International Trade Committee on Feb. 22nd, 2021

[Mark Agnew, Vice-President, Policy and International, Canadian Chamber of Commerce]

Thank you, Madam Chair and honourable members, for the invitation to speak as part of the committee's Bill C-18 study. It's a pleasure to be back. Certainly quite a bit has changed since I last appeared, in the autumn. While on the one hand we do have an agreement signed, certainly it's not yet been implemented. Hopefully, we can talk a bit about that this afternoon.

It won’t surprise members of the committee to hear me say that the Canadian Chamber strongly supports the passage of Bill C-18 in an expeditious manner. The U.K. is a significant trading partner for Canada for all the reasons that we all know, including being both our third-largest goods export market and our second-largest destination for FDI abroad. Despite those rankings, it still remains a small overall proportion of our trade flows, behind the United States. I think this actually means that there's room and potential for the relationship to grow.

Since December 2020, Canadian companies have managed to avoid going off the cliff and having tariffs reimposed, either for exports going to the U.K. or companies that are sourcing products from the U.K. into Canada. However, this doesn't mean that the current arrangements are perfect. We have an MOU implementing remissions orders to apply parts of a transitional agreement that's based on a provisionally applied CETA. As you can imagine, that’s quite a mouthful for a lot of companies to be able to understand.

Therefore, while the execution of remissions orders has been a welcome relief for our members, we should not coast. Bill C-18 provides an ability to simplify the architecture that governs the trade between Canada and the U.K. as well as limit any operational questions that companies may come across during this current period.

I will highlight some of the benefits that we see from the TCA, which I did have a chance to speak to in more detail at my last committee appearance. Number one are the tariff eliminations on such products as lobster, plastics, vehicles and beef.

The second main benefit we see is in and around regulatory co-operation. As I said at my last appearance, CETA provides a critical framework for regulatory dialogues to occur on agriculture and industrial product non-tariff barriers that are keeping our products out of the market in terms of being able to use the CETA preferential tariff rates that were granted in the negotiations.

The third area of benefit we would point to in the TCA is in and around services. CETA’s temporary entry chapter had provisions on intra-company transferees. That enabled Canadian companies to bring in specialized talent from the U.K. to service their Canadian operations. The contractual service supplier provisions mean that specialized skills can be brought in to fill niche supply chain gaps that companies aren't able to fill in-house. The CETA provisions on these entry categories reduce the business burden for bringing in these specialized talents. Without them in a U.K. context it will have a negative impact on Canadian businesses. This is not an area that currently is part of the MOU, as was discussed in the first half of the committee meeting.

As the government’s economic assessment notes, the TCA will preserve an estimated $2 billion in bilateral trade. At a time of significant economic uncertainty, we need to leave no stone unturned for Canadian businesses to find ways to grow our economy. Trade agreements are a way for governments to support growth at a minimal cost to the public purse.

As I noted when last appearing before the committee, if CETA matters, then transitioning it to a bilateral agreement with our largest trading partner in Europe also matters. As we approach March 31, we hope the TCA can be implemented rather than the two governments needing to roll over the current MOU.

Bill C-18 is fundamentally about preserving market access that we already have. Now is not the time to rock the boat on that. From a forward-looking perspective, drawing a line under Bill C-18 will enable us to devote our efforts to focusing on the issues that will allow us to actually expand and improve our market access. This includes such issues as digital trade, regulatory co-operation, trade facilitation, labour mobility and others.

Thank you for your attention. I look forward to taking your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Agnew.

We will go to Mr. Chandler for his opening comments.

[Brad Chandler, Chief Executive Officer and President, Hensall District Co-Operative Inc.]

Thank you, Madam Chair and the members of the committee, for this invitation to appear before the committee.

I represent Hensall Co-Operative. We are one of the largest farmers co-operatives in Canada with over 6,000 farmer members and owners, and we have over 30 locations across Ontario and Manitoba.

Our business is very diversified; it's made up of animal nutrition, crop services, energy, freight-forwarding logistics, grain marketing and marketing of ingredients.

The largest section of our business is made up of our food products, which is our dry bean and IP, non-GMO soybean business, which is an export-type business.

Our growth has been tremendous. Some history is $300 million revenue with 250 employees in 2010, and today, 2020, we stand with over $800 million of revenue and 650 employees, and the biggest growth sector has been in export.

We have entered into commodity and value-added contracts with more 2,500 growers. We have contracts of between 300,000-350,000 acres annually for higher-value human grade soybeans, edible beans and identity preserved soybeans, all going to the U.K. and Asia.

Currently we ship 80 food-grade containers a day of food products out of our facilities to over 40 countries globally. We have invested more than $100 million in hard assets across rural communities in Ontario, and these are primary investments to improve our facilities and our services and to expand our geographical footprint.

