International Trade Committee on May 23rd, 2024

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I'm calling the meeting to order.

Welcome to meeting number 107 of the Standing Committee on International Trade.

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Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, October 17, 2023, the committee is resuming its study of the effects of American and European seafood import policies on the fishing industry in Canada.

We have with us today, from the Fisheries Council of Canada, Paul Lansbergen, president. From the Lobster Council of Canada we have Geoff Irvine, executive director, by video conference. From Louisbourg Seafoods Limited we have Damien Barry, general counsel, by video conference. From the Pacific Balance Pinniped Society we have Ken Pearce, president, by video conference. And from the Prince Edward Island Fishermen's Association we have Ian MacPherson, executive director, by video conference.

Welcome to you all.

Mr. Lansbergen, I invite you to make an opening statement of up to five minutes, please.

[Paul Lansbergen, President, Fisheries Council of Canada]

Thank you, Madam Chair, for the invitation to testify today.

Before I get into my specific comments, I'd like to spend a few minutes to provide some context on the council, the sector and our trade context.

The Fisheries Council of Canada is the national voice for Canada's wild-capture commercial fisheries member companies. Member companies are processors who process the majority of Canada's fish and seafood from all three coasts, and our members, include small, medium and larger-sized companies, as well as indigenous enterprises.

The Canadian seafood industry creates 72,000 direct jobs, mainly in coastal and rural communities. In essence, the sector is the economic heart of these communities. The sector accounts for $7.6 billion in exports to over 100 countries. The largest export markets are the United States, at 64%; China, at 19%; Hong Kong and Japan, both at 2.5%; and the U.K., at 1.6%, to round out the top five. If you take the EU as a whole, it would be ranked third, at 5.5%.

Growing global demand for protein, including fish and seafood, points to growth opportunities for the sector. FCC and the Canadian Aquaculture Industry Alliance, our counterpart on the farm side, have developed a joint 20-year vision to be a global top-three, best quality and sustainable seafood producer—not the largest, but the best.

With this vision, we have three aspirational goals: we want to double the value of the Canadian industry, double the economic benefits to largely coastal communities and double the domestic consumption of Canadian fish and seafood. These are definitely ambitious, but if you don't aim high, you don't achieve high.

The last important backdrop for our conversation today is the sustainability performance of the industry. Canada is a global leader in sustainable fisheries management, with a robust regulatory regime, and DFO reports that 95% of our fish stocks are harvested at sustainable levels. In addition, Canada's adoption of independent third-party certification ranks in the top five in terms of percentage of landings certified. We should feel proud of our collective stewardship of our fish resources.

Like all of our export sectors across Canada, the seafood sector pays very close attention to market access issues. In the agri-food sector, we are blessed with a very strong market access secretariat, which is a joint effort of Agriculture Canada and CFIA. They have been instrumental in addressing market access issues with us. Global Affairs Canada, either here in Ottawa or in trade consulates around the world, also plays a role. Where such issues relate to matters under the purview of DFO, the department engages to support the sector. All of this is important context for today.

I would like to now move on to the specifics of the trading relationship with the U.S. and the EU. These two markets receive a combined 70% of our exports. Our exports to the U.S. are $4.8 billion as of last year, and the top products are lobsters, at $1.6 billion; crab, at $1.1 billion; and salmon, at $975 million, although that is largely farmed. Halibut and scallop are a distant third and fourth, both nearing $200 million.

Our exports to the EU total $416 million, and the top products are lobster, at $200 million; shrimp and prawns at $64 million; scallops at $57 million; and then hake and salmon round out the top five at $21 million and $12 million, respectively.

The Canadian fishing industry values its trading relationships with both the U.S. and the EU. We have free trade agreements that give us preferential tariff treatment. It might be noted that our seafood exports to the U.S. are up 57% over the last decade. The growth of our exports to the EU is more modest at 23% over the last decade, and then within the last five years alone 16% since CETA was signed.

Currently, we are monitoring and engaging on several policies in the U.S. and the EU, but I suggest that we are managing the impacts reasonably well. That is not to say there aren't impacts, but we're doing reasonably well.

Lastly, I would like to suggest that many market access issues are often aimed at practices not found in Canada or particular to our sector. However, we end up vulnerable to being collateral damage if we are not diligent in monitoring potential issues.

With that, I welcome any questions you might have.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir.

Mr. Irvine, the floor is yours for up to five minutes.

[Geoff Irvine, Executive Director, Lobster Council of Canada]

Thank you very much, Madam Chair, for the opportunity to speak with you virtually today.

