Thank you, Mr. Chair.
Thank you and good afternoon. Let me begin by thanking the committee for this very kind invitation to appear and provide testimony related to the Canada-South Korea free trade agreement.
As you all know, seafood is a trading business and it's only appropriate that my two committee appearances to date before Parliament have been before this committee, the trade committee, the first time for the comprehensive economic trade agreement with Europe, and now for the deal between Canada and South Korea.
Since the first explorers ventured to our shores and in the mid-1500s cod provided 60% of all fish consumed in Europe, we have been a trading business. Some have said we were the stock market, indeed, of Europe, and still today, over 80% of our production is exported. I'm amused by those who think that we can find more markets at home to help alleviate the challenges in either international markets or currency volatility. Even if every Newfoundlander and Labradorian doubled their seafood consumption, it would still only represent a fraction—I think 2% or less—of everything we produce and sell.
I'd encourage them to do that, as I would committee members and all Canadians, for their health, but the volumes we sell mean we require access to international markets. It has ever been and ever will be thus.
On behalf of the Association of Seafood Producers, the trade association representing by value and volume the majority of seafood production in Newfoundland and Labrador, between 20% and 25% of all Canadian production, out of proportion to our population, I'm pleased to say we support this agreement.
South Korea is a growing and dynamic economy. The country is in fact a case study for economic development, having grown to be the world's 15th largest economy and the fourth largest in Asia. It's a region of increasing interest to Newfoundland and Labrador seafood producers.
This agreement is another good-news story for the industry. One of the major challenges and impediments to market penetration abroad for Canadian seafood exports has been high tariff walls. Our competitors in South Korea—the United States and the European Union—have typically enjoyed an advantageous position in comparison to us, as my colleagues have just outlined vis-à-vis pork.
This new trade deal and the deal announced with Europe represent new opportunities for my industry, game changers, really. Europe and Asia both have some of the highest seafood consumption rates in the world. These are the very two market regions that we need access to, that we need to grow in. The South Korean market at this stage, I should note, is not a large one for us, but it is a growing one. It has great potential for us. Newfoundland and Labrador seafood exports to South Korea in the period from 2010 to 2012 were around $12 million, the most recent figures available. But with tariffs that went as high as 47% now all going to zero throughout the implementation of the deal, those figures can grow.
It's not even a matter of how big the market is but how big it can be that's important, what might be the potential in a new dispensation. To that we can add that very small movements in trade into the South Korean market, in this case, can have larger impacts on our product going into other markets. Even if our exports never increase in great volume, small changes can have impacts on pricing in returns in other markets to our benefit.
I'd also be remiss if I didn't remind those who oppose free trade and call for fair trade about what free trade really is. I think free trade is fair trade. Tariffs are used to either tax an import product unfairly, as has been the case for us, or to protect local industry behind tariff walls that we can't get over. We said that for years with the prejudicial tariffs we faced in the cold-water shrimp industry in all of Atlantic Canada, shrimp entering the EU supported by interests in Europe that sought to keep our product uncompetitive through very high tariffs. Consumers and local industry in those countries suffer from those tariffs as we do in the inverse. Consumers end up spending more than they have to and local industry never learns to adapt, never learns to grow, never learns to compete. As a trading industry, as an export industry, we support free trade, and we laud this initiative and we laud similar ones.
In closing, let me say this, as I said when I appeared before the committee in late October of 2011. “I'd be remiss in my duties if I didn't take this opportunity to say that the Canadian seafood industry...[is] premised on a broken and failing model. There are constraints on strong resource management because of the socio-economic pressures brought to bear. There's a heavy reliance on EI”--without which the industry would not survive—“and this model cannot attract the capital required to modernize our fleets“ or the plants or to catch the product in the best seasons of the year.
With increasing labour challenges, we must also now modernize our plants. We need the capital, and a model with capital incentives to do that, and we're not there. I'm confident that a better industry model could contribute more to GDP and could make us a larger contributor to Canada's wealth through more valuable exports, through better incomes for harvesters and for plants, and through more stability and less chaos.
We can and should reduce tariffs and we can and should build new markets, but we should also fix things at home. If not, we'll be asking the last fish to pay the next bill. We've been there before.
We must answer a key question in facing this challenge, as somebody said recently. What business are we in, narrowly defined: fishing or seafood? Our competitors, as I saw last week on a trip to Iceland, are answering that question with emphasis on the latter: the seafood business, with access to the whole value chain.
I thank you for your time. I'm available for any questions you might have. If I can't provide specific answers, I'll certainly undertake to get them for you.
Thank you.
