International Trade Committee on Feb. 27th, 2013

[Gordon Bacon]

One of the very positive changes that has occurred in the last five to eight years with Health Canada's regulatory agency is it's working much more closely with EPA and with European authorities.

We are working to harmonize regulatory approaches. The standard only goes one way in terms of food safety, and that is higher. But we need to have harmonized approaches. Ultimately, that is something we're trying to do at the UN level as well—working to one global standard that reflects safety for all.

[Ed Holder, Conservative, London West, ON]

I appreciate that, thank you.

Mr. Pinto, I understand from what you said and what I've reviewed in terms of your business, you focus on construction technologies and systems, and small buildings and components of various buildings, and affordable housing—

[The Chair, Conservative, Rob Merrifield]

Very quickly....

[Ed Holder, Conservative, London West, ON]

With earthquakes in India, which you made reference to, do you anticipate there would be any challenge between the standards that you would set for buildings that you would construct, housing that you would construct, versus what would be done by the Indians themselves?

[The Chair, Conservative, Rob Merrifield]

I'll allow a very quick answer.

Go ahead, Mr. Pinto.

[Mervyn Pinto]

I don't as such, because the standards that are being followed locally there are very similar to those being followed here. They are all governed by the international codes, which Canada follows, as does India. India, being a Commonwealth country, is very much following the British standards set forth.

There are of course some departments that take some shortcuts, but that's secondary. As a Canadian company, as long as we go by the rules and have the drawings endorsed by the architects who are licensed, then I think we are on the safe side.

[The Chair, Conservative, Rob Merrifield]

Okay. Thank you very much.

We'll now welcome Mr. Regan to our committee.

The floor is yours for seven minutes.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much, Mr. Chairman.

Thank you to the witnesses for joining us.

Let me ask you first, Mr. Pinto. You talked about the difficulty with the length of approval processes to get projects approved in India. How would you see a trade agreement helping you overcome that long process? It seems to me that's the sort of non-tariff barrier, or internal issue, that is often not addressed in a trade agreement.

Do you think it's likely that it could be? If so, how would you go about convincing the Indian government to agree to that?

[Mervyn Pinto]

I suppose that's a tough question to answer.

When Minaean first entered the Indian market during the earthquake in Gujarat in 2001, one of the delegates was from the Canada Mortgage and Housing Corporation, which had already signed an MOU with the housing board in New Delhi to introduce a mortgage system. That was signed in 1999. They had to cancel the MOU in 2006, 2007, because nothing really happened.

It all depends on how aggressive the offices or the departments that are controlling or managing are, or how willing they are to get the agreement signed and put in place in the interests of both countries.

[Geoff Regan, Liberal, Halifax West, NS]

All right.

It sounds to me like you're saying that when you consider that it's how aggressive offices are, it's awfully hard to address that in an agreement, right?

[Mervyn Pinto]

We are talking here about how quickly an agreement would be put in place and then followed thereafter. Unfortunately, in India it all depends, state to state.

In early 2000, Maharashtra state was considered to be the most aggressive state. Today it is one of the last ones, whereas Gujarat has taken over. Gujarat, I'm sure you must be aware, conducted a trade fair in mid-January, where close to 200 Canadian companies were present, and Canada played a major role, thanks to the Department of Foreign Affairs and International Trade. They did a good job there of putting Canada in the front, or it could have been behind Japan, but again, it was a well-noted effort.

Today we are pushing that forward with an MOU, which is being put together by DFAIT through a committee of Canadian members so we can participate in the contracts that are required by Gujarat in developing Gujarat.

So that's the difference, and the difference is because the chief minister of Gujarat is an aggressive, forward-looking personality who has cut down quite a few barriers and given open licence to people to move forward to develop the state.

That is the difference we're talking about here in the CEPA, where again it is a federal government that has to push it forward in the interest of the country. Again, it all depends on who is driving it, who is looking at making it happen within the next few weeks, months, or I would even say years.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much.

Just to be clear, I am not opposed to the idea of an agreement. I'm trying to understand what the parameters might be and what we might and might not expect to achieve in an agreement.