The Lobster Council of Canada represents the entire lobster value chain, with members involved in harvesting, buying, processing, live-shipping and exporting Canadian lobster—the best in the world. We focus on the lobster market, managing marketing and promotion programs, providing advocacy and education for our members on market access issues, sharing market intelligence with our members, working with governments on trade development projects and managing the Marine Stewardship Council eco-certification program along with P.E.I. for inshore lobster from the maritime provinces. Our members come from all five eastern Canadian provinces.

As Paul mentioned, lobster is the highest value fishery and seafood sector in Canada, with an export value in 2023 of $2.6 billion. It employs thousands of Canadians on about 9,500 fishing boats, at hundreds of shoreside processing and live-shipping companies and associated industries. We are the world's largest producer of lobster, landing up over 200 million pounds on an annual basis with 50% of the value exported live and 50% in processed forms. Key export markets mirror those Paul just talked about: in 2023, the U.S. took 60% of our lobster, 20% went to China, Europe took 10%, and other markets in Asia and elsewhere took 10%.

One of our key areas of focus is advocacy and education, focused on market access challenges with our key trading partners in the U.S., Europe and Asia. We work with the federal market access secretariat that Paul talked about, which is made up of officials from CFIA and Agriculture and Agri-Food Canada. We collaborate with DFO's international management section and work with Global Affairs and our trade commissioners all around the world, who offer us vital eyes on the ground by liaising with importing associations and officials from other countries.

One key market access challenge is focused on supporting the management of our interactions with the North Atlantic right whale. To abide by the Species at Risk Act and similar rules and regulations of our key trading partners, DFO and Transport Canada have implemented whale mitigation measures that have allowed lobster harvesters to continue to fish when the whales are present in the spring. Specifically, the American Marine Mammal Protection Act compels Canada to take these actions to ensure continued market access, which to date has been successful and, as noted above, aligns with our own Species at Risk Act responsibilities. As our customers around the world are concerned about marine mammal protection, we spend a considerable amount of time, with the support of DFO international officials, telling the right whale mitigation story to the world.

Recent events in lobster fishing area 23 on the Acadian peninsula in New Brunswick are testing these measures as we speak today. It's a complicated issue, as we must abide by Canadian and international laws and agreements, keep our MSC eco-certification and ensure continued market access while protecting the livelihoods of harvesters and the shoreside sector. It's a delicate dance.

We are proud that all inshore lobster from the maritime provinces and most of Quebec is certified under the sustainability standards of the Marine Stewardship Council. The little blue MSC fish you see on the packaging is the gold standard in eco-certification worldwide.

Other market access issues that we are monitoring in the U.S. include the Food Safety Modernization Act, the seafood import monitoring program and the upcoming U.S. lobster gauge increase. Many of these issues are focused on increased traceability, which is a worldwide trend that includes our domestic food processing industry as well.

We're not alone. In Europe, there are new rules being introduced focused on animal welfare, so we are engaging with our sector's customers and import associations as necessary and in collaboration with our trade commissioners and Global Affairs Canada. In China, our processing sector has experienced delays in receiving approvals from Chinese customs authorities.

To summarize, we work very closely with federal and provincial government departments and our members and lobster buyers around the world to ensure that live and processed lobster retain market access everywhere with the least amount of disruption and cost to our harvesters, processors, live-shippers and exporters.

I'll be happy to answer any questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll move on to Mr. Barry, please.

[Damien Barry, General Counsel, Louisbourg Seafoods Ltd.]

Madam Chair, and committee members, thank you for allowing the Louisbourg Seafoods group the opportunity to participate in this important study.

My name is Damien Barry, and I'm the general counsel and CEO of the Louisbourg Seafoods group, based in Cape Breton, Nova Scotia. Established in 1984, we are a privately held, family-owned group of companies, currently operating five processing facilities and employing up to 650 workers at peak times in the coastal communities of Glace Bay, North Sydney, Englishtown, Canso and Louisbourg.

We harvest, buy and process species such as lobster, snow crab, sea cucumber, whelk, cold water shrimp, mussels and redfish, primarily for export to the U.S., China and the European Union. Over the past 40 years, we have invested millions of dollars in developing export markets for various species, and we continue to do so to the present day. Our company prides itself on its sustainable fishing practices and its strong relationships with all stakeholders in the seafood industry, including our inshore harvesters, our fellow processors, our various research partners, and the many different government agencies and departments we engage with at both provincial and federal levels on a daily basis.

