I would like to call this meeting to order.
Good afternoon everyone. Welcome to the international trade committee. My name is Mark Eyking, and our study is on Canada's future trade relationships with our North American counterparts, Mexico and the United States. We started this study a couple of months ago.
We've already visited many states in the western United States. They were very receptive there. We felt it was very good to get outside of the Washington bubble and to visit the states, especially the ones that do a lot of buying from us. We had good dialogue and met many people and are going to continue those visits, ending up in Washington. We might even travel down there in the fall. We're also trying to visit our counterparts in Mexico.
I see that today we have quite the agriculture panel. Welcome.
I recognize many of you from having been on the agriculture committee previously. Farmers are having a rough time across this country with the land being so wet, but let's hope some sunshine will come out and people can get their crops in.
We have a slew of witnesses here, and I'm going to start with the Canadian Agri-Food Trade Alliance. I think we have Brian Innes, the president, here.
I'll just let everybody know that we try to keep it to five minutes so that we can have lots of time for dialogue with MPs.
Without further ado, Brian, you have the floor, sir. Go ahead.
Thank you very much, Mr. Chair, for the invitation to be here.
The Canadian Agri-Food Trade Alliance is very interested to talk with you about how critical North American trade has been for our agrifood exports. First I'd like to explain a bit about CAFTA and how agrifood exports have grown because of improved market access through NAFTA. The agrifood sector has tremendous opportunity for growth, and I'd like to finish off with a few examples of how changes to NAFTA could bring even more growth.
First I want to explain a bit about CAFTA. CAFTA is a coalition of organizations that all seek a more open and fair international trading environment. Our members represent producers, processors, and exporters from the beef, pork, grains, cereals, pulses, soybeans, canola, as well as the sugar and malt sectors. Two CAFTA members are here with me today. Together, CAFTA members represent about 80% of Canada's agrifood exports, or about $55 billion in exports every year. That supports hundreds of thousands of jobs in communities right across the country.
Competitive access to international markets is critical for our sector. As an example, more than 90% of farmers rely upon international markets for their livelihood. The free and fair trade ushered in by NAFTA has been an incredible success for Canadian agriculture and indeed for agriculture throughout North America. Over the 25-plus years of NAFTA and the Canada-U.S. Trade Agreement, Canada's agrifood exports have grown by five times, from $10 billion in 1988 to $56 billion in 2016—a five-fold increase since the beginning of NAFTA.
Together, the U.S. and Mexico represent a little over half of Canada's agrifood exports. Of course, because trade is a two-way street, it has been good for the U.S. and good for Mexico as well. Indeed, Canada's imports from the U.S. have increased by six times since the beginning of NAFTA, and imports from Mexico have increased by ten times since NAFTA came into effect.
NAFTA has allowed us to take advantage of our strengths and to be more competitive. It has encouraged highly coordinated supply chains across all three countries. For example, we export live piglets from Canada to the U.S. They're fed corn and soybeans that are locally produced, and then the meat is processed, and some of it comes back into Canada for further processing and export around the world and indeed throughout North America. It's been clear, then, that NAFTA has been a success.
The first priority for the Canadian government must be to maintain this success by keeping the fair and free access that we currently have. This means we must have access that is free from tariffs, free from border taxes, and free from protectionist non-tariff measures and regulations. That's not to say that NAFTA can't be improved; we've identified several areas in which we could have even more growth coming from agriculture in this country.
Here are some examples.
For all agrifood products, greater regulatory alignment in plant and animal health products would provide producers equal access to these products and would remove barriers to trade. This alignment would include closer co-operation on new breeding techniques, new product approvals, maximum residues limits, and policies that accommodate a low-level presence of biotech crops.
For meat, despite Canada and the U.S. considering each other's systems equivalent, Canadian meat sent to the U.S. still faces greater barriers than U.S. meat coming to Canada. For example, after clearing U.S. customs, Canadian meat is sent for a second inspection after it has already been inspected once here in Canada.
For sugar, as the committee has heard earlier this week, the U.S. has a significant protectionist regime in place. Canada has a competitive advantage for sugar as an ingredient for food processing, but U.S. protectionism has blocked our export opportunities. In fact, U.S. import quotas have steered manufacturing of sugar-containing products away from Canada.
