International Trade Committee on June 5th, 2012

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Henry.

You're opening up a new market for a smaller bean. What did you say it was in? I didn't catch it at the time.

[Henry Van Ankum]

Yes, there is some potential for a specialty bean called a natto bean. It's a very small soybean that is used for a special, almost a snack food-type purpose in Japan. So we have some potential there to displace more Chinese production in that natto bean area.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you.

Turning to Ms. Hayden, you talked about the partnership, the last trade mission of the premier to Japan where some number of partnership agreements were signed. Are there any implications from a trade agreement on those partnership agreements?

[Dana Hayden]

I think the agreements would hold, but we certainly see opportunities for a greater number of agreements or greater value of exports in both goods and services, if we were able to have a trade agreement with Japan. As I said at the beginning, there are a number of tariff and non-tariff barriers that currently create barriers for B.C. exports into Japan.

To give you a couple of examples, on the goods side, we believe there's a market in Japan for B.C.—and Alberta and Saskatchewan, for that matter—beef. Currently, the beef has to be younger than, I believe, 21 months—

[Wayne Easter, Liberal, Malpeque, PE]

Yes, it's 21.

[Dana Hayden]

—for Japan. We think we have a great opportunity there.

There are tree fruits and berries that British Columbia exports, but there are concerns and barriers in Japan that there might be the presence of a pathogen on the fruit, the codling moth, despite the fact that the moth is not known to attack these species. These are things like Canadian apples and cherries. We believe there would be a very important market for B.C. exports of apples and cherries.

On the forest products side, there are tariff barriers. We believe, for example, that our exports of lumber or manufactured wood products absolutely could increase for B.C. if some of those tariffs and non-tariff barriers were reduced. One of the things B.C. has done over the last two years since the tsunami is donated wood products and funds to construct facilities for schools and health care centres in the tsunami region in northern Japan. We've been trading forest products with Japan since the 1940s or 1950s, so we have had a good relationship. We believe there's a huge opportunity for B.C. and Canadian lumber and manufactured wood products in the post-tsunami building phase.

Japan just also introduced a wood first act, something which British Columbia did a couple of years ago. It is a statement of intent through law to utilize wood products in the construction of buildings. Certainly historically in Japan wood was used extensively, but in this last century, concrete and steel have taken over a lot of wood. They've just passed a wood first act that commits them to utilizing a far greater amount of wood products. We'd certainly like those to be Canadian wood products instead of Chinese wood products, or New Zealand or Australian wood products, or for that matter, United States wood products. We believe there are opportunities to increase exports for a number of products.

We also believe on the services side that there are huge opportunities in British Columbia. For example, in the technology sector, the international education sector, and the tourism sector, we have an opportunity to increase the services flow in the provision of services from British Columbia into Japan. There's certainly an interest in that market in what we have to offer, but there are barriers that prevent us from realizing the extent of those opportunities, which we would like to see eliminated through an agreement.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now move to Mr. Shipley for seven minutes.

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

Thank you, Mr. Chair, and I thank the witnesses for being here.

I'll start off my questions with Henry and Erin. Thank you so much for being part of this discussion regarding our EPA with Japan.

I think we're outnumbered by British Columbia members on this board. You've heard about beef, and of course, in Ontario and out west we have great beef. One of the things we find in Canada, and this is the serious part, is that we produce quality products. To you, Ms. Hayden, and to the folks in Ontario, that's what Canada is known for. I think we, as parliamentarians, sometimes overlook that we have great producers and manufacturers in Canada. We are known for quality.

The other part of it is that we're known for keeping our word. The words “relationship approach” have come up.

Erin and Henry, I'm wondering, in terms of non-trade tariff barriers, have you experienced those? Sometimes there are political trade barriers. In terms of political barriers, once you have an agreement with Japan, is it one that you can take on their word, and they stand by what their agreement says?

[Henry Van Ankum]

Yes, thank you for your question, Mr. Shipley.

Certainly the Japanese, once an arrangement is struck with them, have held true to their word.

A big part of doing business with Japan is relationship-building. Over the years, representing the interests of producers in Ontario, we have worked hard to develop strong relationships with the Japanese. I think we can build on that and continue to grow that.

You're bang on. We have an excellent reputation for quality.

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

The issue of GMOs comes up an awful lot at agriculture committee, and clearly at international trade as we're dealing with countries. Some of them will accept and use GMOs yet still require a separation, and some actually haven't adopted GMOs. Yet we want to open up those markets for the producers in Canada that will meet those markets.

I think you said, Henry, that in Ontario, you're able to separate those. I've grown both on my farm without incident.

When you go into a country like Japan, with non-GMOs, what is the low-level presence? How is that established? Because there really isn't an international standard out there.

[Henry Van Ankum]

You're correct. There is no international standard at this time. A non-GMO product must be 100% non-GMO. This is possible within our infrastructure system. That's why Ontario has been able to deliver into these non-GMO markets. The nature of our infrastructure allows us the opportunity for careful segregation. However, looking into the future, if we could consider the development of some kind of international standard that would allow for a very small percentage of GMO content within non-GMOs, this would make the system more efficient, and it would make it a little more attainable on some of these shipments.

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

Thank you very much.

Regarding the natto beans and the production, I know that in Ontario, that's a market that has grown. Are there the same sorts of requirements, in terms of quality and standards that have to be met, for the natto beans as there are for the IP beans or the non-GMOs?

[Henry Van Ankum]

Yes, it's my understanding that there are the same quality expectations for the nattos. Appearance is a key part of that. They have to have a bright, clear colour and be free of any contamination or debris. But these are the same quality expectations we've been able to deliver in the IP soybean market also.

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

I'll just trip back a bit.

