International Trade Committee on May 15th, 2023

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

Mr. Davison, do you want to jump in on that?

[Chris Davison]

Yes. I'm happy to add to that.

I echo what Mr. Walker said. I think our report highlighted that very well.

One of the things it did, through a number of interviews with different stakeholders in the region, was talk not only about current practices in Canada but also about what our competitors are doing in the region. One of the things that came back in spades was very high regard for Canada, but there was also a comment that, while Canada has a very good reputation, particularly in things like regulatory and technical capacity building, we don't have as much of a physical presence in the region. Therefore, building on what Mr. Walker said, I think there's a recognition, a value and an appreciation for what Canada can and has done, but we're looking to step that up with the establishment of the office.

The other, last comment I would build on that—and I think you talked about it in sort of a reactive context—is that we see the ability to have an increased presence on the ground in key markets in the Indo-Pacific, and to build on the relationship building that Mr. Walker talked about with officials, regulators and other stakeholders. We hope a more proactive approach will head off and prevent things from happening in the first place as well.

Thank you.

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

Let me just continue in that vein, Mr. Davison, with you.

There are other agreements in the region that are ongoing, right? We're very public about the fact that we're pursuing something with ASEAN, specifically also an additional bilateral agreement with Indonesia. Minister Goyal was here last week on behalf of the Indian government, in an early progress agreement with India.

What do that office and the Indo-Pacific strategy do in terms of helping to build some of those relationships that you and Mr. Walker just mentioned are so critical in the region? How does that help in terms of the go-forward on the proactive basis in terms of both getting those agreements concluded but also getting, potentially, more entrenched and better and stronger provisions in those agreements—those three upcoming agreements—that would help address some of the non-tariff barriers that we see, unfortunately, cropping up too frequently?

Go ahead, Mr. Davison.

[Chris Davison]

I think there are a couple of areas in that regard where it will be extremely helpful.

One of the other things that is probably apparent to all of us but was highlighted in the report we commissioned is the intense competitiveness in the region. At any given time, we're competing with 70 other countries or markets that are looking to expand their opportunities in the Indo-Pacific. You know that expression “out of sight, out of mind”, so we need to increase our visibility to do that proactive work that you allude to.

Building on my previous comment, where I know we can make an even bigger difference going forward is in regulatory and technical capacity building. This links back to comments made by a number of other folks over the last several minutes. Increasingly, a number of markets, economies and countries are developing and looking to implement their own national systems, but some will acknowledge that they don't have all of the existing technical capacity to do that and are quite welcoming and looking to countries like Canada that have well-established capacity in that area. That is definitely one area where we see this office being able to help play a role in moving forward.

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

I'll turn to Ms. Greenwood.

You were hearkening us back to the RCC, and you wanted to reinvigorate that.

Can you tell us a bit about.... In CUSMA, were some of the non-tariff barriers eliminated? Was there some success with CUSMA? How, specifically, would you like to see us reinvigorate the RCC going forward?

[Maryscott Greenwood]

The new trade agreement does set the rules of the road at kind of a high level, but there are all of these small differences.

For example, how do you test a product? Think about automobiles. Think about any product you have to test for health and safety. The small differences still exist between the United States, Canada and Mexico, even in the new trade agreement. Those small differences, absent an effort to have mutual recognition, really end up costing a lot of money.

To give a car example—and I'm making this up; this isn't an actual thing—you might have to crash test a new car at 60 kilometres per hour in Canada, and in the U.S. that same car, made in both Canada and the United States, is tested at 65 kilometres per hour, and it costs $1 million per vehicle, or something like that, to test it. You don't get an increased benefit in safety, but you have this small difference in how you have to certify something. It could be electric wiring, food, medicines, etc., anything that's manufactured.

All those differences potentially still exist, and companies either choose not to go into another market, even if it's right next door, or spend a lot of money trying to comply with small differences that don't enhance safety. It's still there.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Greenwood.

We'll go on to Mr. Garon.

Welcome to the committee today.

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

Thank you very much.

Hello to the members of the committee and thank you to all the witnesses for being here today.

To begin, I have a question for the Canadian Pork Council.

During the CETA negotiations, Canada obviously had difficulty anticipating the European non-tariff barriers on pork exports. And yet, those were not Canada's first free trade negotiations. Canada has an open economy.

First of all, why was Canada not able to anticipate the impact of those trade barriers?

Secondly, in the negotiations with the UK, do you think Canada is at risk of making the same mistakes and that it is trying to move forward too quickly?

[René Roy]

I will start with your second question.

Right now, we do in fact see a risk regarding the UK. In terms of moving too quickly, that is true. Canada and the UK both have an interest in concluding a trade agreement, but it has to be done properly. If the details are not ironed out properly, we will hit a wall as soon as the agreement is signed. We can see this clearly, with everything happening in the European Union.

As to the order of magnitude, we have exported roughly 255 tonnes of pork to the European Union since the start of the year, while the exports of just four countries in the European Union were more than 8,000 tonnes. Current forecasts suggest that the imbalance will be even greater. So the government has to be very aware, down to the fine details, of non-tariff barriers that sometimes arise based purely on perceptions.

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

When free trade is promised, the very least we should expect is for it to take shape in reality and not just on paper.

You talked about the fine details and your fear that the agreement with the UK could be based on the same conditions as the agreement with the European Union.

