Evidence of meeting #39 for International Trade in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was work.
A recording is available from Parliament.
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
You said that if we imported beef, it could lower the price of ground beef by 5%. I would say that Canadian customers would like to see the price of beef drop significantly—by more than 5%.
President and Chief Executive Officer, Canadian Meat Council
Do I have the opportunity to respond?
President and Chief Executive Officer, Canadian Meat Council
I totally agree, Madame Lapointe. What's impacting the price of ground beef right now is the low cattle supply we have in Canada. It's the lowest we've had in decades.
I know our friends in farming and ranching are working to grow the herd. We had a 2.5% growth in the herd last year, while the U.S. had a negative percentage in growing the herd. This is the first time in a while that Canada and not the Americans is leading the way in growing the herd. There's some more work to be done over the next two or three years in terms of growing the herd, but as we grow the herd, the price of beef will come down.
The last point is on beef processors. They are actually losing $200 to $300 per head right now because of the high price of cattle over the past four years. I have beef processing members in Manitoba, Shawinigan and Charlottetown who are cutting back on shifts right now, cutting back on work, because they can't afford to process more beef.
Liberal
The Chair Liberal Judy Sgro
Thank you very much.
Next is Monsieur Deschênes for two and a half minutes, please.
Bloc
Alexis Deschênes Bloc Gaspésie—Les Îles-de-la-Madeleine—Listuguj, QC
Thank you, Madam Chair.
Mr. Larkin, you mentioned that you are going to the United States very soon and that you travel there regularly.
What are your American partners saying about this idea we are promoting—namely, that there is a shared interest in renewing the Canada–United States–Mexico Agreement, or CUSMA? What feedback have you received?
President and Chief Executive Officer, Canadian Meat Council
From what I hear on the ground, especially from Republican members of Congress and senators, the message over the past 12 months has shifted a bit. The message 12 months ago was, “We're giving a long leash to President Trump and we're allowing the administration to do what they need to do on the tariff front.” The last time I was there, which was in November, the message had changed. I think the leash had shortened a bit, and especially Republican members of Congress were getting a little more bullish with the administration and on promoting the USMCA.
We saw a letter come out in November from bipartisan members of Congress—Democrats and Republicans—that was sent to the White House. Their ask of the White House was for a flat renewal of the USMCA for 16 years.
We have a lot of allies on Capitol Hill in both parties. I expect we'll have very positive meetings next week as we meet with these folks. When I meet with our stakeholders on the ground—the Meat Institute and the other agri-food associations in Washington, D.C.—their message, again, is for a flat renewal of the USMCA for 16 years. They're getting positive messages from the White House, from the Trump administration, that agri-food, as we've seen over the past 12 to 18 months, has very much been carved out of the tariff conversation.
I think there's a clear recognition by the administration and by the Secretary of Agriculture that tariffing food increases the cost at the grocery store. That's why we saw them backtrack on tariffs on things like bananas, coffee, etc.
All agri-food continues to be CUSMA-compliant, so there's a strength there, as I said in my opening remarks, for our negotiators to really lean on the agri-food sector. We also supply the majority of fertilizer to the U.S., so there's a real strength in that relationship that we need to continue taking advantage of.
Bloc
Alexis Deschênes Bloc Gaspésie—Les Îles-de-la-Madeleine—Listuguj, QC
Mr. Neil, do you believe that the revenue we collect from Canadian tariff responses is being put to good use? What do you recommend?
Chief Financial Officer, Dajcor Aluminum, Canadian Coalition of Aluminum Extruders
We are not currently enforcing the countertariffs. They've been under remission from the start. Aluminum products are able to cross tariff-free into Canada from the U.S. under the HS codes that we participate in—7604 and 7608—if they're being used in further manufacturing. Effectively, all aluminum extrusions are used in further manufacturing, so they come in completely tariff-free from the U.S.
We see no benefit to keeping product out of Canada. We've also seen no benefit to revenue being generated that could be further disbursed to the industry.
Liberal
Conservative
Adam Chambers Conservative Simcoe North, ON
Mr. Larkin, welcome back to the committee.
I understand you have a newborn at home, a potential future challenger to Mr. Naqvi's seat here in Ottawa. It's a special thing, so congratulations.
I was listening to your testimony today and from previous appearances. In it you suggested that CUSMA is essential to a well-functioning and integrated supply chain. Is that still your position?
