International Trade Committee on May 4th, 2023

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will go to Mr. Miao for five minutes, please.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair, and thank you to all the witnesses for appearing today.

First, through the chair, I'd like to turn online to Mr. Beck.

Currently our government is exploring or working on a number of trade agreements with countries in the Asia-Pacific region, as I'm sure you're aware. What do you think the key areas of focus should be in terms of addressing non-tariff barriers in the Asia-Pacific region?

[Stewart Beck]

Well, in the context of CPTPP, a lot of the non-tariff trade barriers were addressed. It doesn't necessarily mean that they don't emerge in various ways. That's because the agreement is complex, and in many cases it's technical.

I think the big markets we're talking about need to be addressed in a Canada-ASEAN free trade agreement. In terms of how and where, we should be putting our emphasis on the type of agreement we had with the CPTPP. It's really the gold standard of agreements. If we can replicate it.... It would be much more difficult in ASEAN, as you can imagine, because of the types of countries that are part of ASEAN, but there's no harm in trying.

In the context of India, which is, again, a really important market for us, we've tried. As I said, when I left Delhi in 2014, we'd already gone through seven rounds of negotiations. There are lots of other issues there that are hindering a completion of a comprehensive economic partnership agreement. I think an early progress agreement will hopefully, in the context of what we're willing to offer and what they're willing to offer, deal with some of the most important NTBs. That's all part of what negotiators need to be able to understand. It's going to require us to give in some areas. Hopefully, the Indians will reciprocate.

Again, our focus should be on dealing at the front end with some of those big issues that we need to deal with. Some of them are almost impossible to complete, just due to the nature of the Indian economy and how we approach it, but it's at least something that we should try, and we should find areas where there's common ground. Hopefully, we can offer something that's attractive enough to lead them to deal with some of the agriculture NTBs, which are really important to the Canadian economy, particularly the agricultural economy.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you for that.

Next, through the chair, I have a question for the Canadian Agri-Food Trade Alliance.

How have the non-tariff barriers evolved over time for the Canadian agriculture industry? Are there any emerging trends in terms of non-tariff trade barriers that you're currently monitoring?

[Dave Carey]

They've increased, certainly, after COVID. We've seen a rise in protectionism. Maybe I'll let Adam touch on some of the specifics, but they certainly are on the rise. They've increased significantly.

[Adam Taylor]

To give you a couple of statistics, in the year 2000 there were one million non-tariff measures that we could identify. Today, there are over four million. In 20 years, we've gone from one million to four million. These are equivalent to really hard, trade-disruptive tariffs. They're usually the equivalent of between 25% and 40%. A non-tariff barrier is the equivalent of a 40% tariff in some cases. These block trade, effectively, and that's bad news for agri-food exporters.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you.

Let's talk about canola in Japan. How has the demand for canola in Japan increased over the past five years? What role do international trade agreements such as the CPTPP play in addressing the non-tariff barriers when exporting canola to the Japanese market?

[Dave Carey]

I work in the canola sector in my day job, and yes, Japan is one of the most important markets for canola exports. We have a long-standing, long-established and very solid relationship with the Japanese. I don't have the Japanese trade statistics for 2022, but in 2021 it was 1.7 billion dollars' worth of exports, which is our third-largest market for canola.

Japan is a country that likes to import canola seed that they then crush on their own for cooking oil or for whatever they choose to do. Japan's biggest concern in Canada is getting it. The Japanese come to Canada. Every year, we host a delegation from Japan. The biggest concern of the Japanese is just that they want our canola, and they actually want our canola more. In canola, our biggest competitor is Australia, but they prefer Canadian canola. They want that high-quality oil. Our relationship with Japan is very solid. Trade agreements would certainly help, but Canada and Japan have a very long-standing bilateral relationship—CAFTA as well—with the Japanese trade officials here in Ottawa.

The Japanese market is critical. It's stable. It's been a bellwether for the Canadian canola sector for decades.

[The Chair, Liberal, Judy Sgro]

Okay. Thank you very much. We'll go to Mr. Sheehan for five minutes.

No, I'm sorry; we'll go to Mr. Barlow. I'm sorry.

I was thinking of Mr. Martel. I know he has a problem with a headset that doesn't meet the standards for the translators. I wasn't going to miss you, Mr. Martel, but we'll have Mr. Barlow, please.

[John Barlow, Conservative, Foothills, AB]

That's okay. Welcome to the team, Mr. Sheehan. That's fine. We'll find a spot for you. Don't worry.

[Some hon. members]

Oh, oh!

[John Barlow, Conservative, Foothills, AB]

Mr. Beck, I thought you made an interesting comment earlier in your testimony. You said that we have to start looking at agriculture and agri-food as a geopolitical tool. I couldn't agree with you more in that assessment that we have to use a geopolitical scope in looking at what we offer.

I would say that after COVID, and certainly with Russia's illegal invasion of Ukraine, we now need to lean more on our most trusted trading partners and not on the bad actors that are around the world. Can you expand on the role Canadian agri-food could play as a geopolitical tool and Canada's role in helping not only to feed Canadians but to feed the world?

[Stewart Beck]

Well, it's easy to say that we have probably the largest freshwater resources in the world. When I was a trade commissioner and I went out to market Canada, I often would say, “Look, we have lots of land. We have lots of water. We can grow a lot of products.” A lot of the issue is trade barriers and how we can choose the markets we want to go to and how we can get into those markets.

It's a geopolitical tool. When I was in India, I spent quite a bit of time trying to build our ability to export natural gas to India. The best and easiest place to do that is off the east coast of Canada. Our biggest challenge is our own challenge, which is being able to get our resource to the coast and being able to ship it.

