Evidence of meeting #5 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was chicken.
A recording is available from Parliament.
9:20 a.m.
Liberal
The Chair Liberal Mark Eyking
Your time is up, Mr. Dhaliwal.
That ends our first round. We have about 10 minutes or so, and we'll start off the second round.
We have Madam Ludwig.
9:20 a.m.
Liberal
Karen Ludwig Liberal New Brunswick Southwest, NB
Great, and I'm splitting my time with my colleague.
9:20 a.m.
Liberal
Karen Ludwig Liberal New Brunswick Southwest, NB
Thank you both for your presentations.
My questions are somewhat around the area of modification of products. Entering into the new markets are there any product modifications that you would have to do, either in the winery area or in agriculture, to adapt to the new markets?
9:25 a.m.
President and Chief Executive Officer, Canadian Vintners Association
In Asia, in the Asia-Pacific countries, they do have a keen interest in sweeter wines. There also is a growing interest in sparkling wines. If we can penetrate those markets as those tariffs continue to come down and we produce more of those products, we believe we can capture a pretty significant market share there.
We're a superpower in icewine production around the world. We're the only country in the world that can produce it year in and year out. Within the agreement there is a definition of icewine. As many of you know, icewine is counterfeited around the world, particularly in Asia-Pacific countries. Having that definition is extremely important and we believe there's a huge growth opportunity for those products.
9:25 a.m.
Executive Director, Canadian Agri-Food Trade Alliance
I think, in principle, the industry is ready to adapt their products. If they see the commercial opportunities, they will do so. It's up to them to decide to make those changes and adapt their product. The TPP is only an agreement. The implementation part of it will be important, and then it's up to the companies to take advantage or not of the opportunities.
9:25 a.m.
Liberal
Karen Ludwig Liberal New Brunswick Southwest, NB
This question is for both of you again. How prepared are Canadian companies to adapt for the new markets?
9:25 a.m.
Executive Director, Canadian Agri-Food Trade Alliance
Being prepared is a means to an end. I think the end is being able to continue to export their product on a competitive level, a level playing field. Is the industry ready? I think you'd have to ask the different sectors, but given the fact that we are already currently the fifth exporter of agricultural and agrifood products in the world, we have a good reputation for the quality and food safety systems that are in place there, so I think we are well positioned.
9:25 a.m.
President and Chief Executive Officer, Canadian Vintners Association
In terms of export readiness, there are probably only 50 wineries in Canada that currently export. They are your larger and medium-sized ones. The small ones have to grow a foothold in Canada first. This is not unique to Canada. If you look at a country like Spain, which owns about 95% market share in their own market, they owned their own market before they started exporting.
Our members will continue to export. Those who are exporters have a foothold in the TPP countries already, and they look forward to growing that market share there. Some of the things that the federal government could do is provide us with improved market information on wine sales opportunities and demographics in each of these TPP countries, for example, so that when a small winery or a medium-sized winery is prepared to go, they go there running. They're not going there making mistakes.
9:25 a.m.
Liberal
Karen Ludwig Liberal New Brunswick Southwest, NB
I'll ask a question specifically on that, then. I just have two and then I'm done.
Have you approached Agriculture Canada to prepare a report on your specific question?
9:25 a.m.
President and Chief Executive Officer, Canadian Vintners Association
We haven't asked Agriculture Canada. We have talked to Global Affairs Canada, international trade, and the trade commissioner service that this is an area where it would be important to develop that type of information. The United States does this through their GAIN reports, which are highly helpful, and we do lean on those. They provide you information on the tax structure, the tariffs, the demographics, the trend, male-female consumption habits, etc., and that's very important if you want to enter into that marketplace.
Those are the types of things we would be looking for, not for every country but for specific countries.
9:25 a.m.
Liberal
Karen Ludwig Liberal New Brunswick Southwest, NB
My last question is this. What difference, what impact do you think there will be with the new imports coming in within, let's say, TPP, in terms of price, in comparison to your product or products?
9:25 a.m.
President and Chief Executive Officer, Canadian Vintners Association
We compete in every price range, so if you look at the lower end we do produce blended wine products, which are about half of our economic impact. Those are Canadian and imported wines blended together to meet the 85% of the Canadian population that drinks wine in that $8 to $12 range. Beyond that, we produce our VQA and 100% Canadian premium products that range from, on average, $15 in Ontario or $20 in B.C., all the way up to $30, $40, $50.
