International Trade Committee on May 17th, 2016

[The Chair, Liberal, Mark Eyking]

Good morning. Welcome

To any visitors in the back, welcome to our continuation of the Standing Committee on International Trade's consultation with Canadians and stakeholders on the implications of the TPP.

It's good to be back in Ottawa, I guess. We've done six provinces so far. We started in British Columbia and then did the western provinces, and we did Quebec and Ontario last week. We're back here, and we're going to Atlantic Canada. We're saving the best for the last. We're waiting for all the seafood to come in and then we'll get out to taste it in the fall.

We have had a lot of consultations across the country. We've heard from many different stakeholders, whether it's the health industry or agriculture, but we haven't had many seafood people yet. Today we're focusing on the seafood industry.

I have to say to the witnesses that we're in a time in Ottawa when the votes can be called at any time. That may happen, but we're going to proceed as if there are no votes and we're going to go from there.

Today, on our first panel, we have two witnesses. We have Clearwater Seafoods and the Maritime Fishermen's Union.

I don't know if the Maritime Fishermen's Union is on the phone and can hear us, or if they are going to be coming in a little later.

[Christian Brun, Director General, Maritime Fishermen's Union]

Can you hear me?

[The Chair, Liberal, Mark Eyking]

Yes. Thank you for being with us.

We're going to start off with Clearwater Seafoods, and then we'll move on to you for five minutes. Then we'll have dialogue with MPs.

Christine Penney, go ahead, for five minutes.

[Christine Penney, Vice President, Sustainability and Public Affairs, Clearwater Seafoods Limited Partnership]

On behalf of Clearwater Seafoods, I would like to thank the committee for the opportunity to present on this important issue. This year marks our company's 40th year in business—40 years of sustainable seafood excellence and trade. Clearwater got its start in international trade with a single truckload of Nova Scotia lobster being sold into Boston. Today we sell Canada's finest seafood around the world in over 30 countries.

We see free trade and the Trans-Pacific Partnership as a critical element of our future success. I would like to offer our congratulations to the federal government on their demonstrated leadership in strengthening trade relationships that make our local economies stronger.

By way of introduction, Clearwater Seafoods is a leading global provider of premium wild-caught shellfish. We were founded in 1976 and are now North America's largest vertically integrated processor-distributor of premium shellfish. We are one of Canada's largest holders of shellfish quotas and licences in Atlantic Canada, and we are one of Canada's only publicly traded fishing companies. We own state-of-the-art factory vessels with frozen-at-sea processing technology, and we have advanced on-shore processing, storage, and distribution capabilities. We employ approximately 1,400 Atlantic Canadians in coastal communities across Atlantic Canada.

Clearwater has extensive global sales, marketing, and distribution platforms. As I mentioned, we currently have sales in over 30 countries, and approximately one-third of our business is in Asia.

In 2015 we had approximately $150 million worth of sales into countries that are party to the TPP agreement. Excluding the NAFTA countries, U.S. and Mexico, sales to TPP countries amounted to $72.4 million. Japan alone accounted for almost 14% of Clearwater's sales in 2015.

Clearwater has always been a supporter of reducing trade barriers around the world. In 1976, when we first opened for business, we were a small lobster distributor with a local retail outlet and wholesale export business into the Boston seafood market. Over the next few years Clearwater pioneered the concept of extended live storage and air shipments of live lobster into Japan and Europe.

Clearwater is experienced at opening and developing foreign markets for Canadian seafood products. We have recently supported the ratification of the Canada-EU trade agreement, and we regularly participate in trade shows around the world, including in Asia, to develop our relationships with our customers and build global markets for premium Canadian seafood.

In terms of the importance of the Asia-Pacific region to seafood generally, the Canadian seafood industry relies on export markets for our success. Our oceans have an abundance of resources that far exceed the demand for seafood in Canada. If you look at the Statistics Canada estimates, the value of the Canadian domestic seafood exports was approximately $6 billion in 2015. Asia-Pacific countries are very important markets for Canadian seafood products. In 2015 the estimated value of Canadian seafood exports to TPP countries was approximately $400 million, representing close to 8% of Canadian seafood exports. Of this, Japan accounted for $261 million, and Vietnam $106 million, making these countries the most important TPP markets for Canadian seafood.

