International Trade Committee on Nov. 27th, 2020

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you.

Mr. Poirier, you talk about the necessity of having this agreement ratified by January 1. Are you confident this is going to happen?

[Matthew Poirier]

I'm hopeful. As far as we know, we know that it can.

Parliament has to do its due diligence, of course, but I don't see these as mutually exclusive goals, to try to be done by the first and doing due diligence at the same time.

We're hopeful that there will be no bumps in the road because a pause to that access is very complicated and costly for business, mostly in terms of red tape. Even if they can get some of those monies back somehow, with COVID it's not a good time for that. It's not a good time at the best of days, but especially now, given the economic challenges that most exporters are facing.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

How is the communication with the government on this when it comes to your industry?

I'm hearing what you're saying about the SMEs and our ability to open new markets and be competitive there, but do you think that the government has done enough satisfactory consultation with your industry to be able to come up with a better agreement or best agreement for us?

[The Chair, Liberal, Judy Sgro]

Give a brief answer, sir.

[Matthew Poirier]

Yes.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Okay, thanks.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We go on to Mr. Dhaliwal for six minutes.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you, Madam Chair.

My question will be related to small and medium-sized businesses, particularly because I perked up when Mr. Lansbergen was talking about coastal communities and those businesses, as British Columbia has a lot of both.

I'm going to ask multi-pronged questions, and I will give all of the rest of the time to the presenters.

In June 2019, Madam Chair, this committee proposed to Parliament enhancing small and medium-sized businesses and awareness of international trade agreements and the opportunities they provide. Particularly when it comes to this agreement, how would your industry be affected if we did not have this transitional agreement in place?

Second, what are the main challenges faced by your particular industry, and what actions should our government take to help small and medium-sized businesses to become aware of this agreement and take advantage of it?

[Paul Lansbergen]

Madam Chair, if this is directed to me first, thank you for the question.

Unfortunately, I'm not familiar with your June 2019 report on SMEs, so I will take a look at that. However, as I said in my opening remarks, if we don't have a deal in place by January 1, we will face higher tariffs that could be prohibitive in the marketplace. For some companies, it could represent a large portion of their exports. For individual companies, that could be ultimately catastrophic, particularly on top of all of the impacts from the COVID pandemic and the loss of the food service markets.

In terms of what more the government can do, certainly for my members, as a service to them, I try to make them aware of as many of the government agencies as possible that are there to assist exporters, whether it be EDC or BDC, or many of the other acronyms that Mr. Poirier had mentioned in his remarks.

In fact, one of the things that changed during the pandemic, and we thank the government for this, is that Farm Credit Canada expanded its financing authorities to include the frozen-at-sea factory vessels. They are the large vessels that process as well as harvest. That added financing capability will be very important now and in the years to come as we go through a fleet renewal.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Do any other presenters want to add something?

[Fawn Jackson, Director, International and Government Relations, Canadian Cattlemen's Association]

Yes, I could.

I would first say that farms in Canada are small to medium-sized businesses. Some of our challenges in shipping into the European market are getting the audits completed to be able to send into that market.

We would say that for the U.K., first of all, we should remove those requirements. We should have that full systems approval where they recognize our food system, we recognize theirs and we're able to do trade just as we do with the United States, Japan and South Korea. We would hope that there certainly wouldn't be requirements for those types of audits in the future, but if there are with the EU, then let's make sure that we have all the efficiencies to be able to do that.

Government support is needed there, both in developing programs within Canada and making sure that we have the capacity to manage them.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Do any other presenters want to respond?

[Matthew Poirier]

If I could jump in, I'd love to add the importance of supply chains. For manufacturing, especially in a North American context, but now more and more so with Europe, the supply chains are integrated, with parts moving back and forth in the production of final goods.

If there's any disruption to that, it would run into the same existential threat that our sector had with NAFTA negotiations when the outcome of where those negotiations were going was questionable. It's not good for business. It's not just the trade that happens, but it's the movement of goods between the countries. It's important to maintain that access uninterrupted.

