International Trade Committee on May 15th, 2023

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

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

It's disheartening to hear that although we've had CETA signed since 2016, in seven years the government has been unable to address the harmonization of pork and beef specifications that are still impacting us.

Similarly, I know beef farmers in my area are trying to ship to the U.S. to get access to the South Korean market. In both cases, since CUSMA was signed, and the CPTPP in 2018, we've been five years without the government being able to do anything here.

My first question is for Ms. Greenwood.

Are you aware that the government has raised these issues of beef specification harmonization to the RCC to get them addressed?

[Maryscott Greenwood]

On the question of beef specifically, I don't know.

There is a briefing next week with the Canadian secretariat for regulatory co-operation with their White House counterparts.

There was a period of time when the White House didn't name a counterpart to the RCC. That was a delay. All the work was happening on the Canadian side, and on the U.S. side, nobody was home. That's different now. I think as soon as next week there will be a Canadian delegation coming down.

I don't know specifically about beef, however.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you.

Now, I want to turn to canola. I'm extremely concerned about the risk to the canola business, which is so important.

We know that in response to Meng Wanzhou's arrest, China banned canola for three years. We've been calling on the government to help with diversification into other markets, but again, in response to foreign interference and the expulsion of a Chinese ambassador, I'm quite concerned.

I'd like to hear from our canola friends. What is the government doing to address this risk, to your knowledge?

[Chris Davison]

I'll kick that off.

Let me just start by saying that China historically and today is a very important market for Canadian canola—the largest vegetable oil consumer in the world. I would say that from recent indications, if you look at this crop year and in the past, we have had a very strong trade relationship. We know they value our high-quality canola. Obviously, Canada is the largest producer of that in the world.

To your point, we were very pleased to have resumed full market access to China last year. Our work is all about what we need to do within our capacities to mitigate risk and to maintain open and predictable market access for canola moving forward. At the same time, as an industry, we are very keen and aggressive on diversification efforts. That includes the comments made earlier with respect to other markets in the Indo-Pacific, but we've also been working very hard, for example, in the context of North America and the nascent biofuels markets that we have coming on stream in both Canada and the U.S.

It's a matter of being able to walk and chew gum at the same time. We work very hard on both fronts in terms of maintaining, and mitigating risk in, the markets we have, but also on pursuing diversification opportunities.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Ms. Whitley, would you like to add anything to that?

[Janelle Whitley]

No. I don't have anything more to add.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Okay. That's very good.

My next question has to do with trade dispute resolution mechanisms. We know we have uneven trade in all of these agreements that we've signed. Each agreement has a trade resolution mechanism.

Let's start with you, Mr. Roy. What is being done to address the inequity in pork? Is there a trade dispute under way? What's happening there?

[René Roy]

There is not that I am aware of; from our understanding, there is no dispute resolution regarding the non-tariff trade barriers that we mentioned earlier.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

What do you think the government should be doing to move things forward to get these specifications harmonized with our CETA agreement?

[René Roy]

It's a mechanism that we should use. If it can be successful, then we are happy. If not, there are other ways, political ways and also market ways. It's not that we want to escalate things, but there are various tools we could use in terms of negotiations and just making sure it's a level playing field. We are not requesting higher access or inequitable access. We are just requesting equitable access.

[The Chair, Liberal, Judy Sgro]

Thank you, Ms. Gladu.

Mr. Arya, you have five minutes, please.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

Madam Chair, I would like to place on the record my appreciation for the Canadian agricultural industry, which is so well represented here. We are well placed in the world. Canada is the fifth-largest exporter of total agricultural produce and agri-food products.

Mr. Roy, I understand the frustration of the pork exporters to the U.K. and Europe. While I want that to be resolved, I personally am not in favour of your suggestion that we try retaliatory tariffs. Though it has worked, in my view it more often than not doesn't bring you to an easy solution.

Mr. Greenwood, I'll come back to you later, if I have time, on your opinion about Bill C-282. In my opinion, it's bad legislation for Canada as a country that promotes free trade. I would like your opinion later on whether it affects Canada-U.S. trade relations, especially in the dispute resolution mechanisms before CUSMA is up for renegotiation.

First, though, I would like to go to you, Mr. Walker and Mr. Davison. I understand the problems. You've explained them. I want to know if there are any shortcomings in the dispute resolution mechanisms that we have today. Is there anything we can modify or tweak in the approach that the industry bodies and the government take to adjust the non-tariff barriers that we have seen in different parts of the world?

[Dave Carey]

There are a number of different dispute resolution mechanisms. I think the one we see that is fairly lacking right now is the World Trade Organization and the reform that needs to be done there. The United States has not appointed judges to the appellate body, so the international institution that underpins our entire international framework is lacking. We have seen leadership from the Canadian government and Minister Ng with the Ottawa Group.

There are dispute resolution mechanisms under each of our major agreements, with the CPTPP arguably being the gold standard.

There are certainly things that need to be done. Our hope, with moves like the Indo-Pacific agriculture and agri-food office, is that we're able to be ahead of these before they become trade irritants, because they are often technical barriers to trade.

We have world-class negotiators and trade commissioners, but often, for some of these new ones, as Mark and Chris Davison talked about, it's about helping to establish the path to figuring out a regulatory burden or a regulatory irritant at a technical level, as opposed to at a more political or more strategic level.

