International Trade Committee on Sept. 23rd, 2022

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Virani, go ahead for six minutes, please.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you very much, Madam Chair.

Thank you to all of the witnesses. It has been very informative.

I'm going to start with Mr. Byrne from the Grain Farmers of Ontario.

I note that you observed that we've gone from being a grain importer over the last 10 years to now being a grain exporter, which is terrific news, and it demonstrates the importance of diversifying our trade and pursuing further trade arrangements around the planet, including with less traditional partners. That is really important.

I also note that you indicated that notwithstanding the important work that you and all of your members are doing as grain farmers in Essex and around Ontario, you have never before seen extreme weather conditions of the type you've seen this year, which, to my mind, just underscores the importance of addressing climate change and addressing it aggressively because it affects all of us whether we're individual residents or running massive farming operations.

In terms of the question for you, Mr. Byrne, you commented about China and what had happened over the past few years with that trading relationship, and you emphasized the importance of exploring different markets and opening up new markets and volunteered your assistance in that regard. Among the ASEAN group—we're talking the Indo-Pacific and more broadly ASEAN—are there specific nations you'd identify? I draw your attention to the fact that the speaker just after Mr. Innes was talking about Vietnam and Indonesia. Can you target us toward a few different nations that you think would be particularly attractive for us to be pursuing initiatives on with respect to freer trade, particularly in grains?

[Brendan Byrne]

Thank you for the question and the comments. Mr. Innes might be able to comment as well. With some of the ones he targeted, like Vietnam and Indonesia, we've had a very strong relationship, such as with Japan in terms of food-grade soybeans and tofu production. We've been providing them what they're looking for, so sometimes it's not necessarily us growing something that we'd like to then find the market for; it's finding what the market might be looking for and then being able to produce that here in Ontario.

We do have very strong identity preserved beans that are grown in Ontario and that are marketed throughout the globe in that manner.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you for that.

Could I turn to Mr. Gaudreault?

Your testimony was really fascinating, in keeping with your experience and your point of view. Thank you very much.

Mr. Gaudreault, you commented on this issue with respect to not just traditional fertilizer uses of phosphate but also obviously with respect to electric vehicle battery production, and I wonder if you could comment on this. Last year we spent some time specifically on combatting the Build Back Better Act and some of the potentially punitive aspects that would have applied to vehicle battery production here in Canada had it not been scaled back, and we saw that Build Back Better has been scaled back and now we're looking at the U.S. Inflation Reduction Act.

Could you comment upon that turn of events, how that impacts an industry like yours and where you see phosphate in terms of the future of battery production for electric vehicles in this country so that we can aid the move toward electrical vehicles both in North America and around the planet?

[Raphael Gaudreault]

Phosphate is a commodity that is really easy to source sustainably, compared to cobalt, let's say. Also, even though LFP batteries will have less power, they'll be longer-lasting, with up to five times the life of a standard NMC battery. It goes toward sustainable development.

We in Canada have very high mining regulations to make sure that whatever comes out of the country is a green product. I think this is why it would be a good move for the country.

[Arif Virani, Liberal, Parkdale—High Park, ON]

I'm also seized by the fact that you mentioned food security, and phosphate is a fertilizer. Obviously, we've taken a very aggressive position with respect to Russia and Ukraine, and the sanctions applied to many parts coming out of Russia, including fertilizers. That's had a knock-on impact upon the agricultural industry and farming communities around the country. We're quite alive to that and trying to address it.

How does phosphate production here, including the potential mine you're hoping to open, help us feed into that piece so that we could be sourcing phosphate as a fertilizer for Canadian farmers and, potentially, farmers in other parts of the world as well?

[Raphael Gaudreault]

It would reduce our reliance on imports with production right here in the country. We have a lot of potash available in Saskatchewan, but all of the potash in the world won't replace phosphate. They play different roles in the fertilizing cycle, and we need to have all of the available commodities to have a full fertilizer with the effect on NPK.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Okay.

I'll say very briefly, Monsieur Gaudreault, that you've been well heard with respect to the critical minerals list. I will take that information back to the team in the minister's office.

Mr. Innes, I would indicate to you that having more regulatory conversations between the nations working on these trade agreements is something we're actively pursuing, particularly on sanitary and phytosanitary standards.

Thank you, all, for your evidence today.