Quality, of course, is critical to our success. We ensure that all our food production facilities have quality accreditations, including SQF. Also, with all this shipment globally and to Asia and the U.K., it allows us collaboration with our freight-forwarding business, Hensall Global Logistics, which is one of the largest freight-forwarding businesses in Canada and in the top 10 in North America.

To give you some background, edible beans, human-grade soybeans, represent a critical sector between IP soybeans and dry beans. They represent $300 million-$350 million of our $800 million gross revenue. It's been a key driver of our growth. It's provided a launch to our successful global logistics business. Looking back, we have edible beans and identity-preserved soybeans. The edible beans are our biggest product going into the U.K.; identity-preserved soybeans would be going into Asia.

When we're marketing these with our Canadians growers, we're a totally independent, all-Canadian co-operative, and we try to represent value added to these contracts so growers will grow these dry beans and IP soybeans, which brings another $22 million-$25 million into the farmers' hands and in their sectors. This is all based on export-type business.

As for our customers globally, we have developed long-standing trade with over 44 different countries. These relationships act as a springboard to allow us to offer higher value-added contracts to our Canadian growers.

Our customer list contains many names that you may recognize: Heinz beans, Princes beans and Kikkoman, which is soy sauce. Heinz and Princes are both U.K.-based, and they make up the biggest part of our dry bean business. When I say dry beans, I'm speaking of white beans, which are baked beans, kidney beans, different types of black beans and anything in that type of food sector.

We are also one of the sole major suppliers to Princes Foods in the U.K. We also have customers like Campbell's soup, and many may know that, if you eat Tim Hortons or Wendy's chili, those are our customers also, so you can see how we are diversified across the food sector.

The opportunity today and in the future is the growth of plant-based protein and meat alternatives, today projected to increase from a $4.6-billion industry to an $85-billion industry in 2030. This is an increase of 18-20 times, so you can see what the importance of CETA and Bill C-18 means to our business and Canadian growers.

Our Canadian climate is growing regions with access to arable land and water, a unique opportunity for favourable conditions for growing wide ranges of crops such as IP soybeans, non-GMO, pulses and dry beans.

Canadian agriproducts have a solid reputation all across the world, especially in Asia and Europe, giving us a unique opportunity to create advantages and opportunities for our Canadian growers.

Imperative for our success is that we must have free trade. Quotas will limit our growth opportunities. Duties and taxes can destroy markets since there is price sensitivity to food products and the retailers.

We must deliver our products to our customers on time, making reliable transportation infrastructure vitally important, and that includes ports, rails and roads.

Our primary ports are Montreal and Vancouver for outboard exports to the U.K. and Asia. Our bean-processing facilities are in southwestern Ontario and Manitoba, both utilizing rail and truck, so that's important.

Labour disruptions and blockades and heavy activity at ports and on our rail lines can be catastrophic to how we are viewed by our customers around the globe. Every time we miss a shipment or our product isn't the highest quality, it puts our business at risk.

Local access to employees and affordable housing [Technical difficulty—Editor]. We'd like to see fair access to improved broadband services and support for more innovative projects geared towards agricultural and food processing. The more value we add, [Technical difficulty—Editor] are for others to enter.

We deliver anywhere from 50,000 to 65,000 metric tons of beans annually to the U.K. market, which represents about $150 million to $200 million. This represents probably 50,000 to 80,000 acres of contracts and value-added crops for our Ontario and Manitoba growers.

Today in the U.K. we ship into Liverpool, Felixstowe and Southampton. We are currently seeing issues related to Brexit impacting congestion at some ports, which is an unintended consequence but a consequence all the same. We currently enjoy no tariffs on our products entering into the U.K.

Concerning Bill C-18, in the near term we currently have large trade with the U.K. Failure to put a CETA replacement in place will put substantial revenues at risk for our business, exporters in Ontario and the farmers we all represent. We are owned by 6,000 farm members. For the longer term, our history has proven that we can be leaders capturing share in growing markets of agricultural products. Canadian growers have a solid reputation around the world for quality and stewardship. We have this arable land, access to water, and weather to strengthen our position in the market for agricultural products, in particular dry beans, IPs and pulses.

Other countries have the same access to land and water, so we need to have a solid trade policy that promotes free trade and limits duties and excise taxes. We also need a very reliable transportation infrastructure. Having these will allow us the opportunity to take advantage of our current leadership in the sector, coupled with the reputation of growers.

In short, we need tariff quota-free trade with the U.K. to capture our share of the growth forecast for the pulse sector over the next 10 to 15 years. The benefits to Canadian farmers will be stronger rural communities and a stronger contribution to Canada's economic growth.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Chandler. I assume you've handed that in to the clerk in both official languages.

