International Trade Committee on Dec. 3rd, 2013

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Ms. Salmon, how will the aquaculture industry benefit under the agreement we're discussing today?

[Ruth Salmon]

Sorry, could you repeat the question? I only got the end of it.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

In your view, how will the aquaculture industry benefit under the agreement?

[Ruth Salmon]

As I mentioned, initially the benefits will be that those who are exporting to the EU will increase that activity. However, because our industry has been stalled in production, that really needs to change in order for us to take full advantage of the new market opportunity.

There's huge demand. Other countries are taking this opportunity. If we could parallel CETA with increased production in our industry, that will become a priority market for our industry.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Do you have a sense of how many jobs the agreement could generate? What sector of the aquaculture industry would they be in?

[Ruth Salmon]

What we've done is look at some measured growth in our industry. For example you will see, on the slide here behind you, that within five years we could look at increasing our current jobs of 14,000 to 16,000 jobs and that's without even changing the footprint. Within 10 and 15 years you can see those numbers going up significantly, which again is a combination of production, so jobs on the farms, as well as jobs in the processing sector. These are very reasonable, limited. This is just a quick snapshot from some of our members who we know are interested in investing, but the actual numbers are probably going to be larger than that.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

I have another question for you. Do you currently face any non-tariff barriers that are preventing you from selling your products on the European market?

[Ruth Salmon]

That hasn't been a barrier to date. It's been the lack of production growth and the tariff rates that have been the issue to date. With a reduction in tariff rates and increased production, I see that as being a very positive market situation.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Switching gears a bit, I'd like to talk about the competition that unfortunately exists. We are up against fierce competition from other producing countries, including Norway, Scotland and no doubt others you are familiar with. In some cases, those countries are using Canadian-made technology. Over the years, Canada's aquaculture industry has survived, as we can see from your graph. How do you explain that? What I fail to understand is if the industry is doing well in Norway, why can't the same be true of Newfoundland, Nova Scotia or Quebec?

[Ruth Salmon]

The technologies and the industries are very similar. It's such a global industry that what you see happening in Norway is very similar to what you see happening here on the industry side. The difference is that they have a national vision for growth. They have their own legislation that gives them the right framework to move forward. The limiting factor here is more on having an enabling framework to move forward, because if you walk on a salmon farm in Canada and you also walk on one in Norway they are very similar in terms of how they operate. The limiting factor is our regulatory and legislative framework.

In answer to your first question, there's no question this industry is competitive and seafood is a very competitive industry. But the demand for seafood is growing at such a pace that we, as Canadians, can take a bigger advantage of that growth and we're not doing it right now. As you can see, we've dropped market share in the last decade by 40%. With that growing market—and the UN is concerned that we're not going to be able to meet the world's seafood demands by 2030—we know there's a larger share there for Canada to take.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Do you think the industry will need more substantial investment in order to grow and benefit from the agreement? Norway, for instance, has invested heavily in a host of sectors that have a development fund in which it reinvests oil profits. Do you feel the government is doing enough to support your industry?

[Ruth Salmon]

The government doesn't need to invest dollars in our industry. There are investment dollars there waiting to happen. Just to give you an example, I talked to the salmon farming companies that are all members of our organization and asked them what was being invested in the industry worldwide. The numbers are staggering but only 7% of those numbers are coming back to Canada. I asked what should it be and was told 20% or 25%.

The money is there but it's going to other countries because we don't have an enabling framework to support aquaculture. Amendments are held up for years. There's no access to new sites easily. Companies are investing outside of Canada where it's a better place to invest. The money is not a problem. The industry has the money to invest. Government doesn't need to invest dollars in this industry, significantly. Of course, there is some program support that would be helpful but it's not significant dollars. What this government needs to do with industry is work towards a national piece of legislation and an enabling framework so that companies know this is a good place to invest.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Shory, seven minutes.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair.

Thank you, witnesses, for appearing before the committee this morning.

