Thank you, Mr. Chairman and members of the committee.
Thank you for the opportunity to speak to you today on your discussions around the comprehensive economic partnership agreement between Canada and India.
Pulse Canada is the national industry association representing pulse growers as well as the processors and exporters of pulse crops that are exported to 160 countries around the world.
Pulse Canada has, for more than 15 years, been focused on market access as one of the members' top priorities. Access to markets in a predictable and stable trading environment is a prerequisite to building an export-oriented resource economy for Canada. For this reason it may be that no market in the world is more appropriate than is India when Pulse Canada speaks about the issue of market access and the importance of pursuing more formal agreements.
It will come as a surprise to some Canadians and to some citizens of India that Canada's biggest export to India is pulses. In 2011 Canadian pulse exports to India were valued at $633 million, or 24% of the value of Canada's total commodity exports to India. In 2012, pulse exports from Canada to India were valued at $504 million, or 21.5% of Canada's export trade.
India is Canada's single largest market for pulses, and the single largest crop that Canada sells to India is yellow peas. The range of pulse crops grown and consumed in India is wide and diverse. Yellow peas from Canada compete with peas originating in Australia, France, and the United States, but more importantly, they compete with other pulse crops like desi chickpeas, which may be grown in India or imported from Australia, or pigeon peas, which may be grown in India or imported from countries in Africa.
India is a very complex market. Some of the market demand for pulses reflects religious beliefs of the citizens who consume only vegetarian food. But a great deal of demand is economically driven. Plant protein, like that from a range of pulse crops grown and imported into India, is more affordable than is higher-priced protein from dairy and meat. Canada became the biggest supplier of pulses to India primarily because yellow peas offer the most economical source of plant protein. Price is key. One of the reasons for a drop in exports of pulses from Canada to India in 2012 was that the Australians had a big chickpea crop and moved a large quantity of the crop right after harvest, at the end of 2012.
India is also predicting a big winter season crop of pulses, perhaps as much as a million tonnes more than last year, all of which combines to mean a change in demand for Canadian peas. But while tonnage may change from year to year, what we cannot change is our focus on competitiveness, which means we must ensure that Canadian farmers and Canadian companies are in a position to be competitive. The role of government can be to assist industry to be competitive by creating an enabling environment.
The Canadian pulse industry is very supportive of the development of comprehensive economic partnership agreements at the government-to-government level, because they provide the opportunity to create a more permanent and lasting trade policy framework that puts Canada on a level playing field with other exporting nations. They also ensure that yearly fluctuations in domestic production are not met with yearly fluctuations in import or access policy.
India would like to be self-sufficient in pulse production and has recently increased support to Indian farmers to grow more pulses. But India also needs to import pulses to meet demands. Even with a rise in Indian imports in recent years, the per capita consumption of pulses has dropped significantly in the past 40 years. Malnutrition is a problem in India, and food imports are part of how India will provide adequate and balanced nutrition. Predictable trade policy is a vital component of food security, and equally important, a vital component of affordable food.
Here is a list of things that the Canadian pulse industry has faced in trade with India that would be on our list to be discussed and resolved in an agreement between Canada and India.
While India has not applied an import duty to pulses in many years, an agreement between Canada and India should remove that existing policy option from the table. Partnerships need predictability. Food security needs predictability. A permanently open market would remove that potential restriction from ever re-emerging.
Canada's largest pulse trade challenge with India over the last nine years has been related to a sanitary and phytosanitary issue. This issue, at times, has stopped the loading and unloading of Canadian vessels. It has cost Canadian exporters hundreds of thousands of dollars on single shipments that had to be diverted after leaving Canada to be fumigated in third countries.
For many years Canada has been the beneficiary of a succession of derogations of Indian policy on fumigation as it applies to Canada. But some of these derogations have come at the last moment for a business that has a six-to-eight week lead time to get peas moved from farms in western Canada to Vancouver, and ultimately to ports in India.
The market access issue is not over. Pulse Canada recognizes that an economic partnership can't anticipate and address this level of detail but an agreement can address the timeliness and process that will be used bilaterally when issues emerge. That we are nine years and counting speaks to the challenges that have been faced with SPS issues. Partnerships need predictability, and processes with timelines to address SPS issues need to be part of that partnership agreement.
A bilateral comprehensive economic partnership also allows us the opportunity to sit down with India to discuss solutions to challenges that arise from underperforming third-party processes. India defers to Codex Alimentarius to establish tolerances for levels of chemical residues that, through extensive testing and with high safety margins, establish acceptable levels that are indicative of proper use of crop protection products and at levels that are proven to be safe.
Yet because Codex is chronically underfunded and mired in a process that ensures it is always behind in providing approvals, we're left with a situation where Canada's PMRA will approve crop protection products for use in Canada, but both Canada and India are reliant upon an international body to provide timely responses in order to make that partnership work well. There are alternatives that we need to address and perhaps consider including in the CEPA.
The precedent already exists with another UN body, the World Food Programme, where residue tolerances established in the country from which they purchase a commodity could be the guideline. This could be suggested to India: recognition that a standard developed in Canada for Canadians be acceptable to the Indian government when an international standard does not exist. Perhaps India will ask Canada to consider a reciprocal agreement, where Canada would be asked to accept tolerances established by an Indian regulatory authority for a product like tea.
Partnerships need predictability, and while it may be challenging for Canada and India to address food safety tolerance issues, it's even more challenging to think that this can be left to Codex, which has shown us that it is simply not up to the task of fixing multilateral trade issues on a timely basis.
I want to be clear to all committee members who may not be familiar with the policy and processes around the establishment of crop protection product tolerance levels. Canada is among the toughest regulators in the world when it comes to establishing safety margins. Canada currently works closely with other regulators, such as the EPA, in the United States, and the European Food Safety Authority.
Asking India to consider accepting Canadian standards is not asking India to compromise food safety—far from it. In fact, a recent Codex decision, which followed a decision by the European Food Safety Authority, set a tolerance level for a product used in Canada at two and a half times higher than what had been set by Canadian regulators. This is an issue of regulatory harmonization and not about deciding what is safe. The safety margins are in place, and this is about harmonizing the timing and methodology of policies used to establish tolerances.
Mr. Chairman, it is important for me to note that trade agreements are only the starting point to being a competitive exporting nation. Everything that impacts our ability to be competitive at destination while still providing a high rate of return to the Canadian manufacturer or farmer has to be part of the holistic approach to ensuring competitiveness.
We need trade agreements that eliminate tariffs and quota restrictions. We need a logistics system that is performing at a level that is the envy of the world and not held out as an example of one of the things that limits our ability to get products to market. We need to proactively address market access issues that arise from an asynchrony in approaches and timelines to establish maximum residue limits. The key point I'm trying to make is that addressing one essential element without this holistic approach to tackling all of the impediments to trade is akin to building an eight-lane highway that is served by a single-lane on-ramp.
Yesterday a coalition of rail shippers representing lumber, mining, agriculture, and more—products that account for 80% of rail traffic—presented a united position on amendments to Bill C-52. Trade agreements that provide market access and an efficient logistics system in Canada are all essential elements of building a competitive Canadian economy. Access and transportation are the building blocks for growing a strong Canadian export sector.
Thank you, Mr. Chairman.