International Trade Committee on April 20th, 2016

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

They buy more equipment, spend more money. We know the cycle. Great.

Probably the last point I'll be able to make is that there's a tremendous growing middle class in the Asia-Pacific area. Even in some of the countries we have bilaterals with like Korea, it's growing. We need to do more there.

Is there an opportunity for offshore investment? We could use more cattle processing in Saskatchewan. We could probably use some more crush capacity. We could use some more malt capacity, fractionalization, and all the value-added going on with pulses. Have you seen or heard of—I know I have a few on my list—people that are looking to invest in Saskatchewan in the agricultural lines? Of course, all of that creates jobs too.

Do you see a value there that we're not quantifying yet on investment in value-added? This is very important. We're not just hewers of wood and drawers of water anymore. When you look at the cost of transportation and so on, we need to send out a more value-added product.

Has there been any work done in that regard?

[Carl Potts]

I can make a couple of comments on that.

Certainly a major part of the pulse industry's gross expansion strategy is focusing on the health and nutrition aspects of pulses. Japan and other countries in Asia are certainly health-conscious and have increasing affluence, so we think there's a tremendous opportunity to increase the amount of pulse processing that we do here in Canada.

I think expanding markets and reducing trade barriers, especially in further processed products, starts to eliminate some of the barriers to trade in some of those further processed products. This could be an important element to getting some of those trade barriers out of the way.

[The Chair, Liberal, Mark Eyking]

Thank you for those comments.

Mr. Ritz, your time is up. We're going to move over to the Liberals.

We have Mr. Dhaliwal first, for five minutes.

Go ahead.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you, Mr. Chair.

Welcome and thank you to the panel members. It's valuable knowledge that I've gained yesterday and today. Before, the only person to go to was our big Saskatchewan caucus, Mr. Ralph Goodale, who had the institutional memory here.

What I'm hearing is that you all support ratification of the TPP. You're particularly focusing on Japan and the U.S.A. Are those the only two nations about whom you are concerned that if they sign the TPP we'll be lagging? Is there any other nation that would affect us as well?

[Terry Youzwa]

I thought a number of us spoke about Vietnam and the opportunities in Vietnam behind Japan as well.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Does anyone else want to add something?

[Carl Potts]

Yes. For us Vietnam is an important marketing consideration in TPP as well. We face import duties between 15% and 20% into Vietnam, and for further processed products, between 5% and 30%. Ratcheting down those import duties allows for the expansion of increased trade there.

Vietnam for us is an important one.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

I also heard that the bilateral agreements between Australia and Japan are affecting the canola producers. Setting apart the TPP, because you all support it, is there any nation we can pursue bilateral agreements with? What are some of the challenges you are facing in trade with other nations besides those you mentioned?

[Janice Tranberg]

Well, certainly CETA is very important for us, with our trade with Europe. Korea is another one that's an emerging market. India is another emerging market for us that we're looking at. Those would be some of the top ones.

As well, in TPP there's Malaysia. Malaysia is another one that we see as coming.

From our perspective, it would be a better approach to do this collaborative or collective agreement to move forward. We could look and we are looking at certain bilaterals, as you mentioned, but the TPP would allow us to move forward and would level the playing field among all the members. It would also bring in other, new members behind, which could potentially open doors for us.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Yesterday I was talking to Mr. Ritz. He did aid work setting up some canola lands in India, and he was mentioning that eventually it turned away on us—

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

We did all the work and Australia sold them the seed.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

What are the challenges you are seeing because India is a big market and it's not part of the TPP? If we have to pursue agreements or trade with India, what would you like to see the nations come together to work on?

[Terry Youzwa]

India is a challenging market, Mr. Chair. I didn't know India was part of the TPP question, but—

[A voice]

It is now.

[Some hon. members]

Oh, oh!

[Terry Youzwa]

India also has a rising middle class, so it is an important future potential customer in a more significant way. There are logistical and transportation challenges there and labelling issues that make it more challenging than other markets in developing logistical, traditional trade routes.

The way into India may well be a different path. Is it normal and traditional, from the standpoint of other markets? I think you're going to end up supplying canola to someone else who processes it and packages it and gets it into India.

The industry as a whole has a role to play in creating an awareness, so that people know to look for it, Then there needs to be internal demand, and you will find canola oil on the shelves there. We need to find a way to ensure that it's Canadian canola oil and that it goes through in a way that gets it in there in an acceptable, competitive manner.

It is going to be in a traditional manner with 65,000-tonne vessels.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

How about the pulses industry?

[Carl Potts]

India is our largest market for pulses by far. We would welcome a closer economic relationship with India through a trade agreement or something like that.

We have zero import duties, moving into India at the present time, but India has the ability to use import duties up to a fairly high level. Some of the areas we would see value in with India would be improved trade rules to reduce the level of non-tariff barriers to trade, moving into India.

