International Trade Committee on Feb. 8th, 2018

[Tracey Ramsey, NDP, Essex, ON]

Good morning, everyone.

Thank you so much for your presentations today.

Mr. Lomas, I wanted to pick up on something you said. You raised several concerns you have about the Pacific Alliance, and you said something about labour, and about the labour costs at risk in New Brunswick. I wonder if you can expand on that and really touch upon the number of employees you have there in the Atlantic, and what you foresee under a potential Pacific Alliance, if there would be an impact on your workforce there.

[David Lomas]

What I was referring to was we felt there was a situation where we know what the labour costs are in Mexico, what the labour costs are in Peru and in Chile. Each of those markets is different. There are different conditions in each of the markets on a variety of regulatory and labour practices and standards, and so forth. But all of this boils down to: what is the ultimate cost of finished goods that come from each of these locations and from our own location, and how competitive are we going to be against them? There is clearly a difference in the labour costs that we pay here in Canada so people can have a reasonable quality of life here versus what a producer is paying in Equador or Mexico, and so forth.

We have had to adjust over time and we have had to look at increasing automation. We've taken a lot of steps to make sure we're much more efficient and a less costly producer, to ensure that we remain competitive, because we compete against each of these member states in a variety of markets that we currently service. I'm really talking about the fact that we have to look very carefully at that. In these agreements there are going to be not just actual wages, but also additional costs to maintaining a labour force that we pay for here in Canada that others may not have to pay for.

[Tracey Ramsey, NDP, Essex, ON]

Thank you. I think it's that call for a level playing field, and you mention that in your presentation.

[David Lomas]

Yes.

[Tracey Ramsey, NDP, Essex, ON]

We hear that from many presenters here at the trade committee.

My next question is to Mr. Innes.

You touched upon the misapplication of SPS and some of the non-tariff barriers that exist for you in canola. I wonder if you can expand on where you see potentials to address those issues in the Pacific Alliance specifically.

[Brian Innes]

One of the things I talked about was around plant breeding innovation. Canada has been very progressive in seeking provisions in trade agreements that help ensure that, when we introduce new plant breeding innovation, this doesn't create trade barriers with our partners. For example, in the European Union, in the Comprehensive Economic and Trade Agreement we have with them, there are provisions there that create a dialogue and a commitment that there will be an open dialogue among regulators on products of biotechnology, for example; and that we work together to help ensure regulatory barriers don't prevent the adoption of innovation and prevent trade from flowing between our two countries, even though our regulators may deem their product to be safe and to be studied very well.

In the whole area of plant breeding innovation, that cuts across crops, whether it's canola or whether it's vegetables. There's an incredible opportunity to help continue to improve the ability of plants to withstand diseases and drought and other pressures that face plants. When we think about a trade agreement, it's an opportunity to help regulators in different countries talk to each other more often and think about how to adopt innovation, to do what we do best, and grow what we grow best in each country, but be able to trade those products back and forth.

[Tracey Ramsey, NDP, Essex, ON]

In TPP there was the creation of these committees that would meet frequently, but really there was a call for even more strengthening of the ability of these committees to enact things, to have issues come forward, to resolve them. What could you see in a potential committee in the Pacific Alliance that would really have teeth to be able to address these issues?

[Brian Innes]

What we would see is a real firm opportunity to have firm language, for example, that the committee shall meet when concerns come up; that there shall be notice provided to exporters and importers in a timely manner if concerns arise.

It's being able to put provisions in a trade agreement so that we're not stuck in a situation where we have ambiguity, that there's no clear incentive or requirement for regulators to discuss when these issues come up. We see trade agreements as a way to ensure that dialogue happens in a timely way and we can work together to solve any concerns that arise.

[Tracey Ramsey, NDP, Essex, ON]

Okay, excellent.

[The Chair, Liberal, Mark Eyking]

We're going to move over to the Liberals now, and Madam Ludwig you have the floor.

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

Thank you.

I'm going to direct most of my questions to Mr. Lomas. If I have any time left, I'll go to the other people here

As you probably well know, I live in Saint Andrews, not too far from Blacks Harbour. I have had the opportunity several times to tour the facilities in Blacks Harbour, and thank you. Thank you for all the employment opportunities that are certainly offered locally. I speak often with Tony.

I want to go back to my colleague's questions regarding regulatory requirements.

We are talking this morning about the Pacific Alliance, so I have two specific areas I'd like to ask you about. One is the area on the domestic sales. What percentage of your sales are in Canada?

[David Lomas]

Currently, the Canadian canned seafood category is worth about $415 million. As I said, we're a little under half of all canned seafood sales in Canada. With respect to Blacks Harbour, in the sardine category we currently have about a 55% share of that market. We used to have a higher share but, for reasons I cited earlier, we've seen increasing costs in our operation that we've had to pass along, and that has had an effect on our market share.

Our Canadian sales right now are very strong. As I was saying before, we've been significantly affected by a constrained supply situation, which we've been looking at various avenues to try and address, even importing raw material requirements.

