CIIT Committee Meeting

    I call the meeting to order. I'm sorry that we're a little tardy getting started; a couple of our members have yet to arrive.

    We are in the ninth meeting of the Standing Committee on International Trade. Today we're going to continue our discussion of the Canada-Jordan free trade agreement. We are waiting with anticipation for a bill to come from the House on that matter and we are getting a bit of a head start with some expert witnesses today. We will follow that with an in camera session on the furtherance of our report on Canada-U.S. trade relations, with particular regard to government procurement.

    Before we do that, Mr. Silva has a comment.

    Thank you very much, Mr. Chair.

    Unfortunately, our vice-chair is not able to be here--he's not feeling well--and our critic, Scott Brison, is not here because he had another commitment. They both had issues they wanted to raise with the report, and I was wondering if we could defer the report to the next meeting. Then we'd all have an opportunity to debate the report. That would be with the acceptance of the committee.

    Let me take that under advisement for a moment. Rather than get into a debate on it at this point, and rather than pull our witnesses through that discussion, if there is going to be one, could I ask that we pursue that at about 4:40 and take it up for consideration at that point?

    Right now we have our witnesses waiting, and we're glad to have them here again on our discussion of the Canada-Jordan free trade agreement.

     I welcome back John Masswohl from the Canadian Cattlemen's Association.

    John, thank you for your continued support of this committee and for providing information to us.

    We also have the president of the Grain Growers of Canada, Doug Robertson.

    It's a pleasure to have you with us. We've had your colleague, Richard Phillips, with us before. He is the executive director.

    Richard, welcome back.

    We're going to begin with some opening statements. I take it we have three opening statements, so that's fine. I hope you can keep them under 10 minutes. You are all used to that by now.

    We are going to start with Mr. Phillips.

    Thank you, Mr. Chair, and members of the committee.

    My name is Richard Phillips, and I am the executive director of the Grain Growers of Canada, Producteurs de grains du Canada. With me today is our president, Doug Robertson.

    The invitation today was originally sent to the Canadian Agri-Food Trade Alliance. On behalf of the Grain Growers of Canada, I sit on the board of the Canadian Agri-Food Trade Alliance, and I'd like to make a few opening comments before I put my grain grower's hat back on again.

    The Canadian Agri-Food Trade Alliance is a coalition of Canada's major beef, pork, grain, and oilseed organizations supporting a more open and transparent international trading environment for agriculture and agrifood.

    Canada is a world leader in agricultural trade. We are the fourth-largest agrifood exporter in the world, exporting half our beef cattle and wheat, 60% of our hogs and pork, and over 70% of our canola. Across Canada over 90% of farms are directly dependent on export markets. They either export their products or sell them domestically at prices set by the international marketplaces. This represents 200,000 farms and includes the majority of farms in every province, including Ontario and Quebec.

    A more open and fair trading environment is essential for the future growth and prosperity of our agrifood sector and Canada's economy as a whole. CAFTA's primary focus, though, is the successful conclusion to the Doha Round of world trade talks.

    Bilaterals can achieve major gains for us, but it is difficult to get at the issues of domestic subsidies, domestic supports, and export subsidies. Therefore it is important that you, as politicians of all parties, encourage the government to actively push other countries to get back to the table at WTO.

    CAFTA, although our focus is multilaterals, is engaged on one bilateral. The Canada-European trade negotiations, due to the huge population and potential size, are of great interest to our membership. We encourage you to follow the talks closely and to support our efforts to gain access to this highly lucrative marketplace.

    At this time I'm taking off my CAFTA hat and giving the floor to the president of the Grain Growers of Canada, Doug Robertson.

    Thanks, Richard.

    I'm a farmer from Carstairs, Alberta, and at present the president of the Grain Growers of Canada, as Richard said. We represent approximately 80,000 farmers across western Canada and the Maritimes. Our primary belief is that Canadian farmers are efficient, competitive people, and as businessmen they want to make their living from the marketplace. So that's what drives our organization.

    One of our major concerns is a free and open trade of agricultural products and commodities between Canada and the rest of the world, since, as Richard said, about 90% of Canadian farmers rely on exports or export prices to drive their business. While we favour an overarching multilateral deal on trade, bilateral agreements are at present the only way for Canada to keep pace with our competitors in the key markets we're working on.

    On a sectoral basis, this Canada-Jordan free trade agreement has an impact especially on the pulse industry in western Canada, although we do ship some wheat to Jordan as well. Pulse crops are crops such as peas, beans, lentils, and chickpeas. At present, Jordan's tariffs range from 5% to 10% on these crops. These would be eliminated under the free trade agreement.

    In 2009, we exported approximately $6.4 million worth of these crops to Jordan, down from $8.3 million in 2008. So the potential is high in these crops.