But it is our largest market by far and we would welcome some movement there.

[The Chair, Liberal, Mark Eyking]

Thank you. There might be a chance for others to answer later, and Liberals will have more time later on. But now we're going to move over to the NDP and Ms. Ramsey for five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

Thank you for your presentations this morning. All that you do to provide food is greatly appreciated here in Saskatchewan and around the world.

I think if we were sitting talking about this agreement and were talking about tariffs and non-tariff barriers, we'd be having a different conversation in the country around the Trans-Pacific Partnership. Unfortunately it raises concerns for other Canadians around such things as the ISDS, the patent extensions for medication, and also the various chapters that deal with IP. This deal simply isn't about removing those barriers, which I understand would allow your markets to have access, and we would like to see that trade expand in that way.

I think, also, what I'm clearly hearing from you is that Japan is the market that you're most wishing to enter into, and that's something we've heard across the west coast. I imagine that if we are unable to ratify the TPP, Japan would be the next place with which you would be seeking trade, trying to get into that market through a bilateral.

The one thing I want to say about the U.S. is that it's clear we've had an unfair advantage in this deal from the beginning, from the entry in 2012 to this point. The U.S. really still holds the key for us, in that they still—even if we ratified—would have to approve that ratification. I think it's unfortunate, and what I hear is that they have that advantage and you'd want to get to that market at the same time they do.

My first question is to the canola commission. In its submission to the Government of Canada, as part of the consultations on entering into free trade negotiations with the TPP countries, the Canadian Canola Growers Association indicated:

Pursuing export markets for [canola] seed is important, but an increase in exports of value-added products such as canola meal and oil is a must. This in turn will have a greater economic impact domestically, than [canola] seed exports alone.

To what extent could the entry into force of the TPP facilitate the processing of canola seeds in Canada and increase Canadian export of such products as canola meal and oil to the TPP countries?

[Terry Youzwa]

There's a 15% tariff on oil moving into Japan. As that gets phased out over a period of time—the shorter the better and we're already disadvantaged vis-à-vis Australia on this front—it means we have an opportunity to export oil instead of canola, so those jobs are here at home and growing at home.

Over the last six years we've seen a billion-dollar investment in canola crush capacity, as it has more than doubled in six years. That's huge. There are 250,000 jobs in canola in Canada, and a large proportion is in relatively new crush capacity because of an ongoing strategic vision for growth because of open and stable trade.

There are three pillars to the plan, the strategy, of the canola industry. One of them is production, one is value-driven demand, and the other is stable and open trade. If we don't have stable and open trade, we don't get the status quo; we get a massive reduction. It's important to realize that our economy, our livelihoods, are seriously damaged—and we represent a large number of producers.

[Tracey Ramsey, NDP, Essex, ON]

I hear that there's opportunity, and it's something we'd like to see—more processing in Canada—if that tariff reduction is achieved.

I'll go to the pulse growers. According to Saskatchewan Pulse Growers, the TPP provides an opportunity to reduce trade barriers, improve harmonization of sanitary and phytosanitary issues between countries, and improve access where pulses did not already have duty-free access.

To which countries are Canadian pulse exports expected to increase the most, if the TPP is implemented, and to what extent would this increase occur immediately after implementation?

[Carl Potts]

I can address those.

Japan and Vietnam would be the ones where we would expect the most significant growth in trade. I mentioned before the types of tariffs we currently face going into Vietnam. Going into Japan, we have a tariff rate quota for peas and beans, with in-quota rates of about 10% and 354 yen-per-kilogram prohibitive over-quota tariffs.

Although that's important, one of the biggest assets for us from TPP is what Tim mentioned in his comments about working to align maximum residue limit standards across various jurisdictions. That's where this group of countries within TPP can, I think, for the pulse sector have the greatest benefit, to help to create more alignment on those particular issues.

That, for us at least, is even more important than the tariff and immediate trade expansions. It's that harmonization of market access related to trade tolerances.

[The Chair, Liberal, Mark Eyking]

That wraps up your five minutes, Ms. Ramsey.

We're going to move back over to the Liberals.

Ms. Ludwig, you have five minutes. Go ahead.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Good morning, and thank you very much for your presentations.

I would like to say that this is actually my first time in Saskatchewan, so I'm very pleased to be here. I'm from the riding of New Brunswick Southwest. It's very different. We are looking forward to having our warm weather soon.

Looking at the presentations from yesterday and today, there's definitely a synergy there. That is important, because obviously you are markets and you are areas that stand together.

The Alberta Canola Producers Commission mentioned yesterday that one of the greatest obstacles to exporting right now is infrastructure and transportation. Is that a similar issue here in Saskatchewan for getting products to market?