Good afternoon, everyone, and to any members who are visiting us, welcome to the trade committee.
Today's meeting is very important. We have discussed this before. It's about the challenging trade issues facing our canola industry. It is a very important industry. Canola is a crop that was developed in Canada and represents over 250,000 jobs, $11 billion in wages and almost $30 billion in sales.
Before I start, I want to give the committee a heads-up that things are working quite well with the whips on our very important trip to the United States that we're working on with the ways and means committee. It looks as though we might be going between the 8th and the 10th. I'm just letting the parties know they should put forward the names of your designated travellers. Right now, it's looking good and it could be a very important meeting.
Without further ado, we're going to get right into our meeting. We have a very busy one today. We're going to have to be done at 5:30 sharp because there are votes.
Thank you, Chair and colleagues. Thanks for the invitation to appear in front of the committee.
For a long time, I've believed that parliamentary committees are really the heart of our democracy. That's where we are held accountable. That's where we have spirited debates about public policy, sometimes contrasting in their points of view and perspective. It's open to the public and it's the kind of exchange that makes our democracy as vibrant as it is.
I am pleased to be here to talk about a very important issue, particularly for me as a Manitoban, because I know how important our agricultural and agri-food industries are. I know how vital the export markets are for the well-being of western Canadians. I know that they are the wealth creators of the prairie economy—indeed of the national economy.
I also know, as all members of the committee will know too, that China is a key market for our canola exporters. One figure always sticks in my mind. If I were to ask you in what year the Richardson family did its first deal with China, what might you say? It would probably not be 1910. For over a century, we on the prairie have been selling wheat to China. For over 100 years, prairie farmers have been growing and selling the highest-quality products in the world to customers in China.
As a former CEO of the Business Council of Manitoba, I know how critical our agricultural experts are to the overall economy, not only of the prairies but to the entire country. If our farmers suffer, we all suffer. If our farmers succeed, we all share in that success.
As , we must maintain our trading relationship with China. China is Canada's second-largest trading partner and an important market for Canadian exporters. ln 2018, two-way merchandise trade between Canada and China reached $102.2 billion. Canadian total exports of agriculture, agri-food, fish and seafood to China were valued at $10.5 billion in 2018, up from $8 billion in 2017 and even more from the year before that. Total Canadian exports of canola seed, oil and meal to China in 2018 were valued at $4.3 billion, up from $3.6 billion in 2017 and $2.7 billion in 2016.
However, despite the depth and strength of our bilateral ties, as with any diplomatic relationship, ours is not without its challenges. This is as true today as it has been in the past, and as it was in 2009, the last time that China gave us a bit of grief over Canadian canola.
We were extremely disappointed in the decision by China to halt import of Canadian canola. Last week, the and I met with Richardson executives in Winnipeg. and I also met with both Viterra and the Canola Council of Canada last Friday in Saskatoon. Importantly, over those number of days, we have also met with our counterparts, the ministers of agriculture and ministers of trade from both Manitoba and Saskatchewan. We also met with the Premier of Saskatchewan, to show that we are working in lockstep with the industry, with producers and with our provincial counterparts.
I want to thank our provincial partners for their collaborative effort and their support on this very important file. We're all committed to resolving this issue for our growers.
Colleagues, this is not a partisan issue. I'll say to you what we told the producers and our counterparts. Our government is seized with this issue. We recognize the potential impact of China's decision, and we are working hard to restore our exports to China and mitigate the impact of their decision on our canola sector, and by extension, our economy as a whole.
Yesterday, we announced the formation of a working group, which includes the Canola Council of Canada, the Canola Growers Association, the Richardson company, Viterra, and representatives not only from the federal government but also from the governments of Alberta, Manitoba and Saskatchewan.
The CFIA and our officials are working diligently with the Chinese to refute the reasons for halting Canadian imports.
While those efforts continue, we are seeking other markets for Canadian canola. I have been working the phones to grow our canola exports in other markets. I've connected with, and will continue speaking to my counterparts in other countries worldwide to expand our canola exports.