    Other crops exported include frozen potato products, which have been subject to tariffs as high as 20%. Elimination of this tariff would place Canada on an even playing field with our competitors, especially the United States. The United States already has duty-free access to the Jordanian market. Exports of animal feeds currently see tariffs as high as 23%, which would be eliminated as well. Crops such as canary seed, which is a fairly big crop in some areas of Saskatchewan and Alberta, are subject to a 10% tariff and would also see elimination of that tariff upon the adoption of this free trade agreement.

    On a provincial basis, Quebec exporters of agricultural products were subject to tariffs that would be eliminated in a number of areas. Animal feed preparations, for instance, are currently subject to 10% to 23% tariffs. Maple products are currently subject to 24% tariffs. Sugar confections are subject to tariffs of up to 30%; and jams and jellies have a tariff of 25% applied to them. All these would be removed and eliminated once the free trade agreement is adopted.

    In Ontario—and this would also apply to Quebec—cheeses are subject to a tariff of 20%. Sauces and other food preparations have tariffs of up to 24% applied against them, and a number of things, such as bovine livestock genetics, are subject to a 10% tariff at present. All these would be eliminated under a free trade agreement.

    In western Canada, as I said before, the pulse crops are the main beneficiaries of the current tariff reduction of 5% to 10%. Beef exports have a 5% to 23% tariff, depending on the product; animal feeds, 10% to 23%; and, as I said, canary seed, up to 10%.

    In Atlantic Canada, where the primary amount of potato products are being grown, frozen french fries and other potato products are subject to 20% tariffs right now. Fish and seafood are also tariffed from 10% to 30%.

    The benefits agriculturally are added to other land resource sectors that farmers depend on to boost their incomes. These would include things like forest products, which are currently at 10% to 30% tariffs.

    At the present time, we have a lot of growth potential, especially with fairly high tariffs in some areas to grow products into these markets.

    Richard.

    I'd like to wrap up on behalf of the Grain Growers of Canada.

    I was going to mention that we sell wheat. We have sold a little bit of wheat when they have had a real shortage, and in the last few years the Canadian Wheat Board has also sold a limited amount of barley as well. That's another crop that goes there.

    In terms of imports, we actually import a small amount of vegetables from Jordan. In 2008 it was over $1 million, mainly cucumbers and gherkins, but it has been as high as $1.3 million in recent years.

    In summary, while the immediate trade gains don't appear large, we feel that there is strategic potential here. First, Jordan acts as a trading and distribution hub in the Middle East, with easy access to a number of other countries. Jordan has a moderate and stable government, and outside of the United States, we will be one of the few agricultural exporters with a free trade agreement there.

    Jordan has challenges in being self-sufficient in agriculture because of a lack of water. This trade deal makes good sense, then, because what we grow and what we export does not displace the local farmers on the ground in Jordan. I know that some parties especially are quite concerned about whether we are being fair to local farmers in those countries. This is a good deal, because when they're short of water, they simply import, and Canada is an exporter. So this particular trade deal is a good fit for us; it doesn't negatively affect the small farmers there.

    Secondly, Jordan with its population of six million people is a foothold into a larger trading body, the Gulf Cooperation Council, which consists of the nations of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. This group has a population of 40 million people. It is a relatively wealthy area. It's largely desert, frankly, and they import almost all of their agricultural products.

    So this deal could be a foothold for us to get into a much larger market in that region, and that's why we'd encourage you very strongly to support this trade agreement and do so in a timely manner so that we can get it up and going.

    Thank you for the opportunity to be here.

    I think Mr. Masswohl, from the cattlemen's, is next.

    Great. Thank you, gentlemen. Well done. I enjoyed the choreography as well.

    Mr. Masswohl.

    Thank you, and thank you for the opportunity to be here again.

    My comments will be fairly brief. I thought Richard would be pretty comprehensive, and he didn't disappoint, so I'll just take a couple of minutes.

    The bottom line is that the Canadian Cattlemen's Association supports implementation of the Canada-Jordan free trade agreement. Our standard for supporting an agreement is that it must provide us with the opportunity for commercially meaningful access for Canadian beef. Jordan announced the lifting of all BSE restrictions on Canadian beef and live cattle when Minister Ritz travelled there last year. This free trade agreement itself provides for immediate, unlimited, duty-free access for beef and also for genetics and for live cattle.

    Admittedly, Jordan is not going to be a large market for us, but the important thing here is to recognize that the terms of an FTA just don't get any better than this. It is realistic for us to expect to negotiate an agreement that provides us with unlimited, immediate, duty-free access, and that's what we have here. We would like to see all future negotiations take note of this result and seek the same outcome.

    Those are my brief comments. I think they're fairly unambiguous. I'm pleased to take your questions either on the Jordan situation or on any other trade agreements or trade issues that you want to explore.

    Thank you.

    Thank you, Mr. Masswohl.

    We're going to go to questions now. I should say to the members that you're at liberty to ask any or all of our witnesses any of your questions. We're going to try to keep the first round of questions to seven minutes for questions and answers.

