's fine; we do have that one.

I will start with the representative of the Council of Chief Executives. You mentioned the concerns that we are falling behind on trade in some countries where we have already secured trade, one of them being Korea. That is an extremely important market to us, on that is already established, and we're falling behind the Americans. The government is in all kinds of negotiations, but the results are not there. We're very concerned and have been saying to the government consistently—and I'm glad you reminded them as well—that they have to concentrate on the markets we're already in, Korea being a big one, and not just go out and negotiate an agreement anywhere just so they can talk about the number of trade discussions they're in, because it seems to be a numbers game.

On your presentation from the council, I do have to agree with some of the concerns raised by Mr. Slomp, although I'm very much in favour of trade. One concern we have is that with increased globalization, the power of global multinational corporations is very much enhanced and an opportunity for them, on behalf of their shareholders, basically to exploit the environment and resources and labour around the world. That concern is being expressed by more and more people. While good work is done by corporations, I’m concerned.

Here I will mention that John Manley, as you know, is a former colleague of mine. I spoke to him the other night, and we certainly very much disagree with his position on supply management. We think it's a model of rural development that could be used around the world.

I agree with whoever said that we have to be careful with the Japanese market. Trade is not going to be as it was, because the Japanese have very much changed their position and are now into bilateral agreements. We have to be in the game, but how do we find a way of adding value to Canadian exports? When I look at exports, whether coal, raw products, oilseeds, copper, or the beef industry we are into some value-added, I wonder what we have to do as a country, regardless of the agreement, to add value in Canada to these exports to a country like Japan?

[Sam Boutziouvis]

You negotiate a comprehensive EPA that includes the issue of addressing non-tariff barriers. Mr. Slomp referred to canola. It's true. We would like to see Canadian producers being able to add value to canola to sell it into Japan as oil or as other byproducts. We think that the EPA is a good opportunity to be able to negotiate such provisions. If you negotiate a broad, ambitious EPA, the negotiators will be able to deal with non-tariff barriers as well as tariff barriers and a whole host of other issues that will allow for opportunities to add value to products.

One-fourth of our organization's 120 members are foreign multinationals, CEOs of foreign multinationals. They would not be here if Canada was not an advanced society from which they can continue to do business, sell products, get plugged into global supply chains, buy goods and services from small, medium, and large enterprises, and take advantage of this incredible country that we've been able to develop.

The same goes for Canadian multinationals who work abroad. What Mr. Slomp and Ms. Bronson are trying to convey is that global corporations don't care about where they are. But they really care about Canada. I worked for the council for 21 years and I cannot tell you how many times I've been impressed with the CEOs who have declared how great it is to be able to work and lead organizations, to work with a group of people such as the Canadians working for our members.

It is fundamentally at odds with the overall impression that you're receiving. If Canadian large enterprises were as these two individuals describe, the country wouldn't be nearly as successful as it is. It would be a waste land. But it simply isn't the case.

[Wayne Easter, Liberal, Malpeque, PE]

You mentioned the competition policy in Japan. But we need improvements in the Competition Act as well, because we are seeing many small companies taken over. I would like your answer on that.

[Diana Bronson]

I have no doubt that the individuals who run corporations care about things and people and developments. I take a bit of offence at that last assertion. The corporations themselves are there to make money. Let's get real about that. The individuals who run them may be another thing.

Furthermore, we're not sitting here as two individuals. We're sitting here as organizations representing people, farmers, movements, and food banks across this country. They are concerned about this increasing export-driven model that works to the detriment of the people who work in food in our country, and there's two million of them. The kind of rules that are being put in place prevent municipalities, hospitals, and government agencies from adopting sustainable local procurement strategies. That's the problem.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Shipley.

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

Thank you, and my thanks to the witnesses.

Mr. Slomp, those are interesting comments, particularly the last one by Madam Bronson. I have all kinds of farmers around me that actually are corporations. They're family farms. I'm wondering why you are concerned about corporations making money, because often corporations are families. Sometimes they might not be families, but may be out in the processing.... You've left the impression that it's bad to make money, but I think it's good for farmers to make money.

Do you agree with that, Mr. Slomp?

[Paul Slomp]

I think it's true. It's great for farmers to make money: the more money farmers can make from the marketplace, the better.

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

Great, because most of us—

[Paul Slomp]

But I would like to continue and say there's a big distinction between a corporation owned and operated by a family and a corporation involving many people where the owners and shareholders in that corporation aren't the same players who do the work.

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

Oh, but quite the opposite. I know many corporations where farmers are among the shareholders. So is that wrong?

[Paul Slomp]

No, and I would say I'm speaking on behalf of those owner-operated farms.

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

You've left a bit of an impression that this discussion on trade agreements, albeit not just this one, is not good for the agriculture industry. Yet a number of witnesses and just about everyone in agriculture, even those in supply management, aren't opposing these discussions.

Now to you, Mr. Boutziouvis, you say that securing an agreement with Japan would give Canada “a first mover advantage that will yield significant benefits.... Canada's agricultural producers will gain a first mover advantage over their competitors if ambitious preferential access to the Japanese market is secured”.

So we've got two different stories. Quite honestly, I agree with you and so do all the commodity organizations in agriculture. They see the advantage in this. What is a first mover advantage?