International Trade Committee on May 11th, 2016

[Denis Lebel, Conservative, Lac-Saint-Jean, QC]

So even people who are not affected by supply management agree on the compensation measures that have been put in place. We have heard that on a number of occasions.

Mr. Leblanc, I know that it is important for you, as milk and egg producers, to receive confirmation about what is going to happen as quickly as possible so that you know which direction to go in. In the former government, we moved things forward to confirm everything and show our desire to secure the future. I also hope that it will happen quite quickly.

We are hearing a lot of talk about diafiltered milk and pizza kits from a while ago. We talked a lot about pizza kits yesterday. Pizza producers, remember, were putting on a bit of pepperoni, a bit of paste and a lot of cheese and exporting the whole thing without it being subject to export rules. So they were not selling what they were calling pizza kits at the time, they were selling cheese. We fixed that.

Mr. Leblanc and Ms. Labonté, for you, by way of comparison, are the consequences of what is happening at the borders as bad as or worse than the diafiltered milk situation?

[Martine Labonté]

We estimate that about 6% of chicken production comes into the country by fraudulent means.

[Denis Lebel, Conservative, Lac-Saint-Jean, QC]

At one point, when I was in the Saint-Hyacinthe area, we talked about one of your local producer's famous brochettes. Is that still a problem or has the situation been resolved?

[Martine Labonté]

It was resolved through the import for re-export program.

You were talking about pizza kits. But on the subject of specially defined mixtures, we are currently dealing with the same problem with the sauce and the wings I was mentioning earlier.

[Denis Lebel, Conservative, Lac-Saint-Jean, QC]

Thank you.

Mr. Tétrault, we are fascinated by your sector. We know that you have to export. Aircraft to you means the C Series, but you are not talking about purchases. Our F-18s have come to the end of their useful life. We hear Bombardier talking about the C Series, but Pratt & Whitney, Héroux-Devtek and all the other companies are talking to us about acquiring fighters, such as the F-35, for example. No matter, it is being studied right now. They want to be part of the supply chain and they would prefer to be bidding on parts for 3,000 aircraft rather than for 60.

I would like to hear what you have to say about that.

[Éric Tétrault]

First, I will tell you that we are in favour of any assistance that can be provided to the Quebec aerospace sector. This is because, besides Bombardier, our major manufacturer, there is a cluster of about 200 SMEs in Quebec, providing some 40,000 well-paying jobs. You can understand the manufacturing sector's interest in supporting an industry like that. We will support any national strategy designed to strengthen the aerospace sector. We will also do so for the energy sector. People here may find it a little suspect that Manufacturiers et Exportateurs are supporting the Energy East project, but there is a reason for that: it comes with about 200 to 300 manufacturing contracts. So we always have to be in the background thinking about the degree to which it could strengthen Quebec's manufacturing sector. We must always remember that we form the base of the economies of Quebec and of Canada. We may not provide the 20% of GDP that we did 10 years ago, but 12% to 15% is still the biggest share of our economy.

[Denis Lebel, Conservative, Lac-Saint-Jean, QC]

Mr. Tétrault, I would like to hear what you have to say about—

[The Chair, Liberal, Mark Eyking]

Your time is well over, Mr. Lebel, well over.

We're going to move over now to Madam Lapointe for five minutes.

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

Good morning, welcome to all the witnesses.

I am the only member of Parliament from Quebec. No, Mr. Lebel is here too. I am very pleased to see you here with us.

My constituency is Rivière-des-Mille-Îles. We have a number of manufacturers there. In agri-food, we have St-Hubert, le Commensal, Plaisirs Gastronomiques and O'Sole Mio. We are not far from Bombardier. In terms of the manufacturing sector, we certainly have to study the TPP properly. We have met with other producers who talked to us about reciprocity, but you did not. You did not mention what is happening in other countries that affects us, what our country requires to raise chickens, and other things. Standards are different, so are things like antibiotics, for example. Do you see a problem there? My question is as much about berries—which I find very interesting, it's great—as about chickens. I will let both of you answer the question.

[Pierre-Luc Leblanc]

When we are talking about reciprocity in terms of poultry, I go back to the time during the agreement when the quality of chicken in Canada was being praised to the heavens. In Canada, we know that the Canadian Food Inspection Agency is renowned for its work. The quality of our meat is very high and our standards are very strict. With the Americans, we often find similar standards for slaughterhouses and the packing of the product. However, it is different on the production side. We have to change the litter for each batch. That means additional costs. With reciprocity in terms of the quality of the product, things are really different. Basically, products approved in the United States are not approved here. There are differences with some products that we are not allowed to use. You can talk about antibiotic-free chicken, but antibiotic-free chicken in the United States or the European Union—where there is no question of it nowadays—are two different categories entirely. They are allowed to use different things. So the situation is not fair, and it is certainly not fair when it comes to labour and the climate. The jobs here are good quality jobs. Those who work in the poultry sector are well paid, but, in the United States, people working in the sector are often illegal workers from Mexico. The fact that we are not competitive is not only attributable to the quality of the product, but it is also attributable to the demands in terms of labour and the climate. Things are different.