    I'll again remind you that Mr. Masswohl is representing the Canadian Cattlemen's Association, Doug Robertson the Grain Growers of Canada, as is Richard Phillips.

    I presume as well, Mr. Phillips, that you're prepared to answer anything to do with CAFTA, the Canada Agri-Food Trade Alliance?

    Yes.

    Thank you, Richard.

    We're going to begin our questions this time around with Mr. Silva.

    Thank you. I'll be short as well with my questions, Mr. Chair.

    It seems from the witnesses we heard today that, from the agricultural perspective—not all aspects of the trade agreement, because we still need to go through and pick out what the implications are going to be for different sectors—for your sector in agriculture it seems to be a positive thing, because it is a country and a region that doesn't have a lot of farming, and therefore agricultural products are going to be needed. Also, you specified the issue I was going to raise, of small farmers and whether there was going to be displacement or not.

    I want to know, and I think I have already had the assurance from you, while from the Canadian perspective on agriculture it seems like a positive thing, whether there are undue concerns that we should be looking at, particularly in terms of small farmers. Is there an issue that needs to be clarified in the agreement that we should be looking at?

    To be honest with you, we don't really see any issues, at least in the beef and cattle world. As you say, we don't expect to have large shipments there. Maybe we'll do a couple of hundred tonnes per year. It will have to be halal production. We do have that capability to produce halal beef in Canada. We really don't expect any competition from Jordanian cattle producers. I'm sure there are a few people with a few cows over there, but in terms of it being beef production it's not anything for us to worry about.

    Thank you.

    I'll split my time with Shawn.

    Mr. Murphy, welcome to our committee.

    Thank you very much, Mr. Chair.

    I just want to pursue with you, Mr. Phillips, the point you raised about how right now the agricultural trade with Jordan is a not big issue for obvious reasons because of the existing tariff. But what's your thought on this: if the FTA were implemented, do you have any projections as to how this could grow?

    My second, and perhaps more important, question is that you mentioned this could be an entry into a lot of other countries in the Middle East, so I'd ask, do goods flow without impediment to other countries? If you land in Jordan, can you go to other countries or are you stuck in Jordan? Please describe that to me, because it seems to me that the bigger fish is the larger Middle East rather than the country of Jordan, which probably will never be a big issue.

    I think to some degree in that part of the world, and in all parts of the world where there are regions like that, once you have your foot in the door and you establish that you are a fair trader and you are not actually coming in to dump products on the market and displace farmers, for example, and you are trading in a fair process, then it establishes good relationships, and in much of the Middle East a lot of business is built on relationships. Business will grow because of relationships. That's how we see it. That's why it's so important to get in there and build those good relationships with people and that trust. From there it is so much easier to grow a business.

    The goods would not move from Jordan to another Middle East country. You'd have to establish a trading relationship with the other country, like Bahrain and some of those other countries nearby.

    I have to confess that I don't know about the internal trade and whether they could move to Syria or Bahrain or other countries internally. I'm not exactly sure what the rules would be on the transshipping in there. I apologize for that.

    Right now, obviously, Jordan is purchasing agricultural products from another country. As you pointed out, Canada is capable of competing with any other country. But who has the market now?

    I would say it's a very price-sensitive market and they will go to where the lowest price is to a large degree. Turkey, for example, produces a lot of lentils and other crops that we would be producing as well. So Turkey would certainly be a major competitor,

    So I would say they would first go to their own farmers and then go within the region simply because of the proximity and less freight, shipping, and handling. Only after that do they go outside to, say, the EU, or the U.S. or Canada.

    But do others among our normal competitors, such as the United States, Australia, New Zealand, have any sizeable market share in Jordan now?

    Of those, the only other country that has a free trade agreement is the United States, which does have some market. But when I was doing the research on this, I found that they do not do a lot of agricultural trade with Jordan.

    Thank you, Mr. Murphy.

    Mr. Laforest.

    I believe Mr. Guimond, who is a farmer, is well suited to put questions to our guests.

    You have seven minutes.

    Thank you, Mr. Chairman.

    Welcome, gentlemen. I am glad to have you here. Your presentations were interesting. I have a few short questions to help us, my colleagues and me, to better understand.

    You say that you presently export worldwide 5 to 10% of your pulses. Is that correct?

    No, that's what the tariff is, it's a 5% to 10% tariff level now. That would be eliminated under the free trade agreement.

    We would export well over 50% of the pulses we produce in Canada. This is one potential market. India is a very large market for our pulses. Other countries in the Middle East are also markets for our pulses. We export a lot of pulses.

    We are dealing here with the Canada-Jordan trade agreement. Did you assess its potential? You said that Jordan could serve as a foothold to develop our market in the Middle East. Did you do any studies or do you feel there is a significant market there and could you quantify it?

    No, we have not done any studies on that. But before we came to this meeting, we talked with the Canadian Wheat Board; we talked with Pulse Canada, who does the exports; we phoned up the Canadian Canola Growers and we talked with the canola exporters. We did our research that way; we talked with the grains, oilseeds, and pulses organizations as to the market potential.