Our government is committed, as you know, to diversifying trade and opening new markets for Canadian exporters. The newly implemented CPTPP and CETA agreements are creating significant export opportunities for Canadians, with the CPTPP alone expected to result in $780 million in new canola exports.
Canada now has 14 trade agreements covering 1.5 billion consumers in our free trade zone, and access to nearly $50 trillion in combined GDP.
Colleagues, we are the only G7 nation to have a free trade relationship with all of the other six, which positions Canada to be an international leader and investment hub.
Our government works diligently to help more Canadians export more goods to more places, creating more jobs and more wealth from coast to coast to coast.
Thank you very much.
I thank all the members of the committee for your focus on this very important issue and for calling us here today to address your questions.
There is nothing more Canadian than canola.
It is a symbol of Canada's scientific achievement and agricultural innovation. The success of Canadian canola is a source of great pride.
Canola is a stable rotation crop for many farmers and contributes almost $27 billion a year to the Canadian economy, a contribution that has tripled over the last 10 years. Our producers create a top-quality product and the science and inspection system that supports our exports is world class.
Our government knows that strong markets for our high-quality Canadian canola mean more money in the pockets of our farmers and good middle-class jobs for Canadians.
As you know, China suspended the licences of two Canadian canola seed exporters. It is also subjecting all Canadian canola seed to more stringent inspection. We want to reaffirm our support for producers and make clear that we are doing everything we can to resolve this issue, in conjunction with our partners and industry stakeholders.
As mentioned by the last week, Canada is prepared to send a high-level technical delegation to China.
I have recently sent a letter to my Chinese counterpart requesting to send a delegation led by the president of the Canadian Food Inspection Agency, along with her team of plant health experts and the support of technical experts from the prairie provinces.
In the meantime, experts from both countries continue to share information, and the talks are ongoing. Just 10 days after my appointment as Minister of Agriculture and Agri-Food, I travelled to Alberta, Manitoba and British Columbia. Here, in Ottawa, and out west, I have already met with dozens of industry representatives, producers and processors.
Last Friday, with Minister Carr, we were in Saskatchewan to meet with our provincial counterparts and agricultural leaders.
Strong collaboration and ongoing dialogue between industry and governments is vitally important. That is why we have set up a working group that includes the Canola Council, the Canola Growers Association, Richardson, Viterra, and representatives of the federal government and the Alberta, Manitoba and Saskatchewan governments.
The working group will ensure a coordinated and collaborative approach towards resolving this canola market access issue in China. The group will also explore alternative markets for both the short and long term.
On top of that, we know that Canada's canola farmers have concerns about seeding, storage, prices and cash flow. We understand that.
We are continuing to explore the full suite of existing risk management tools and support mechanisms to help the industry and farmers as much as possible.
Mr. Chair, Canada has a world-class canola industry. Our government will continue to work together with partners and stakeholders to find a science-based solution to the current issues the industry is facing.
We will continue to stand firmly behind farmers.
Unfortunately, I only have five minutes. I don't mean to be rude, but there's urgency. Planting will be happening in John's riding in probably the next two weeks. On May 1, guys will be seeding. That's why I was really stressing to the committee when we first requested the emergency meeting roughly three weeks ago that we needed to move more quickly and faster to get as much information in front of them...so they could make the best decisions.
I understand now the reason for the technical delegation. I'm disappointed that it's not already there and being done. To me, that should have been done two or three weeks ago and it should already have been crossed off the list of reality. I think we've done everything in Canada that we can do.
I think, Mr. Carr, you were in the media saying that CFIA has taken another look at the samples, and there's absolutely nothing wrong. We already know that the end result after all of this will be that there's nothing wrong with our canola. It's a safe product. There's actually something other than that. It's a political statement.
You still have to check that box, and I get that. In the same breath, however, you have to be planning for alternatives. The reality is that if you've checked that box and we have said that, yes, this canola is safe, and we have not changed our processes, and this is actually a political issue, what are you prepared to do?
I think you have these farmers saying, okay, we want to know that when our crop comes off in the fall, you will actually have completed something, and you will actually have laid out something tangible so the Chinese understand there are consequences to their playing politics with food. It's hurting their reputation but it's also hurting our livelihoods.
