International Trade Committee on April 29th, 2014

[César Urias]

No, that would be a direct input from the FTA, definitely. You're right, there is a restraint on the supply of pork worldwide, but that hasn't actually stopped Canada from being able to serve many markets. We're present in the major markets out there. I guess that's in major part because we still have good pricing. We can serve not always, not all the time, because again, it is a commodity, and the name of the commodity is always pricing. Pricing fluctuates constantly. But we've been able to actually stay in Honduras even though local importers have to pay the 15% duty on Canadian product.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Okay. Thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. O'Toole, the floor is yours.

[Erin O'Toole, Conservative, Durham, ON]

Thank you, Mr. Chair.

I'd like to thank all the witnesses for taking the time from their schedules to come here to speak about not only the importance of this agreement but more broadly, I think, you touched on the importance of new markets. I think we have a tremendous example here today with the companies that are appearing. We have investors, from some of our world-class mining industry, and we also have our agricultural sectors represented, on the produce side, the crop side, and the food processing side. Really we have almost the triple-threat of Canada before us.

I have a couple of specific questions, and the first is for you, Mr. Bannantine. You spoke at length about your investments in the San Andres mine. You did paint a stark picture of the choice Hondurans have in getting a job in one of the sectors—we've heard from Gildan and others, Canadian employers on the ground there—or being drawn into the strife and terrible circumstances of narco-trafficking and the violence associated with it.

You also talked about the $10 million you spend annually in the country on services and engineering. In my consultations with NGOs specific to the extractive sector, Engineers Without Borders talked about the importance from a CSR perspective of building those local supplier and local procurement networks with the hope that at first they service your investment and your operation in the country, but it fosters an actual economy beyond simply your investment.

Have you seen the growth of that local procurement and that local supply network in the years you've lived there, both as an army officer on the ground through to your investments with Aura? Have you seen that grow?

[James Bannantine]

Yes, we have. If you look at our CSR policy, and our CSR annual report that is online, and look at the highlights of what we're doing and what our policies and procedures are, local procurement is an initiative that we always incentivize. Where we are succeeding, you can't go from zero to 100 kilometres an hour overnight, so we have to train people, depending on the economies and different speeds.

We recently had a village contractor win the lining job of a new gold leach pad. The lining job is 10 hectares of a big leaching pad that has to be lined with a rubber mat. It's a lot of manual labour, but this little, tiny village contractor won that contract by organizing the local villagers. He got an engineer from Venezuela to come and help with the technical side. It was a big victory for us on local contracts. In our procurement policy, there are points awarded for local contracts. Extra points are awarded for local contractors. It's huge.

Everybody is in it for the jobs. They put up with what they have to put up with, in terms of working with noise and stuff around their villages, for the jobs.

[Erin O'Toole, Conservative, Durham, ON]

So you've seen the multiplying effect. You're employing 700 in your operation directly, but your investments have that multiplying effect in actually growing additional jobs in the surrounding economy.

[James Bannantine]

Those 700 jobs basically support 5,000 people. We have the statistics to show that.

[Erin O'Toole, Conservative, Durham, ON]

In a country with very few opportunities at the pay level you mentioned.

[James Bannantine]

The indices on violence and insecurity and all the other...including domestic violence, are much lower in our area. It's because of the jobs.

[Erin O'Toole, Conservative, Durham, ON]

You're echoing the leading human rights person from an association for missing and murdered people on the ground in Honduras. She was clear that engagement is important. Isolation is not going to help the life of an average Honduran. So I appreciate your going into the local procurement a little more.

Mr. Taddeo, thank you very much. It's refreshing to hear about a Canadian company that already exports to 50 countries and is hungry to do more. You've come to the committee that is hungry to give you more countries to sell your goods in.

I find the attitude that you reflect here to be refreshing. We need more Canadian companies to look beyond just our southern border and really look at the opportunities that Latin America, Central America, Europe, and Asia present. You talked about the CA4 and the negotiations we did have with Central America that ended up being just a bilateral. There's a whole range of reasons, and we've heard from the department on that.

Can you reflect on the impact of the loss of markets, not just in dollars, but also with regard to potential pressures on employment here in Canada because Canada has been slower in Central America and South America? You talked a bit about the EU FTA with Honduras beating us to the punch, and the U.S., giving 15% advantage to your competitors. How does that equate to lost opportunity or pressure on the jobs that you create in New Brunswick, Ontario, and Alberta?

[Vincent Taddeo]

That's a very good point. As you know, right now we're in Ontario, New Brunswick, Prince Edward Island, and Alberta, and we depend on growth. We depend on open borders to grow our system, to increase our weight. Our management, Mr. Robert Irving, has suggested that we are now doing $1.3 billion, and our vision is to be at $2 billion by 2020.

