International Trade Committee on May 29th, 2012

[Allen F. Roach]

I think one area we need to look at, certainly for the Atlantic region, is our need to have a hub for shipping that's specific to Atlantic Canada—I've had conversations with the minister of ACOA in this respect—so that we could take whatever the goods are, whether tuna or blueberries, mussels, or whatever the case may be, and co-pack them and have all that in one hub. These are things we have to certainly look at.

[Wayne Easter, Liberal, Malpeque, PE]

Basically, you're saying on the ground. It's one thing in terms of a comprehensive economic agreement with Japan, but there are other things that need to be done jointly or cooperatively between the Atlantic provinces and the federal government to make it possible for us to take advantage of that market.

[Allen F. Roach]

Absolutely, yes.

[Wayne Easter, Liberal, Malpeque, PE]

That may be something we need to consider.

You also said there are huge opportunities. Is that what you mean by co-packing—

[Allen F. Roach]

Yes.

[Wayne Easter, Liberal, Malpeque, PE]

—whether we work jointly with Nova Scotia, or whoever?

[Allen F. Roach]

Exactly, and certainly between the different sectors, whether it's agriculture or seafood.

[Wayne Easter, Liberal, Malpeque, PE]

Brad, to turn to your points on Korea, I have to mention, as I often do—the government would be expecting me to—that one of the problems we're seeing with the government's trade strategy is that they seem to be into a numbers game: how many countries can they go to and how many agreements can they get to be able to use the numbers that we're negotiating or at least talking about. Often, they're very minor players in terms of a market for us.

What we're worried about is that while all this activity is going on with potential new markets, we're falling behind in the existing markets, for example, the United States, but Korea is an important one too. We think the government is basically asleep at the switch on that one. I simply make that point.

In terms of Japan, on the 21 months, is there anything we need to be recommending there in terms of the trade agreement? Would the OIE standard do the trick? What do we need to be saying that has to be in this negotiation so that we don't get into this...? I mean, it should be 30 months, not 21 months.

[Brad Wildeman]

Maybe I should say that, generally speaking, in all these trade agreements, and we've experienced this in the past, of course, with some of the FTAs we've signed already—with Colombia and Peru, for example—we don't have the same type of access as maybe the U.S. might have, or others.

Again, the world standard is OIE when it comes down to health regulations. Yet very few countries are following those recommendations. So we see under 21 months in Japan, when really there's no scientific basis for that. We see ractopamine issues in China and Taiwan. Again, it's really not very science-based. Going to under 30 months would allow us to supply year-round, so that would be important.

For many of these countries, having bone-in product, not just boneless, is important, particularly for Korea, where they like bone-in product, for example. This really hampers our ability to trade. Even though you may have trade on the record, meaningful trade or commercial trade simply can't occur.

We like to advise our negotiators to try to get the standards of OIE put into these agreements so that we can actually conduct some meaningful trade.

[Wayne Easter, Liberal, Malpeque, PE]

So it would be useful for the committee to make that recommendation?

[Brad Wildeman]

Yes.

[Wayne Easter, Liberal, Malpeque, PE]

And going to OIE would put it at 30 months?

[Brad Wildeman]

In fact, Mr. Easter, if they adopted OIE, that says meat from cattle of all ages with the SRMs removed is allowed, so it wouldn't even need to be under 30 months. But the reality is we would likely trade no product from cattle over 30 months, because then we're into sort of cull cow beef and processing beef, when really that market is a key market for prime cuts. But OIE really states that it is meat from cattle of all ages with SRMs removed.

[Wayne Easter, Liberal, Malpeque, PE]

I just want to be clear on what you said on Korea, because this is the first time I've heard it put this specifically.

The tariffs for the U.S. product getting into Japan are dropping about 2.7% a year. We run into a problem with losing market after two years, probably about 5% or 6%.

[Brad Wildeman]

In my consultations with key importers over there—and this happened within the last month. We had a reception with over a hundred meat importers, so we had a chance to visit with them quite a bit. Our ambassador was there as well, which we appreciated. Canada is very highly viewed abroad. I don't know how often this has been spoken about here. They see us a pristine place, a producer of grain and safe food. The problem is that not many people know us very well. So a lot of these importers are now saying if they can get enough product, they want to position it at the absolutely highest end of the premium market. That's good for us because we'll never be a volume supplier. But they said even at some point a Porsche gets too expensive for everybody to drive.

So I think that's what they're saying, that as we get to 2.7%, and the next year 5%, and the next year 7%, at some point, we simply fall out of that game. That's a huge concern for importers, who are going to spend millions of dollars, of course, promoting this product only to find out that they simply can't afford to bring it in.