It's the same thing with agriculture. It's a resource that's in demand globally. In terms of how we approach it and what's being done under the Indo-Pacific strategy, I agree that having an office in Asia focused on agriculture is going to be critical, because it is something we'll always be able to rely on. It's going to create tremendous opportunities for Canada and it will create great income for us.

[John Barlow, Conservative, Foothills, AB]

Thanks. I appreciate your bringing energy into that. Certainly I would say that Canadian resources such as energy and agriculture are critical geopolitical tools. If two of our most important allies, two of the strongest economies in the world, Germany and Japan, come to Canada and ask for our help, in terms of Canadian energy, to cut their umbilical cord or cut the ties with Russia and to stop funding Russia's war machine, it is extremely disappointing—and I think that's an understatement—for Canada to turn its back on two of our most trusted trading partners and not come to an agreement to supply them with Canadian LNG. I appreciate your raising that issue.

I'll turn now to CAFTA and Mr. Taylor.

I was stunned by your number about the increase to four million non-tariff trade barriers in global trade. Has CAFTA done an assessment of the economic impact of those trade barriers on Canada's agri-food industry, for example?

[Adam Taylor]

Yes. We're updating our numbers now. We've looked at how automatically these numbers show up to a 40% tariff. Tariffs could fall to zero in an FTA, but if non-tariff barriers persisted, they'd be the equivalent of a 40% tariff barrier. We'd lose opportunity right there.

Under CETA we were supposed to have $2 billion of access to that market annually. We have a fraction of that, while their trade surplus is growing every day. We're making ground, but not nearly what we were promised when that agreement was first signed.

We're trying to update some numbers, but the numbers are staggering when you look at the potential that's been lost.

[John Barlow, Conservative, Foothills, AB]

To that, Mr. Taylor, and maybe even to what Mr. Beck was saying, with CETA and allowing or being in the process of allowing the U.K. accession into the CPTPP and not addressing some of these problems, what is the current government missing? I would assume we want to show a position of strength when it comes to negotiating trade agreements or addressing these gaps when they become apparent, but it doesn't seem as though we're doing that. What are we missing? What is the current regime failing to address when it comes to improving these trade agreements or ensuring that new trade agreements don't have these trade barriers that are impacting Canadian producers?

[Adam Taylor]

Ultimately, it's using our leverage. We need to be strategic in terms of the sequence in which we negotiate things. I think that by putting the U.K. accession ahead of the U.K. bilateral agreements, we lost that leverage. We could have said, “No, we're not going to move that forward until we address these things. We're not going to repeat the same mistakes we made in CETA.” I think that would have resulted in a more advantageous outcome for us. That's on its track, and now we have to fix it in the bilateral agreement. Whatever tools parliamentarians have to help us do that would be very beneficial to our sector.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Now we go to Mr. Sheehan for five minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much. My first question will be for Stewart.

First of all, thanks to all the folks for presenting on these non-tariff trade barriers.

We're planning a trip, Madam Chair, to the ASEAN countries, to India. I want to tap into Mr. Beck's extensive knowledge about the Indo-Pacific region. We're going to be meeting with different people over there, so what advice would you give all of us, the ones who go on this trip, when we are meeting with some of our counterparts? What kind of non-tariff trade barriers are happening in those regions? Are there common non-tariff trade barriers among countries in that area or those that are similar? Would you like to address that?

[Stewart Beck]

I think most of the common ones would be around agriculture and agricultural products. Again, agriculture is a sensitive sector for most economies in the region. If you're going to ASEAN, and India in particular, I think you'll find that out. That's just the nature of how their economy has grown, or how it exists.

I remember that when I was being posted from San Francisco to Delhi in 2010, I was amazed by how the press was consumed by the monsoon season, about how much rain was going to come and how that was going to impact India's GDP. It's understandable that it's a very sensitive sector.

How they develop their own NTBs around that is related partly to the geopolitical relationship that exists between us and them and partly to the reality on the ground, to what's happening. The same is true in other markets in ASEAN. I think that's one of the ones you'll probably have to address in your conversations, and it's something you're going to want to try to understand.

Again, it's really understanding where they're coming from and why they want to create that environment. They won't be too forthcoming.

As someone on the panel was saying, there are now four million different types of NTBs. There are many different ways that you can approach that. Essentially you want a set of rules of the game that we can all live by. It doesn't mean that people are going to necessarily follow them. I can give you lots of examples of it not happening, even though you have tariffs in place and you think you have rules in place.

Again, it's partly the reality of doing business and the practical elements that you have to consider. In your conversations, find out where they're coming from, what their biggest concerns are, how we can work around those, and how we can be partners in helping them solve some of their problems. That will help to eliminate some of those potential NTBs.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

That's very sage advice. Thank you for that.

I've had opportunities to travel to that area. They are very concerned about climate change, about rain. There are a lot of coastal areas where they're very concerned about how that is affecting their country. I noted that when you were talking about monsoon season and such. A lot of coastal towns that are ports as well have challenges with the rising tides and water.

Madam Chair, my next question is to the cattle people.

Jack, I'm also co-chair of the Canada-Japan Interparliamentary Group. Yes, they love our beef. They love our canola. They love our pork. If you go to a store in Tokyo, you see it everywhere.

Anju asked a question about the CPTPP agreement. I recall that being one of the original signatories and doing it expeditiously allowed for two tariff lifts and really helped the cattlemen at that particular time.

Could you explain to the committee again how that benefited your members?

[Jack Chaffe]

I'll let my colleague Dennis Laycraft respond. He'll have the numbers right in front of him.

[The Chair, Liberal, Judy Sgro]

You're on mute, Dennis.

Dennis, you need to unmute yourself. You may have a problem with your headset.

[A voice]

There's a button, usually on the side of it.