International Trade Committee on Oct. 20th, 2016

[Sandra Marsden]

It's because we face quota restrictions going into the United States. Those quotas will be increased, and the rules within the quotas will be more flexible to allow more product diversity, but they won't eliminate the quotas. That would take either a U.S. sugar policy change under their farm bill or a multilateral agreement where there would be much wider changes.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Under the TPP, where do you see the big net benefit to Canadian companies and consumers, etc.? How much would we export to the other TPP countries in terms of sugar products?

[Sandra Marsden]

There are direct benefits through the various quotas. Most of the countries are not fully liberalizing. Many food products are, but sugar itself won't be liberalized as a commodity, so we have to depend on food products, and many food products will eliminate duties.

Canada will have to compete, of course, with other TPP partners, but we're well positioned given investment, particularly in food processing in Ontario and Quebec. Also, we have a lot of very good small and medium-sized businesses in western Canada that would have specialty products that may meet the needs of consumers looking for products.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

How much would sugar make up of those input costs? Would sugar be a big part of their cost?

[Sandra Marsden]

Sugar would be a relatively low-cost input, which helps make those products more competitive in those markets. That's the advantage our sector in particular brings and the high quality as well.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you.

Ms. Salmon, you brought up that your greatest increase in export was 600% to China. Was that correct?

[Ruth Salmon]

That's right.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

What percentage of all exports within aquaculture would go to China?

[Ruth Salmon]

It's actually quite small because 65% of our products are exported, and of that, 96% is to the United States. The remainder is Asia, and that's broken down. China would be a big piece of that, but we're still talking about a fairly small piece of the pie at this stage, but again, if growth happens, we adjust. There's such a huge potential in China and the other countries that while we're not sending a lot of product now because of availability of product, that could just go through the roof. It's small now compared to what we send to the United States, but certainly that potential is there.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Have you looked at the risk of TPP countries that then would themselves be exporting and we'd be net importers to Canada or the United States, and they would take a lot of your market share?

[Ruth Salmon]

It's a good question, but when you look at the overall global demand for seafood at a 6.6% increase, it just isn't a problem in the short term for sure.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

You've not looked further out.

[Ruth Salmon]

No, we haven't. Again, we're focused on trying to be able to grow responsibly and move forward, but we don't estimate that being a problem for a long time.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Mr. McLinton, for the retailer, I know many of the things we purchase here are brand-type products. As I understand it, with branded types of products, one of the big concerns with the TPP has been that this is made for large, global corporate players. If they are selling a pair of Nike shoes that are made in Vietnam, one of the TPP countries, when they export those shoes, be it to the United States, Canada, Switzerland, or other countries, they put a price on that shoe based on what the market will bear. What we will find here in Canada is that many of the prices are a lot higher because our market will bear those prices. You'll find a pair of Nike shoes at $130, the same currency—

[The Vice-Chair, Conservative, Randy Hoback]

I'll give you a couple of seconds to let your witness give you a quick answer.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

—but then you'll find it much cheaper, be it in the United States or in some other countries. How would the TPP bring down those prices?

[The Vice-Chair, Conservative, Randy Hoback]

I'm sorry, but we're going to have to stop it there, Peter. You're well over your time.

[Jason McLinton]

Can I comment quickly on that?

[The Vice-Chair, Conservative, Randy Hoback]

I'll give you 10 seconds.

[Jason McLinton]

That's a phenomenon known as country pricing, and it's a very real problem. That's why we support tariff elimination generally. It's a very competitive market. With retailers in Canada, it's the opposite of a monopoly. They are very competitive with one another, so the more we can eliminate tariffs and have these types of agreements, the more competitive, generally, we will be, and we will have better prices for consumers.

[The Vice-Chair, Conservative, Randy Hoback]

Thank you, Mr. Fonseca.

Everybody has had a chance to have a round of questions, which was good to see.

I want to thank the witnesses. I'm going to dismiss you now.

We are going in camera to deal with a bit of committee business.

[Proceedings continue in camera]