[The Chair, Conservative, Rob Merrifield]

Okay, thank you very much.

Now we'll move to Mr. Keddy, who just got back from Japan.

The floor is yours, sir.

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

Thank you, Mr. Chairman.

Welcome to our witnesses.

I think we're having a very useful and informative discussion here. I want to focus on a couple of points.

First, I want to talk about beef.

It's obvious from the discussion here that we need to get access for Canadian beef to have that year-round supply under 30 months. We generated a lot of goodwill with Japan when we became the first country in the world to accept Japanese products and produce again after the Fukushima reactor meltdown. We did that based on science. What we're asking the Japanese to do, quite frankly, is to open their market to beef based on science. There's no health restriction, no scientific reason to have an embargo on beef after 21 months.

I would like to hear from Canada Beef, and maybe I could get a quick answer from Mr. Tiberghien on what that goodwill is worth.

[Brad Wildeman]

Obviously that would be our position as well. Again, we were also one of the first to open up and re-export Kobe beef. So we've set a couple of firsts there, and we haven't seen that same response.

What's interesting for us is that there's a difference between positioning your domestic product as a high-value product—which they do, and we don't have a problem with that—and putting in tariff barriers that restrict beef from coming in. We're sort of saying they should take the scientific standard, and we'll compete and let the consumers decide what that value differential should be. That's key to any of our ability to move forward in that market.

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

Mr. Tiberghien.

[Prof. Yves Tiberghien]

Beef is an interesting issue, because it's quite sensitive in Japan. It's not just the government negotiating and giving something in a strategic way. It's more the bureaucrat thinking how the politicians are able to handle the public. So it's a bigger game.

Ultimately, the way to move forward, first of all, is to check and see what the U.S. has. I forget whether they have been able to move to 21 months or if they're still at 30 months. If the U.S. has been able to get 21 months, that shows that public understanding has been pushed and that will give room for Canada. If it's not the case, then the solution is to find a way to make it easier for the politicians to face the public, to show that there is no health issue. It's not about just science, right? The public in Japan, or in Korea or Taiwan, actually, has become sensitive about beef—and similarly about GMOs—so it's something that's almost cultural and socio-economic.

So maybe engaging an NGO in Japan or getting a kind of label or finding a way to reassure the public in a credible way would then open the way for politicians to accept it.

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

This is just a comment more than anything else, but part of that discussion needs to be that agriculture trade from Japan to Canada and Canada to Japan is really complementary. You mentioned that earlier.

[Prof. Yves Tiberghien]

That is right.

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

We're not competing on rice, we're not competing on oranges. We complement one another in a number of areas.

The next issue I want to focus on a little bit is seafood coming out of P.E.I., Atlantic Canada, and British Columbia.

One issue we face in Nova Scotia is that we had a number of exporters—I think we used to have about 25 exporters—who focused primarily on the Japanese market, particularly in lobster, and there are only two left. Quite frankly, we're being snookered by most of the American states, Rhode Island in particular, on that two-pound to two-and-a-half-pound lobster being shipped out of Atlantic Canada into the U.S. It’s repackaged as a U.S. brand and shipped into Japan because of PSP, paralytic shellfish poisoning. The reality is that the Americans have a higher level of PSP than we do in Canada. We have colder water and less PSP, but the Americans have a trade agreement that allows them to accept one another's regulatory regimes.

That's a non-tariff trade barrier, affecting us in a major way, that we've simply not been able to resolve. We're working on it, but part of that also becomes marketing, and everyone has talked about the marketing idea.

I was in Japan on Friday and Saturday for trade meetings and then spent a week with our inter-parliamentary group. One thing the Japanese talked about, the seafood importers in particular, was branding. They love the idea. The Japanese flag is red and white, the Canadian flag is red and white, and the maple leaf is recognized wherever you go. They said it should be on every product that comes into Japan. Often it is, but not necessarily. Whether it's beef or seafood, wherever it's coming from in Canada, what can we do to advertise that red maple leaf on that white background?

[Allen F. Roach]

That certainly was a major part of my discussions this past spring when I was at the Boston Seafood Show. I met with many producers and processors down there, and we had some very strong conversations around that branding. Of course, some of it came back to whether it was a P.E.I. branding, in terms of product coming from P.E.I. or Nova Scotia or New Brunswick, but certainly the Canadian branding. I agree with you that red and white flag carries everywhere quite well. I think that's a very important issue for us.

When we take lobsters out of Nova Scotia, Prince Edward Island, and New Brunswick that are from much colder waters, a much better product, and they're being sold—

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

They’re hard shell.