What are the most important fine details? What is the minimum Canada should ask for?

[René Roy]

We have to make sure that the same requirements apply to both sides. It is with respect to the technical requirements that differences arise. We have to make sure they are very clear and are well understood by both parties, since they are spelled out.

In the agreement with the EU, we noted that certain technical requirements were not spelled out. When our exporters tried to access the European market, they were told that there were certain limits, that certain details were not accepted, and that it was in the agreement.

So we have to make sure that our negotiators are well aware of the technical details and are able to negotiate trade agreements that are fair for both parties.

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

Public opinion is an important factor, and it determines the conditions for free trade. We know that, and you referred to it. Pork producers in Canada, who are mostly in Quebec, were maligned by the UK media, to say the least, unfairly so, according to several people.

Do you consider it a mistake that Canada failed to defend you adequately or do you think that is a trend that is too common?

[René Roy]

In that specific case, we have to make sure it doesn't happen again. That is why it is important that representatives of the industry sectors that are affected by trade relationship are also at the table to make their case.

Canada cannot afford to ignore the industry's opinion. The negotiators do not hear about our industry until they go to the other country. Yet they must be aware of the challenges we face on our side so the other party does not simply impose their rules.

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

I have one last question for you. Perhaps we will return to the topic later on.

Diplomatic relations between Canada and China are complicated, to say the least. Quebec pork producers sent us a document recently which stresses the need to open up new markets, in particular since the Chinese market was closed. These are non-tariff barriers which can be interpreted as voluntary measures to counter free trade.

Did the government consult you to listen to your requests and to get further details about this? What action was taken in response to your requests?

[René Roy]

We expressed our support for new trading relationships in the Indo-Pacific region, which we regard as a potential market. Market diversification is extremely important, especially in Southeast Asia, but it is still important to be able to conclude agreements with as few non-trade barriers as possible.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will go on to Mr. Cannings, for six minutes, please.

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

Thank you. I'm going to stay with Mr. Roy to talk about this issue with the U.K.

Correct me if I'm wrong, but it seems that some of these non-tariff barriers suddenly arose when we signed FTAs. They have come in as a response to FTAs. We sign them with the best intentions, and then other countries come up with ways of getting around them. We think we're going to get more access for pork and beef in exchange for more access to European cheese, and instead, we get nothing out of it.

That was my first comment, if you can respond to that.

With regard to the U.K., we have a situation with the accession to the CPTPP and the bilateral agreement that we're working on. It's my understanding that there's still an opportunity to sign a side letter with the U.K. about various aspects of what the CPTPP provides. We can specify in there some of the issues we have.

I'm wondering if you would comment on that opportunity, to see whether it would apply to some of your concerns.

[René Roy]

To answer your first question, yes, there is an opportunity. We are in discussion with the government right now to make sure that these non-tariff trade barriers that have appeared in the first agreement will not be sustained in the final agreement. Yes, there is an opportunity that we should grasp. Otherwise, it will be an unfair trade.

It is clear to us that it will be just a replication. They have decided to get out of the EU, but they mimic the same behaviour. We believe that this should be different. They should behave differently with our country.

On the question regarding when it happens in the process, whether it happens after the fact or during the negotiations, we are more careful right now to make sure that it is not in what I will call the fine print. I am not a negotiator, but it's not in the big-picture items. However, it's important that we take care of these details, which are, at the end, completely detrimental to the trade.

Eventually, if it's possible, I would like to say a couple of words about zoning agreements. It doesn't have to be now. I don't want to take up your time.

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

I'll see if I have time at the end.

I would like to turn to Ms. Greenwood and ask about the RCC and the issues that are dealt with through that. Some of them obviously affect big companies and big export-import operations.

I have a riding that has six border crossings in it. Most of them are used by small Canadian companies that are exporting to the United States, obviously. One example I have of a small non-tariff barrier is a large nursery in Grand Forks that imports American plants that have just been planted. They grow them up over the summer, and then they export them back to the United States to be sold in garden stores around the United States.

They have run into problems whereby suddenly they have to have more inspections at the border. They need to have aisles down the middle of their trucks so that inspectors can get in. It cuts their volumes in half, so their prices double. Those little things can have huge impacts on these small companies.

I'm wondering how many examples of that you see, where it's really the small companies being affected rather than the big ones.

[Maryscott Greenwood]

It's a perfect example.

Large companies have lots of people who can deal with any administrative burden that comes their way. They don't like it, but they have people to do it. Small companies don't. They don't have teams of analysts, lawyers and staffers who can figure out whatever the new regulation is. There is a disproportionate impact on small and medium-sized companies, and on entrepreneurs, actually, who are trying to do business cross-border.

It's tiny differences of regulation that don't mean anything. If the United States and Canada could just say that if it's safe in Canada, it's good enough for the U.S. and vice versa—just a mutual recognition—that would save tens of billions of dollars in the economy. It would help governments, and it would help small businesses the most.

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

This is a case in which we have a plant that comes from the United States to Canada and then goes back. You would think that the same phytosanitary procedures would be good enough in both.

[Maryscott Greenwood]

They can be, if we just focus on it. We just have to pay attention to it.

[The Chair, Liberal, Judy Sgro]

You have 20 seconds.

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

I'm out of time.

[The Chair, Liberal, Judy Sgro]

Okay, thank you, Mr. Cannings.

We go on to Ms. Gladu for five minutes, please.