For canola, despite having a globally competitive industry on both sides of the border, further-processed products, such as margarine and shortening, can't cross the border without tariffs. This should be fixed.
For wheat, significant changes to the Canadian system over the last 10 years have substantially addressed the long-standing concerns of the U.S. around cross-border trade. While many of these concerns have been addressed, there are remnants of the former system in the Canada Grain Act. Industry supports the reintroduction of legislation to amend the Canada Grain Act, so Canadian grades can be given to wheat varieties registered in Canada, no matter where they have been grown.
In closing, we couldn't agree more with the advisory council to finance minister on how the agrifood sector has a tremendous opportunity for growth that can contribute to Canada's economy. The vast majority of this growth will come from exports.
As I've described, we've shown how international access to markets can really allow us to be competitive and to grow. Maintaining the free and fair trade we have in NAFTA, improving it, and achieving and implementing agreements with countries in the Asia-Pacific, like Japan and China, will help us achieve the $75-billion agrifood export target set in budget 2017.
I thank you for the opportunity and look forward to your questions.
Thank you very much for the invitation to appear before the committee and for your continued attention to international market access for Canadian beef.
The last time we were here talking about implementing the Canada-Europe agreement, we advised that the establishment of new market access through trade agreements is now our top priority, and that Europe and Japan are at the top of our priority list. Little did we imagine, that short time ago, that we would soon be preparing for a NAFTA renegotiation. My advice is that the Canadian beef producers strongly support keeping the NAFTA provisions on beef trade exactly the way they are.
In 2016, we exported 270,000 tonnes of beef and 760,000 head of live cattle to the United States for just over $3 billion. A further 16,000 tonnes of Canadian beef went to Mexico for $109 million. The U.S. is always our top export market, usually taking about 70% of our beef exports and nearly all of our live cattle exports.
Last year, Mexico was our number four beef export market. Sometimes they are number two or three. Mexico jockeys with Hong Kong and Japan for the numbers two through four spots. On the import side, Canadians bought $978 million of U.S. beef and $19 million of Mexican beef in 2016.
We currently enjoy unlimited duty-free beef trade between Canada, the United States, and Mexico. We can access those markets without any tariffs or quotas for either beef or live cattle trade. They can do likewise for the Canadian market. This is how free trade should work, and such access should be preserved.
NAFTA contains extensive product-specific rules of origin for determining which products are eligible to be traded duty-free amongst the NAFTA countries. Under these rules, either beef that is wholly produced in a NAFTA territory or transformed from a live animal into beef in a NAFTA country is eligible for NAFTA treatment. It also means that importing beef from a non-NAFTA country and shipping it to another NAFTA country does not provide a back door. These rules of origin should be maintained just as they are.
We also advise maintaining dispute settlement provisions in NAFTA and seeking to improve enforceability of NAFTA panel decisions. The Canadian beef sector has from time to time relied on dispute settlement, more so under the WTO, but strengthening the NAFTA option would provide a meaningful alternative to the WTO.
We understand that at least one protectionist group in the United States is advising the Trump administration that a renegotiation of NAFTA is the ideal forum to reinstate country of origin labelling, or COOL, for beef and pork. Our adversaries state:
||The reinstatement of COOL would be a relatively straightforward negotiation.... The United States should first require in the NAFTA renegotiation that both Canada and Mexico formally withdraw their COOL complaints that are pending before the WTO as well as their WTO-sanctioned authorizations to impose retaliatory tariffs.... The United States should then prepare a NAFTA Renegotiation Implementing Act...that includes the restoration of the previously repealed COOL statute....
Such a demand is not only counter to Canada's interest, it's a harmful policy for the United States, and it jeopardizes American jobs.
If the Trump administration should formally include such a demand in the NAFTA position, Canada should reject it unequivocally and work with U.S. allies to demonstrate how U.S. jobs depend on livestock trade with Canada.
CCA has been working with U.S. counterparts to develop a list of actions that could improve the Canada-U.S. beef trade. While most of these are of a regulatory nature and therefore not likely to fit as part of a NAFTA negotiation, we do feel that they are consistent with the spirit of NAFTA.
