Evidence of meeting #50 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was wine.
A recording is available from Parliament.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Are you looking at the possibility of exporting as well?
Owner, Savia Wine Agency
As a future business plan, yes. There are agents in Japan that are specializing in importing Canadian wine as well. I know that one of the Canadian winemakers that I have spoken to, from Vineland Estates, has an agent in Japan and he travels annually to Osaka to promote his product.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
In 2000 I was a city councillor in Kelowna. I had the privilege of leading a delegation to our sister city Kasugai. There was a group of wine consultants and agents as well. It has continued to grow not only in British Columbia but elsewhere in Canada. I think it's a great opportunity to look at exporting as well.
The challenge right now is to look at the two-way flow and expanding to the tens of thousands of Japanese Canadians, getting the market through the distribution channels that are set up in each province. Is that a challenge for you as well?
Owner, Savia Wine Agency
Yes. It's a challenge for me in two ways.
First, allow me to apologize for omitting your name. Thank you for assisting. It was a lovely evening to see that bill pass.
One of the challenges we have is that we do need to open up the access. Traditionally Japan is known as a fairly closed market, one that's challenging to enter. With wine and alcoholic beverages I think we have a unique opportunity. For instance, the wine I will bring in will not overtake any Canadian producers. This is a perfect opportunity of an ideal quid pro quo on the negotiation table.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Excellent.
I'm going to share my time with Mr. Hiebert, so I have one more quick question for Ms. Sava and Ms. Wilkinson.
With almost three years of working with a Japanese distributor, obviously you have some stories you could share off the record. You could write a book and go into consulting. You worked with our trade commissioners as well. Have you had some good success and also challenges both in Canada and in Japan?
Director of Possibilites and Founder, Soak Wash Inc.
Predominantly in Canada. I haven't gone as far as Japan. When your Canadian counterparts can't help you and can't find someone on the other side of the world who can help you, we tend to go backwards at that point to the chemists and to the raw material suppliers to try to decipher things.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Are you looking for a harmonization of comparable standards?
Director of Possibilites and Founder, Soak Wash Inc.
I don't think we're going to find a harmonization of comparable standards. That is a good phrase which I might have to write down for later. I don't think that the major North American corporations that manufacture and distribute in these markets are ever going to feel that the Japanese standard is an acceptable standard to meet. We meet an exceptional standard and we found that we could barely meet the Japanese standard. I don't think you're going to find a comparable standard unless the Japanese lower their standard, which they won't. This is why they're a good export market, because they have a high standard. I think it's access to understanding what their standards are, and experts in place who have the job of helping companies.
I do some consulting. I had a meeting with a maple syrup company last weekend, a high-end maple producer not far from here, which is making a skin care line with maple. Japan is a perfect market because they get Japanese tourists and they love their things. I told them that they didn't know what they were doing in this market yet. We weren't going to discuss Japanese skin care regulations with raw materials and stuff like that because it was so far off on the horizon. They have a potentially premium product which in my opinion is quite suited to the Japanese market. I wouldn't even suggest they try it until there are more resources in place for them to communicate and build the business.
What would happen to them is what happens to us. You find a Japanese distributor. They bring in your product. Everything's fine in the beginning, and then you hit this regulatory storm that blasts you back.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Thank you.
I was going to say ice wine, too, is very important for the Japanese.
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
Are you suggesting there's a non-tariff barrier in terms of this regulatory storm you're referring to?
Director of Possibilites and Founder, Soak Wash Inc.
Yes. We require our distributors to manage the tariffs and import duties related to our products, so I would say it's a non-tariff barrier. Much like what is happening according to my limited knowledge on the markup on pork, they're marking up our product to cover all the tariffs and duties in Japan. It's a regulatory issue that has to do with how we define our raw ingredients and what the standards are in our markets for raw ingredients.
I think I'm meeting and exceeding the Canadian standard for how I label, how I identify my raw ingredients, and how I brand my product. Those answers, which are the most detailed answers I can get from my manufacturers, do not meet the standard for Japan.
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
Sorry, I have very little time. I just want to ask Mr. Garrido one other question.
You highlighted the 30% tariff on wine in Ontario. What's the tariff on Canadian wine going to Japan? What's the Canadian tariff on Japanese wine coming to Canada? I want to know those two numbers. What difference would the elimination of those tariffs make on your business?
Owner, Savia Wine Agency
According to the last document I saw on tariffs on imported wine to Japan, it is 38.5%, I believe. That also accounts for beer. That would explain why now in Japan non-alcoholic beer is starting to become a booming market, because they get better margins.
I'm sorry, what was the follow-up question about both directions?
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
I was asking about the tariffs on wine going to Japan, and wine coming to Canada. What impact did the elimination of those have on your business?
Owner, Savia Wine Agency
On tariffs, I can specifically speak to the tariff that I would pay as an agent coming into Canada with my samples. The reason my example in my statement was 70% was that I had very kind Canada Customs officers. When I bring in my samples, it is supposed to be 102% of the value of the wine.
Conservative
Owner, Savia Wine Agency
It's 38%. I would probably hold it more to my Canadian wine-making friends to answer more specifically about the export market to Japan, but that is the number that I've become familiar with.
Liberal
Wayne Easter Liberal Malpeque, PE
Thank you, Mr. Chair. Hopefully, I won't take all seven minutes.
Both of you are to be congratulated for having the gumption to start a business. Starting a business is such fun, and such a headache from time to time. Congratulations to you both.
Ms. Sava, I'm trying to understand the difficulty you have. Is it a detail on labels that match Japanese concern? Is it background documentation on the makeup of the ingredients that go into Soak products?
Director of Possibilites and Founder, Soak Wash Inc.
It's background documentation.
Liberal
Wayne Easter Liberal Malpeque, PE
What can be done to help your business expand from a government policy perspective? One of the problems I have with governments on trade is that we think signing trade agreements is enough. I think we need another strategy beyond that, and an industrial strategy is not the right word, but how do you take a trade agreement and add value in Canada? How do you assist business in terms of knowing what they've got to know to get into another market? Maple Leaf Foods, the big players, they’ve got people there.
Director of Possibilites and Founder, Soak Wash Inc.
Yes, most people don't have offices there. It's resources. It's experts who are local, experts in the domestic market who have had experience trading in the Japanese market.
Yesterday, I spoke to a colleague who is a skin care consultant in the U.K. and a manufacturer who can point me in the direction of plants and facilities there through my network. It's easier to find someone in the U.K. than it is to find someone in Japan or a Japanese person who has worked here. The people that you are introduced to at a consulate, or when you're travelling, or at trade shows are people who are looking for documents, or who are trying to find references, or trying to lead you to websites. What I need is somebody who is the skin care equivalent of Maple Leaf Foods. I need someone who has been trading in products in Japan and who has found the answers that are hard to find, who's here as a resource appointed by the government, or listed by the government.
Chris Wilkinson Director of Sales and Operations, Soak Wash Inc.
We need somebody who can point us in the direction of the tests that need to be run on our product to get it through the Japanese regulatory system. Is that more clear?