Having said that, my mandate is to grow every year. Either we grow or we die—or maybe I won't have a job, one or the other; I'm not sure which.

Nonetheless, having said that, we've experienced major troubles in the 2005-10 period because of the loss of all of the majors. The drivers in our industry are those QSRs, the quick service industries, Burger King, Wendy's, the KFCs. These are the companies that expand at a huge pace. When you lose all of these guys, immediately you lose the marketplace. It's not only the marketplace; you end up losing the food service as well as the retail side.

If I were to put it in perspective, the numbers in Central America alone have been huge. It's had a huge impact on our labour, our growth, on shipping. I can name half a dozen things right now.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Before we go to our second round here, the population of Honduras is about eight million, is that right?

[James Bannantine]

Yes, it's eight million to ten million.

[The Chair, Conservative, Rob Merrifield]

I have a sideline question before we get into a second round. I think Mr. Morin is up next.

You're talking about first advantage and opportunity for the potato industry. Can you tell me what first advantage on the CETA would be for your industry? I know it's a bit of a sideline to this agreement, but you alluded to some of the other agreements. We will likely get there way ahead of the United States on this one.

[Vincent Taddeo]

Yes. The reality is that if Canada completes any agreement prior to either Europe and/or the United States, it gives us tremendous advantages. Number one, you get established. You get your brand in the marketplace and you grow your brand accordingly. Once the brand is established, it's very difficult to move it.

[The Chair, Conservative, Rob Merrifield]

Okay. That's a broad answer to a bit of a broad question.

Monsieur Morin, the floor is yours.

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

Mr. Bannantine, under the terms of the new provisions on mining activities in Honduras, 3% of the royalties will go directly to the security forces.

Do you not see that as a huge amount?

[James Bannantine]

You have to look at it from the perspective of the Hondurans. I would say that if you look at it purely economically, logistically a big part of the infrastructure of the country is wrapped up in security. Can you get a truck across the road? Can you get a truck to go down the road? Can you get the people on the bus to their work? Security is almost like an investment in rail, or road, or basic public services. Sitting here, it's hard to envision that, but the security is so bad that it costs that much. It's 2%, yes.

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

At the beginning of your presentation, you mentioned the new legislation in Honduras. You said that it was quite good, but more changes should be made.

What exactly were you referring to?

[James Bannantine]

There's a couple of things in the Honduran legislation. The mandate of our team and of our company is Latin America. We're mining in the Americas, so we all speak Spanish and Portuguese. In Honduras, that 6% that I referenced is the highest tax rate in Latin America on the revenues of the mining companies, probably because the Honduran need, including security, is the greatest.

The other general area that can use improvement in the law is the sanctity of a concession. Once you take the risk and drill under an exploration permit, you need to protect the right to build a mine where you found the minerals you're looking for. That's the other element we're working on.

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

Mr. Urias, let us take a look at the world market for pork.

I understand that we are talking about trade, but often trade issues and moral issues, such as democracy, enter into the equation. For example, Canada is the biggest supplier of pork to Russia. Correct me if I am wrong, but that is the largest export market there is for pork producers. The volume is huge.

For reasons of democracy and human rights, the sanctions to be imposed on Russia will threaten that market significantly. Should we not be asking ourselves the same questions for other states where we have no doubt, where we are certain, that the place is in chaos and that human rights are held in contempt?

[César Urias]

It is clear that the world is always changing and the markets have to always adapt to the circumstances out there in terms of the political, economic, and financial restraints imposed on them.

You're right when you say that Russia is a big market for us. It's probably our third-largest market in volume and in value, but right now China is achieving that level of importance for us. The U.S. is also there.

Precisely because we don't want to depend on just one market and one country, and because we search for options for our producers, for our exporters, and for industry in general, we seek to support this FTA.

When it comes to democracy, this is a question that is probably outside of my reach and that of my organization, but we always support the idea of democratic development out there.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll move to Mr. Cannan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

Thanks to our witnesses.

Mr. Bannantine, in your opening comments and during your previous answers, you said to refer to your website. I went to your website and took a look at your CSR link. One comment is that you strive to “continuously improve corporate responsibility practices”.

Some of the committee members had a chance with ParlAmericas to go to Peru about a month ago and tour a mine. Maybe you can share your experience as to how Canada ranks on corporate social responsibility on the world stage compared to China, the U.S., and other mining operations?

[James Bannantine]

CSR obviously generally encompasses environmental, human rights, labour, and community, including procurement-type things. But Canada is clearly a leader, and we are flag-bearers in the places where we operate. We have to get local permits, but that's not our standard. Our standard is an absolute standard and it's really driven by the Equator Principles. Those are the best international metric for the standards we operate under. They were developed by the World Bank's IFC.