[The Chair, Liberal, Judy Sgro]

Thank you all very much.

Monsieur Savard-Tremblay, you have six minutes.

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

Greetings to my colleagues, and thanks to the witnesses for being here.

I'd like to begin with Mr. Gaudreault.

Mr. Gaudreault, Could you briefly explain to me where your company fits into the battery ecosystem?

[Raphael Gaudreault]

We position ourselves as a supplier for a future battery manufacturer. Phosphate is one of the raw materials needed to make batteries. We have recently seen battery and even automobile manufacturers award contracts directly to mines to ensure that they have the raw materials needed for their production. That's where we fit in.

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

There is now a strategy in place to free us from our dependence on Asia for batteries. I'm sure that we all agree on the need to do that. One day, we have to be able to make them ourselves.

It's also essential to link up with trade in the Indo-Pacific region. If I've understood correctly, from your standpoint, you are seeking more clients in this part of the world so that they can assemble their own batteries using your product. Is that correct?

[Raphael Gaudreault]

That region is where the battery industry is the most advanced at this time. In North America, generally speaking, many projects are being launched or at an advanced engineering phase, but there are not yet any actual producers. That's, in fact, is why we are focusing on this region.

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

By doing that, do you think it will be possible in the short term to free us of our dependency on this part of the world, which is already supplying 90% of the world's batteries?

[Raphael Gaudreault]

Yes, that's right. As I was saying earlier, all the raw materials required to manufacture batteries are available in Canada. There is therefore no reason to export our products there only to have them returned to us afterwards. However, there is a transitional period during which we will have to export raw material.

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

So in the short term, that's where things stand. Thank you for your answers.

I now have a question for Mr. Innes, of Soy Canada.

Mr. Innes, in discussing the need for soybeans for human consumption, you said that it would have to come from the Indo-Pacific region. What country are we talking about, exactly?

[Brian Innes]

Thank you for the question.

For food grade soybeans, the greatest demand, which is currently growing, is definitely in the Indo-Pacific region. Whether in Indonesia, Vietnam, Japan or South Korea, soy-based products are in very high demand in all these countries, as are tofu and soy milk.

Much of our soybean exports to Indonesia for example, is used to make soy milk. It's therefore safe to say that this region is central to international demand for soybeans, particularly for our identity-preserved or IP soybeans, which are produced in Quebec by Prograin, Ceresco, and other companies that export to Asia and the Indo-Pacific region.

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

In other words, it means exporting our soybeans to the Indo-Pacific region for processing in that part of the world.

From your standpoint, on the other hand, do you have any concerns about a possible agreement? Are your members afraid that the corresponding sector in the Indo-Pacific region will be given preferential treatment in exporting its products to our region?

[Brian Innes]

Not really. We are concentrating on exports. We are usually very competitive. We have a number of challenges, such as the concentration of companies that provide container services, but generally speaking, we are focused on exports. We export approximately 80% of the soybeans produced in Quebec and 70% of soybeans produced across Canada. We are therefore highly competitive, despite the challenges tied to fertilizer and containers, as Mr. Byrne explained. That's why we're focused on export markets, but also on aspects that keep us competitive.

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

What is distinctive about soybeans and would give it value on the Indo-Pacific market?

[Brian Innes]

Our industry in Canada is highly specialized in the production of food quality identity-preserved soybeans. We produce specialized seed crops for a higher quality tofu compared to other regions. As Mr. Byrne explained, we also have the right climate for growing quality soybeans, whether because of the sugar content or other factors. We also have a highly developed industry. Our producers can adapt to technology and our exporters are very agile, as are our seed producers.

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

I'm being told that I am out of time. So I will just thank you and congratulate you on the quality of your French.

[The Chair, Liberal, Judy Sgro]

Thank you.

We'll go on to Mr. Masse, please, for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

I want to start by recognizing that Mr. Virani was correct on the dilatory motion. I was wrong on it. I didn't read my email stuff on the web, so I want to thank him for holding off for the last meeting, but we'll be happy to move that when we get there. If the Liberal whip gives them a hard time, they can blame it on me. I'm sure it's not the first time that my name has come up.

With that, I definitely want to continue with Mr. Innes here. I didn't realize the trade imbalance position that we have with India. What's it like with the United States and Mexico? Those are our NAFTA trading partners. I'm curious about what their treatment and the reciprocity are in this as well.