Specifically, we should eliminate the reinspection of meat at the border. Since Canada and the U.S. deem each other's meat inspection systems to be equivalent, inspection at the point of production should be sufficient.
We should enable Canadian beef exported to the U.S. to receive a U.S. beef grade and eliminate the requirement for Canadian cattle to bear a permanent identification in the United States while there's no such requirement for U.S. cattle.
We should eliminate the requirement to prove that live cattle exported to the U.S. were born after March 1999.
In closing, I would note that we have consulted with our U.S. counterparts on these objectives, and I am pleased to inform you that we are in alignment with the mainstream cattle producer organizations in the United States.
Thank you for your time. John and I would be happy to answer any questions later.
Good afternoon. My name is Hans Kristensen. I'm a producer from New Brunswick and am the Maritimes representative on the Canadian Pork Council board of directors.
I'd first like to thank the members of the committee for the invitation to appear before you this afternoon.
The hog industry is extremely important to the Canadian economy, contributing 103,000 direct and indirect jobs across the country. These in turn generate $23.8 billion in economic activity. With well over 70% of our industry's output now exported to almost 100 countries, the Canadian pork sector is the classic example of what positives can occur with improved terms of trade.
Over the years since the implementation of the Canada-United States Trade Agreement, followed by NAFTA, the completion of the Uruguay round of multilateral trade negotiations, and ratification of several bilateral and regional trade agreements, we have increased the amount of exported pork and pork products by 387%, from $700 million to just over $4 billion in 16 years.
The U.S. is our strongest market, purchasing 408,000 tonnes of pork worth $1.4 billion. Mexico is our fourth-largest market, to which we ship 314,000 tonnes valued at $587 million. In 2016, we also shipped 4.8 million feeder pigs to U.S. producers to raise and 848,000 market hogs direct to slaughter.
This is an excellent example of each country focusing on its strengths and of the strengths of each country complementing the other's. Canada offers an advantage in swine health, since its cooler climate and lower herd density significantly reduce the development and spread of swine diseases. On the other hand, the U.S. industry has an advantage in finishing hogs, due to the abundance of low-cost and easily-sourced U.S. corn and soybean meal, which gives the U.S. an advantage in finishing the hogs.
There is no doubt that Canada and the U.S. have both benefited from a long trading relationship, the integrated nature of which enables both countries to remain competitive internationally, supporting jobs and exports on both sides of the border and enhancing our potential to increase our respective contributions to the Canadian and American economies even further.
The Canadian Pork Council takes the U.S. and Mexican market relationship very seriously. We invest a great deal of time and money to participate in trade missions whenever possible. We regularly meet with our U.S. and Mexican counterparts to discuss areas of common interest and concern. We have a strong relationship, since Canada, the U.S., and Mexico share many of the same animal health and trade policy goals in opening new markets together. We are natural allies, which helps in advocating our messages in various multilateral trade forums, including the World Trade Organization.
The North American meat and livestock industries have benefited from trade under NAFTA. Our counterpart in the U.S., the National Pork Producers Council, has publicly stated that their producers benefit from North American trade. Mexico and Canada are the number two and number four export markets respectively for U.S. pork. Canada alone imports close to $1.2 billion of U.S. pork, and disruption in that trade affects producers on both sides of the border negatively.
The U.S. industry knows that tariff-free trade is essential. Needless trade barriers provide no benefit to either country's economy. In Canada, we know what it's like to deal with disruptions in the marketplace. We are concerned when the issue of COOL keeps creeping back into the news and into trade negotiations. Challenging the U.S. COOL was a long and expensive fight for Canadian producers, and I encourage the federal government not only to protect it but also to retain its retaliatory rights to action in the future.
Canada and the U.S. serve customers with similar preferences for food safety, animal health, and risk profiles. Both countries follow almost identical science-based risk assessment frameworks for managing food safety and animal health, and both countries require very similar HACCP-based food safety programs in federally registered meat plants.