As a processor, we export significant quantities of product to the aforementioned markets on an annual basis, and as such, we deal with a multitude of requirements, policies and regulations when transporting our products to our customers around the globe. Each year, these regulatory requirements continue to grow as the global seafood industry continues to engage with issues such as forced labour, illegal, unreported and unregulated fishing, marine mammal protection and traceability, to name but a few. We of course fully support any policies and measures that can help reduce any harmful impact on the seafood sector, and we strive to fulfill our obligations as a company to ensure that we meet the highest standards.

The inshore harvesters we buy from in Cape Breton—particularly in lobster and snow crab—rely on processors such as us to take their product and to sell it into the market in bulk. Owing to the sheer volume we produce as well as market factors, 99% of the lobster and crab we buy and process is exported to the U.S. and China. Key administrative matters such as pre-export approvals, correct labelling, packaging and marking requirements to meet regulatory requirements, catch certificates and traceability requirements fall on processors such as us to ensure that Atlantic Canadian seafood products can be showcased internationally.

As requirements under international import policies continue to grow and expand, so too does the pressure and burden on processors. Markets have softened dramatically in the past two years, and margins continue to shrink for the processing sector. Harvesters have expectations of certain prices when selling their catches. Without processors buying their catch, the seafood industry—particularly in Atlantic Canada—would essentially collapse without the access to export markets that has been developed by processors and buyers.

In order to remain competitive and ensure high-quality export products, processors must constantly reinvest in their facilities to try to maintain these high-quality products and to meet constantly changing and more stringent import policies of our target markets. For example, digitization of records and the traceability of seafood products is now becoming a necessity when exporting to markets in the EU and in the U.S.A.. The burden and responsibility invariably falls on processors to invest in resources to meet these regulatory demands. In addition to investing in processing and value-added products, we also invest heavily in science to ensure healthy and sustainable stocks in all of our species, including our secondary species.

To echo some of the comments of earlier speakers before this committee, we would strongly advocate for continued close relationships and co-operation between all stakeholders in the seafood industry, such as government and the private sector, to ensure that we continue to remain competitive in the global seafood market. For example, we have worked closely with trade commissioners in various target markets to help us connect with and develop relationships with our international customers. Services and supports provided by federal agencies such as the trade commissioners are vital to companies such as ours.

We would also ask that the government continue to financially support the processing and harvesting sector through programs such as the Atlantic fisheries fund and other related programs that support the development and implementation of innovative and practical solutions to meet the ever increasing and changing regulatory demands of our trading partners and export markets. In addition to this, the government also needs to provide support in helping all industry stakeholders develop and implement traceability programs. With the coming into effect of the Food Safety Modernization Act in the U.S. by January 2026, for example, this is a critical time for the seafood sector in Atlantic Canada to prepare for and be ready for the various new requirements of the FSMA.

The FSMA is but one example of the ever-changing and evolving import policies that processors and other stakeholders in the seafood sector have to adapt to and respond to in order to remain competitive in the global seafood marketplace. Whilst revenues may be significant for the seafood sector in Canada in general, the cost of doing business continues to grow with increased labour costs, raw material shortages and increased costs associated with responding to ever demanding regulatory requirements both at home and abroad.

Thank you for the opportunity to speak here today, and I welcome any questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir.

We move to Mr. Pearce for five minutes.

[Ken Pearce, President, Pacific Balance Pinniped Society]

To start off, a quick thank you for inviting Pacific Balance Pinniped Society to appear before this committee.

First, as a quick background on who we are and our mission, we represent over 700,000 British Columbians in our united quest to bring the out-of-control pinniped populations on the west coast back into historical balance and to reduce the carnage they reap on our salmon stocks. Included in this group are the following: Gary Biggar, director and past minister of natural resources for the BC Métis; Dr. Carl Walters, Institute for the Oceans and Fisheries, UBC; Wilf Luedke, retired past head scientist at DFO Nanaimo; Ken Malloway, chair, Fraser Salmon Management Council, which represents 115 first nations; Emily Orr of the United Fishermen and Allied Workers' Union/Unifor; Ted Brookman of SFAB; and Mel Arnold, MP for the Conservative Party. We are also in active communications with Clifford Small, the shadow fisheries minister for the Conservative Party.

