International Trade Committee on June 5th, 2013

[Rick White]

Hands down, it will be Japan, when they come into the TPP. That really is the important market from a canola-specific perspective.

When we look at the trading bloc, we see it more as an opportunity to get into some better science-based regulatory systems—and LLP and MRLs and all those things. We want this trading bloc to get the trade policy right and to use it as an example of what can be done and pursue other agreements around the world, emulating this model, if we get it right.

It's not only about getting more product into these countries. That's very important. There’s a huge demand and a lot of consumption going on there. Growing economies, that's very important. But secondary to that is the opportunity, within this trading bloc, to get the trade policy right.

[Devinder Shory, Conservative, Calgary Northeast, AB]

You touched on tariff and non-tariff trade barriers in your presentation. Should these tariff and non-tariff barrier issues be resolved through a TPP? How much would your exports increase?

[Rick White]

That's a very difficult question. We have not done a very solid analysis of the economic impact on the Canadian canola industry in terms of this deal or what this deal could potentially do, but there are a lot of factors going into it.

It's not only better access to those markets. It's also getting the policy right, so that we can use it as a model. Additionally, it's about making sure that we're in agreement with some of our major competitors because we don't want them to get a better deal than us. If we weren't in this TPP, we'd have the U.S. and Australia, which is a strong competitor on the canola front, going into these Asian markets with a deal that maybe we wouldn't be privy to if we weren't part of this agreement.

It's very important to be there alongside our major competitors.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Mr. Everson, how could a TPP make trading access in the Asia-Pacific region more predictable? Also, for your industry, what are some of the largest barriers to trade in the region?

[Jim Everson]

In his opening statement, Rick mentioned maximum residue levels. This is the measurement of residues of pesticides used in growing a crop. There are maximum permissible levels of residues on seeds exported to foreign countries and those are established by regulators in those countries.

The challenge there is that sometimes that can take a very long time. You may have a product available to the Canadian farmer that makes the farmer more competitive. It helps them grow a crop at less cost and helps control weeds. It gives agronomic advantages. That product has to be safety assessed and approved in an export market before you can ship there, which means that the producer in Canada doesn't have access to that new, innovative technology until it's approved in another market. One of the goals we're looking for in our trade negotiations, including the TPP, is an ability to have more timely approvals and to have the countries, the scientists of the countries, working more closely together on the approval process to make that process more efficient.

Science is science. Science done in Canada should be the same as science done in one of those export markets. If they can pull together and make these products available to the farmer more quickly, it will make the Canadian producer more competitive in international markets. That's one example, sir.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Also, Mr. Everson, I'd like you to make a comment on Canada's brand in the Asia-Pacific region. Is Canada's brand there right now? If it is, where in the region is it the strongest, and what more can we do to strengthen it throughout the Asia-Pacific region?

[Jim Everson]

I think Canada has a very strong brand in a number of those markets. I mentioned Japan at the outset of my comments. We have over 40% market share of vegetable oils there. We have a very consistent, very valuable market for Canadian canola in Japan, one that we put a lot of effort into when we're working with the Japanese importers. It's very valuable for the Canadian farmer. That 40% market share of vegetable oil speaks to the brand that Canada has. It shows that we are a reliable producer and exporter of a consistently high-quality product, vegetable oil, that they can use for cooking in Japan.

What can we do there? I think, sir, what we can do there is exactly what this committee is all about: to look at ways we can reduce tariffs and add predictability to the trade environment. We're very confident and Rick's producers are very confident that if we're able to export to those markets without any barriers, our product is going to prevail. It's a high-quality product. It's the healthiest vegetable oil available in the international markets. It's free of trans fat. It has low saturated fats. It has the good fats that are good for you. It can be used in all kinds of applications—in cooking, in preparing food, and in processing food. So it's just a terrific product.

If we are in a tariff-free environment with predictable trade rules, Rick's farmers and our exporters are going to sell more of it.

[Devinder Shory, Conservative, Calgary Northeast, AB]

You and Rick both mentioned Japan a few times. It seems as though the canola industry has established a presence and a trading relationship primarily in Japan. Do you foresee any increase in that trade relationship through the TPP?

[Rick White]

Certainly we have more product to deliver to Japan. If they would buy it and take it from us, we'd be happy to ship it there. They're a very important customer to us, but picking their suppliers is their decision. We have the capacity to sell them more. I think maybe we could work at that. I think Japan probably presents the largest opportunity to grow our market, but maybe Jim has a different opinion. I'm not sure.

[The Chair, Conservative, Rob Merrifield]

Our time is gone, but I'm sure you'll have an opportunity to answer that question with the next questioner.

Mr. Easter, the floor is yours for seven minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Thank you, Jim and Rick, for coming in.

You answered previously that you had both signed confidentiality agreements, so the government is in at least some phase of negotiations. Have you seen any text of any agreement?

[Rick White]

I have not seen any text.

[Jim Everson]

I haven't either.