That said, although we speak frequently of an integrated North American market, the unfortunate reality is that the Canadian meat entering the U.S. is subject still to substantially greater bureaucratic requirements and cost than U.S. meat coming into Canada. We are disappointed that Canadian meat entering the U.S. must still proceed to privately owned inspection houses that set their own fees, while U.S. meat entering Canada can proceed directly to a federally registered establishment.
There is an opportunity here to smooth the flow of pork between Canada and the U.S. by reducing regulatory barriers and further aligning our regulatory processes. We support the work of the Canadian government as it works towards this end.
I welcome any questions you may have.
Thank you, Mr. Chair, and I do thank all committee members for inviting the Western Canadian Wheat Growers Association to this discussion on the critical matter of trade in North America.
Going back to what you said, I would have liked to join you in person, but we're seeding canola and lentils here right now, just west of Regina, so I hopped off the tractor and came in right here, right now. It's good to have a little break anyway. Thank you very much.
Founded in 1970, the Western Canadian Wheat Growers Association is a voluntary farmer-run advocacy organization dedicated to developing public policy solutions that strengthen the profitability and sustainability of farming in the agriculture industry as a whole.
Without going into a variety of stats, which I believe Brian covered very eloquently and which everyone is fairly aware of, the bottom line for us and for western grain farmers is that trade and market access are absolutely essential, especially with the United States and Mexico.
In North America, and specifically in the crop sector, we're sending more and more of our products south as Canadian and U.S. markets continue to grow individually—but also, as a result, to become more integrated.
As we work to become more integrated in our markets, which we western farmers think is a really good thing, our growers and industry colleagues in the agriculture value chain continue to work closely together on both sides of the border. In my mind, this provides a great example or template of sorts of how we can improve and modernize NAFTA in a renegotiation of the trade deal, which would improve the flow of trade, not just specifically for agriculture but for our country as a whole.
Our counterparts in the United States, the U.S. Wheat Associates and the National Association of Wheat Growers, recently said “there are several elements of the trade agreement that could be re-examined and modernized. However, we believe withdrawing from NAFTA would be a serious mistake.” We agree with their position.
The Western Canadian Wheat Growers Association, in fact, wrote a joint op-ed in February with the U.S. Wheat Associates, in which we highlighted specifically how we could improve trade. I would like to talk to you today about one concrete example, which I'll summarize.
Currently, Canadian farmers delivering wheat into the U.S. receive equitable treatment with grain grown south of the border. However, because of legislation and regulations that have existed for years before the changes to the Canadian Wheat Board came to western Canada, U.S. producers who currently deliver into Canadian markets automatically receive the lowest grade, regardless of quality or variety of grain, even if the variety is currently registered here in Canada.
Our organizations have been working together to urge the House of Commons to address open, cross-border wheat trade, and we support updating the Canada Grain Act to ensure that wheat is treated consistently on both sides of the border. As a farmer, I want access to the most competitive wheat markets, but it's often not the case for U.S. farmers living near the Canadian border.
This inequity has started to create significant concerns in both the Canadian and the U.S. industries, especially given the potential of renegotiating NAFTA. A free flow of grain in both directions will improve the efficiency of our grain handling system and eliminate artificial price distortions that frustrate farmers and have caused ill will. Grain producers in both countries have worked hard to maintain a good relationship, and these ongoing concerns need to be addressed to prevent any future trade restrictions, which would be bad news for farmers and industry on both sides of the border.
Our organizations, and farmers in Canada and the U.S. strongly support co-operating to ensure an open market. Last year we also worked together to recommend that the Canada-United States Regulatory Cooperation Council and the Pacific NorthWest Economic Region Foundation, whom you had here this week, work to address this trade disparity. We hope that the work on this subject in the House of Commons can result in a free and equitable wheat trade across the Canada-U.S. border. That would be good news for grain growers, the wheat value chain, and consumers in both countries.
Two weeks ago, the Western Canadian Wheat Growers Association asked the Government of Canada to take action to harmonize regulations and to ensure the free flow of wheat between Canada and the U.S., as we're growing concerned about the open wheat market and cross-border trade with the U.S. with the prospect of the renegotiation of NAFTA.