    Again, it's the pulse growers who say there are opportunities not just for pulses but also some opportunities for special crops, canary seed, for example, as a bird seed. There are some other small special crops too. But there's been no definitive study done of what you're asking for, that I know of, within the agriculture sector.

    We talk mainly about exports of raw products. In a market like Jordan, and maybe soon the Middle East, do you see any opportunity for value-added products, such as semen and genetics on the beef side? Do you believe there are opportunities in this part of the world in terms of added-value products?

    Perhaps Mr. Masswohl can talk on the beef side, but on the grains side, to a large degree, in some of these countries, the people process stuff locally or domestically. People will take the wheat they grow in their country down to a local miller, who grinds it. So to a large degree, the market really is for the raw products, which store better and can be distributed in some of these climates. These will be distributed out to the markets, creating jobs for the local people in these communities to process. That's what we see in some markets.

    With a more refined market like the European Union, I think there's a much better chance to export value-added products to it. But in a place like Jordan, which is very price sensitive, I think it will primarily be the raw products on the grains side that will continue to go there.

    I guess the three of us at this table would probably consider beef to be a value-added grain product.

    Is that fair to say?

    Voices: Oh, oh!

    Mr. John Masswohl: Okay.

    I guess I would reiterate that Jordan is probably going to be a small market for us. I think if we looked at the last five years, we shipped about one tonne in total to Jordan over those five years. We think we can increase that up to a few hundred tonnes, which, on a percentage basis, is quite impressive, but it's still going to be a fairly small market.

    As we were formulating our position on Jordan and really looking at its potential, we talked to the companies that export the beef. Are they interested? Are they going to travel to Jordan, and those sorts of things? Basically, what a few of them told us is that they're very interested in the region. They're very interested in Saudi Arabia, which was previously one of our top ten export markets, in 2002. As they're in the area, why not take a couple of days and check out the potential and the buyers in Jordan and start to develop those relationships? I'm not sure if “foothold” is the right word, but if you're in that area anyway and you have a free trade agreement, all of it certainly helps.

    I guess I didn't mention the tariff situation on the beef side. Right now the beef tariffs range from 5% on steaks, beef cuts, and some of the organ meats, and 10% on embryos and semen for the genetics. If we can get rid of the 10% tariff on genetics, that will create some opportunities. Tariffs on the processed products, the sausages and some of these processed meats, range from 21% to 28%. So we'll see what happens with the elimination of those tariffs. There are some significant tariffs, particularly on the value-added side.

    Mr. Masswohl, you mentioned halal products. They are very important in order to gain entry to this market because it is a requirement. Are you equipped in Canada to slaughter the halal way, as well as to do primary and secondary halal processing in order to serve this market, or would you need to acquire this capacity? This could be a very promising market since Jordan is a potential centre for distribution to other Middle Eastern countries.

    Yes, we have a halal capability in Canada, and we have had some export success to Saudi Arabia and other countries that have that requirement. As well, you can imagine that there's a growing halal demand right here in Canada and in the United States, and that is an area that's growing.

    One of things we talk about at the agriculture committee is the competitiveness of slaughtering cattle in Canada, both on the commodity side and on some of these niche sides as well. We have some work to do to improve the competitiveness of slaughtering in Canada versus, say, the United States. This is something we're definitely working on with your counterparts over in the agriculture committee.

    I would like a clarification. We talk about halal products. Does this have to do with breeding or does this apply only to the equipment used for processing and slaughtering?

    My understanding is that it's for the slaughtering and how the meat is treated. There will be certain inspections all through the slaughtering and the deconstructing of the animal. They're looking for certain characteristics. I'm no expert on it, but to my understanding it's at the slaughter facility.

    Do you agree that this is a promising market, a niche market that we could develop and make use of?

    Very much.

    Mr. Julian.

    Thank you very much, Mr. Chair.

    I'd like to welcome our witnesses. As usual, you gave excellent presentations. Thank you very much for coming back.

    I'd also like to welcome my old colleague Mr. Harris back to the trade committee. It's very nice to see him back.

    I want to start with two issues.

    The tariff tables that you brought are very helpful. We'll be looking at the blues over the next couple of days, but particularly in your presentations I think those will be useful for the committee.

    The first question concerns consultations. Were you consulted at any stage around Canada-Jordan, and if so how? We had some discussions with departmental officials a couple of days ago, and it didn't seem clear at all that there were any consultations, even with some of the key export sectors that would be impacted by the agreement.

    Secondly, I have questions concerning promotional budgets. We've talked about this before, but it turned out from the testimony we got on Tuesday that the total promotional budget of the Government of Canada for export products in the Jordanian market right now is a grand total of zero, and if we implemented this agreement it would go up to a grand total of $12,000 per year. That's less than what your average corner store spends in New Westminster marketing to an area of a few blocks. We're talking about a market of six million people.