Mr. Everson, I was looking at some news and just before CETA was announced, Ms. Miller, the president of the Canola Council of Canada, said:

Market access is critical to our industry – that’s why we’ve been supportive of the negotiations since the beginning. The government’s continued commitment in today’s Throne Speech to trade and to concluding CETA is great news for our industry.

Now, I understand that the canola industry has almost 250,000 people working in Canada, which is of course an incredible number. I want you to shed some light on how CETA will affect these jobs.

[Jim Everson]

I think, as I said in the presentation earlier, we have estimated that the increase in market opportunity for Europe could be as much as a $90-million increase, which is a doubling of our potential oil sales to the European Union. So Europe is not a huge market for the canola industry; we have larger markets in other jurisdictions. But at any time you remove tariffs off products going into a market, you make those products more competitive and, as Ailish Campbell said on the earlier panel, that's a tax on the farmer in Canada.... If that tariff is eliminated, then more returns come to the industry and come to the farmer in Canada. It helps the Canadian farmer to be more competitive in the European marketplace. All around that's a good thing for the canola sector.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Would it impact the number of jobs we have now?

[Jim Everson]

It would have a positive impact on jobs. We don't have a job figure, so I don't have a number to be able to use. I think a more predictable access creates more confidence, then it creates the opportunity for jobs.

[Devinder Shory, Conservative, Calgary Northeast, AB]

You mentioned there was a $90-million increase in the market. There was an eager European market waiting for Canadian goods. Will the canola industry be ready to deal with the increased demand that CETA will create for goods? How will this impact the industry as a whole?

[Jim Everson]

Certainly, the industry will be ready. The industry is increasing its production year after year. In 2013 we had a record crop of 16 million tonnes, and we expect that we can increase production further. So the industry will certainly be ready to serve the market in Europe. Much of our market for canola in Europe, which is different from our international markets, for the most part, is in the biodiesel sector. There's a big opportunity in Europe because they have a very ambitious biodiesel, biofuels policy to increase the mix of transportation fuels up to 10% of their overall fuels. So we have a real opportunity there, and we've done a lot of work to prepare the industry appropriately to serve that market.

[Devinder Shory, Conservative, Calgary Northeast, AB]

It's the last question before I go to Ms. Salmon.

Mr. Everson, is the industry ready? Will the industry be able to meet the demand?

[Jim Everson]

Yes.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you.

Ms. Salmon, in your press release of October 18 when we announced CETA's completion you said:

The Canada/EU trade deal announced today is welcome news for Canadian aquaculture. This will open new opportunities for Canadian farmed salmon, arctic char in the Yukon, oysters on the Pacific coast, and mussels in Atlantic Canada. Canada’s seafood farmers stand to benefit from coast to coast to coast.

So Canadian aquaculture companies have a lot to take pride in, of course, as Canadian seafood is among the best in the world. Europe is the single largest importer of fish and seafood products, bringing in $26.7 billion worth of it in 2011 alone. With more than 500 million consumers, Europe is a market 14 times larger than Canada. How do Canadian aquaculture companies, which are offering the best seafood in the world to this hungry market, stand to benefit from increased access through CETA?

[Ruth Salmon]

I think in our experience the European market has been a very discerning, high-value niche kind of market. It's different from other markets for seafood in that they're willing to pay for high quality products and unique products, and that's certainly where we have seen the interest. So I would say that is probably the area that will expand if production can expand as well.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Another point the witness before you, Ms. Campbell, made was on first entry to the market. We all know that recently the United States has expressed interest in signing a trade agreement with the EU. Does the fact that Canada is the first major developed economy to sign a deal with the EU offer a competitive advantage for Canadian aquaculture companies? By getting access to this market first is there a benefit, and if so what is it and what is the potential of that benefit?

[Ruth Salmon]

First of all, I think Canada is a larger market for seafood. The United States, in terms of aquaculture products, is quite small. Given the fact that we've already established some good relations, and our products are viewed as high quality, and we have signed the deal first and will be able to take advantage of that, that puts us in a good position compared to the U.S.