A U.S. senator moved a resolution last month with respect to “supporting fair and equitable grading treatment for exports of United States wheat products to Canada”, which has now been referred to the U.S. Senate Committee on Finance. If not remedied, the action suggested in the resolution would potentially have very devastating effects on our industry, especially to wheat farmers and the whole ag sector. We see this as an area for greater harmonization in a renegotiation. It’s very timely that this has come up now.
Western farmers have a good news story to tell. We’re innovative and entrepreneurial, we're helping create jobs throughout the value chain, and are growing the Canadian economy. Open markets and freer trade are absolutely essential for us to continue going down this road in the agrifood sector.
I thank you again for the opportunity to be here and for allowing me to speak with you. I look forward to entertaining any questions you might have.
Welcome, everyone. It's good to see you again. I'm sure we'll be talking to you again and again and again. Trade is one of those ongoing targets that are never really settled; there are always irritants.
As you rightly point out, Levi, we've had a lot of discussions around grain trading back and forth across the border. It's more an irritant from the American side; it's not a lot of bushels, I know that. There are changes that have been made. Most of it is done on spec. The Americans have—what will I say?—an iron in the fire that really isn't that hot, but at the end of the day it's just one of those things. It's not hard to fix, and I think we should do it.
How many acres are you guys putting in this year, just as an aside?
Yes, that's what I thought.
Anyway, say hi to your dad. It's always good to chat with you guys.
On the beef side, we've learned a lot about NAFTA and about the WTO with COOL. It really gives us a bit of an edge as we go into renegotiations on this, to try to make sure that things like that aren't in our future. It comes down to regulatory co-operation, tax harmonization, and a lot of different levels that need to be adjusted so that we can still have the free flow of product back and forth across the border.
One thing that I think is paramount to keep the Americans honest is to have diversity in our trade. I'm a firm believer in having a bit of a hammer going into these NAFTA negotiations by ratifying the TPP, especially since the Americans aren't doing so.
Have you guys given any thought to that with your Mexican counterparts? I've been speaking to the Mexicans at the trade level. New Zealand and Japan have both ratified it. Of course, Japan is the crown jewel in it. I'm a firm believer in getting the TPP done even before we get serious discussions on NAFTA going.
It would be great, if you make presentations to the U.S., that we get a copy of them too so that we can follow up at the political level and, as we did with COOL, hit them on all the different levels. It certainly has a better effect. That way, when their own people are saying we have to do this—
I know Pat Roberts, who chairs the Senate committee, and Mike Conaway, who chairs the House ag committee, are both very much on side with getting NAFTA reinvigorated and continuing to make it work. They see how important the integration is.
Certainly I'll start, and I would like my meat colleagues to contribute as well.
The trade in agricultural products is in a highly regulated sector, with food and feed safety regulations on both sides of the border essentially looking to accomplish the same thing. When product crosses the border from one country to another, however, you're not just meeting the Canadian regulations but also need to meet the U.S. regulations and the inspection that comes with them.
When it comes to something like meat, which is highly regulated in the same way that many other agricultural commodities are highly regulated, there is an additional inspection required for meat products when they cross the border. Even though none of us, when we travel to the United States, would think that any meat we eat is unsafe, and I'm sure no American coming to Canada would think the meat they might eat would be unsafe, it needs to go through that extra inspection process in order to meet the regulatory requirement.
Maybe I can turn it over to my colleagues to provide more detail.
In that process, after clearing customs the truck moves to something called an “I house”, an inspection house. The inspection house is usually not right at the border. It's usually not far from the border, but nearby. These are privately owned, but they have USDA inspectors at them.
When the truck arrives at that I house, it will be told what kind of inspection is necessary. Sometimes they might just open it up, look at the manifest, and see that the boxes in the truck are the same as what's on the manifest. Sometimes they might open the boxes and start taking samples to be sent away for tests.
Let's say a company such as Cargill is going to export meat to the United States. If one of their trucks is opened up and the inspectors take samples, Cargill will immediately return that truck to Canada, because either way, whatever the test result is.... If it proves that it's okay, they have probably lost several days of shelf life on the product; if it proceeds and the test ends up turning negative, because there was some issue with it, then they have a recall on their hands.
