International Trade Committee on April 19th, 2016

[D'Arcy Hilgartner]

It's just something short I will say.

Will it address all of our issues? Probably not. However, it gives you that forum, that panel, that spot to have that discussion, as opposed to having that discussion with China, Japan, or Myanmar. Do you know what I mean? They are efficiencies.

[The Chair, Liberal, Mark Eyking]

We just have one more questioner left, and that will end the round.

Go ahead, Mr. Van Kesteren, for five minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thank you, panel, for being here. I have to say I get excited when I listen to people like your organizations. I guess I'm a little bit of an amateur farmer myself too.

However, the one thing that stands out is the opportunity. I love that entrepreneurial spirit that you all generate, that you show.

We were talking earlier to Mr. Hilgartner and Ms. Fischbuch about the pulse industry and how that has mushroomed. Sometimes when I get the opportunity, I love to explore in my own mind the unguided hand and how that just feeds and goes into so many different directions.

When we talk about pulses, I must confess that before I got into politics, I had never heard of pulses. I had heard about beans and all these other things.

Tell me, where is that market going, and where is the possibility for expansion? I think we as North Americans are beginning to consume more pulse products, but obviously, across the globe, tell us a bit about the possibilities of that.

[D'Arcy Hilgartner]

Well, I can tell you a little bit about what I know, and it's as you said. I'm excited, too. The opportunities are huge.

Pulses have been well established in the Middle East, and they've been eating them for centuries. It's kind of new to us. We can grow them well. We don't consume a lot of them here in North America, so when you look for opportunities for expansion, right here at home is part of that. Part of the TPP agreement is with the United States and harmonization of some of those rules.

With a lot of these areas that we have entered in with our products, we've looked at the market and started there as a filler for some of the local production. That gives us the “in”, and then it expands from there. They find a fit for this and then we develop it from that point.

Any time you can get into a country and start developing a product and working with them—the producers, the pulse mills, the bakers, and the ingredient companies—it allows you to expand and say, “Well, have you thought about using it here?” We work with them through our organizations, commissions, and our national bodies to facilitate some of that research in agronomics as well as in the utilization of the product. How can we make this product work better for you? It's about staying in touch with our customers.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Do you want to add to that?

[Leanne Fischbuch]

Yes, I could add something.

With the International Year of Pulses, we have an opportunity to promote the pulse industry globally. The way we're talking about it is through sustainability messaging, health messaging, market access to trade, and a variety of things and awareness.

There are certainly health issues in multiple countries, and I think this also gives us that opportunity to talk about pulses and the advantages and the benefits we can get. Even within the TPP countries, there could be a myriad of benefits from eating more pulses, and growing those marketplaces via the health benefits. That's one of the great opportunities that we have this year with the international year.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I am from southern Ontario and I remember the pictures of western Canada when it was opened up. For the pioneers who came here, my goodness, it really wasn't the sort of place where.... Most people took the best lands, or what we thought were the best lands, but today I see the west as this enormous place that seems to be expanding further and further. Do you think we've reached our full potential?

Maybe I'll go to you, Mr. Sears, since you know about my area and understand where I'm coming from. Have you reached your potential, or is there still more? You said that we've only got so much land, but are there areas that can still be developed?

[Greg Sears]

I will briefly talk about your first comment.

My grandfather came from Michigan in 1911 and homesteaded. He took the train over here, walked from Edson, which is west of Edmonton, to Grand Prairie, and settled. I live in the exact same spot as his original log cabin.

Do we have potential? I think the potential has less to do with land. It has more to do with using the tools that are available to improve the productivity of that land, be it drought resistance traits or better agronomics, and just generally improving the knowledge base of those people who are producing the products. On the farmer's end, that is what I think about. We still have great opportunities for value-added processing, as everybody has talked about. We do have some issues to overcome, but in a few years we are going to be one of the few net food exporting countries of the world. That's a great opportunity.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

This is exciting stuff. It is great to see that spirit that you have here.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Van Kesteren. That was a good question, and it was a good end to our panel here.

We'd like to thank all the witnesses for coming. You not only produce a lot of food, you represent a lot of people who produce food, whether it's growing it or processing it or shipping it. We really appreciate your comments here with us today.

Have a good growing season. Thank you very much.

[The Chair, Liberal, Mark Eyking]

Welcome, witnesses and anybody in the audience who just came in.

As many of you know, we are the international trade committee of the House of Commons. We are represented by all parties. The study we are doing right now is on the TPP, and we're travelling across the country. We're going to go to every province and we're also going to Skype with the territories.