In Japan, seafood imports account for more than 50% of domestic seafood consumption; however, tariffs can be quite high, and in some cases are as high as 15%. The TPP will eliminate two-thirds of these tariffs, and all of them will be removed within 15 years. This is a very important element for increasing our trade relationship on seafood with Japan.

In Vietnam, imports account for only 8% of seafood consumption currently, leaving significant room for growth. Consumption is also expected to increase by about 8% between 2016 and 2020. In Vietnam, tariffs can be as high as 34% on Canadian seafood products. With the TPP, 83% of these tariffs will be reduced to zero immediately, and all will be eliminated within 10 years.

Coming back to the impact of the Trans-Pacific Partnership agreement for the Clearwater business, Clearwater competes globally for market share, and tariffs—

[The Chair, Liberal, Mark Eyking]

If you could finish up in half a minute, that would be great.

You'll have time to add to that when we have dialogue.

[Christine Penney]

Clearwater competes for market share, and tariffs and non-tariff trade barriers are important considerations for our business. There are significant tariffs currently on lobster, snow crab, and frozen shrimp in the TPP markets.

In closing, the TPP ensures that Canadian seafood is on a level playing field globally, allowing Canadian companies to compete, expand, and invest for growth to the benefit of Canadian workers. Opening new markets and growing exports of Canadian seafood through expanded free trade will benefit Clearwater and all Canadian fisheries.

I'll wrap it up there.

Thank you very much.

[The Chair, Liberal, Mark Eyking]

Thank you very much. You have quite the success story from one truckload of lobsters. Your numbers are amazing and the potential is quite staggering. Thank you.

We're going to go to the beautiful town of Shediac.

Is that where you're from, Mr. Brun? Are you in Shediac?

[Christian Brun]

Yes, that's correct.

[The Chair, Liberal, Mark Eyking]

Thank you for joining us today. Could you give us your assessment of the TPP in five minutes or less?

Go ahead, sir.

[Christian Brun]

Thank you very much, Mr. Chair. I don't know if the vice-chairs Mr. Hoback or Ms. Ramsey are present today.

We thank you for the invitation to appear before the committee today.

For a dozen years or so, I have worked for the Maritime Fishermen's Union in Shediac, New Brunswick. That is where the head office is located. We represent coastal fishers on New Brunswick's east coast and three regions in Nova Scotia, including Cape Breton—we work with Ms. Ludwig, who is a member of your committee—Pictou and Antigonish, as well as the southwestern regions of Nova Scotia, at the other end of the province.

We represent more than 1,300 fishers of lobster, herring, halibut and a multitude of other coastal species. We also represent fishers who are owner-operators. They are the owners of their businesses and operate their own boat. These people live in the community, spend their income there and live in the regions to see them develop.

This is very important, helps hundreds of communities in the Atlantic provinces to live, to grow and to be dynamic. Without this industry, it would be very difficult to live in the Atlantic provinces, especially now, because the economic situation is difficult. I also include Quebec, because fishing is very important there. Obviously, Pacific regions must be included as well. This region is a little less well known, even though there is often contact with people from there.

I would like to highlight that I am also the president of the Canadian Independent Fish Harvesters Federation, an organization that includes all of these fishers' organizations, such as the Maritime Fishermen's Union, and represents more than 7,000 independent fishers. They own and operate their boats in Canada in the five provinces on the Atlantic coast, as well as in western Canada.

We support reducing barriers and tariffs throughout the world, especially for our most important fisheries. Above all, our fishers harvest lobster and crustaceans. That's very important, particularly because this harvest is meant to be exported. Indeed, lobsters and shellfish are for the most part sold outside of Canada. Any reduction in existing tariff barriers increases the potential sale of species that are the most important for our fishers. This improves both the value of products and Canada's competitiveness in the seafood sector.