I'll defer to my colleagues Chris and Mark.

[Chris Davison]

I'll add one or two things to Dave's comments about the WTO and others.

I think there are things that can be done in our own monitoring and tracking once we have agreements in place, and we all have a role to play in that. Industry works very closely with government in that, but I think there are opportunities to potentially formalize and institutionalize that a bit more. That would be one thing.

The other thing I would say is that the nature of some of the NTBs that we face tends to be fairly technical, so there's usually a significant investment up front in terms of time and working with both stakeholders and government here, domestically, as well as internationally—wherever we may experience these particular issues.

There are mechanisms in place through various trade agreements we have. I referenced the example of a recent technical consultation with Mexico. We want to avail ourselves of all those avenues before contemplating escalating something to a higher level. That's not something we take lightly. All the sectors represented here have invested much time and effort in building up relationships in the export markets that we are shipping to. Therefore, as a matter of course, our first stop is to work with entities and stakeholders domestically and in those markets to seek out a resolution.

Where that can get more challenging sometimes is if you have measures that are adopted without prior notification. That leaves little time for industry to either adapt, if it's perceived as legitimate, or seek clarity in terms of what the intended measure is about and what compliance may look like.

Anything we can do to alleviate that up front would be seen as beneficial.

Thank you.

[Chandra Arya, Liberal, Nepean, ON]

Mr. Walker, please answer quickly.

[Mark Walker]

I'm mindful of the time, so I would say we have world-class negotiators, and they need to be empowered to negotiate binding dispute resolution mechanisms, supported by scientific, risk-based assessments.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Monsieur Garon, please, for two and a half minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Madam Chair.

My questions are for you once again, Mr. Roy and Mr. Heckbert.

There was a long conflict with the United States about country of origin labelling. My understanding is that it resulted in a billion dollars in losses for you.

Is that a one-off or is it the kind of issue that you, pork producers, and other trading partners have to face?

[René Roy]

It is a problem that could resurface because this idea, this principle, is being revived in the United States. So it is indeed something that worries us.

Country of origin labelling is fine, but we want it to be done in accordance with trade agreements. Since there is so much trade with the United States, including live animals that are sent there, this principle must be respected. Otherwise, trade frictions between the two countries will increase.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Standards for phytosanitary measures are often a pretext for imposing non-trade barriers. It is understandable that the countries most vulnerable to such barriers are those whose scientific standards are much lower than those that are globally recognized, including for pork.

Why do you think the market you operate in is particularly vulnerable to such barriers?

Please tell us about Canadian quality standards, the ones you are subject to. Why are we especially vulnerable to such barriers? I find it a bit hard to understand.

[René Roy]

It is paradoxical indeed, because our products are recognized around the world for their quality. The Canadian Food Inspection Agency ensures that our product quality is very high. It is well-known, including in Japan, which is one of the countries with the highest food quality standards.

I would also point out that we signed an African swine fever zoning agreement with the European Union. In the event of an African swine fever outbreak in Canada, we would have a bilateral agreement. There was a swine fever outbreak in Germany, which was able to export its products to Canada. If the same thing were to happen here, however, we would not be able to export our products.

Even with balanced zoning agreements, if the trade agreements are not balanced, we will not be able to address the problem. Seventy per cent of our pork is exported. That represents a high value to Canadian producers.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Next, we have Mr. Cannings for two and a half minutes, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

The issue of dispute mechanisms was brought up, and I'd like to turn to Mr. Carey now. It's my understanding that dispute mechanisms, especially investor-state dispute mechanisms, come into play when the investors or exporters feel they're being treated differently from domestic markets. In the case of canola and other agricultural products, if the EU has different regulations from Canada for its farmers, I can't see how those dispute mechanisms would work very well, because the EU would say, “This is what we hold our farmers to, and we are holding you to the same standard.”

Could you comment on that?

[Dave Carey]

Absolutely. As my colleague, Chris Davison, said, we're always hopeful of avoiding it ever getting to a dispute resolution, a formal process. It's time-consuming, and it often leads to a deterioration in bilateral or multilateral relationships.

That being said, the threat of it is an important part of a negotiation, and, as we observed with CETA, there's certainly a lot to comment on there from an agricultural perspective. One of the issues we still have with CETA is that a number of EU states have not ratified the agreement. CETA is very politicized, so there are discussions with a number of other trade deals to be dealt with without the politicians involved. Everything is sort of politicized with the European Commission, so that certainly is a concern.

Our particular concerns are around the adjudication around biotechnology and crop protection products, where the European Union just takes a different view of science from the rest of the agricultural trading world, for example, Canada and the United States.

We look to the CPTPP. It probably has the most robust provisions for adjudication, such as science-based equivalency. It also spells out the path to resolve issues. My colleague, Mark Walker, indicated earlier that sometimes it's not about signing the trade agreement, it's about making sure our trading partners follow through on the spirit of the agreements they've signed. Having trade dispute resolution mechanisms that have teeth and a real threat of using them are very important to avoid ever using them.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Right, so the important thing is to develop those relationships and keep those discussions going, to make sure it's clear what Canada expects.