We have heard lots of witnesses in Ottawa, and we're also getting a lot of submissions from the general public. We started off with 5,000 last week, or 10,000 by the weekend, and now we have over 15,000, so there is a lot of interest. Of course, it is a big deal. There's $1 trillion worth of trade in this TPP. One way or another, it will affect every Canadian to a certain extent, whether you are buying goods or selling them. It is a big deal and is something that is very concerning, so we are out here travelling. We did British Columbia yesterday. Today we're in Alberta, and we're just going to keep going east from here.

We now have our last panel from Alberta. For the next hour we are going to have the Alberta Chicken Producers, the Canadian Association of Petroleum Products, and the Canadian Federation of Musicians. We will begin with Erna Ference of the Chicken Producers.

Welcome. You have five minutes. Go ahead and state your case.

[Erna M. Ference, Chair, Alberta Chicken Producers]

My name is Erna Ference. I'm with Alberta Chicken Producers. I'm also a producer just south of the city of Calgary, so I do know about chicken farming as well.

Chicken Farmers of Alberta represents 250 farmers, and it's a member of the national organization that you're familiar with, Chicken Farmers of Canada, which represents 2,700 active farmers.

While our Board of Directors is made up of farmers, the national organization is made up of farmers, processors, further processors, and restaurant representatives.

The chicken industry here in the province is a growth and value-added success story. We have three processors in the province. We have a farm gate revenue of $221.3 million. We pay taxes in the neighbourhood of $176 million, and our sector contributes $830 million to Canadian GDP. Our farmers are located throughout the province, from Grande Prairie right down to the U.S. border. We have more farms around today then we did when we were first formed 50 years ago. This is our anniversary year. Production has steadily grown more than 20% in the past 15 years and 2015 marked the sixth consecutive year of growth. Here in Alberta, in the last year, we grew by 7% and we have 25 new entrants.

Contrary to the popular misconception, Canada's chicken market is not a closed system. Everyone focuses on the high over-quota tariff for supply-managed product, but nobody pays it. Their sole purpose is to provide certainty to the amount of imports. People avoid talking about tariffs that everybody pays for.

From every one of our free trade partners, chicken comes in duty free. From all other countries, the tariff is a miniscule 5.4%, and this is not applied to just a small amount of chicken. In 2015, Canada imported 214 million kilograms of chicken. Just to put it in perspective, Canada is the 17th largest importer of chicken in the world. It's the second most important market for our neighbours to the south, the U.S. Among the 12 Trans-Pacific Partnership member countries, Canada imports more chicken than the United States, Peru, New Zealand, Australia, Malaysia, and Brunei combined.

Only 10% of the world's chicken production is traded, and the United States and Brazil supply approximately 75% of that traded amount.

Alberta chicken producers believe that we can increase our contribution to the Canadian economy despite the concessions provided for chicken access under the TPP.

At the end of TPP's implementation period, 26.7 million kilograms of new access will be provided annually. This is the equivalent of losing 61 chicken farms generating annual sales of $57 million. On an industry basis, it equates to a loss of more than 2,200 jobs and a reduction in our contribution to Canada's GDP of $150 million annually. The additional TPP access will be on top of our already significant WTO and NAFTA access of 7.5% of the previous year's production. This access was 80.2 million kilograms in 2005.

Together the existing WTO and NAFTA access and the new TPP access will be more than 9.6% of our production, right in line with the percentage that's traded worldwide. Every single kilogram of this access will enter Canada duty free. On its own, this would be a hard hit for the Canadian chicken industry. However, the displacement of our production resulting from additional TPP access can be mitigated by the elimination of import control circumvention.

We've been working with the government for several years to address these areas.

Three specific measures were announced by the government on October 5, 2015, at the conclusion of the TPP talks. It's critical that the government implement them without delay.

First is to exclude chicken from the duty relief program. This is a Canada Border Service Agency program that permits chicken processors to import, process, and re-export chicken. They can keep the chicken in Canada for up to four years and re-export lower value chicken if they wish: 96 million kilograms were imported in 2015. That represents 9% of our production.

Second is to implement mandatory certification for all spent fowl imports. Old laying hens that are not subject to Canada's TRQ can be imported in unlimited quantities. Imports of 103 million kilograms, representing another 9.5% of our production, are robbing Canada of 8,900 jobs and $600 million in GDP. In fact, right now we're importing more spent fowl breast meat than is actually produced in the United States. This is fraud.

Third is to stop creative packaging by modifying the specially defined mixture rule. This is commonly referred to as the 13% rule. It stipulates that you can just add a simple pack of sauce to a box of chicken, and then it's no longer considered chicken and is not subject to import controls. The solutions is simple: the government needs to reinstate the sauce and cooking requirements that we agreed to in the WTO commitments we negotiated, and put that into the customs tariff.

In addition to the elimination of import controls—

[The Chair, Liberal, Mark Eyking]

Excuse me, could you please wrap up?