[Wayne Easter, Liberal, Malpeque, PE]

From our perspective at least, getting a report, whether it's from the chief negotiator or whoever, is crucial. It's their opinion. One of our great concerns with the government is the amount of secrecy around the negotiations. It's important that people see the text so they can offer advice and criticism in areas where the government can manoeuvre. It has happened in the past that texts were available to people involved in SAGITs, and so on. I think this is a major area of concern for the government as we go down this road.

In terms of Japan versus the TPP, if you look at all of the rest of the countries and compare them to Japan, do you have any idea of the percentage of trade you do with the total mix of countries versus what you do with Japan? I'm raising the point because I really sincerely feel that the government is not doing a great job on trade. They're signing agreements for the sake of signing agreements. They haven't established priorities. In my view, certainly Japan should be a priority, and that's where the emphasis should go. Yes, we need to be part of the TPP, but I think we'll be a long way down the road before that happens.

In terms of a comparison, how important is Japan versus the rest of the countries put together?

[Jim Everson]

In addressing the issue about text, I would want to add that in our experience at the Canola Council, working with the government negotiators on the Canada-European trade negotiation and on this one, it isn't so much access to text as it is access to understanding what issues are being discussed and having the opportunity to engage in technical discussions on issues that are quite complicated with them. That way, they really understand the issues and are well briefed, and able to represent us really strongly at the table in the negotiation. Our experience has been that this model has worked very well in past agreements. We have excellent negotiators across the board for these international negotiations. I would hasten to add this, in terms of having to see text of the TPP.

As to markets, we've talked about Japan because there is a tariff escalation issue in Japan, and it's such an important and valuable market for Canadian canola. But the United States is our most valuable market when you put the oil we sell there together with the meal and seed that we sell into the U.S. That's a critical market. Mexico is buying about 500,000 tonnes of canola seed, so it is a critical market for us too, and they are part of the TPP negotiations.

We see the opportunity here as not so much on tariffs, although some of these tariff situations among TPP countries are important, but rather on the non-tariff barrier issues. It's important to have agreements with countries like Australia, who's a competitor from a canola point of view, the United States, and other countries in order to address some of the non-tariff barrier issues. That's where we can make some substantial gains.

[Wayne Easter, Liberal, Malpeque, PE]

I don't disagree with you at all in that regard. Whether it's a low-level presence or the maximum residue level tolerance, those are extremely important areas, especially for an industry like canola and some of the other GM crops that are coming to the fore.

Are there any countries we have an agreement with that can be used as a model for low-level presence or maximum residue level tolerances? Does Australia or any others have agreements where we do not on the non-tariff barriers? I think increasingly non-tariffs are becoming more important than tariffs. Do we have any models to follow?

[Jim Everson]

With respect to the discussion around low-level presence, which is certainly important to the canola industry, Canada is charting some new ground and showing some real leadership. The Minister of Agriculture really appreciates the challenge we have in that regard, as there are more biotechnology crops grown in the world. He understands the need to ensure that trace amounts of these GM crops that have already been safety assessed and approved by a competent authority don't disrupt trade. I think he has taken some real leadership there in trying to get a global discussion going about that. Certainly, we've been part of trying to have that happen.

[Wayne Easter, Liberal, Malpeque, PE]

You mentioned Triffid flax. We don't want any more examples like that.

Charles McMillan, who used to be a policy adviser in Brian Mulroney's government, was here and is big on the Japan discussions and their importance. In fact, he has worked on this for years. When he was here he said—and I agree with him—that there are other areas of trade that we need to look at. The government seems to feel that you sign a trade agreement and that's it. But we're not doing that well in creating jobs in Canada and adding value here.

What other areas do we need to be looking at, whether it's transportation or whatever, that would enhance our ability to take advantage of trade agreements when we sign them?

[The Chair, Conservative, Rob Merrifield]

Okay. Go ahead.

[Rick White]

I think out of everything that we have talked about, transportation is key. We're landlocked, but that's a whole different topic. There is movement and new legislation being put in place even as we speak, with the rail transportation bill. But it is a critical link to getting farmers' grain from the field and into position to serve our export markets. This is a critical link.

We have to make sure our research and development atmosphere in Canada attracts R and D dollars for investment. We need to encourage investors to put money into R and D to keep us at the leading edge of competitiveness. The money goes into biotech, pesticide products, farm equipment technologies, GPS, intellectual property protection, and all those things.

This is why we need to get it right and make sure we're an attractive place to invest. That will keep us competitive.

[The Chair, Conservative, Rob Merrifield]

Very good.

Mr. Holder, you have seven minutes.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I'd like to thank our guests for being here.

You know, gentlemen, my Cape Breton mom used to say that if something is hoggle-swap, it should be called hoggle-swap. What I just heard from the member opposite seems a lot like that definition.

[Voices]

Oh, oh!

[Ed Holder, Conservative, London West, ON]

I'd like to ask you, how's the canola business doing just generally? Is it okay?

[Rick White]

Yes, it's doing very well. But the opportunity to do better is always there as well.