Evidence of meeting #67 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 nafta.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Brian Innes  President, Canadian Agri-Food Trade Alliance
Dan Darling  President, Canadian Cattlemen's Association
Hans Kristensen  Director, Board of Directors, Canadian Pork Council
Levi Wood  President, Western Canadian Wheat Growers Association
John Masswohl  Director, Government and International Relations, Canadian Cattlemen's Association
Gary Stordy  Public Relations Manager, Canadian Pork Council

3:55 p.m.

Conservative

Gerry Ritz Conservative Battlefords—Lloydminster, SK

Is he in Nebraska?

May 11th, 2017 / 3:55 p.m.

President, Canadian Cattlemen's Association

Dan Darling

Yes, he is. He is a supporter of the Canadian products.

Yes, absolutely we can do that.

3:55 p.m.

Conservative

Gerry Ritz Conservative Battlefords—Lloydminster, SK

That's good.

3:55 p.m.

Liberal

The Chair Liberal Mark Eyking

Thanks, Mr. Ritz.

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

Mr. Peterson, you have the floor.

3:55 p.m.

Liberal

Kyle Peterson Liberal Newmarket—Aurora, ON

Thanks, Mr. Chair, and thank you, gentlemen. It's good to see you again. Thanks for your information. It's always very valuable to us.

I have a few questions, following up on some of your presentations.

I think, Mr. Innes, you mentioned that meat in particular still faces some barriers on the borders. Can you elaborate on what some of those are and how any new negotiations within NAFTA might be able to address them and improve that situation?

3:55 p.m.

President, Canadian Agri-Food Trade Alliance

Brian Innes

Certainly I'll start, and I would like my meat colleagues to contribute as well.

The trade in agricultural products is in a highly regulated sector, with food and feed safety regulations on both sides of the border essentially looking to accomplish the same thing. When product crosses the border from one country to another, however, you're not just meeting the Canadian regulations but also need to meet the U.S. regulations and the inspection that comes with them.

When it comes to something like meat, which is highly regulated in the same way that many other agricultural commodities are highly regulated, there is an additional inspection required for meat products when they cross the border. Even though none of us, when we travel to the United States, would think that any meat we eat is unsafe, and I'm sure no American coming to Canada would think the meat they might eat would be unsafe, it needs to go through that extra inspection process in order to meet the regulatory requirement.

Maybe I can turn it over to my colleagues to provide more detail.

3:55 p.m.

John Masswohl Director, Government and International Relations, Canadian Cattlemen's Association

In that process, after clearing customs the truck moves to something called an “I house”, an inspection house. The inspection house is usually not right at the border. It's usually not far from the border, but nearby. These are privately owned, but they have USDA inspectors at them.

When the truck arrives at that I house, it will be told what kind of inspection is necessary. Sometimes they might just open it up, look at the manifest, and see that the boxes in the truck are the same as what's on the manifest. Sometimes they might open the boxes and start taking samples to be sent away for tests.

Let's say a company such as Cargill is going to export meat to the United States. If one of their trucks is opened up and the inspectors take samples, Cargill will immediately return that truck to Canada, because either way, whatever the test result is.... If it proves that it's okay, they have probably lost several days of shelf life on the product; if it proceeds and the test ends up turning negative, because there was some issue with it, then they have a recall on their hands.

They can figure that usually about one in ten loads is going to have a test. If they have a customer who is ordering 10 loads, they ship 11, because they know one of them is coming back.

3:55 p.m.

A voice

Do you have anything to add from the pork side?

3:55 p.m.

Director, Board of Directors, Canadian Pork Council

Hans Kristensen

It's a very similar situation. We face the exact same situation. Once we clear the border, we still go to the independent houses. Those are independently owned, with USDA inspectors, and it's exactly the same situation.

Anything we can do in negotiations to further align our regulatory environment so that we're recognizing their inspection process more fully and they are recognizing our inspection process more fully and allowing our product to flow from buyer to customer more freely would be greatly advantageous.

3:55 p.m.

Liberal

Kyle Peterson Liberal Newmarket—Aurora, ON

Okay. Thanks for clarifying that. I had no idea it was that high a ratio. That seems like a very inefficient way of doing it, and there's room for improvement, in my opinion.

I think I have a minute or two left, so I'm going to talk a bit about the dispute settlement provisions. You mentioned in your remarks that you wanted to either leave them as they are in NAFTA or strengthen them.

How would you see them improved, if we were to strengthen them? What works in it, and what could we do better?

Anyone who has an opinion on this and is happy to do so can pipe in.

3:55 p.m.

Director, Government and International Relations, Canadian Cattlemen's Association

John Masswohl

As an example, we went through that very lengthy dispute settlement panel on the country of origin labelling. We started it in 2008 and we finally got the authorization to retaliate in 2015.

We knew that law was coming, and as we started looking at how to address it, working co-operatively with the trade and agriculture departments at the time, we evaluated the options of taking the panel under NAFTA or under the WTO.

Our feeling at the time was that NAFTA probably would have given a more expeditious result. We could have started earlier, because under the NAFTA you can challenge a prospective measure to try to head off something from coming into effect, but under the WTO you have to wait until it's in effect. We balanced that off, but looking at the history of the NAFTA panels and the decisions, there really isn't a strong enforcement mechanism, such as exists with the WTO and the authorization to retaliate.

In the end, even though we felt that the WTO process was going to be the more lengthy, it was the one that would give us the hammer, so to speak, at the end.

4 p.m.

Liberal

Kyle Peterson Liberal Newmarket—Aurora, ON

Thank you. I think I'm out of time.

