International Trade Committee on Oct. 2nd, 2014

[Derek Butler]

We haven't done the math on the actual benefits. I do know on the about $12 million that we now export, the tariffs are quite high, so there would be that advantage. It depends on how you negotiate that with your buyers, where the benefit comes from the tariff reduction in the value chain. Do you get to pocket all of that or do you pass it on to the consumer? The way tariffs work in the marketplace is up for grabs, I guess, in the negotiations on particular sales.

The opportunity I see in particular is to—

[The Chair, Conservative, Randy Hoback]

I'm going to have to stop you there, Mr. Butler. I'm sorry. We are past the time allocation for that member, so hopefully you'll get a chance to complete your question later.

We'll go on to Mr. Pacetti.

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

Thank you, Mr. Chair.

I want to thank the witnesses for joining us today.

Mr. Vincent, if you happen to lose your job, you could always have a career in interpreting. Well done! Sometimes, our interpreters don't have the required information, and they still manage to do their job. I congratulate them on that.

My question is more about percentages than tariffs in the pork sector. By how much will tariffs decrease, percentage-wise, over the next few years? Canada is already lagging behind the United States in this area. If the agreement comes into effect on November 1 or December 1, we heard that there would be a discrepancy of 8% in the beef industry. What would that discrepancy be percentage-wise in the pork sector?

[Jean-Guy Vincent]

I will let Mr. Rice answer this question, which concerns statistics.

[Martin Rice]

On frozen pork we are at a 15% disadvantage now to the Americans and Europeans, because they have had three of the five equal cuts in the tariff. As of January 1, if we can have our agreement in place, we can at least lock in to that 15%—

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

Sorry, but my time is limited. How will you make up for that 15%?

[Martin Rice]

We'd make it up by no longer shipping many of the products for which we used to be close competitors with the U.S. So, we've kind of given up on selling bellies and things like that. We're still selling some of these offcuts, like bones and so on, but the 15% disadvantage has really knocked us out. And then it would be 25% if we were not able to get this deal.

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

Great. Thanks.

Mr. Butler, in your situation you're not being affected by the Americans because the Americans are not competitors with your product. Is that correct?

[Derek Butler]

They can be competitors for some species, in particular with jordani shrimp from the west coast, but I'm not sure if they sell in South Korea.

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

So, for you it's going into a new market. Just because we sign a free trade agreement doesn't mean that all of a sudden you're going to have all kinds of new sales. What is your strategy? What investment do you anticipate to make this free trade agreement work?

[Derek Butler]

I had a similar question on the Canada-European trade deal when that was launched. We leave to the individual members the strategies, in terms of accessing individual markets, so I wouldn't have an answer for that particular question.

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

You're speaking on behalf of your members and saying it's beneficial, so how is it going to be beneficial if they are going to have to invest money and they don't have the money available? As I said, it just doesn't happen overnight that you benefit from these types of agreements.

[Derek Butler]

No, you're right. It never happens overnight, and we would never say it would happen overnight. As we said, with the Canada-European trade deal, there are no magic bullets.

On the $12 million of sales we have, obviously there will be benefit from the tariff reductions. Then there's an opportunity to say to the customers we now have, “Here is a suite of products we have available to you. The tariffs are now being eliminated. What would you like to buy?”

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

How about if they say, “Thanks, but we have enough product. We're just going to reduce our prices, and that's it.”

[Derek Butler]

Any customer could say that at any point, but obviously we're in a better situation if the tariff walls come down. We're more competitive in negotiations to sell more product. I think that is incontrovertible.

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

Who is your competition right now, in getting your product into South Korea? Do you know which market it is?

[Derek Butler]

In snow crab there's some competition from Japan, some from Russia, some from Norway now, and some from the Alaskan snow crab fishery, of course. For shrimp, it would be Greenland, Iceland, some from Norway, and for the jordani it would be the Oregon fishery.

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

Australia wouldn't pose a—

[Derek Butler]

Just to finish the other thought, those would be the main competitors for the two main species we have.

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

Okay.

[Derek Butler]

I'm not as familiar with the lobster industry, but I know Australia would be a strong competitor for lobster in Asia.

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

So you would also want to have this agreement ratified sooner rather than later, so that we're ahead of Australia.

[Derek Butler]

Yes.

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

Have you lost any market share to the Europeans because the Europeans have a free trade agreement?

[Derek Butler]

Are you talking about European product going into the South Korean markets specifically?