[Brad Chandler]

I have not, as of yet.

[The Chair, Liberal, Judy Sgro]

Please do that as soon as possible.

We'll go on to Ms. MacEwen from Trade Justice Network.

[Angella MacEwen, Co-Chair, Trade Justice Network]

Good afternoon.

Thank you for inviting me to appear on behalf of the Trade Justice Network.

We're a coalition of environmental, civil society, student, indigenous, cultural, farming, labour and social justice organizations. We came together in 2010 to call for a new global trade regime founded on social justice, human rights and environmental sustainability.

Our members include the Canadian Labour Congress, Unifor, the Canadian Union of Public Employees, United Steelworkers, Climate Action Network Canada, The Council of Canadians, the National Union of Public and General Employees, Communication Workers of America, the National Farmers Union and many other groups that represent people in Canada from all walks of life.

I was a part of the CETA negotiations and I'm quite concerned about the regulatory co-operation that we had in CETA being ported over to the U.K. Regulatory co-operation has been a central part of updates to NAFTA and CETA, locking in Canada's current approach to regulating. We should be particularly cautious here, as well, that we are able to maintain the freedom to respond appropriately to future crises in health, climate and the economic fallout of those crises.

Our current approach gives multinational industrial interests several entry points into Canada's regulatory system, which is not advantageous to Canadian workers, consumers or businesses.

Besides increased transparency, one of the key changes we would like to see is allowing for the use of the precautionary principle as EU nations already do.

We also have significant concerns about how previous and ongoing privatization of public services in Canadian provinces will interact with a new U.K. deal to lock these changes in with something we call “ratchet” and “standstill” clauses. We think that in a future U.K. deal, public services should be entirely exempt from parts of the deal, so it wouldn't be restricting governments in any way from developing new public services or repatriating privatized public services.

The new standard we had set with CUSMA is that ISDS and other investor-state dispute settlement courts are unnecessary and, in fact, harmful. We expect that in the future Canada-U.K. deal, we won't need the investor-state port that we have been developing in CETA.

In general, we feel that trade and investment should be viewed as a means to enhance material and social well-being, not an end in its own right. Proposals for a progressive trade agenda should be judged against four principles. The first is human rights in the broadest sense, including economic, social, cultural and environmental rights. These should have primacy over corporate and investor rights. There needs to be legally binding obligations to the responsibilities of transnational corporations to recognize those rights.

Next, democratic government must have the policy space to pursue and prioritize local and national economic development, good jobs for citizens and the preservation, promotion and restoration of public services.

Citizens, communities and the environment have the right to protection through public interest regulation. A climate-friendly approach should be adopted whenever pursuing trade and investment, which can no longer be allowed to outpace the carrying capacity of our planet.

Finally, we think it's important to think about how our trade policy fits in with other international commitments such as the sustainable development goals, SDGs, and the United Nations Declaration on the Rights of Indigenous Peoples.

If we take our commitments to the SDGs seriously, before finalizing any deal, we would do an impact assessment of the social and economic consequences the agreement will have on participating nations' ability to progress toward the SDGs. In implementing the UN Declaration on the Rights of Indigenous Peoples, we should consider what that means for including first nations, Inuit and Métis people at the bargaining table for international trade negotiation.

We're looking forward to seeing increased transparency in the negotiation of this new trade deal. That would include increased data availability from the economic report they have done. We're also looking at seeing an independent analysis of the deal's impact on our economy and our legislative and regulatory frameworks.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I'm going to ask if the committee could stay an extra few minutes so that we could make sure that we can get through round one. We'd probably have to go to 1:05 p.m. or 1:06 p.m. I'd ask our witnesses and our committee members to please keep that in mind if it's possible for you to stay a little bit longer.

We'll go on to Mr. Lobb for six minutes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thank you very much, Madam Chair. Thank you to all our witnesses here today.

My first question is to Mr. Chandler.

Hi, Brad. That was a great presentation.

We're talking about the transition agreement here today, but could you give the committee an idea about whether, going forward, there is anything from your perspective and what you've experienced day in, day out, the negotiators should look for when setting up a Canada-U.K. trade agreement, something that would benefit not only Hensall Co-Op but other bean growers in Ontario and around?

[Brad Chandler]

Ideally, we would keep close to what we have today. Quotas will limit our growth opportunities and it's hard to put into perspective how many growth opportunities there are, into the U.K. and globally, for our Canadian agriculture. We have to think vast and we have to think broad, and limit any types of quotas or duties or taxes that could destroy our ability to trade freely.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Do you know what the quota limits are today?

[Brad Chandler]

I'm sorry. I don't know those numbers today.