I would like to share with you some statistics and their meaning. It is somewhat sad—I need to emphasize this very strongly—that the fishing industry is one of the most underestimated industries in Canada, when it is one of the industries with the most potential in the country. That has been the case for several years, because fishing depends on highly unpredictable marine environments. It is very difficult to conduct scientific studies when one is talking about the sea. Things are not visible or easy to access. The environment is very unpredictable, because there are many predators and many other activities that occur in the sea. Also, certain humans have an impact on our fisheries.

It is very important to highlight both the importance and the potential of fisheries.

Over most of the last 50 years, there have been highs and lows, but it has been proven that today, the potential is huge.

Let's just look at lobster as an example. In 2014, the amount of lobster fished reached 352 million pounds. The value of lobster in Canada—or rather, I should say the Atlantic, because it is fished there for the most part—has now reached $1.5 billion. That represents an increase of about 33% over the last five years. It is unpredictable, but the potential is huge.

[The Chair, Liberal, Mark Eyking]

Excuse me, can you wrap it up, sir?

[Christian Brun]

Yes, of course.

I would like to quickly say two final things which are very important.

First of all, the strategy for lobster and shellfish is to create a triangle of demand: in Asia, Europe and in North America. We depend entirely too much on North America, which represents about 86% of our exports. That percentage is much too high. We must diversify our sales. That is why free trade agreements and reduced barriers and tariffs are so important if we want to further develop the market in Asia.

The last point I wanted to emphasize is very important as well. When negotiating free trade agreements, it is absolutely imperative to respect both the policies and Canadian rules of the game. In the Atlantic, there is an owner-operator policy. This is very important to ensure that the benefits of fishing remain in the hands of fishers, so that they make it all the way to communities and so that money earned is spent at home.

As I explained, land use and the economies of hundreds of communities that have nothing else to keep their economies going are what is at stake. That is extremely important and non-negotiable. It is very important to highlight it.

To conclude, it is clear that we support reduced tariffs in the Pacific region. It is very important for the future to develop the triangle of demand throughout the world, to better promote our seafood products and, above all, shellfish, which are very important for us.

Thank you very much.

[The Chair, Liberal, Mark Eyking]

Thank you, sir. You represent a very large group of fishers, men and women who work on or near the water. I commend you for the work you're doing.

You asked who's on our committee. I'll introduce some of our members. Our members come from all over the country. We have Mr. Dhaliwal from British Columbia and Mr. Ritz and Mr. Hoback from Saskatchewan. From southwestern Ontario, we have Mr. Van Kesteren and Ms. Ramsey. From the Toronto area, we have Mr. Peterson and Mr. Fonseca. We have Madam Lapointe from Quebec and Ms. Ludwig from the Maritimes. I'm from Cape Breton, and you represent many people from my area, too.

Anyway, we're going to open it up to dialogue with MPs. I'd like to get through most of the MPs, so please keep it brief.

We're going to start off with the Conservatives. Mr. Ritz, you have the floor.

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

Thank you, Mr. Chair. Thank you for your presentations this morning, ladies and gentlemen.

I'm familiar with Clearwater and the great work you do in Japan. About a year ago, I had the opportunity to be with your president as we did a taste test with a Japanese audience. It was mostly lobster, but there were 10 or so different dishes that chefs made up over there. It went over extremely well. We had a pet lobster in the box, some 20 pounds—just a monster—that we held up to show the size and scope of the industry.

You're absolutely right, Christian, that trade is critical to the growth of this industry. We know the potential is there. That's the first time I've heard someone talk about a trade triangle, and you're spot on with that. The more people you have vying for your product, the more valuable the product becomes.

On a trip with the Prime Minister in China, we were at Hangzhou at an operation called Alibaba (China) Co., Ltd. Jack Ma said that, in honour of the Prime Minister's being there, he was going to offer Canadian lobster for sale on his site. He had 250,000 lobsters. They sold in nine minutes. You're absolutely right in defining the Asia-Pacific area. Vietnam has a real problem getting top-quality Canadian product.

We're at a delicate stage with the TPP. We seem to be waiting for the Americans to ratify it before we jump into the arena. Do you think that's right, or should we show leadership and move forward rather than waiting for the next president? Neither Democrats nor Republicans seem to be in favour of this deal. Should we move forward on our own and show leadership?