You talked about the 38%, which leaves 62% of the market that we, as a competitive nation, have an opportunity to work on. How have you been able to garner the 38%? Have you been the ones, as a commodity organization, that have had to do the marketing?

We heard earlier from some other witnesses that they've had some Canadian-Japanese people who have come and bought their product. They really haven't marketed their product to the Japanese yet. Have you been able to market to the Japanese on your own, or is it basically that same sort of scenario, where there's been a relationship with Canadian-Japanese entrepreneurs or processors who have come and bought Canadian product?

[Henry Van Ankum]

We have worked very hard at that relationship-building over the years. We have invested a significant amount of grower dollars in building that relationship. It's private industry that makes the contracts, but we have certainly worked hard. We've also received some assistance in that area over the years through the government trade channels, which we've appreciated. But we have worked very hard on building those relationships also.

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

Okay.

I think my time is up. I didn't get a chance to talk to Ms. Hayden, but maybe another time.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you, Mr. Shipley.

Now we'll move to Mr. Sandhu, for five minutes, second round.

[Jasbir Sandhu, NDP, Surrey North, BC]

Thank you to both of the witnesses.

I'm from British Columbia, so I will talk to Ms. Hayden about some of the issues that are very important to the coastal communities.

Over the years we've had issues with mad cow disease, where we've seen, overnight, the beef industry, cattle industry, devastated in regard to shipping their goods out to Korea and Japan and other parts of the world.

Being from British Columbia, the coastal communities, we have many communities along the coast that depend on fishing, and also other seafood products that we export to South Asian countries. Lately, we've had issues around sea lice in farmed salmon.

Ms. Hayden, could you maybe tell us what impact that would have, considering that we've heard in the committee here that the Japanese expect very high-quality products? If that sea lice somehow gets into our commercial wild salmon or other seafood products, what impact would that have on our ability to trade those goods with Japan?

[Dana Hayden]

I'm not sure exactly what the impact would be. The issue with sea lice is that it is purported to present a risk to other seafood living in the general area of fish farms where there may be sea lice. Once the fish are processed, I don't think there is an issue with the sea lice in terms of an export product. The barriers that we see in front of us now for seafood exports to Japan are primarily tariff-based. For example, there's a tariff of 3.5% on salmon and tariffs on frozen fish from Canada range from 2% to 6%. So right now we see the issues as primarily tariff-based.

We export a fairly broad range of seafood products from British Columbia that British Columbians aren't actually a huge fan of. Sea urchins, sea cucumbers, these are fish and seafood products that are quite popular in Japan and less popular in Canada, simply because of our culinary preferences. Our belief at this point in time, without the extensive consultations that we might have had with stakeholders in B.C., is that the issues are primarily tariff-based on the seafood side.

[Jasbir Sandhu, NDP, Surrey North, BC]

We've heard over the last month or so from various groups that we have a large trade deficit in regard to us shipping raw materials or semi-processed materials, whereas Japan is shipping us manufactured goods. Would you see that trade deficit in manufactured goods increase or decrease with the agreement that's being negotiated?

[Dana Hayden]

Whether or not a trade agreement would increase manufacturing capability in British Columbia would depend entirely on the nature of the product and the competitive conditions in Japan versus Canada. It's quite difficult. I don't know how quite to answer your question, if you're talking about all products. Is there a particular product that you're thinking of?

[Jasbir Sandhu, NDP, Surrey North, BC]

Would you say that it also depends on government policy in regard to either shrinking that deficit or expanding it? We heard earlier today that Japan, China, South Korea have a very succinct industrial policy with regard to having more manufactured goods leaving their country than they import. Would government policy have an impact on what kinds of products we ship out to those countries?

[Dana Hayden]

Certainly, if governments chose, for example, to invest capital or invest operating dollars in operations to assist the competitiveness of those operations in their home country, that could obviously create a different sort of balance in terms of the competitive situation. The Government of British Columbia over some years, since 2001, has had a policy of not subsidizing businesses, not picking winners and losers, not doing that.

I would say generally, however, reducing tariffs in a market where we are trying to export improves the competitiveness of the domestic industry and would allow for greater value-added production in British Columbia or Canada. Reducing tariffs reduces the cost framework within which any producer is operating, therefore it would give them a better opportunity to increase the value-added product in their home province or country.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Now we want to welcome Mr. Menegakis to the committee.

The floor is yours for five minutes.

[Costas Menegakis, Conservative, Richmond Hill, ON]

Thank you, Mr. Chair.

I thank our witnesses for appearing before us today. I certainly found their testimony, as well as the responses to the questions so far, very informative.

Ms. Hayden, I'd like to start with you. You gave us a few very interesting statistics. You mentioned that 50% of Japanese Canadians live in British Columbia, and I think you mentioned that about 50% of Japanese visitors to Canada spend their time in beautiful British Columbia.

But I was really struck with your comments that were supportive of expanding our trade with Asian countries. You mentioned China, Japan, Taiwan, and South Korea, amongst others. Also, it was particularly interesting to hear that the premier's recent visit to Japan yielded 25 agreements totalling business in excess of half a billion dollars.

I guess what I'd like to add is that on a very recent visit of our Prime Minister to China—and I had the privilege of being on that delegation—to add to the 25 agreements that were signed in Japan, 23 agreements were signed in China, overseen by our Prime Minister and the Minister of International Trade, Ed Fast, totalling some $3 billion in GDP to Canada. So it is abundantly obvious that for Canada our trading with the Asian market is a big potential plus for us.

I'm just wondering if you've done an analysis of or have a handle on perhaps a dollar figure of what it would mean for British Columbia should an economic trade agreement be signed with Japan.