What types of items have you put on that list? When you talk to your friends in the Chinese government you say, you know, there are going to be consequences if this is not an actual CFIA issue, and if it comes back and the reality is that this is a political issue, which is what everybody is speculating about, then these will be the consequences. Have you looked at that list and at what that list would look like?
It's similar to what we did with the country of origin labelling with the U.S., when we said, okay, here are the counter tariffs. We were very strategic, and we had a very unique goal to accomplish with those lists.
I know, Mr. Verheul, you worked on creating some of those lists.
Have you done that yet?
We've signed trade agreements. We signed a trade agreement with the European Union, and that means we now have 500 million customers in Canada's free trade zone. We have agreed to NAFTA 2, for lack of a better acronym. Very importantly for canola in particular, we have signed and ratified the CPTPP.
Importantly, we were among the first six nations to ratify it. That made record speed through the House of Commons and the Senate, and I want to pause for a moment to thank my Conservative colleagues, in particular , who did a lot of work on this file. Because of the co-operation of the opposition and the Senate, we were able to ratify the CPTPP before the end of the year, which meant we have had two tariff reductions, one at the end of December 2018 and one at the beginning of 2019. This means our producers have been first to take advantage of this market. We now know that in the month of January alone, our exports to CPTPP countries grew by 17% year over year.
That is the kind of diversification of markets that matters. We now sell canola to 50 countries internationally, and we continue to redouble our efforts to make sure that countries other than China are reminded of the high quality of our canola and to deepen our trading relationship with them.
Thank you very much, Chair. I'm glad to be here.
Thank you very much, Minister Carr and Minister Bibeau, for appearing today. I very much agree with you that this is a world-class product that we've made and we should be very proud of it. I very much agree with the Team Canada approach that you talked about in your opening statement.
I am a member of the Standing Committee on Agriculture. Last year we did a trip across Canada. We've heard grumbling from farmers about the CFIA's onerous standards, but at the same time they realize that those standards are what makes us rise above...and that when you see the maple leaf on agricultural products, you know they're backed by world-class standards. We've retested our products and we've never had phytosanitary concerns with canola, so we know those science-based claims do not hold much water.
Assuming that this problem is in fact a political problem and, just hypothetically speaking, is linked to Huawei and other problems we're having in our bilateral relationship, and looking at China's fairly spotty track record for respecting WTO rules, how do we ensure that if we resolve this particular crisis, Minister Carr, we'll have the tools in place going forward to ensure that it doesn't happen again? What will the Government of Canada come to the table with so that our agricultural producers in another year or two years or five years down the road are not going to be put in the exact same position? We know that our farmers are very concerned right now.
I appreciate the question because it drives at the heart of an anxiety that many nations around the world are feeling at this moment in the rules-based trading order, which is that the World Trade Organization needs to be reformed, and it needs to be reformed soon, because the Americans have not appointed appellate court judges and the whole dispute settlement mechanism of the WTO is at risk.
Canada has led an international initiative to reform the WTO that includes the EU and nations from every continent. It's not easy. I like to say that if you invite 164 of your neighbours to your backyard on a July night, give them a barbecue and have a conversation about where the cell tower should go, are you going to get consensus among the 164? Probably not, regardless of how good your burgers are.
To reform the WTO, you need consensus among 164 nations, so where do you start? You start with those who agree with us that liberalized trade and a rules-based trading order are in the interests of the world, as they have been since the Second World War. We are very aggressive in bringing together that group. It happened first in Ottawa. We had a second meeting in Europe in January. We meet again in Paris in May, and we meet again in Japan in June.
We believe that there is momentum growing for the reform of these rules that are so important. We're not naive. We know that if it's going to work, ultimately the Chinese and the Americans are going to have to support it.
Maybe I can start by remembering everyone who is participating in the group: the Canola Council of Canada, the Canadian Canola Growers Association, the two companies involved, Richardson and Viterra, and obviously our federal government, but also our counterparts from Alberta, Manitoba and Saskatchewan.
I will be represented by my deputy minister in this group. I might be meeting with them as well. They have planned their first telephone meeting for this Thursday.