[Ben Lobb, Conservative, Huron—Bruce, ON]

What about on the port side? Let's just use Montreal because that's the one with the service in the U.K. Are there any limitations in the port as far as future growth is concerned? There is opportunity, as you mentioned. Are there things governments should be looking at to make sure we have port capacity?

[Brad Chandler]

If we want to rise to the challenge of filling a bigger market, we need more port capacity. A continuity of rail service is always crucial. It cripples us very quickly when we lose any rail service. It's phenomenal how quickly that backlog is on us, especially when we're shipping 80 containers a day and that's just us. There are lots of other exporters and I wouldn't know the numbers of what they represent.

Also, on the availability of containers, even today that is a challenge to our businesses. Getting the food-quality containers here and getting them filled and getting them back is a challenge. Also, there's a consolidation of shippers. At one time, not too long ago, 10 years ago, we had 12 to 14 businesses that represented companies that owned containers and now we're down to, probably, six. As there's more consolidation, there are tighter and more restrictive conditions. More volumes are restricted. It's always a very big challenge.

Transportation is key, and timeliness of transportation, and we need the ports to grow with the opportunities that are available. And that's what we see in the private sector. We see more companies getting involved in ports. Anything that continues to grow with our exporting opportunities will be good.

[Ben Lobb, Conservative, Huron—Bruce, ON]

The other question I have is about the ports on the other side. I think you mentioned Liverpool, Southampton and maybe one other port.

[Brad Chandler]

Felixstowe.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Are there any issues? I know you mentioned bottlenecking. Is that a Brexit issue that they're having short term or are these long-term issues that they're experiencing?

[Brad Chandler]

They're running at capacity and they need investments in some of their ports. Today we're struggling with some Brexit-type issues as the U.K. is trying to manage that situation. There are some political problems there.

Overall they seem to handle our products, but with food products going in, as our business grows, we're encountering some limiting factors. We can get the product out of Ontario, out of Canada, quickly enough, but can it be received in a timely fashion and to the doorstep? These large canners are going more to just-in-time delivery so that's why we have now grown our freight-forwarding and logistics business so much. We needed to take control of that. We couldn't rely on third parties.

Our biggest strength of area of growth is that we have full traceability with growers. They're growing our products under contract. We receive them. We segregate them. We clean them, process them to a high quality, and then we do also offer delivery to the customer's doorstep, to the Heinzes and the Princes Foods in the U.K. in our food-quality sea containers. We're the only business in Canada I know of that can offer that.

[Ben Lobb, Conservative, Huron—Bruce, ON]

I have one last question because I'm about to run out of time. Locally, just give everybody an idea of the premium, I guess you'd call it, or the benefit for local producers to grow edible beans, and what it means to their bottom line to be sustainable, profitable farmers.

[Brad Chandler]

Today, as we market globally, first of all we look at what income a farmer could receive if he's just growing corn, soybeans and wheat, and then usually you have to look at which one makes the most money for the farmers. That's the one that's going to trend higher. Then we try to offer a premium of $50 to $100 an acre over and above that competing crop revenue per acre. We try to pay over $75 to $100 more. That converts into probably $23 million to $25 million of added premiums to Ontario growers, and that money goes right into their bottom line and helps us keep our volumes, to continue to grow.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thank you.

[The Chair, Liberal, Judy Sgro]

We'll move on to Mr. Sarai.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you, Madam Chair.

I want to thank the witnesses. You always bring good insight into how our trade is affected and how these deals affect you in particular.

I'm very keen to know from Mr. Chartrand, who gave a very accurate and detailed analysis of his industry, an industry that is also relevant here in Surrey, British Columbia. We have a lot of aviation jobs and aviation parts that get made here and it's good to know the effect of them.

What trade opportunities do you see going forward that we could negotiate to make it better for our machinists and our parts manufacturers here in Canada to export more into the U.K.?

[David Chartrand]

We have opportunities through SMEs, small and medium-sized businesses. It's not a huge trading partner necessarily, but there are opportunities on the military side. There are opportunities with parts from aircraft and things like that. It is one of the biggest countries that produces over there, so we have multiple opportunities with them.

The problem is the lack of structure we have here. It's making it more difficult for us to compete because the industry in the U.K. is heavily subsidized and supported by their government.

Over here, for us, the lack of support from the government currently makes investors wary of coming here. I'll give you an example. When big investors like Airbus came here and invested, they had big ideas of putting in a lot of money, but the overcapacity we have right now due to the pandemic makes it so companies are looking at bringing back work in-house and are looking at their investments, and whether they should continue investing in Canada.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Mr. Chartrand, you're talking more about supporting the industry here. I'm talking about the tariff itself. Is there anything that the trade negotiators, our ministers, staff and others, should look into to increase trade? That's what I'm particularly interested in. I know what you're saying might be valid as well, but—