Let me turn to you, Mr. Bacon. You talked about the ways you could add additional value to the pulses that are now exported. If there were a CEPA, what would you envisage in terms of the additional value that could be added and the new jobs that could be created in Canada?

The first thing that comes to mind, of course, is that in a lower-wage environment there would perhaps be a greater opportunity for India to do that with the pulses and other agricultural products we might sell to them, and then they would sell them back to us processed or use them themselves. What are your thoughts on that?

[Gordon Bacon]

I think it's a great question. I would agree with you that India has competitively priced labour and is a supplier of split pulses to the region. But we have also seen the development of a pulse-splitting industry in Canada that has for many years been exporting to South Asia and the Middle East as well. So I think we can be competitive in many areas.

One thing I want to highlight very quickly is that we're also doing a lot of work with the food industry. On recent visits we've met with some people in the food industry there to focus on some of the health and nutrition components. There are cookie companies that are selling individually packaged biscuits at bus and train stations in India to people who are at the lower end of the economic scale.

In India there is a lot of interest in and focus on health and nutrition. Even though India has a very large population of undernourished people, like Canada, India is addressing issues of obesity, cardiovascular disease, and diabetes. We're actually working with major food companies—international ones like PepsiCo but also local Indian companies—to look at reformulating food products.

I think that just strengthening these ties and expanding the potential uses gives us more opportunity to market product. Whether we can process them more economically here in Canada or in India is something the market is going to decide. But clearly for yellow peas, since we are the biggest producer and exporter, we're going to be the beneficiary of additional demand.

[Geoff Regan, Liberal, Halifax West, NS]

I was reading today, of course, about the increased consumption of beef and other meats in India, which obviously suggests a change in diet to some degree. That kind of reinforces what you're saying about the openings for different kinds of products in the future and the way that market is changing.

What issues do you find in terms of transport and storage within India, and what obstacles do you find in getting products to market?

[Gordon Bacon]

Our biggest issues have been phytosanitary ones. The policy environment is a bit difficult in India. There are different interpretations from port to port, and primarily just a difficulty in making progress. It is interesting that it has been going on for nine years and we still don't have a long-term policy decision with India.

We have very good commercial relationships, but we need to strengthen some of those plant protection issues.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Shipley.

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

Thank you, witnesses, for being with us today.

I just want to quickly follow up on a couple of things.

Mr. Bacon, are you seeing the phytosanitary issues being used as a non-trade tariff barrier or is it just that there is a lack of coordination between ports or between containers and companies?

[Gordon Bacon]

With India I haven't seen such glaring examples of them being used as a way to frustrate trade as I have in other cases. I think there's just a lack of clarity and a need to make sure we have a harmonized approach.

I would use the example of chemical residues. The big concern is that we have trade in pulse crops valued at nearly $1 billion a year going to markets that don't have up-to-date MRL policies, with India being one example that relies on Codex.

If we add oilseeds and cereals, on an annual basis we have $3 billion of trade from Canada going out into a bit of a regulatory void. The issue then becomes that if you do detect a residue of a chemical—which could be one-tenth of what the acceptable level is in Canada—but you are going into a country that doesn't have any stated policy, what guidance do courts or traders use in case of arbitration?

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

But isn't that clearly something that is.... You're saying that it isn't a trade barrier. If they don't have the minimum residue levels, then it really becomes quite open and very risky in terms of those types of markets.

[Gordon Bacon]

It's a huge risk. That's what we were saying. If we can't fix Codex quickly—and we can't—then one of the options we're suggesting as viable is to do it on a bilateral basis so there is a mutual recognition.

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

That would be one of the driving points of this agreement.

[Gordon Bacon]

Yes.

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

Okay.

Secondly, I forget now whether it was 21% or 24% to India as your largest export.... But 21% or 24% of Canada's production in pulses is going to India. I think that—

[Gordon Bacon]

No. Actually, of the total Canadian exports to India in 2012, 21.5% of them were pulses.

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

Okay. So then—