[Erna M. Ference]

In conclusion, the Alberta chicken industry, and by extension, the Canadian chicken industry continues to be a significant contributor to the Canadian agricultural industry.

We are an agricultural community that is continually innovating and investing to grow our industry and evolving our system to meet the changing world requirements and consumer demands. Even though it will be a hard hit for us, we do support the way it is, and feel that it's critical. We support a rules-based and enforced trading system, and call upon the government to re-establish the integrity of import controls and trading agreements by eliminating the import circumvention practices so we can fully seize the growth opportunities that we see coming.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you very much.

We're going to move over to the Canadian Association of Petroleum Producers with Tim McMillan.

[Tim McMillan, President and Chief Executive Officer, Canadian Association of Petroleum Producers]

Thank you, Mr. Chair.

Thank you to the panel members for putting these hearings on. I know it's no small imposition to do a cross-Canada listening and engagement tour, but I think it's very important when we talk about something as important as a trade agreement like this that would have a profound effect on all Canadians for many years into the future.

At CAPP we represent the upstream oil and gas producers in Canada. We don't represent pipelines or the downstream side, just the upstream side. That said, the ability to get our products to market is crucial to the ongoing success of not only our industry but also of many parts of the Canadian economy. With that principle in mind, we're very supportive of trade and free trade.

I'm going to highlight a few points where I think there will be a direct overlap with the Trans-Pacific Partnership and where it can enable Canada to be more competitive on specific parts of what we've seen of the agreement.

In a general sense, I did want to comment that some of our stakeholders we work with very closely are challenged and have put forward concerns that I think are legitimate and, certainly, need to be thoughtfully approached.

One concern would be the labour force. Our industry hires about 500,000 Canadians—today it's slightly less than that at 450,000—who are integral to the ongoing success of the oil and gas industry. At times, labour shortages are one of the biggest challenges facing our industry and labour mobility is something that we have and will continue to advocate for. I don't think it's one or the other. I think we need to ensure that even within Canada, we can make labour mobility a priority so that we can utilize Canadians as much as possible in any project that will go forward into the future.

I wanted to put on the table that there are a lot of aspects here that are certainly important.

If I shift to where I see the Trans-Pacific Partnership having direct impact on Canada's competitive position, one of the most obvious is diluent. In Canada we produce a lot of heavy oil or very heavy oil that requires diluent to dilute it so it can flow easily in pipelines. We don't produce enough diluent in Canada, so we have to import much of it. We do produce a substantial amount, but much of it is imported from the U.S. and from offshore. In any given year that could amount to about $40 million worth of tariffs, which decreases the economics of investing in Canada and, of course, affects the creation of Canadian jobs. If the TPP were to allow a freer flow of diluent, that would be very helpful.

Our industry is a technology leader. If you look at where oil and gas is produced around the world, Canada is out in front in almost every regard—in environmental standards and production techniques, and in many different ways. Our ability to export those high standards and new technologies around the world will have benefits around the world.

When we look at some of the challenges we're facing today in eastern Canada, we are seeing western Canadian gas being displaced by gas coming out of the U.S. In western Canada we have a carbon price on the gas produced in British Columbia on the compressor stations while the gas coming out of the eastern seaboard of the U.S. does not. I guess one approach would be to say that maybe we should have a tariff on gas coming into Canada that doesn't have the high environmental standards or the incentives to always be improving performance.

I think a better approach from our industry's point of view is that we make everybody better. If we can export our technology, not just to the U.S. but around the world, that will benefit countries that are also producing, and Canada can maintain its leadership position.

I also wanted to talk a little bit about the market access piece That is something we continue to work on, getting our products to those new markets around the world, be it natural gas and the LNG facilities, or oil through new pipeline infrastructure. I think the commitments that the governments have made on market access, both provincial and federal, are important and the Trans-Pacific Partnership would be a further reflection of that imperative of Canada's role in the world as an exporter of energy, of products, and of the resources that we produce.

In a general sense, I think that Canada can compete, that we will continue to be innovators, and that the Trans-Pacific Partnership will enable us to be competitive in this new world.

Thank you for your time today.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. McMillan, for that briefing.

Last but not least, all the way from Cape Breton, the home of not only many good politicians, of course, but many good songwriters and singers, we have Mr. Elliott. He's not from Cape Breton, but he was a Cape Bretoner for a week, I guess.

It's good to see you, Mr. Elliott. Welcome. You're representing the Federation of Musicians. Go ahead, sir, for five minutes.

[Allistair Elliott, International Representative, Canada, Canadian Federation of Musicians]

Thank you, Mr. Chairman.