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

Thank you.

Do you have anything to add?

[Sylvain Dufour]

With fruits and vegetables, each country continues to impose certain standards that have to be met for things like health, hygiene and pesticide residue. With exports to Europe, we see the Americans allowing the use of more and more new pesticides that are prohibited over there. So, with fruits and vegetables, we are seeing a two-tier system developing because Canadian products have to comply with a lot of restrictions. Producers would like to have the same ability, in order to increase their yields. But, with exports, we are realizing that those restrictions can be extremely advantageous.

More and more, American processors are losing their access to European markets because they are accepting products treated with pesticides that are banned in Europe. So the standards we have adopted here provide us with an advantage. However, we are seeing that, in terms of labour and energy costs, and so on, we are not on a level playing field. However, I believe that it always balances out. A Canadian product subject to health standards that are much higher than elsewhere gains a great advantage internationally, especially in highly developed markets.

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

Thank you. This is very interesting.

I have a question for you, Mr. Tétrault. Earlier, you mentioned that our SMEs were not sufficiently developed, innovative or ambitious.

What role could you play in helping them become more open to the global market?

[Éric Tétrault]

I thank you for your question because it deals with the main message I want to deliver today. We have to be much more innovative. Internationally, we have to have better strategies than our competitors.

For example, we could act as intermediaries and go into the trenches to meet entrepreneurs to tell them about the various government programs. I have been president of Manufacturiers et Exportateurs du Québec for a year and a half, and I can tell you the only way to have a real dialogue with producers is to go and meet them on their own turf to inform them about all the federal government has to offer. Unfortunately, not enough is known about it in Quebec. Mr. Lebel, who was the minister responsible for Quebec in the previous government, certainly knows what I am talking about.

The whole range of government services needs to be better known, including the already very significant support provided by federal authorities to stimulate exports. In Quebec, for example, I am certain that the CanExport program, which the current government has just renewed, is not at all familiar to most people. It would be a good idea to make it better known.

We also have to make an effort to educate our entrepreneurs so that we can help them to be more ambitious. Perhaps for historical reasons, Quebec is more risk-averse than Ontario or other parts of the country. Our entrepreneurs have to be introduced to that culture. We have to help them to become ambitious. We have to help them to take a longer view.

I believe sincerely that we are just about to get there. The older generation of entrepreneurs is ready to retire. They are going to be giving up their companies soon. Young people are already taking a global view, while current owners are dreaming about retirement, not about innovation and expansion strategies, which cost millions of dollars.

I feel that everything is in place for Manufacturiers et Exportateurs du Québec to act as an intermediary and to go into the field introducing much more ambitious government programs. That is probably a full-time job for the next two years, but we are ready to do it. It is our role, our mandate to go and meet entrepreneurs, to help them take a longer view and to provide them with better support.

I have several suggestions, but—

[The Chair, Liberal, Mark Eyking]

Thank you. We have to move on. You are way over time, so we are going to have to move on to Ms. Ramsey of the NDP for five minutes.

Go ahead.

[Tracey Ramsey, NDP, Essex, ON]

Thank you very much.

Mr. Tétrault, I share your passion for manufacturing. I have been an auto worker for 20 years down in southwestern Ontario, so I know what we have to offer to Canadians and how unfortunate it has been that under the previous government there was no manufacturing policy. No attention at all went to resources.

I think we are sitting here talking about all of these missed opportunities because there are gaps that exist. We have heard of many programs, and there is a deep irony in talking about having government export education and mentoring programs, innovation policy, agricultural policy, and manufacturing policy, because if we do any of this, in signing the TPP we could find ourselves being sued under ISDS provisions for being protectionist.

If we try to improve the way we access these markets, we could in fact end up not having access to those markets and paying taxpayer money in great sums, up in the billions now, to multinational corporations that are saying they are losing potential in our markets.

To me, this is a huge imbalance in where we are focusing. We have to look at how we can improve what we already have and more forward.

My question will be for Ms. Labonté and Mr. Leblanc. If we don't fix the import issues that we currently have in the poultry industry—you talked about spent fowl, and there are broiler chickens—if these controls are not put in place and we open up our markets further, what position could we potentially be in? If we don't fix this before we sign such an agreement, how could your industry further suffer when these new countries have access to our market?