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

Looking at your 55% in terms of the canned sales in Canada, what is the potential impact if canned sardines from the Pacific Alliance were more integrated into the Canadian market with an agreement, without any provisions on labour standards?

[David Lomas]

I think it's a long-term competitive issue there, because they already have access to this market. Canada has not applied substantial tariffs at all to importation of canned sardine products for some time, so we've contended with that for a number of years. It's a little more complex than just tariffs, because there are over 20—I think 22—different species of small marine fish that can be canned and sold as sardine product. As I mentioned earlier, we focus on herring as a raw material, and that has a very distinct taste profile and form versus some of the other products.

There's been a preference built up in a number of the markets that we've serviced for a number of years. Certainly Canadians have a preference for the kind of sardine product that we produce. As I said, Peru has been selling into this market, once they gained the FTA. So far, I don't believe there have been a great deal of sales of Mexican product or Colombian product or, for that matter, Chilean product. I think they've all tried.

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

For the supply side, I know that's certainly been a challenge, so how important is it that we harmonize regulatory standards within signatory countries? If you're importing herring from Sweden or somewhere like that, how important is it that we have similar standards in inspection?

[David Lomas]

I think it's critically important because it's all about having a level playing field. There's a cost to us to produce under those regulatory regimes. For us, these regimes are what they are, and they do a good job of ensuring a high-quality, safe product. We want to see that those standards are applied to other Pacific Alliance members.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

Thank you, Madam Ludwig. I knew you'd be asking questions about your riding. You're doing a good job.

Madam Lapointe, you have the floor.

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

Thank you very much, Mr. Chair.

Welcome, everyone.

Mr. Innes, earlier, you said that, if every country did what was best, we would benefit. You talked about canola. How could the countries of the Pacific Alliance help us with the imports?

[Brian Innes]

Thank you very much for the question.

One of the things that we import from Pacific Alliance countries is canola, which is strange when you think that we are two-thirds of the global trade in canola. Nevertheless, we import seed grown in the winter in Chile to grow here in Canada, because that helps us speed up the process. A canola plant takes so long to grow, and we only have one growing season here in Canada, but by being able to work in the off-season in Chile, where right now it's very warm, we can grow out our seeds there and import them back into Canada and speed up the process of growing seeds.

There are a number of other things that Pacific Alliance countries do. The climate, for example, is a huge factor in vegetables and fruit. It's pretty hard to grow things outside in the winter here in Canada, but we like our fresh fruit and vegetables. Peru has excelled in asparagus production, for example, because of their climate. There are a number of opportunities where each geography has a chance to excel and do what they do best.

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

I have a question for you, Mr. Dade.

We only touched on labour mobility. We have agreements with Europe and there is the North American Free Trade Agreement (NAFTA), but how could we improve the mobility? What's your opinion on that?

[Carlo Dade]

With the Pacific Alliance, the integration would allow us to move people within these countries more fluidly. It would also allow Canadian companies that have staff in these countries to move that staff more fluidly without the necessity for, say, work visas or labour decisions to move staff back and forth. The fluidity of labour would add to what we have in these other agreements.

Also, I should note that the Pacific Alliance—and the work on things like labour mobility and phytosanitary—is an ongoing process. This is not a simple agreement that stands static in time. The alliance is constantly working to update measures. The committees that are part of the alliance, working with the Inter-American Development Bank, are constantly updating regulations, innovating, and putting new measures in place. With the mobility of people, they're looking at a common entry visa to facilitate trade with Asia. That's something that's going to give Asian countries wishing to do business on this side of the Pacific a competitive advantage over NAFTA.

Taking part would give us access to this agenda, which is ongoing and constantly being updated, for example, with the phytosanitary measures. The track record that the alliance has, I would argue, is more important than mandated provisions that the measures be adapted. Look at what they've done and how consistently they've moved measures from these committees into action. I would argue that this track record speaks for itself.

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

Mr. Innes, you referred to the Pacific Alliance. I wonder whether I understood correctly. Could this alliance become a benefit for subsequent negotiations with China? Could you tell me more about it?

Mr. Dade, you can also intervene if you have other comments.

You can use the rest of my time to answer.

[Brian Innes]

Thank you for the question.

One thing we see is that trade agreements negotiated today influence the trade agreements negotiated tomorrow and 10 years from now. The Canada-Europe agreement, for example, is one of the most progressive agreements in the world, and when trade negotiators and governments look to negotiate their next agreement, they look at what has already been established. In negotiating the original trans-Pacific partnership, we've seen many of those provisions come into negotiations with NAFTA.

When we think about an agreement with four countries across the Pacific Alliance, and indeed beyond that, with other associate members like Australia and New Zealand, we see an opportunity to build momentum for standards and provisions that help enable more stable and open trade, because it takes time to reach consensus on how we can do that. Every agreement builds on previous agreements, and the Pacific Alliance, with a group of aligned countries and many agricultural exports amongst those countries, is an opportunity to move that forward.

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

Have you finished?

[The Chair, Liberal, Mark Eyking]

Give a short answer. Go ahead.