They can figure that usually about one in ten loads is going to have a test. If they have a customer who is ordering 10 loads, they ship 11, because they know one of them is coming back.
A voice: Do you have anything to add from the pork side?
As an example, we went through that very lengthy dispute settlement panel on the country of origin labelling. We started it in 2008 and we finally got the authorization to retaliate in 2015.
We knew that law was coming, and as we started looking at how to address it, working co-operatively with the trade and agriculture departments at the time, we evaluated the options of taking the panel under NAFTA or under the WTO.
Our feeling at the time was that NAFTA probably would have given a more expeditious result. We could have started earlier, because under the NAFTA you can challenge a prospective measure to try to head off something from coming into effect, but under the WTO you have to wait until it's in effect. We balanced that off, but looking at the history of the NAFTA panels and the decisions, there really isn't a strong enforcement mechanism, such as exists with the WTO and the authorization to retaliate.
In the end, even though we felt that the WTO process was going to be the more lengthy, it was the one that would give us the hammer, so to speak, at the end.
Thank you for the question.
The signatory countries of CAFTA—the agreement between Central America, the Dominican Republic and the United States—support the current trilateral agreement, NAFTA.
What that means is that if we like the agreement as it is now, there's no need to rip it up and create new agreements bilaterally between Canada and the U.S., between the U.S. and Mexico, and between Canada and Mexico.
From the perspective of agrifood exporters, the agreement we have is working particularly well. Yes, we see opportunities to improve the agreement, but when it comes to thinking about new frameworks, we understand that in keeping what we have now there is no need to tear it up and create new agreements.
There are opportunities to make it better. We have articulated some of those today. However, when we look at the world, as agrifood exporters we see major opportunities in other countries, such as through the negotiations that potentially may happen with China and through the trans-Pacific partnership agreement, whereby we have an agreement among 11 countries and an opportunity to get major benefits in countries such as Japan and create new frameworks to enable us to trade in the Asia-Pacific region more broadly.
The concept of ripping up an agreement has been roundly denounced by U.S. agriculture, and we share that stance. I am sure the members of the committee have seen the remarks by U.S. agriculture, but just to give you a sense, here are some quotes. The National Corn Growers Association says it would be disastrous for North American agriculture. The American Soybean Association says it's “a terrible idea”. The U.S. Grains Council says they are “shocked and distressed” to see the concept of NAFTA being torn up.
I would say that from the standpoint of the Canadian agriculture sector and from the perspective of CAFTA members, we would agree with those comments and recognize the value of what we have in taking a North American approach.
I think that one we mentioned, this reinspection at the border, is certainly a very significant one.
We also mentioned the inability to use the U.S. grades on beef that we export to the United States. It's very similar to what Levi mentioned about grains coming into Canada. American grains exporters very clearly have the issue that their grain that comes up here gets the lowest grade.
When we export beef to the United States we can't use a U.S. grade at all. Essentially, it goes as ungraded, which is a problem in the marketplace. We could grade it as Canada AAA or Canada AA. American consumers have no idea what that means, so we don't use that grade. That is something we would like to see.
We have a couple of little issues left over from the BSE era with the United States. Right now we have to prove that all live cattle we export to the United States were born after March 1999. They all are, but we have to prove it.
I would add one thing, just to build on the remarks I made earlier, concerning our ability to export further processed products, such as margarine and shortening.
Think back to the creation of NAFTA in 1993; we're many years after that, and many things have changed. The same thing applies in such processed products as margarine and shortening. For example, with the ban on trans fats in the United States, you need imported palm oil to make processed products such as margarine and shortening. At the time NAFTA was created, that wasn't envisioned. As a consequence, we both import palm oil, into Canada and the United States, to make margarine and shortening, but once you put it into a processed product, you have a tariff on that margarine or shortening going back across the border.
It's things such as this, on which the world has moved significantly since NAFTA was brought in. The rules of NAFTA can be updated in very targeted areas to enable modern commerce to take place. That's one example.