President and Chief Executive Officer, Canadian Meat Council
Yes, it is, absolutely.
Our largest customer is the U.S. There's a lot of work being done right now on trade diversification, including by the industry, and trying to find customers in other places globally, but the U.S. is our current largest customer and will continue to be our largest customer for the vast foreseeable future.
Conservative
Adam Chambers Conservative Simcoe North, ON
Your position would be that a successful negotiation and conclusion to the current or upcoming CUSMA negotiations would be essential for your members.
Conservative
Adam Chambers Conservative Simcoe North, ON
How should we take the observation that Mexico is seemingly having ongoing and formal discussions in advance of this CUSMA deadline? How do you interpret the fact that Mexico is having these discussions and it does not appear that Canada is? Are you concerned? Do you think we should be at the table? What do you read into that fact?
President and Chief Executive Officer, Canadian Meat Council
Am I concerned? It's yes or no. I'm concerned, yes, because we need to get the deal done with the U.S. and Mexico. A lot of the industry is based on the relationship we have with both countries. It's no because I'm also a believer that we need to get the best deal possible at the table. We can't rush things.
My worry for our friends in Mexico is that they may be rushing into things and getting a deal that may not be beneficial to their own country. We saw the same thing happen with our friends in the European Union and in the United Kingdom.
That's not the direction we want to go. We want to ensure that the agreement, first of all, remains the same as the one we have right now, but if there are amendments or edits to it, we want to ensure that it continues to support the agri-food sector here in Canada and in the United States.
Conservative
Adam Chambers Conservative Simcoe North, ON
Those are very fair warnings.
You might recall that in the 2018 renegotiation, Mexico and the U.S. basically defined the deal and then brought it to Canada as a bit of a “take it or leave it” at the end. Do you think that is also a risk this time, given the dynamic that we see?
President and Chief Executive Officer, Canadian Meat Council
It could be a risk. It depends on what we see with CUSMA.
What I've heard from interlocutors in Washington, D.C., and the U.S. is that there's no appetite from the administration to bring the agreement to Congress. They don't have the votes from even their own party in the House or on the Senate side.
When we look at potential updates or amendments to the agreement, we're very much looking at side letters on key issues. The key issues we hear about in the media and every day are obviously dairy, aluminum, lumber, etc., but in terms of the fundamental agreement that we have among our three countries, I hear very positive messaging from our friends in the U.S.
Conservative
Adam Chambers Conservative Simcoe North, ON
That's very encouraging.
Would it also be your position or testimony that a resolution or a successful renegotiation of CUSMA is in Canada's best interest, generally?
President and Chief Executive Officer, Canadian Meat Council
Yes, absolutely.
Conservative
Adam Chambers Conservative Simcoe North, ON
That's good.
I will just flip to Mercosur for a second, because you had a couple of good exchanges on that.
We recognize that any deal that Canada would do with another country could be viewed by the United States in a particular light, not that it would prevent us from doing any free trade deals. Our position is that we should be expanding trade with other countries. However, do we have to be mindful about how we might structure a deal with Mercosur so as not to potentially create additional frictions with the U.S. at a very crucial moment?
President and Chief Executive Officer, Canadian Meat Council
We at the Meat Council are the most pro-free trade folks you'll find, but as you folks around the committee table know, any free trade agreement we sign—or most of them we sign—have TRQs, or they have some elements to them that aren't about free and unfettered access. That's what the Brazilians and Argentinians are asking for—full, unfettered access to Canada. That would absolutely have a major impact on the beef sector in Canada.
There are definitely concerns we have heard from our American counterparts about the backdoor treatment for imports through Canada into the United States. I can tell you that the beef processing sector and ranchers in the U.S. are very sensitive to imports coming in from places like Brazil and Argentina. We've seen that happen over the past few months when Trump had to backtrack on some of the moves we made.
The last piece I'll note, which I haven't mentioned yet, is that we also need to ensure that our SPS—our sanitary and phytosanitary—and inspection systems are equivalent to those of the folks in Mercosur. I would note to the committee that our last audits of the establishments in the Mercosur countries were in 2018 in Brazil and in 2015 in Argentina. We need to ensure that our CFIA inspectors are getting out there and inspecting establishments that are currently exporting to Canada to ensure that they are at the same level as our food standards.