    I'm wondering what promotional budgets you would be interested in putting into Jordan. Are you aware of how much money other governments, for example those of the United States and Australia, are putting into marketing to Jordan, compared with the $12,000 that the Conservative government wants to put in?

    Could you also mention the total promotional budgets that you have now, through the federal government and through the ranchers, grain growers, pulse growers themselves? What is your total worldwide budget for this year, 2010, for Canadian exports?

    You're both very important industries, and I just don't think the government pays more than lip service to developing these markets by providing the promotional oomph that other countries provide.

    Concerning the first part of your question, on consultation, I'm trying to remember. It was actually quite brief. I remember the first meeting we had with the negotiators. They advised us—this was after the first negotiating round—that Jordan had offered immediate duty-free access on beef. We said, that's good.

    To be honest with you, that was the extent of the consultations. We wish they could all be like that, but they haven't been.

    On promotional budgets for Jordan in particular, we had this conversation a bit before. The way we do our beef promotion is that the Beef Information Centre is responsible for the Canadian and the U.S. markets, and then we have the Canada Beef Export Federation, which is responsible for beef promotion in the rest of the world.

    The Beef Information Centre is a division of the Canadian Cattlemen's Association, and I can share with you that budget. Approximately $10.5 million is the 2010-11 budget for the Beef Information Centre; that's for Canada and the U.S.

    That's both federal government plus the contribution of ranchers.

    Right. And this year our government contribution proportion is larger than it was last year. Last year the government contribution was approximately 60% of the total. This year the government contribution is just a shade under three-quarters .

    So it's about $7.5 million.

    Right. When we were talking last time, I didn't have the numbers with me. I was probably a little off in my guess the last time around.

    How would that compare with the U.S., Australia...? We've talked about some of these figures before. The United States offers many times more.

    Now, that's what we spend in Canada and the U.S. Getting into comparing the rest of the world and what the U.S. spends in the rest of the world, our Canada Beef Export Federation is not part of the Canadian Cattlemen's Association. We are one of a number of members. If you want to explore what their budget is, you'd probably want to talk to them directly as to how that compares.

    Okay, but you're aware of the United States' promotional budget. We can certainly ask them for the proportion of beef export sales that they're involved with. But we've talked previously of figures upwards of $50 million or $60 million in support from the U.S. government. Is that accurate?

    I personally don't know what the U.S. Meat Export Federation spends. I imagine that the Canada Beef Export Federation has some estimates of what they spend. I think the numbers you've quoted in the past were from Ted Haney, from the Canada Beef Export Federation, so I would probably encourage you to follow up with Ted.

    Fair enough. Thank you.

    Mr. Phillips.

    The Grain Growers of Canada is a coalition of commodity associations that would be more directly involved themselves. So Pulse Canada, for example, which would be made up of all the pulse associations and the industry, would have their promotional budget. I don't know the exact numbers of these, unfortunately. But they will sit down at the start of the year and say, what are the key target growth areas? Is it more growth in India? Is it more growth in the Middle East? And they'll make those determinations.

    They do receive some money. Again, I don't have the exact figures, but I'll make a commitment on record to get those numbers for you, for what the pulse growers would do.

    Likewise, the Canola Council of Canada, when I sat on the board there, we had a market development committee and we would prioritize certain markets. When it did come to the Middle East, which is such a price-sensitive market, at the Canola Council we would discuss whether we would spend money to develop a price-sensitive market or should we go where there is a premium price paid and do further development there. We always tended to lean towards whether we could do more market development within the United States or within the European Union or places where people will pay for the healthier oil aspects versus a lower price market, which you're in one day and then if olive oil is cheaper the next day, you're out again. So we tended not to prioritize some of the really price-sensitive markets. I suspect--I'll just speculate here--that Jordan would probably fall into that. It's a place where if you can meet the price at certain times, you will make a sale, but it's maybe not as long term a development on some of those issues.

    The Canadian Wheat Board may very well be doing some market development if they're doing a trip through that area. They may stop in and see them.

    The other thing we have in Canada that does promotion for Canadian products, though, is the Canadian International Grains Institute, where we have full-scale sample milling labs and pasta plants and there is some pulse processing in there now. What we would do there, if we thought Jordan was a key market, is we'd invite one or two of the milling companies, one of the big bakeries from Jordan, to send somebody to Canada. We'll take them through the Canadian wheat and show them how we'd set up their mills, the products that would be made, and how our product would make the exact breads they want and the quality they can expect from Canadian products. Or they'll do that with the durums for the pastas as well to show the quality of products we can make.

    This is an excellent tool that maybe a lot of people don't even know about that we use in Canada.

    Thank you, Mr. Phillips.

    I'm sorry, that's eight minutes. They were great answers but they just got a little long, unfortunately.

    We're going to have to go over to this side, to Mr. Keddy.