I would say there are three objectives for them. The first one is to make sure that we collaborate and share information throughout the process; the second that we also work on alternative markets; and the third that we discuss, as I said earlier, and potentially improve, the different programs in place to support the farmers in this particular situation. These are the main objectives of the working group.
China is the second-largest economy in the world. It is by far the largest importer of Canadian canola. It's growing rapidly, and it will continue to.
I take a fair bit of comfort, by the way, in remembering that date in 1910 when the Richardsons signed their first deal with China. That's a long time ago. I would go out on a limb and say we will be doing business with China 100 years from now.
This is a tough moment in Canada-China relations. We have serious disagreements over the treatment of Canadian citizens in China who we believe have been arrested arbitrarily. We have an issue with the case of a Canadian national whose sentence has been moved to the death penalty. We talk about these issues.
There was a question before about the international community. I don't think I have had a conversation with any of my counterparts internationally without bringing up Canadian values vis-à-vis our relationship with China. That is our responsibility.
Because we believe in the rules-based world international trading order, we have allies. We have allies who understand that it's in the interest of their people to know that when you sign an agreement, you can solve disputes in ways that will be accepted by both parties. That's why we are working so hard internationally, not only to try to build a consensus on how to reform the WTO, but also for Canada to make alliance with those who understand what we're now facing in some of our bilateral relationships.
We're moving on both those fronts.
Thank you very much, Mr. Chair.
I appreciate the ministers being here on this very important issue. I can tell you that my producers in Alberta are seized with this. Its urgency cannot be overstated. As my colleague said, many of them are heading to the fields in the next couple of weeks.
I just want to mention something to Minister Carr. I know you said that you're waiting for the Chinese to make a statement on this and that this is a scientific issue. China's foreign ministry spokesperson, Geng Shuang, has already said, when asked if this is connected to Meng's arrest and Huawei, that that is a scientifically sound and reasonable question and that “the Canadian side should take some concrete measures to correct its previous mistakes”. That is his quote. China is admitting this is a political issue. I'm hoping that the government is dealing with that, as well as the science side of it. We have to understand the reality we're faced with here.
I wanted to ask a question of both ministers—whoever can answer. There were 23 million acres of canola planted in 2018. As I said, our growers are at home making some very difficult decisions right now. Do they plant canola? Many of them have spent hundreds of thousands of dollars on their input costs. They've bought the seed and they've bought the fertilizer.
Yes or no? Should these producers plant canola this season or should they be looking at something else?
Minister, as you know, there are so many ridings and farmers affected. You can see how many MPs are attending at the table here today. Many of them don't have a chance to speak, but I appreciate their being here. We have Mr. Kitchen from Souris-Moose Mountain, Saskatchewan; Mr. Maguire from Brandon-Souris, Manitoba; and Mr. Dreeshen from Red Deer-Mountain View, Alberta.
It's good to see you guys here.
A voice: There are others too [Inaudible—Editor].
The Chair: I know, but they'll be able to ask questions. These gentlemen are here because they're very interested, but they won't be able to get the floor. That's why I recognized them.
We have some people splitting their time. When members do so, they should keep in mind that they have to make sure their colleague gets enough time for their question.
We'll go right to the Liberals. Mr. Hébert is starting off, and he is splitting his time with Mr. Peterson.
Go ahead, Mr. Hébert.
I'd like to begin by congratulating you, Minister, and I thank you for being here today.
My fellow member pointed out that you are the first female agriculture minister. What's more, you come from Quebec, so double congratulations are in order.
Ms. Bibeau, yours is an agricultural riding, so I have no doubt that you're able to understand what farmers need. You know what the agricultural industry is all about. My questions will focus on that.
What role does the agricultural sector play in your efforts? How are you keeping the industry apprised of what you're doing?
I've been working on this issue since the day after taking office as Minister of Agriculture and Agri-Food. I'm in talks with departmental and CFIA experts, as well as my provincial counterparts and the various associations that represent grain farmers, specifically, canola farmers. Those discussions began immediately after I took office and have not stopped. Since the very beginning, we've been sharing a lot of information.