4 p.m.

Liberal

The Chair Liberal Mark Eyking

Thank you, Mr. Peterson.

We're going to move over to the NDP.

I welcome Mr. Choquette, from Drummond, Quebec.

Welcome sir. You have five minutes.

4 p.m.

NDP

François Choquette NDP Drummond, QC

Thank you very much, Mr. Chair.

Thank you to the witnesses today.

According to an Inside U.S. Trade report, Mexico's Secretary of Economy believes that NAFTA will be renegotiated. There should be a trilateral agreement. The United States is rather leaning toward a bilateral agreement.

What do you think is the advantage of having a bilateral Canada-U.S., Canada-Mexico agreement, rather than an agreement like the one we currently have, the North American Free Trade Agreement, or NAFTA?

4 p.m.

President, Canadian Agri-Food Trade Alliance

Brian Innes

Thank you for the question.

The signatory countries of CAFTA—the agreement between Central America, the Dominican Republic and the United States—support the current trilateral agreement, NAFTA.

What that means is that if we like the agreement as it is now, there's no need to rip it up and create new agreements bilaterally between Canada and the U.S., between the U.S. and Mexico, and between Canada and Mexico.

From the perspective of agrifood exporters, the agreement we have is working particularly well. Yes, we see opportunities to improve the agreement, but when it comes to thinking about new frameworks, we understand that in keeping what we have now there is no need to tear it up and create new agreements.

There are opportunities to make it better. We have articulated some of those today. However, when we look at the world, as agrifood exporters we see major opportunities in other countries, such as through the negotiations that potentially may happen with China and through the trans-Pacific partnership agreement, whereby we have an agreement among 11 countries and an opportunity to get major benefits in countries such as Japan and create new frameworks to enable us to trade in the Asia-Pacific region more broadly.

The concept of ripping up an agreement has been roundly denounced by U.S. agriculture, and we share that stance. I am sure the members of the committee have seen the remarks by U.S. agriculture, but just to give you a sense, here are some quotes. The National Corn Growers Association says it would be disastrous for North American agriculture. The American Soybean Association says it's “a terrible idea”. The U.S. Grains Council says they are “shocked and distressed” to see the concept of NAFTA being torn up.

I would say that from the standpoint of the Canadian agriculture sector and from the perspective of CAFTA members, we would agree with those comments and recognize the value of what we have in taking a North American approach.

4 p.m.

NDP

François Choquette NDP Drummond, QC

Thank you very much.

Are there specific barriers that are preventing further trade in agriculture and agrifood products between Canada and the United States?

4 p.m.

Director, Government and International Relations, Canadian Cattlemen's Association

John Masswohl

I think that one we mentioned, this reinspection at the border, is certainly a very significant one.

We also mentioned the inability to use the U.S. grades on beef that we export to the United States. It's very similar to what Levi mentioned about grains coming into Canada. American grains exporters very clearly have the issue that their grain that comes up here gets the lowest grade.

When we export beef to the United States we can't use a U.S. grade at all. Essentially, it goes as ungraded, which is a problem in the marketplace. We could grade it as Canada AAA or Canada AA. American consumers have no idea what that means, so we don't use that grade. That is something we would like to see.

We have a couple of little issues left over from the BSE era with the United States. Right now we have to prove that all live cattle we export to the United States were born after March 1999. They all are, but we have to prove it.

4:05 p.m.

NDP

François Choquette NDP Drummond, QC

Is it complicated to prove it?

4:05 p.m.

Director, Government and International Relations, Canadian Cattlemen's Association

John Masswohl

It's costly to prove it. It's like proving that you breathed air today: show me the documentation that you did.

We have to brand all of the live cattle that are going for other than immediate slaughter. They have to have the CAN brand or a tattoo in the ear. That's a sort of leftover, a cost that we'd like to see eliminated.

4:05 p.m.

President, Canadian Agri-Food Trade Alliance

Brian Innes

I would add one thing, just to build on the remarks I made earlier, concerning our ability to export further processed products, such as margarine and shortening.

Think back to the creation of NAFTA in 1993; we're many years after that, and many things have changed. The same thing applies in such processed products as margarine and shortening. For example, with the ban on trans fats in the United States, you need imported palm oil to make processed products such as margarine and shortening. At the time NAFTA was created, that wasn't envisioned. As a consequence, we both import palm oil, into Canada and the United States, to make margarine and shortening, but once you put it into a processed product, you have a tariff on that margarine or shortening going back across the border.

It's things such as this, on which the world has moved significantly since NAFTA was brought in. The rules of NAFTA can be updated in very targeted areas to enable modern commerce to take place. That's one example.

4:05 p.m.

Liberal

The Chair Liberal Mark Eyking

Thank you, sir.

We're going to move back over to the Liberals.

We have Madame Lapointe.

4:05 p.m.

Liberal

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

Thank you for joining us.

If I have understood correctly, when beef arrives here from the United States, we cannot use their AAA classification. It seems to me that the Americans use their A, AA and AAA classifications when they export beef to Canada.

Am I mistaken?

4:05 p.m.

Director, Government and International Relations, Canadian Cattlemen's Association

John Masswohl

When they export beef to Canada, they can use their grade.

4:05 p.m.

Liberal

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

From what I understand, we cannot, however, use ours.

4:05 p.m.

Director, Government and International Relations, Canadian Cattlemen's Association

John Masswohl

When we export our beef to the United States, we can use our grading system, but our system doesn't mean anything to American consumers or American retailers, and they're not interested in seeing our grade. Therefore, it essentially goes ungraded.