    Thank you, Mr. Chairman. I'll be sharing my time with Mr. Trost.

    Welcome to our witnesses.

    Mr. Phillips, I just want to pick up where you were leaving off, on how we actually do our promotion in foreign lands. I want you to expand a little bit on the fact that you're obviously concentrating on countries where we have trade agreements in place. I would expect the reason for this is that we're not already at a 15% or 25% tariff, which puts us in a deficit position before we even begin to trade.

    Do you want to expand on that?

    You're shaking your head “yes”, but....

    No, no, I think that's true. If you had to focus somewhere, why would you start off with a 15% tariff barrier in any of your market development work? That's why the trade deals and the negotiations are important to move forward. Certainly the government has been very aggressive on these deals, and as agricultural producers we are very supportive of that and very appreciative of it.

    To go back to promotion, we can go overseas and promote our products there. There is money available from the federal government. I don't know how much uptake there was to show up at major food fairs in Europe, for example. The beef and the pulse people have some government support to go into the major food fairs there, where the buyers and all the food companies are, and show them what Canadian products look like. There are various supports available. I just don't have all the numbers on what each of these groups is taking advantage of.

    I appreciate that. I was more interested in the reasoning behind where you actually market, and it makes perfectly good business sense to me.

    I appreciated your comments earlier, when you said you would prefer that we pursue more multilateral deals, such as the WTO, and try to get this uniform trade deal worldwide. The difficulty is that we're stalled, and we're seriously stalled. We certainly made overtures to try to get those trade talks moving and we have some small success there, but in the meanwhile I don't think we can stop. That's the whole point of the bilateral discussions, whether with Jordan or Colombia or Panama or other countries around the world. Otherwise, we don't find new markets for our agricultural products or manufactured products, and essentially we're sliding backward every day instead of moving forward. I thought that needed to be said.

    I appreciate your comment, and I agree with you, but if we're not moving forward in those directions, we have to--we have to--look at bilateral discussions.

    I'm going to turn the rest of my time over to Mr. Trost. Being a prairie boy, he wants to get at you guys.

    Thank you, Mr. Keddy.

    You made some remarks about price sensitivity, and I can understand that with raw markets. Looking at the data of top exports to Jordan, I see there doesn't seem to be very much in beef. You mentioned it was one tonne of exports. Has it just been price that's been keeping our products out? Why haven't we been able to sell more agricultural products to the Jordanian market?

    I'm getting an “I don't know” look.

    Mr. Richard Phillips: No, I'm looking to see if John wants to answer first.

    Sure.

    You know, kind of coming around that question, one of the things that I constantly hear from people who do business after a free trade agreement has been established is, “What was it in the free trade agreement that really opened up that market to you?” Yes, lowering the tariff helps, but often they say that just the fact that we signed an agreement means there is an opportunity. It raises awareness of the market and bumps it up the priority list.

    There are some 180 countries around the world, and we can't be in all of them all the time. As I said, we're probably interested in Jordan because we're interested in Saudi Arabia. We're interested in the United Arab Emirates. We have sold a lot to those countries. If we're in the neighbourhood anyway, let's have a look at Jordan.

    Also, Jordan has had a trade agreement with the United States for almost 10 years. I don't know that the U.S. has sold a lot of beef in Jordan, but if you're on the Jordanian buyer side and you can buy duty free from the United States or pay a 5% tariff if you buy from Canada, why would you buy from Canada?

    I'm hearing basically price and awareness.

    To follow up on where Mr. Murphy was going with some of his questions earlier and the remarks about strategic location and a strategic plan for the future, how do you suggest that the Government of Canada strategically approach trade relations in the area, using Jordan to leverage into the Saudis or the Kuwaitis? Iraq is starting to have more money in that neighbourhood, and Syria, etc. Have you any suggestions on what we should prioritize strategically in that region?

    Let's look out one year, two years, three years and let's just presume that there's been an excellent relationship and maybe a growing trade relationship between Canada and Jordan and that we've always met the specifications: they're happy with the quality, happy with the products. I would say that if you were to go into that area, you would first approach the Gulf Cooperation Council, which is the group of nations with 40 million people. If you can go into a larger group like that, it saves having to negotiate the individual agreement with each of Bahrain, Kuwait, Oman, Qatar.

    So we would use this as a template: we've culturally done fairly well with one Arab country, so let's work toward the big market.

    Yes.

    Go ahead; finish. We have about 40 seconds.

    I think it's similar to the reason the EU is looking to do a free trade agreement with Canada, only in reverse. They're looking to see whether they can make it work with somebody who is very similar to the U.S. They really want to get into the United States. It's rather the same thing here: if we can prove our worth and prove that we can do things well and show the cleanliness of our products...

    There were a lot of questions before about products that could be upgraded, value-added products, cheeses, and all kinds of things such as jams and sugar, confectioneries, and all those kinds of things. Those are all value-added things besides beef that we have a possibility to get into as well and that are presently tariffed.