I can tell you that, when department officials initially told me about the science-based approach, I wanted to know what producers thought. I learned that support for the approach was unanimous. Everyone agreed on the importance of finding an evidence-based solution. Canada's agricultural products are of the highest quality, and we have an excellent reputation, which we must protect. We also have a robust food export inspection system, one of the world's best, so we need to protect it at all costs.
Chinese officials told us that they found impurities in our canola exports, so we want to know what they found. We did testing before the product was shipped and after, once the information about the samples came in, and we still haven't found anything.
The experts have to come together to discuss the matter. Currently, the discussions are happening over the phone and by video conference, but I sent my Chinese counterpart a letter asking if he would agree to host a delegation from CFIA to examine the matter in greater detail.
I was shocked by that statement, absolutely shocked, because the essence of the scientific process is replicability. If the two methodologies are different, the Chinese will have an out every single time.
What are you going to do if the Chinese use the excuse that their methodology shows that our canola is substandard, and then you say...? Then we get into a he said, she said thing.
Why haven't we pursued the notion that the testing systems have to be identical?
My questions are for the ministers.
Minister Carr, in 2015 China and South Korea signed a free trade agreement. Subsequent to that, South Korea decided to install an anti-missile battery. China responded with the following actions: It curbed tourism to South Korea by manipulating tour packages, it found alleged fire code violations in a chain of South Korean department stores, and then it promoted popular boycotts against Korean exports like Kia and Hyundai.
I'm not saying we're installing an anti-missile battery, but Chinese officials have alleged that the current imbroglio we're in is related to the Huawei case. Going forward, given that China has no reservations about using heavy-handed tactics when it feels that national pride or national interests are at stake, at what point does the Government of Canada look at the fact that we have a trade deficit with China that's over $40 billion? At what point do we start looking at a list of Chinese imports to Canada and saying that we're going to start looking at what we take from their country, because they are treating us with absolutely zero respect?
I appreciate that you are following a scientific-based approach, and I think that's the correct way to go, but we also have to keep in mind the elephant in the room. This may in fact be a political problem and we're dealing with a government that has a history of using heavy-handed tactics against countries like South Korea, which we're a little more closely aligned with.
That wraps up our time. We had a very productive time.
Thank you for coming, ministers.
As you know, our committee is very seized with this situation, and if you can send updates on this situation as you go along, we'd appreciate it.
Colleagues, we're going to suspend for a few minutes, so we can get the officials in. Then we'll go at it again. Thank you.
MPs, please take your seats.
We're continuing our meeting on the situation with our canola industry and trade, the challenges we're facing right now. For this last part, we have about 45 minutes and we appreciate the officials coming here. We have officials from Foreign Affairs and the Department of Agriculture and Agri-food, and also from the Canadian Food Inspection Agency.
Thank you very much for coming, folks.
We're going to change a little bit of the format. We're going to go with four-minute slots for the MPs, but I understand there's one official speaking.
Mr. Verheul, are you going to have opening comments? Okay. There will be no opening comments.
It's good to have the CFIA here, because we have to talk about checking off that box before we get to what really is the problem. I think everybody has come to that conclusion: you have to deal with the science part of it and then eliminate that from the equation as quickly has possible so that you actually get to the true heart of the problem. If it's political, then that's what it is.
In checking those boxes, have we changed our processes in how we examine canola? Is there any way that you think they could have made a mistake in the process that could have created a problem with what we sent to China?
Absolutely not. Okay. We'll get that on the record.
Is there anything you've seen in the samples, when you re-looked at them, that said “Hey, this is a problem” or raised concerns that would be unusual compared to other samples you've had from other companies?
We heard today testimony today at the agriculture committee from both Viterra and Richardson. Richardson, in particular, made note of its very long trading history with China and the relationship it's cultivated over a hundred years. Both companies stressed the fact that with canola in particular, there is no one case of phytosanitary concerns with it at all. I know that you have the utmost confidence in our methodologies and the way we test for pests in our containers that are destined for export. I know that you attach certificates, so that the importing party can see that it was verified before it left our ports. During all this time, since we started trading canola with China back in 1994, they have not found a problem to date. There have been a few concerns in other years, but by and large it's been pretty good. Other countries have faith in our system and they haven't found any problems.