In terms of SME supports, as I mentioned, we have excellent programs that Paul touched on, from the various agencies that are dedicated to this. The issues comes when nobody knows about them in the community. Think about it from a business perspective. If you're an SME, you're not sitting around saying,“Gee, I wonder what the government has to offer me.” You're thinking, “I will talk to my accountant, I will talk to my lawyer and I will talk to my staff to try to get ideas.” It's not a default way of thinking to wonder what the government has.

That's where we need to bridge those two solitudes really. As I said, trade associations are perfectly positioned to do that type of work to help out.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Madam Chair, do I have more time?

[The Chair, Liberal, Judy Sgro]

I'm sorry, Mr. Dhaliwal, but your time is up.

We'll go on to Mr. Savard-Tremblay, for six minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Good afternoon, everyone.

Allow me to first thank all our witnesses for joining us today. I also thank them for their presentations.

The dairy sector is of paramount importance for the economy, health, food and security of the Quebec population in all respects—and I am not afraid to use those terms, as I don't think I am at all exaggerating.

Mr. Gobeil, you were saying that you hoped this continuity agreement would be reproduced as a permanent agreement because it contains no breaches. That said, the negotiating team's members testified before the committee last week. We were told that the United Kingdom was pushing for increased exports of their cheeses.

Is that a concern for you over the short or the medium term?

[Daniel Gobeil]

Thank you for the question, Mr. Savard-Tremblay.

I gave an overview of dairy processing in Quebec. The province is responsible for more than 60% of the country's cheese production. The situation you are describing does in fact worry us. Through the World Trade Organization, or WTO, significant tariff rate quotas are currently granted by the European Union. That is what the continuity agreement includes. However, we feel that it is completely unacceptable for this sector to be further damaged.

You know there were only two tariff rate quotas for the European Union. Other agreements contain 13 or 14 tariff rate quotas. Those other agreements also have major repercussions, but the one we are talking about really undermines a specific sector, and that accounts for significant loss of income.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Those are indeed substantial income losses.

You were saying earlier that you were given guarantees that nothing was being conceded in the continuity agreement, that there were no—nyet, zero point zero—breaches.

[Daniel Gobeil]

We have indeed obtained those guarantees. Quotas were reallocated, but we must remain careful, as there is still a possibility of an increase. Two agreements have been negotiated since then, and there will certainly be an appetite for other products. We want it to be clear that we should not move toward those options.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

You continue to fight for compensations. You have received only one cheque consecutive to a single agreement. Of course, that amount covers the bare minimum—a small band-aid—but it must absolutely be paid out to you.

You have warned us against the temptation to do the same thing again—in other words, to concede once again because cheques will be sent afterwards anyway. It will then be said that it's not a big deal, that we are just trading four quarters for a dollar, if I may put it that way. However, you are saying that's not it.

Can you elaborate?

[Daniel Gobeil]

It goes without saying that the dairy production model was based on the necessity to meet Canadians' needs. As you know, millions of dollars have actually been invested over the past few years, be it in Quebec or in Canada, to meet societal expectations.

Consumers have requirements, whether in terms of the environment or of animal welfare. Concerning the environment, the country is a global leader in dairy production as far as the carbon footprint goes. We think that we have certainly met the demand.

However, when it comes to reducing a product's market access to make room for products from other countries—countries that do not take reciprocity of standards into account—there is no doubt for us that the model has reached its limit. I just want to point out that Canada will import 18% of its dairy production.

Many political parties are saying that the supply management system must be protected, but protecting it is not enough. More needs to be done by promoting it. We have been seeing a great deal of erosion over the years, and that must be stopped.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

We are in complete agreement on this. We must not only protect it, we must not only defend it with vigilant effort, we must promote it.

As you know, a bill prohibiting any future breach in supply management has been tabled. In other words, this is going to stop being an election campaign promise. It will no longer be a promise. That does not prevent a government from changing the law later on; we are in a free country, we live in a democracy. However, any government that would do so would have to bear the unpleasant brunt of that.

Do you welcome this bill?

[Daniel Gobeil]

There is no doubt that it was well received. These are things you hear a lot during election campaigns. Often, in those circumstances, the four party leaders are very supportive. Having said that, it is now time to move from words to action. For our part, we think it is important to have the support of all political parties.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Gobeil.