    Fair enough; thank you.

    We're going to have time for another round.

    Mr. Julian, it looks as though there's time to complete your response to the other one, if you wanted to conclude your question on—

    Thank you very much, Mr. Chair.

    The two questions I'd asked Mr. Phillips were on consultation: whether there has been any consultation around the Jordan agreement, and secondly whether you're aware of how much funding and support other countries, our competitors, provide to their pulse growers, to their grain growers.

    To the first one, I'm not aware of consultation with the grain growers on this. It may have happened, because it was about the time I came to the Grain Growers of Canada. It was my understanding that the King of Jordan was coming for a visit and that this was the impetus to move a little more quickly to put this one together. I think that's what got it started, that the King was coming. There might have been other diplomatic reasons, even, for their wanting to put this together.

    But I'm not aware of consultations with us in advance. I would say that in other trade agreements, the larger trade agreements—for example, the Canada-EU agreement—there has been substantial consultation with most of the commodity groups in advance of it. On this particular one, I'm not aware of any.

    We don't actually track what other countries are doing, in terms of the dollars or the percentage. You can hide money so easily in promotional budgets that you never know for sure where it's coming from. Is it coming through an embassy? Is it coming directly to the industry association? Is it flowing somewhere else? It's hard to track all that. We don't have a firm number on it.

    We don't feel that we're being badly outdone. To a large degree, and maybe the beef people feel differently, I think Canada has done... Through the quality of our products over the years, I think we have a very good reputation out there. When we talk about expanding our markets and about other value-added products, if we're doing a good job and the chickpeas and the canary seeds and the beef are meeting the specifications, then maybe if someone is importing and is bringing a container load over there, well, if there's room for other value-added products, there's a better chance, once you get your foot in the door, to make those other value-added sales.

    It is due to our reputation, I think, that we do so well, quite frankly.

    Thank you, Mr. Chair.

    Mr. Holder.

    Thank you very much.

    I'd like to thank our guests for coming in today. In the case of a couple of you, it's nice to have you back. Mr. Masswohl and Mr. Phillips, it's good to have you here.

    I've been thinking about this deal, and I'm getting a sense around the table that we're getting closer to general support of this free trade deal.

    Mr. Phillips, I'm encouraged by your support, along with Mr. Robertson's.

    I noted, Mr. Masswohl, what you said--I'll try to quote you correctly, but I'm sure you'll correct me if I don't--that in terms of an FTA, it just doesn't “get any better than this”. Thank you for that.

    I knew you would pick up on that.

    You know, it's rather interesting. The United States ratified a trade deal with Jordan in 2001. The EU ratified one a few years later. In fact, I was looking at all the bilaterals that Jordan has. They deal with five countries in the Middle East--Algeria, Libya, Syria, Kuwait, and Bahrain--but they have also ratified deals with Peru and EFTA and, as I've mentioned, the U.S.A. and the EU.

    Here's where I struggle. I struggle with the reality that for nine years now, we've been at a competitive disadvantage with the United States as a result of this. It defies description why any number of governments--and I'm not picking on any of them--have taken this long to get us here. Because it's an easier deal than some, this may well be, as some people have said, an opportunity for us to use Jordan as an entree into the rest of the Middle East. That might well be true, particularly since Jordan has some bilaterals that I've mentioned in place.

    It's rather interesting; the other night, Tuesday night, I attended a council of Arab League ambassadors to Canada and the Canada-Arab World Parliamentary Association. This was a group of ambassadors and chefs de mission. I'd like to read out the countries they represented, because I think this does matter: Algeria, Tunisia, Egypt, the United Arab Emirates, Iraq, Jordan, Yemen, Kuwait, Mauritania, and Morocco. In all of that, as soon as I mentioned to them that I sit on the Standing Committee on International Trade, the interest was huge, because they're all interested in doing more business with us.

    By the way, we do business with them. Let's be clear; we trade with every country in the world in varying degrees--except for Canadian beef in Jordan, perhaps--but we clearly do trade all around the world.

    Here's what strikes me. I made reference to the United States. The United States--and by the way, I would encourage all members around the table to remember that the United States has had a free trade deal ratified since 2001 with Jordan--does $220 million in exports to Jordan. We do $1.5 million. That is 147 times more than we do, and they're not 147 times larger than Canada. That's the loss that happens when we don't show the initiative to get this done.

    Mr. Masswohl, I have a question for you. It seems to me that three years ago there was a little bit of business, about $19,000 of fresh beef, sent to Jordan, and it stopped in the last two years. Why would that be? Was that all this BSE issue?

    I was looking at the numbers myself, and I was wondering how that beef even got in there when we've been shut out of that market from 2003 until just last year. Sometimes when the numbers are that small, you wonder if somebody coded something in the wrong column or something.

    Effectively, there were no exports to speak of.

    Maybe we had one tonne over the last five years. Maybe we had nothing.