As an overview with regard to the perceived fears of selling pinniped products into the U.S., these fears appear to arrive from harvesting pinnipeds on the west coast with the Marine Mammal Protection Act of 1972 still in place. The U.S. Fish and Wildlife Service is dealing with the huge problem of sea lions in the Columbia consuming large amounts of inbound chinook and other salmon species. It took time, but they got an exemption from the above act and have culled over 10,000 sea lions in the Columbia system in the last two years. With the overabundance of pinnipeds here in B.C., it makes no sense to have an act that was passed in 1972 protecting the pinnipeds. Back then there were extremely low populations: The 1972 census showed 7,500 seals and 2,500 Steller's sea lions. The 2019 count shows 100,000 seals, 48,000 Steller's sea lions and 25,000 California sea lions. Have this act repealed and the trade issue should disappear.

Here's what our group found in our quest to establish markets for pinniped products from British Columbia: (a) in the local market there is a 1.5 million to 2 million pound bait market for commercial prawn and crab fisheries, with similar sized markets in Alaska, Washington and California; (b), we have approached a British Columbia specialty dog food manufacturer, and they can take all we can produce; (c) local restaurants have also approached us looking for supply; (d) there is a large specialty market for sealskin products; and (e) the skull and whiskers of sea lions are sought after by first nations groups, both locally and in the U.S.

Dealing with the offshore markets, one of our representatives had been working with the Chinese market for years, and we have a buyer waiting for the green light from DFO to begin harvesting, and they will take our entire production. We have sent first nations-harvested meat samples to China, and they were very well-received in trial tests in their restaurant business. Similar interest has also been shown by both South Korea and Japan.

The stigma still lingering from the anti-sealing protests in the 1980s for the east coast simply does not exist in the above markets. The market for which we can produce, from a controlled commercial harvest, can be easily satisfied with the annual harvest of pinnipeds proposed in our IFMP, integrated fishing management plan. If anyone would like to read the 52-page proposal, it is on record at FOPO with our appearance [Inaudible—Editor] last March.

Again, thank you for inviting me to attend. I'm open to any questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir.

Go ahead, Mr. MacPherson.

[Ian MacPherson, Executive Director, Prince Edward Island Fishermen's Association]

Thank you, Madam Chair.

The Prince Edward Island Fishermen's Association would like to thank the Standing Committee on International Trade for the opportunity to present this afternoon.

The PEIFA represents over 1,260 captains who are independent owner-operators on Prince Edward Island. Many of our members also employ two to three crew members, which underscores how important the fishery is to the island economy, with a small population of 150,000 people.

Lobster is a significant contributor to our fishery, with recent estimates conservatively generating $260 million from the harvesting sector alone. Secondary species such as halibut and bluefin tuna are also financial contributors; however, other species that we fish, like herring and mackerel, are under significant catch restrictions or closures.

These factors underscore how our export markets are critical to maximizing financial returns for the species we do fish. Changing water temperatures, intensifying storms and lack of ice cover are all things that are changing our ocean landscape.

In addition to the live market, our members supply plants in eastern Canada and the United States with significant amounts of lobster. Our catches, in important species such as lobster, far exceed what our local and regional populations can consume. Therefore, it is vitally important that the critical trade channels to the United States and Europe be kept accessible. In addition, a significant portion of lobster harvested around Prince Edward Island goes to the processing sector in Prince Edward Island, New Brunswick and the United States. These are historic and symbiotic trade relationships that have existed for many decades.

We understand that trade is back and forth and that trade ebbs and tides between trading partners. I will defer to the other committee witnesses to provide specific examples or to identify areas of concern. My intent today is to educate committee members on how important international trade is to our island fishery.

Provincial data from 2019 listed exports of $238 million, of which 72% was exported to the United States. Europe is also a traditional and strong market. These numbers translate to approximately 9.2% of Canadian lobster exports. It is important for keeping coastal communities vibrant, for supporting local business, and more importantly, for contributing to the food security and food sovereignty of this nation.

As Canadians, we do not think in terms of our Canadian seafood as a critical resource. As global dynamics change, we need to ensure that ownership of our resources stays Canadian and that trade is carried out with global security partners. A coastal network of independent Canadian owner-operators ensures that the harvesting and processing benefits stay in local communities.

We are not naive to think that trade is precise and exact. We know that the politics of disputes can creep into unrelated industries; therefore—

[The Chair, Liberal, Judy Sgro]

Excuse me, Mr. MacPherson. I'm sorry, but could you just move your mic a little to the side?

Thank you.

[Ian MacPherson]

—it is critical that we encourage and maintain fair and equitable trade with secure trading partners. It is critical that the purchase of processing plants and seafood supply chains are properly scrutinized by our federal government in terms of who receives the benefit of ownership.

