International Trade Committee on April 26th, 2018

[Tracey Ramsey, NDP, Essex, ON]

Thank you for being here today, gentlemen.

The Mercosur meetings have been quite unique for us in terms of trade. In the last two meetings, we heard from several witnesses from agriculture, auto, and steel that their sectors don't believe that the Government of Canada should focus or split the focus away from securing NAFTA negotiations by moving on to Mercosur in an FTA. They really brought the point that they consider there to be no real or substantive growth potential within their industries, and we're hearing that I think today from Mr. Hall.

Also, they raised the reality, and you did this as well, Mr. Hall, about Venezuela being suspended, and Paraguay, for various human rights and labour rights issues. Instability exists in the Mercosur countries, and it's likely to continue under the political climate, and the abuse of human rights would continue.

I want to dig into something that you said, Mr. Hall. You talked about unreasonable demands. We heard this from the agriculture folks who were here previously as well. I wonder if you can expand on what those unreasonable demands are, given the understanding that we have trade agreements with other countries where we possibly don't see those.

[Michael Hall]

It's more in that sanitary-phytosanitary realm, and it could be anything from asking us to produce the documentation that says a product is safe when they pioneered the document, pioneered the whole thing in the first place. It could be back to just, for example, a testing regime, or what needs to be done, say, on the bulls that are housed in Canada in order to export the frozen semen. There are fairly standard protocols, and there is an AI program across Canada that's administered by the CFIA. Everything is to enact a standard that meets EU and China's demands, and everywhere else around the world. Suddenly they might want that plus 10, just as an example, so then you end up with basically a trade barrier until you get that settled.

Those are some of the things that we see, as it's a region that's prone to demands that can go beyond what's normal in the world trading environment, and they can also hold up based on a lack of understanding of animal health issues and what certain diseases really mean.

[Tracey Ramsey, NDP, Essex, ON]

I'd like to ask if you can submit something to the committee following this meeting that has some of those concrete examples for us so that we can have that in our report when we prepare it.

You mentioned the CFIA. I come from an agriculture region and I can tell you that the CFIA is severely understaffed in agriculture communities, and with marijuana on the horizon it will be even more so because they have a CFIA component. I wonder if you can speak to what you see with the CFIA, the needs that you see, or what you think the CFIA should do to staff up to be able to realize the potential.

[Michael Hall]

Quite quickly, CFIA plant and animal health needs to get away from human health. It needs to get back in the realm of agriculture. Signing free trade agreements, and this kind of stuff, has no bearing on the Minister of Health, so if the Minister of Agriculture is out doing that, then the work falls to the CFIA. I know there's been some restructuring right now going on within that, but at the same time there's been an extraordinary amount of cutting on the animal-plant side of things when there have been budget cuts in the past.

For example, if the CFIA got a 40% budget cut overall, then the meat inspectors maybe saw 5% of that, and the people putting together the trade agreements and negotiating the certificates, who are generally veterinarians—and the CVO might be part of that too—that whole group has been whittled down to nothing. It's at the point where we are becoming one of the countries we used to make fun of for not getting back to people: “Don't worry about Peru. You might hear from them in another six months.” That's where Canada is at right now. It pains me to say it, but we're at the point where we cannot respond to simple trade issues that happen and arise over these negotiated trade health agreements for a live product like this. Then what happens is that it gets addressed when they finally close the market. So that other country may close the market, and then we'll be sitting there and we have to scramble and light fires and try to get it reopened, instead of answering their questions in a timely manner when they come in.

It comes right down to resources. There's just not enough.

[Tracey Ramsey, NDP, Essex, ON]

Lastly, just very quickly, on the dispute settlement, what needs to happen in trade agreements to make that functional?

[Michael Hall]

I'm going to leave that to the experts, but if you're going to do a FTA, I would assume that some of the benefits of an agreement with another country or a group or trading bloc is that you have mechanisms in place to expedite, to resolve trade issues as quickly as possible, because other than that, what's the point? We can talk about market access and everything, but as soon as they close the door for one reason or another, be it BSE or avian influenza, or something that happens within the world environment, if you don't have the proper means of settling those disputes, you're stuck again.

It's something that I would like to see a little more thought put into, and I'll leave that to the experts who know a lot more than I do.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

The time is up and we're going to move over to the Liberals.

Madam Lapointe, you have the floor.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you very much.

Mr. Cancilla, I have a question regarding mining industry products.

In my lovely riding of Rivière-des-Mille-Îles, there is a company called Matériaux King et Compagnie. They make cementitious products that are primarily used in subway tunnels and in underground mines.

Are those products exported to Argentina and Brazil?

I am not referring just to machinery, but also to cementitious products.

[Phil Cancilla]

The tunnelling machines right now are not exported for the cement industry. They are for mining.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Okay. So you have to make cementitious products for openings, for instance.

Do the companies that want to export their products face transportation constraints when they want to ship their products?

[Phil Cancilla]

That's one of the areas in which we have some challenges in transportation lanes and getting those machines to the ports and out of the country in a timely manner. From your part of the world, it's probably not a problem, but across the country, the farther away you are from the port, the harder it is for us to get the product to the port.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Is it easier to ship products from a port to South America?

[Phil Cancilla]

Yes. From eastern Canada, it's easier.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

Mr. Lourenco, I have some questions about Air Canada.

My riding is north of Montreal and south of the Bombardier and Bell Helicopter sites, so you can see what I am getting at. In Brazil, Embraer makes airplanes.

If Canada were to sign a free trade agreement with Mercosur, might Air Canada decide to purchase more aircraft from Embraer or would you continue to purchase C Series aircraft?

[Fittipauld Lourenco]

If you don't mind, I'll answer in English.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

That's fine.

[Fittipauld Lourenco]

Air Canada has made a substantial investment in Bombardier, in particular in the C Series, and not only in the C Series but I think we operate probably the largest Bombardier fleet in the world between us and our partners at Jazz. We are not walking away from Bombardier. We do operate some Embraer aircraft.

We have moved some of those aircraft to other partners, but currently, Air Canada is not considering returning to the Embraer or in any way exchanging that for the C Series. The C Series is an incredible plane. Our CEO gives it very high praise. It was a great decision by Air Canada, and you will see Air Canada with the Bombardier C Series.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

I like your answer.

Does Air Canada transport a lot of merchandise to South America?

I know Canada imports a lot of small fruit from Chile in the winter.

What is the ratio of passengers to merchandise that is transported?

[Fittipauld Lourenco]

I can't tell you specifically what the ratio is. Again, it is a little commercially sensitive. What I can tell you is that our cargo operations, because we don't operate dedicated freighters anymore, are pretty much limited by the remaining space in the belly of the aircraft, so I'll leave that to you. We carry enough passengers that it leaves us enough room for a cargo operation. We would like to have more space, but I can't give you an exact percentage or ratio.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

So I gather that works well.

I am a member of another committee, the Standing Committee on Official Languages. We have met with Air Canada officials a few times.

You said earlier that you had hired 3,000 people in the past three years. Is it hard for you to find people to hire?

If you increased the frequency of flights to South America, if the Mercosur countries increased their use of this kind of transportation, and if you added airlines, would you have trouble finding qualified employees?

[Fittipauld Lourenco]

Do you mean to find bilingual staff?

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Yes.

[Fittipauld Lourenco]

We have our challenges finding staff across Canada to the capacity that we need, because we are legislated in the Air Canada Public Participation Act to be bilingual. But we have very robust programs to ensure that our front-line staff, our operating staff, are almost fully bilingual across our operation.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

[The Chair, Liberal, Mark Eyking]

We're going to move over to Mr. Dhaliwal.