[Pierre-Luc Leblanc]

That is a very important question. For us, it goes beyond the economy and deals with the survival of the system. We have a system and rules in place. We negotiated the TPP in good faith, but we do not accept it when participating countries ignore those rules. That undermines our credibility. Then what?

Perhaps American diafiltered milk is a different situation, but, in terms of poultry, the previous government did the work. Customs documents had been prepared and the Americans agreed to fix the situation. We could have agreements with them because the forms we need are ready. The economic impact is very significant. We say 6%, but that is the 6% we are aware of. In reality, it is likely closer to 10%. The effects are very harmful right now. We know how important employment is, even here in Quebec. In this case, jobs would be created right away and they are free jobs, jobs with no subsidies. If everyone just played by the rules we have played by, Canadian jobs would be created immediately. It is important for the sector and the Americans agree. Honestly, we do not know why the problem of illegal imports has not yet been fixed. This is completely different from the diafiltered milk situation. The Americans are ready to put measures into place and the agreements have already been reached. All we have to do is act and well-paying jobs in Canada will be created immediately.

[Tracey Ramsey, NDP, Essex, ON]

I think the caution is that here we are getting ready to enter into another huge trade deal without having fixed the problems we already have and without addressing these issues you're all presenting to us.

Of course, we've heard from pork and from berries, and we heard from maple syrup yesterday, so we understand the importance of access to those markets.

Are there non-tariff barriers that exist for you? We've heard of harmonization and phytosanitary mismatches, if you will, across the sector. I'm sure it applies to poultry as well. Can you speak to any non-tariff barriers that you see in place that would prevent us from being able to access the market?

[David Boissonneault]

For the TPP, non-tariff barriers are certainly less important. As for the agreement with Europe, we had reservations, because we did not know what the constraints would be.

I would like to respond to one part of the question that Ms. Lapointe asked earlier about reciprocity. It is all about competitiveness. We can put rules in place and often they give us an advantage. Mr. Leblanc mentioned just now that the Canadian agency is doing a good job and is earning us an unparalleled reputation around the world. But, if rules are put in place, it must be part of a global strategy. We must make sure that we remain competitive and that the competitiveness is measured. If we do not get an advantage or if our choice is made on purely social grounds, there must be measures to assist. We are not opposed, but it must be part of a global strategy.

[The Chair, Liberal, Mark Eyking]

Thank you, and your time is up, Ms. Ramsey.

We're going to move over to Mr. Peterson for five minutes.

Go ahead, sir.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you very much, Mr. Chair.

Ladies and gentlemen, thank you for your presentations and your comments. I have some questions for you.

According to Global Affairs Canada, one of the main advantages of the TPP for Quebec would be duty-free access for most agricultural products, including maple syrup and cranberry products, as well as expanded market access for some other products, including pork and chicken.

Are your sectors or industries in a position to capitalize on the increased market access that will result from the TPP?

[David Boissonneault]

In our case, we already have studies that confirm the potential of such an agreement and the favourable conditions for exports to Asia. I could not say it earlier because we ran out of time, but we support the TPP as well. We know that the United States and Japan must ratify the agreement for it to come into force. On our side, we want Canada to be proactive in bilateral negotiations with the various countries, in order to be ahead of the game and to have access to the markets. Under better circumstances, we will be able to increase our exports.

[Sylvain Dufour]

I would say that the situation is about the same for the berry industry. In fact, if we look at the blueberries and cranberries, those two sectors are growing. Cranberries have experienced a weighted average annual growth of over 12% in the past five years. We are constantly looking for new markets. Somewhat the same thing is happening with the Quebec wild blueberries, which are becoming more and more popular internationally. We receive requests but, unfortunately, in recent years, due to weather conditions, we have been lacking some resources to be able to supply the markets. However, the growth potential is there.

[The Chair, Liberal, Mark Eyking]

Thank you.

Mr. Leblanc, you have the floor.

[Pierre-Luc Leblanc]

Things are different with chicken and turkey. We have difficulty in developing export markets. Right now, 7% of Quebec's production is exported. The province exporting the largest percentage of its production is Saskatchewan. I think it has exhausted all the possibilities in the system. As for us, as I said earlier, we have to factor in the competition, the labour and the climate. In the case of chicken, when a facility starts up, you have to heat the site at a high enough temperature first. For example, when starting to brood chicks, the temperature should be 88 degrees Fahrenheit, 38 degrees Celsius. Our winter climate is very harsh. So many factors make it difficult for us to develop export markets. It's hard for us to compete.

That said, we don't want to shut the door, but we certainly need help to develop those markets. We know that we can create jobs through exports. We would like to have a positive balance. If the import rate is 9%, our export rate should be at least 9% to balance the books at the very least. Achieving a positive balance would be good for the Canadian industry.