Going to the fact that you have a team that's ready, willing and able to go at a moment's notice, I understand we're waiting for visas and for the official invitation to come. Is that where we're at right now? How long, generally, does this kind of thing take? At what point do we kind of start to worry that there's an unreasonable delay?
Thank you very much, Mr. Chair.
I want to clarify something on Mr. Fonseca's question about previous mistakes. This came from the Chinese foreign ministry spokesperson, Geng Shuang, when asked specifically about Ms. Meng. His complete comment was:
As for China-Canada relations, we hope that the Canadian side could work with us to promote the sound and steady development of bilateral relations. The Canadian side should take some concrete measures to correct its previous mistakes.
It wasn't about the science side; it was about the political, foreign affairs side. I just wanted to read that into the record in relation to his question on that.
Picking up on what Ms. Ludwig was saying—and I know, Mr. Forsyth and Mr. Verheul, you might be the best to answer this—we heard from the trade minister that he will be looking for new markets to try to divert the canola seed that was going to go to China.
My understanding is that there isn't crushing capacity anywhere else in the world that could possibly displace what was going to be exported and processed in China. Is that correct, or are there opportunities for other markets to take what would be close to several million tonnes of canola seed?
Yes, and I appreciate that. I think our best solution is to repair the relationship with China, with whatever means that takes. I appreciate that we're looking at a multi-pronged approach—scientific and, hopefully, political as well.
I did ask the question of the ministers, but they weren't really able to answer. We've certainly heard from our stakeholders that existing contracts with China are being honoured in commodities other than canola seed. But we've certainly heard a lot, and it has been in the media as well, so there may be some misinformation being put out there, and I'm guessing it's mainly from Chinese importers, from the companies. They have said they are no longer going to be signing new contracts for other commodities. I know flaxseed has been mentioned, as well as barley and wheat.
Is this true or is that misinformation? Is there a move by these Chinese exporters to no longer sign new contracts with Canadian producers, or have they have threatened that any shipments that come to China will be heavily scrutinized, which is a pretty stern warning of what will happen if we try to send commodities over there?
Is this a lot of misinformation, or are these things that we need to be wary of?
Thank you all for being here.
I come from the southeast corner of Saskatchewan, and I might have a little contention with my colleagues here who would say they might have more canola farmers than I do. Let's just say we're equal. The reality is that we have seeding just around the corner, not even weeks away. A carbon tax is being dumped on them, and now they're trying to deal with an issue of how and where they're going to market their product.
I appreciate your being here and the emphasis on the science, because that's what we truly believe is going to prove our point and continue to do that.
You brought up an issue about bacteria. I'm interested to hear about that. What is China saying to you on this avenue, and where are we showing them the science to say differently?
I was actually going to ask that question as well, so thanks for clarifying that for me.
I note that we exported to China 4.8 million tonnes of canola seed, valued at $2.7 billion, but 1.1 million tonnes of canola oil, valued at $1.1 billion. Obviously, you can see the effect of a value-added product there.
I'm not sure if it was at the meeting this morning at the Standing Committee on Agriculture and Agri-Food that we heard that it's pretty much impossible to have phytosanitary concerns with regard to oil, because it's gone through the crusher, is a processed product and has gone, I think, through a heat treatment. It comes out and is in a sealed container. Can you confirm that?
I want to read a couple of motions to get on the record for us to deal with next Thursday, and perhaps talk quickly about them now.
The first two are for Thursday. The first one is:
That the Committee call industry associations and producers to testify to discuss the impact of the Chinese withdrawal of the canola market.
My second motion would be:
That the Committee invite Chinese officials, including the Ambassador, to discuss Canada-China's relationship and canola.
The third item, which we should talk about quickly here amongst ourselves if we have time, is the following:
That the Committee send a letter asking the Speaker for an emergency debate on canola.
Perhaps we can consider doing that as a committee. It's something that is very important to farmers. We can see that time is of the essence. If that came from the committee, I think it would help the Speaker make a decision on moving that forward.