When we think about what we achieved in the trans-Pacific partnership among 12 ambitious like-minded countries that were looking to make trade easier in the Asia-Pacific region, we saw some major advances made in that agreement on things such as sanitary and phytosanitary measures, which include food and feed safety and things around plant health that are so critical for the trade of agricultural products.
If your question is what are some of the things we could include in a modernized NAFTA, certainly some of the provisions on sanitary and phytosanitary measures are much more ambitious and would serve our sectors better than what we have on the books right now.
To give you an example, just as in 1993 there was no ban on trans fats, there was no biotechnology in agriculture. The trans-Pacific partnership included provisions on biotechnology, recognizing that plant biotechnology should not be a barrier to trade and that transparency and openness in regulation are extremely important to enable trade to happen among members of that agreement. We have, then, an opportunity to align our approaches in regulating those products.
This is for all of you, actually.
Earlier this week I attended the Can/Am Trade Border Alliance conference. Obviously the issue of border security was a common theme, but everyone was on the same page. It wasn't to thicken the border or thin the border; it was about a smarter, more efficient border.
One theme that constantly came up was the issue of pre-clearance and why we can't have pre-clearance here in Canada. They used the example, Mr. Kristensen, not of pork but just a better...that has to be sometimes double-, sometimes quadruple-checked when it gets down there, and the time frame in which that takes place.
I will also say that I am very pleased to hear about the great successes with NAFTA and that we can be a launching ground for a new negotiation, because I believe it's one of the true values of our North American relationship.
I'll start with Mr. Innes. In terms of a more integrated North American supply chain, how can we be better integrated and maybe work together, between the CBSA and the CBP, the U.S. border patrol?
Thank you for the question.
When we look at the trade in agricultural goods back and forth, one of the major regulatory agencies overseeing us is the U.S. Food and Drug Administration, on both food and feed safety on the grain side, and certainly on the meat side. There are other agencies involved on the animal health side and in regulating meat health safety as well. When we look at the opportunities you describe to make the border more seamless, it really is about recognizing that we're both achieving the same thing with our systems and about not requiring inspections or testing times two. All of the work that goes into meeting regulatory requirements is essentially doubled because you have two systems.
It's thinking about how to recognize each other's systems, as has been recently undertaken by the Regulatory Cooperation Council in looking at food safety, for example. That still isn't fully implemented. We say we don't necessarily need to do everything twice, but let's recognize each other's systems and then avoid double-testing, double-inspecting, double-certifying.
Thank you all for being here. I think it's great that you guys are working with your colleagues across the line, because two weeks ago, when there was this talk of pulling out of NAFTA, I understand that Sonny Perdue went over to the White House and did a lot of talking. That's probably why they didn't pull out of NAFTA. It's because of the ag sector and what it meant to them.
I'll use the example of corn out of the U.S. not going to Mexico. That's huge. It's a big problem if they don't have that market. I think that having Mr. Perdue there will help them understand just how important the ag sector is to them and will hopefully make them understand what NAFTA means to them and keep NAFTA renegotiated as a three-country agreement.
I'm rather curious, though. You're down there quite a bit. We had the TPP sitting there. It's ready to be signed, we've gone through the committee, and I'm waiting for legislation to come forward saying that we're going to ratify this and move it forward. I'm not sure when that's going to happen.
But then I also see the current government talking about going into China and holding a new type of trade talks with China. I don't necessarily have a problem with that; I'm just looking at the relationship with the U.S. at this point in time and how anti-China the U.S. versus what we're doing with China. I'm curious why we wouldn't sign the TPP and have access to Japan and the Asia market and get the rules in place. The concern I have is that if we start pushing too hard with China we're actually going to do more harm than good to our relationship with the U.S.
Are you hearing any of that when you're down there? Do you have any comments on that?
Thank you to the witnesses.
My riding of Mississauga East—Cooksville probably hasn't seen a farm in just over 30 years, when there were a bunch of apple orchards in the area right by the Pearson airport. We have a lot of industry. We have automotive, medical devices, a lot of manufacturing, including advanced manufacturing, and aerospace, but we don't have any farms.
When I speak to the businesses, they're quite concerned about the tweaking or the modernization of NAFTA, etc. They talk about most of their business being with the United States, not so much with Mexico, although yours is quite intertwined.