The Canadian Federation of Musicians is a Canadian division of the American Federation of Musicians of the United States and Canada with a membership of 90,000 people across North America, 17,000 of whom are Canadian. The AFM-CFM is the leading professional organization of its kind to musicians in North America. The Canadian Federation of Musicians' headquarters oversees all matters of national importance to musicians and governs its 25 local offices coast to coast in Canada. There are just over 200 offices in the U.S. as well.

As a distinctly Canadian division of AFM and under its federal status of the artist recognition, the CFM negotiates fair agreements and working conditions covering all musical services within Canada. CFM diligently works to protect ownership of recorded music, secure benefits such as health care and pension for its members, and actively lobbies in copyright reform and other matters of interest to all professional musicians working and/or living in Canada.

The Canadian Federation of Musicians helps thousands of musicians who need assistance with any number of issues related to the recording and live performance of their craft with various departments covering an array of services important to musicians, including cross-border work. We're a P2 petitioner. We do a lot of work for P2s for musicians travelling across the border: medical care, insurance programs, etc.

Our agenda today is addressing some issues with regard to intellectual property and the temporary entry for foreign business persons. Intellectual property talks about several treaties, but it leaves out a very important treaty, the Beijing treaty, which was recently signed off on in 2012. We would like to see the Beijing treaty added as a reference document here.

We would also like to bring up the topic of national treatment. While national treatment is good, our concern with national treatment is that Canada has, in some cases, reduced the level of protection below what is recommended in the WCT and the WPPT. We would like to see a higher level of compliance there. The Beijing treaty and also the Rome Convention would be reference documents we would like to bring forward.

Regarding temporary entry business persons, there seems to be a recognition—and we applaud that—that there should be an application procedure and licence. We would like to push for recognition that musicians entering Canada on a temporary basis must submit to contract to the certified organization—that's us, the Canadian Federation of Musicians—to ensure that conditions of employment meet or exceed the recommended minimums for that particular classification of work. We're federally certified to represent all musicians in this country, and immigration is definitely a federal topic.

With regard to this committee, we would like to also bring up an overall request to recognize the need to clear all musicians entering Canada through our office. Without scrutiny by our national office and the enforcement of a fair wage in all sectors, there's very likely to be a huge influx of foreign musicians under this treaty, which makes the market more competitive. It drives wages down unless they are controlled and floods the market with non-Canadian culture. We would like to uphold Canadian culture in this country, and we need to do that by fair competition and fair wages.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Elliott.

Thank you to the panel for their briefs.

We're going to go into questioning now by members of Parliament for five minutes each.

We're going to start off with Mr. Van Kesteren for five minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I want to go to Mr. McMillan first. We all know your industry has taken quite a hit. I'm curious; you mentioned some talk about the foreign workers program. You seem to be either in the best of times or the worst of times. It's like a Dickens story.

At a time like this, you wouldn't have any call for any foreign workers, would you?

[Tim McMillan]

I would say in very specific skill sets, potentially. I don't know the details on that. We have seen our capital expenditure drop from about $81 billion in 2014 to today, when we are expecting 2016 to be about $31 billion. We've lost $50 billion worth of capital expenditure, so the requirements of the workforce have diminished substantially as well, and that's not a good news story.

But if I were to extrapolate out of that, when we were growing substantially at $81 billion, our need was for very specific skill sets, a lot of them very large, and it wasn't always possible to source them within Canada. We think we, as Canadians, can do a better job of clearing barriers so we can access as easily as possible. There likely will be opportunities or need for accessing beyond the borders into the future, but that need today would be far less than it was in 2014.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

When times were good your industry had some enormous growth. I would suspect there was a lot of innovation, especially with the type of oil extraction Canadians, and specifically Albertans and Saskatchewanians, are involved with in the oil sands.

Is that technology being exported, and would this trade agreement give you better access to other markets where Canadian mining companies could find some employment and investment?

[Tim McMillan]

Yes, I would certainly say that some of the unique challenges that are overcome in Canadian mining in situ, or even on the conventional side of the business, are often innovated first here in Canada.

We have some of the harshest climates, some of the biggest resources, and some big challenges. As Canadians unlock those, it sends an opportunity not just to utilize them here, but also in other places around the world where the climate might also be harsh, or maybe less so. That technology being unlocked here can be used there.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Is that starting to happen? Can you expand on that and tell the committee about that?

[Tim McMillan]

Absolutely. Knowing the oil and gas business and speaking on their behalf, our entrepreneurs do branch out around the world. Some of the modern drilling techniques that we are using here are today.... We have Canadian-based companies, not always Calgary-based, that have the majority of their operations around the world.

One example would be Vermilion Energy. It is the largest oil producer in France. They are headquartered here in Canada. In South America, developing some of the resources there, they are taking Canadian expertise and Canadian values. They are taking the standards of what we think is acceptable to countries around the world that may not share those standards and don't have access to the technology locally. That benefits Canada in the long run.