Finally, we need to have legislation in place that ensures our seafood is in the direct control of Canada for Canadians. Many of us are acutely aware that our resources are finite, that supply and demand are fluid and that trade is a major component of the Canadian economy. As a representative of Canada's smallest but mightiest province, we ask that you assist us in keeping our trade channels open and viable.

That concludes my opening remarks.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much to everyone.

We will move on to Mr. Jeneroux, for six minutes, please.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you, Madam Chair.

Thank you, everybody, for joining us here today.

I'm going to start with Mr. Lansbergen; and then, if I have time, pop over to Mr. Irvine to talk about the minimum legal size of lobster; and then, if I still have time—hopefully—to you, Mr. Barry, as the only identified lawyer on the witness list, to talk potentially about the EU's labelling requirements.

First, Mr. Lansbergen, thanks for joining us today. You mentioned in your opening testimony that you plan to double the domestic consumption of fish here in the country. Simply, how do you plan on doing that?

[Paul Lansbergen]

That's a great question.

Unfortunately, we don't have a strong seafood culture in Canada. Health Canada recommends that we eat two servings per week, and we average just over one serving per week, so in the last couple of years we've had a national marketing campaign to convince Canadians to eat more Canadian seafood and to get them to broaden out some of their appetite for different species. The main species that are eaten in Canada are salmon, shrimp and tuna. Particularly for shrimp, it's the larger warm-water shrimp, so we should be eating smaller, northern cold-water shrimp. It's just as delicious—just smaller.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I guess I'm hearing a marketing campaign. Is that the plan?

[Paul Lansbergen]

That's what we've been doing for the last couple of years. It was funded by a grant program, the Canadian fish and seafood opportunities fund. Unfortunately, that has expired. We asked for the last budget to include a renewal, long-term funding for such a campaign. Unfortunately, the industry is very fragmented, very diverse, and it's difficult for us to undertake a campaign like that domestically.

The other part is that we export 80% of what we harvest and process in Canada, and there are species that we harvest and send offshore because Canadians don't have an appetite for that particular species.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I'm sorry, but just to be clear, you made the budget submission request but didn't receive it as part of the federal budget.

[Paul Lansbergen]

That's correct.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Okay.

To Mr. Irvine, in talking about the minimum legal size of lobsters, I guess that refers to the outer shell...moving from 82 millimetres to 84 millimetres in 2025 and to 86 millimetres in 2027. That sounds like it could restrict Canada's exports of live lobsters to the United States. Am I correct in saying that?

[Geoff Irvine]

The Magnuson-Stevens act, which is part of U.S. law, has a provision that requires that any imported lobster be the same minimum size in live format as it is for the U.S., so it could. We're undertaking some work right now inside the council, trying to analyze what those two millimetre increases could mean. It's going to mean different things for different parts of the value chain. We also learned recently that there's intensive push-back from the Maine and the New England lobster shoreside and harvesting sectors to those two moves, so we're waiting to see if that may change their schedule. However, as of right now we're monitoring it, trying to figure out what it could do. It could have some impacts.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Are you working with Fisheries and Oceans Canada to monitor this, or is there any action that you understand is being taken by the government on this right now?

[Geoff Irvine]

Yes, the DFO regions are in touch with us about this and they're talking to officials in Maine as well, and I think every association, every organization in eastern Canada is working on this, trying to figure out what the impact will be.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Then lastly, Mr. Barry, you didn't really touch on this during your testimony but I hope that you can help by answering some of the...EU's labelling requirements on imported fish and seafood products that, depending on the packaging or form of the product, the labels must provide specific information. If you can, I hope you'll talk about which of those labelling requirements are the most onerous.

[Damien Barry]

Thank you for your question.

I guess it goes back to my opening comments, where we talked about traceability. Again, these labelling requirements simply fit into that whole area of traceability. As it stands, we already export shrimp to the European Union and, in addition to our packaging and labelling requirements, we also have to provide catch certificates. It's something that we're dealing with internally at the moment.

Again, as I stated in my comments, we're unfortunately at the mercy of our export partners and the requirements they need. For us as a company, our primary market is the U.S. China would be our secondary market, but we're looking to break into the European Union as well, just to diversify and try to expand our portfolio of customers.

Yes, like I said, it's something that we have to do as a company, something we would deal with. I don't know if you can pick out any particular one of them as being more onerous than the other, simply because it's something that we deal with on a daily basis anyway.

We tend to be quite vertically integrated with some of our species. For example, with some of our other species, we have our own harvesting vessels, so we try to maintain control, I guess, of the supply chain. We have control of the raw product when it comes in to us, so we can certainly meet those requirements to ensure that we can show where the products have come from.