Because you're all in the agriculture sector, I want to ask whether you have had the opportunity to visit farms in the United States or Mexico.
Has everybody had the opportunity to do that?
We hear a lot of criticism about not having a level playing field when it comes to the three countries. You have Canada and the United States with pretty high standards, and then in Mexico....
Can you—and this is open to the panel—inform us maybe, so that we have an understanding, what those farms are like? Do they have the same health and safety standards? What kind of labour wages are they providing? What kind of standards do they have?
What we heard during the election down in the United States is that they're undercutting American workers and syphoning off jobs, not necessarily in agriculture but in all industry. Because NAFTA is being looked at as a whole, I'm asking you, being experts in the field.
As for the cattle operations that we visited in Mexico, we certainly never got into a conversation on how much they're paying their employees. They seem to be well looked after.
From our perspective, we like to look more at the positive things than the negative things. Mexico takes a lot of our genetics. When we were down in Mexico a couple of years ago, we visited several ranches where Canadian genetics—more specifically, western Canadian genetics—on their cattle were very prevalent. In fact, when we came back and were at the Agribition, we saw cattle there that were owned by Mexican ranchers. They buy those genetics because we have a high quality. I like to look at the positives rather than the negatives, because it's not really our place to judge them.
The comment was right. The CFIA is there to make sure the standards for products coming in from Mexico are similar. I might want to add, though, that we are so integrated in the U.S. and Canada that a lot of the packers are owned by the same companies, right? We can't forget that. Those products are sent from either Canada or the U.S. into Mexico. It's a completely integrated system.
I would go further and say for sure that maybe our CETA deal could take a few glimpses at NAFTA and its successes. There seems to be a little protectionism on the CETA at this time, and they could take a page out of NAFTA.
As it relates to the U.S. and what we're talking about, I think that in the last couple of years farmers in the west have had a tough time dealing with some of the challenges, namely around transportation, and obviously with some of the interactions with the grain companies that have gone on.
The fact is that for most of us out here in the west, as a farmer we're basically a price-taker. We really don't have the ability to pass on any of our costs, and how we recoup our costs is through our production. When you're talking about some of the regulation that has gone on, what we're a little concerned about in terms of the U.S. border, and why we would really encourage wheat trade, goes back to some of these transportation issues that we're seeing.
Basically, while this is not the case all of the time, you really have to be living very close to the U.S. to deliver into the U.S., especially for farmer-based deliveries. It's the same on the U.S. side if you're going to deliver into Canada. That's just because of the cost of freight by truck or, in some cases, on rail. When we look at that with what we're doing here, what we would like to say is that open access to the border is good on both sides. Realistically, it is our best form of ancillary competition in the absence of improved rail links and in the absence of potentially more rail service and those kinds of things. Really, it's access to the U.S. that is helping the Canadian farmer as a source of competition where one doesn't typically exist in the market, especially on transportation. From our standpoint in terms of infrastructure, we definitely support opening the border and also, obviously, any investments that we can have in further processing and the value-added industry here in Canada.
I'd like to add to that.
As far as the hog industry is concerned, British Columbia, while it doesn't have a large hog industry in production, does have in its possession a couple of smaller plants that have the ability to process product and to adapt to specialty products. On free trade, one of the things I mentioned earlier was niche marketing, so British Columbia can benefit hugely from continued and enhanced free trade in NAFTA simply by being able to process and move those products.
Also, our next biggest target—our desire—is ratifying the TPP. That's a huge potential benefit to British Columbia, both for the small independent producers who can do high-value specialty products for the Asian market and also just for its impact on the export facilities in Vancouver.
That wraps up our dialogue and meeting.
Thank you, gentlemen, for coming and for all of your insights on your industry. It's a very challenging industry, especially when you're growing and producing a product. Our trade committee can't help you on that part too much, but we're going to do our best to keep your markets and to get your products some more markets.
Levi, good luck, and have no breakdowns. You have a couple hours of sunlight out there. So, full throttle....
We're going to suspend for a minute or two, folks, and then get to some future business.
[Proceedings continue in camera]