International Trade Committee on Nov. 24th, 2016

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

Thank you for that, Mr. Fine.

Mr. Littler, I just want to follow up on some of your points. You mentioned, as I alluded to with Mr. Fine, that input prices and cost components would go down for Canadian manufacturers and retailers. Do you see the retailers passing those savings on to the consumer, or are they somehow going to be subsumed by a higher price?

[Karl Littler]

I do. There are two parts to that. We have to remember that the costs of goods themselves are but one input cost for a retailer; there's everything from labour through utilities to occupancy. Somebody at one point put together 73 drivers.

It would have an impact on only that part of it. Retail is a strongly competitive marketplace, and we believe that is going to drive most of those savings through.

To the extent that input costs are reduced, it isn't invariable that the savings are going to be passed on penny for penny, because there may be other decisions to make. There may be investment decisions. There may be wage rate changes. There may be hiring decisions made. But certainly there is a huge benefit both to consumers in terms of pricing and to the economy overall.

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

Okay. Thank you for that.

I have time for one more question, and I'm going to ask Ms. Pohlmann.

[The Chair, Liberal, Mark Eyking]

It will have to be a short question and a short answer.

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

You mentioned that 18% of your members don't take advantage or don't have enough information about trade deals generally. What can we do to help you? I know it's not just limited to your members. We hear this often. What should we as a government be doing to make sure that when we open these doors with trade deals, our companies and SMEs walk through these doors?

[Corinne Pohlmann]

As I said earlier, it's really about finding ways to make it clear to them that there are resources available that can help them deal with the complexities of trade, because trade is complex; there is no doubt about it. The Trade Commissioner Service is a great one, and there are other organizations out there that do that kind of work. It's really about making it clear to them that it's not as hard as they think and that there are resources that can help. That type of message would probably go a long way. The problem is that those messages are often much more complex, and that's when people get turned away.

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

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you. We're right on time. That's the first round. We're going to start the second round. The Liberals have the first slot here.

Madame Lapointe, you have the floor for five minutes. Go ahead.

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

Thank you very much, Mr. Chair.

I would like to welcome the witnesses appearing before us today. It will be a pleasure to ask them questions.

I will start with dairy products. It is interesting to note that there are two different ways of viewing the quotas of cheese makers.

Certainly, people in Quebec don't eat the same products as in the rest of Canada, and Europeans don't necessarily eat the same products as we do. For example, they eat cheeses made from raw milk, something that isn't produced in Canada.

My question is for you, Mr. Leduc.

With the way you are proposing we receive the quotas, how could Quebec have a positive trade balance with respect to these imported products?

[Yves Leduc]

First of all, it's important to acknowledge that these cheeses will be imported on the Canadian market. The agreement opens the door to an additional 17,700 tonnes of imported cheese. Among other reasons, there are market conditions that will result in a price advantage. European products made from milk benefit from substantial subsidies on the European market. However, in Europe, the price paid to the farm is not comparable to what farms are paid in Canada. So there is already a comparative advantage in the ingredients used in the manufacture of European products. We think this price advantage will ensure that these cheeses will be imported entirely into the Canadian market.

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

The advantage for manufacturers, as you suggest—

[Yves Leduc]

Considering this fact and considering that we will face the importation of these cheeses, how can we ensure that the sector will be able to benefit from it or, at the very least, that it will be less affected negatively? A new approach was adopted where small and medium cheese makers made the decision to group together. They are new players in the market, and they could have access to at least 30% of the new quota. They could increase the products they offer by adding imported cheeses, which would give them access to a distribution network for their own products. It could be a win-win solution for Canada's smaller or medium cheese makers.

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

Thank you.

Welcome, Mr. Littler. I have a question for you, also about cheese.

You suggested sending all the quotas directly to retailers. Are you suggesting sending them to Canadian businesses? Earlier, my colleague was talking mainly about American businesses. I must say that it was music to my ears since I used to be a grocer in Quebec.

Did you consider that in your proposals?

[Karl Littler]

I presume you're referring to the reference to Walmart and Costco earlier. Our members are transnational companies that invest here and hire here, and also domestic firms that invest here and hire here.

They are all robust entities, and there are obviously some specialized entities as well, but we wouldn't want to be in a world in which we were discriminating—I'm not even sure that it would be permissible under trade law—based on whether an entity is a transnational or a domestically headquartered company.

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

Based on your proposal, these cheeses should be sold in Canadian networks.

[Karl Littler]

Our supposition is indeed that these cheeses are for importation and ultimately for consumption in Canada, whether they be the small portion that goes the industrial route or cheeses ultimately sold to consumers in our stores.

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

Thank you.

Mr. Fine, my next question is for you.

As my colleague said a little earlier, your business is very interesting. You said that you employ between 80 and 120 people. Have you explored how CETA could increase your sales and create new jobs in your company?

[Josh Fine]

We think that growing our business will grow our employment and our impact overall in the community. Our vision as a company is to make a big impact in the aboriginal communities.

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

Earlier, we mentioned that e-commerce is used mainly in the United States. What is the current percentage of e-commerce in the United States and Europe?

[Josh Fine]

About 95% of our exports would be to the United States, and only about 5% to the global markets.

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

Thank you very much.

[The Chair, Liberal, Mark Eyking]

Thank you, Madame Lapointe.

We're going to move over to the Conservatives now.

Mr. Ritz, you have the floor for five minutes.

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

Thank you, Mr. Chair.

Thank you, ladies and gentlemen, for your presentations today.

A lot of things we're hearing again and again, but there are always some new twists to them.

Corinne, your surveys are always very well done, and you get a good response. This had 6,600-plus businesses responding, so that's as close to scientific as you're going to get.

I'd like to see a couple of things added to that particular survey. How many of those businesses take part in or are aware of global supply chains? That's very important. That's how you get your toe in the water and start moving forward and become part of a global supply chain. Also, how many of them are shipping raw goods, and how many of them are shipping remanufactured or finished goods? Adding those questions would be helpful too, the next time you do a survey to that extent, unless you have other data that would address that now.

[Corinne Pohlmann]

We do have some data about companies that sell to other companies that then export, so I can get you that. I don't have it in front of me. That would be on the first one.

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

Okay, that's great.

I wanted to wade in on the discussion on cheese allocation between the Dairy Farmers of Canada and the Retail Council of Canada.

Yves, one of the things we recognized early on was that there had to be a mechanism so new entrants would get a definite percentage of the cheese coming in to fill the supply lines you're talking about, and also then look for the larger distributor. It's 30% and you just made that comment, Yves, that if we had at least 30%, we could.... You have it. It's in the document. I don't see any reason that it would ever be changed, so it's a matter of making those agreements and getting the distribution.

You're absolutely right that producing cheese and having access to that cheese will help you form your own distribution network. I know that at the last Paris show, a number of cheese manufacturers from Quebec and Atlantic Canada were winning awards and signing contracts. We have unlimited access back to Europe, and those kinds of awards in your hip pocket are a great way to start that distribution system over there with 500 million potential consumers.

I just wanted to point that out.

On the mukluks, that's a fantastic story, Josh. I've seen some of your product, and it's top-shelf. I think it's a tremendous opportunity to have the intergenerational transfer of culture and stories. You talked about the Storyboots; the beading on them is phenomenal. They're certainly worth $2,000 when you look at the time frame it takes to produce them.

There's a tremendous demand for that type of cultural, historical type of thing, in Germany especially. It's is a big part of their tourism when they come to Canada. Have you started to look at the potential of what that market would do for you?