Christine, I'll start with you.

[Christine Penney]

From our perspective, yes, certainly we would like to see Canada show some leadership. We've talked about the importance of this agreement for our industry, the Canadian industry. I think one of the points that is important to note is that we do compete with supplies of like species from other producers that could be party to this deal, so we would really like to make sure that Canada has a strong place at the table and helps to see this agreement cross the finish line.

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

Christian, do you have any points?

[Christian Brun]

Mr. Chair, the comments that were just made are very important.

It is very important to continue finding new markets and new opportunities. The markets in Vietnam are extremely important for China. Products often pass through Vietnam. The markets in Australia also have an enormous economic impact on the world. We should not neglect these markets—I mean countries that are part of the TPP. Canada should play a leadership role to encourage its American neighbours to see the importance of this partnership.

It is important to remember that there are two types of lobster products: live lobster and frozen lobster, which is becoming increasingly popular. China and other Asian countries may be very interested in these products. There is enormous potential there that we haven't exploited yet, or at least not much. This is only the tip of the iceberg and we really need to develop the potential of this sector.

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

Sure, and there's also a tremendous opportunity to value-add. There's a lot of lobster that isn't first tier and, of course, there's a premium required for that, but there are a lot of bits and pieces that can be made use of as well. How long do you think it would take for industries in Atlantic Canada, which is what we're talking about today, to have the potential to add those value-added lines to the processing to make sure we're capturing every penny we can out of all the product that's moved forward?

There is a phase-in period for the TPP, and of course for CETA as well, and it's very important, I think, that we send a strong signal to industry that they tool up to take advantage of that, that they find those markets and then tool up accordingly. I'd like your thoughts on that as well, please.

[The Chair, Liberal, Mark Eyking]

It will have to be a short answer, please.

[Christian Brun]

I completely agree that there is enormous potential but there is still work to be done. Over the last 10 or 15 years, some very good things have been done to further highlight the value of lobster. We have 30 or 40 different products for frozen lobster alone. Over the last 15 years, innovation in the frozen lobster and lobster processing sectors has taken off in an incredible way.

We now have a whole range of products, including lobster tails, lobster claws, and entire cooked or raw lobsters. There's something for everyone, from the famous chef who wants to create an absolutely fascinating product, to the family who wants a much more affordable lobster meal. We have managed to offer a whole range of different products. There is innovation, but I agree that we need to have even more innovation in Canada.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We're going to move to the Liberals for five minutes.

Ms. Ludwig, you have the floor. Go ahead.

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

Good morning. Thanks to both of you for your presentations. As someone from the Atlantic region, I'm very encouraged by the conversation and by the presentations you've made this morning.

One of the areas that is key, and that I've heard about from so many businesses, is the challenge of the non-harmonization of standards regarding fish processing.

Christian, being from the herring industry, you would know that the herring industry is definitely at a deficit and at dangerous levels across North America. For fish procurement, how have your businesses been affected by the lack of harmonization of standards also set by the CFIA?

[Christian Brun]

I represent fishermen, mostly. It's really the processing industry that was affected by the harmonization of standards. We received very little information on this subject. There was a certain impact, which is just beginning to be felt. Like other groups, we are trying to find the best way of harmonizing the standards and seeing what it is possible to do. This mostly affects the processing industry.

I know that Clearwater does not have a lot of herring, but it is possible that it is part of the industry. People from that company would probably be able to give you a better answer to that question.

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

Thank you.

Christine?

[Christine Penney]

Certainly, as a company that exports to 30 countries around the world, harmonization of requirements is an important consideration. Each market has its own nuances and intricacies and from time to time these issues can become non-tariff trade barriers, so harmonization and provisions within deals like the TPP are an important component for us. They ensure that at a government-to-government level these issues will be resolved.

Our experience is that the Canadian Food Inspection Agency has a very good reputation internationally. They work well with their colleagues around the world, and it's important to us as an industry that we maintain that high level of rigour and the high reputation that the Canadian Food Inspection Agency has.

Our reputation as the Clearwater brand depends in large part on the reputation of safe Canadian seafood, so that's quite important.