We can compete toe to toe with these products. Our challenge is being one of the most attractive wine markets in the world. The governments of the United States and all of the CETA countries spend millions and millions of dollars in Canada to promote their products, and that becomes a greater challenge.
9:30 a.m.
Liberal
Peter Fonseca Liberal Mississauga East—Cooksville, ON
I have a question around currency devaluation. I know it's a concern for some of the countries that are within the TPP agreement, namely Japan.
Ms. Citeau, I know you mentioned that Japan was one of the markets that you are focused in on and would like to see some real opportunity there.
To Mr. Paszkowski, how would currency devaluation affect you?
In the same light, in regard to currency fluctuations, we've seen a great deal of currency fluctuation with the Canadian dollar over the last number of years, especially over this year. How has that affected you within the TPP market?
9:30 a.m.
Liberal
9:30 a.m.
Liberal
9:30 a.m.
President and Chief Executive Officer, Canadian Vintners Association
Clearly, the margins are tight in any marketplace. In Japan, for example, when you have a 15% ad valorem tariff and then you have impacts on currency, if you can't meet the margins it's not an attractive market to enter into.
9:30 a.m.
Liberal
The Chair Liberal Mark Eyking
Before we move to the Conservatives, I'd like to welcome two other members of Parliament to the table. We have Mr. Stetski from Kootenay-Columbia, and Mr. Lemieux from Chicoutimi—Le Fjord. Welcome.
For the last part of this round we have the Conservatives and Mr. Ritz.
February 25th, 2016 / 9:30 a.m.
Conservative
Gerry Ritz Conservative Battlefords—Lloydminster, SK
Thank you, Mr. Chair.
Dan and Claire, thank you for your presentations.
Claire, you made the point that this should be ratified quickly so that your companies can gear up and be ready for the market.
Dan, would you echo those sentiments?
9:30 a.m.
President and Chief Executive Officer, Canadian Vintners Association
I would completely agree.
9:30 a.m.
Conservative
Gerry Ritz Conservative Battlefords—Lloydminster, SK
You also alluded to the fact that you've done some cost-benefit analysis with your member groups, and we'll have access to that. That's good. I know there has been quite a bit of discussion—I've seen numbers out there and I don't believe them, personally—that there are going to be 58,000 jobs lost if we do this.
Food processing is the largest manufacturing sector in the country. It's not Ottawa. It's not anything else. It's food. Do you have any idea of the jobs that could be created once these markets are in place and we start to gear up to address the market share that we can gain in countries like Japan, which is premium, as well as some of the other countries that are talking about joining the TPP? Do you have any idea of the potential percentage increase in food processing jobs?
9:30 a.m.
Executive Director, Canadian Agri-Food Trade Alliance
Not specifically right now. It's something that we are looking into and will be happy to share with the committee once we have it.
It's important to know that while we don't have the specific costs or benefits in terms of what it will create for all sectors, the costs of not being in the TPP are very important to consider. Look at the Canada-Korea situation, but also consider the fact that if we are not in the TPP the rules of origin are such that our companies would be excluded from supply chains, because our products would not qualify as TPP originating.
9:30 a.m.
Conservative
Gerry Ritz Conservative Battlefords—Lloydminster, SK
That's a good point. I've always thought there would be a tougher sell with the jobs that would not be created and the jobs lost if we're not part of this global change. We would see an erosion, especially in the South Korean market should they join, because then they would have access to it and they wouldn't need us at all.
I'm very concerned about that. If you have done any work on that, it would be great. We did do some at Agriculture and Agri-Food Canada using that pork market in Korea as an example.
You also both talked about the rules behind the tariff walls. It's not difficult to bring tariff walls down when the countries then just slip back into non-tariff trade barriers. We see that with the agreements now. We've been very cautious and careful that we have the phytosanitary agreements, agreements on GM products, and a lot of other things that could be thrown up as a roadblock.
You both have been consulted all along. Thank you for that and the direction you've given.
Was there anything that you think should still be added when it comes to non-tariff trade barriers?