    Listen, first I want to say how much I appreciate your acknowledgment of Minister Gerry Ritz and his negotiations with Jordan in terms of lifting the BSE ban. That actually matters to us, and it's not just the minister, but all his staff. I think that's good for Canada and good for all the provinces of Canada, if I might be so bold.

    Here's my question. There's an issue that typically comes up with some members opposite about promotional budgets. We heard an expert witness in our last meeting, Thomas Marr, a director at DFAIT. We talked about this very issue of financial dollars, and I know Mr. Keddy talked a bit about it. I just want to ask whether you would support this notion. It was his view and his experience that, given opportunities to eliminate tariffs in a country like Jordan, where the tariffs are 10% to 30%, where we could do business immediately, where 99% of our product would move tariff-free immediately and the rest over the balance of, I think, some seven years, private enterprise would take up the slack and seek the opportunities. When it came to promotion and opportunities, whether in grains or in beef, they would do that.

    What is your thought? Do you think private enterprise--and I look at you as private enterprise--would take up that slack? Would you be able to compete effectively in Jordan with your own marketing budgets?

    First, I also want to pick up on the fact that the minister has been travelling in order to open beef markets. He's in China this week, and we want to thank him for being there. We also want to thank the Liberal Party and the Bloc for sending MPs with him on this trip this week, which made that trip possible as well. That's the kind of all-party cooperation that we'd really like to see continue through the parliamentary session.

    With reference to your question, I would agree. The tariff on beef is 5%. That's not an insurmountable tariff; we ship to Japan at a 38% tariff. In a high-income market that doesn't produce any beef, you can sometimes get beyond the tariff, but if it's a smaller market where there's not a lot of awareness, if you get an agreement and you're in the region anyway, I think an agreement like this is going to help.

    For us, the big thing about this agreement is that it proves we can actually do an agreement that lets us get beef opened right way, fully, and we want to see that be the standard that Canadian negotiators repeat in future agreements.

    Would our colleagues from the “grains, beans, and things”, as I like to call that side, like to make a comment?

    Yes. To put it in perspective, the private sector is very active in the pulse sector there right now: in 2007 Jordan was Canada's largest chickpea market. I think you will see that the private sector has already got its fingers in there, and with the tariff barriers gone, I think we will see a growth in sales, so the private sector will pick that up to a large degree.

    With reference to promotion budgets, if money came to us, we'd certainly never send a cheque back. There's only so much money to do promotions, so you have to focus on where you get the best return.

    With respect, Mr. Julian, I'm not sure a price-sensitive market, where you can easily be displaced by another commodity, is where you'd want to spend your promotional budgets, as opposed to going into a higher-valued end market and doing your promotion there, where there are longer-term and higher-end returns.

    We're not doing either.

    Well, fair enough.

    I too would like to thank the opposition members for pairing. It's really important. We had a huge problem in the Chinese market with blackleg on our canola, and if opposition MPs did not go along on the trips and pair on this, we wouldn't be able to resolve the issues. Whether you like Minister Ritz or don't like Minister Ritz, sometimes it takes a minister-level person to talk to a minister-level person and resolve issues, so we really appreciate your support on this too.

    We really like Mr. Ritz.

    Yes, I will say for the record that I like Mr. Ritz too. If my Cape Breton mom knew him, she'd probably like him too.

    Thanks very much. I can't imagine who wouldn't like Minister Ritz--even Mr. Julian.

    We've got time for a couple more.

    I'm going to go to Mr. Laforest.

    Thank you, Mr. Chairman.

    My colleague, Mr. Guimond, mentioned earlier that beef exports to Jordan would mainly be done using the halal method. He asked if this method only involved the slaughtering or if it also applied to livestock production.

    Does it also involve the shipping? Must this meat be delivered within a prescribed timeframe following slaughter? And, according to circumstance, should it be transported by sea or by air? Are any such requirements imposed by virtue of halal guidelines?

    To be honest with you, I just don't know the answer to that question. We can look up the halal process and we can forward that information to you.

    You say that there already are exports, but in the case of countries that are as far away as Jordan, are the goods shipped by sea or by air? I am simply curious.

    For the grains sector, it would be by sea. There would be no air--

    And what about for meat?

    It was over 10,000 tonnes of chickpeas, so that would be either containerized or in a hold in a vessel or two. It's large volumes going on the bulk grain side.

    Usually when we get into large commercial quantities, we're selling containers, and they go by sea. Sometimes a specialty purchase could go by air. If somebody's going to buy a couple of hundred kilos or one tonne of something, and they need it and they're willing to pay for it, it will go by air.

    Thank you.

    Merci. Thank you.

    Mr. Harris, did you have a question; or Mr. Julian?

    I think I have a question.

    Very good. Go ahead, Mr. Harris.

     I want to go back to product promotion. You said that a beef buyer in Jordan, for example, given the choice between American beef at 0% and Canadian beef at 5%, would choose American beef in most cases.

    As far as the promotion goes, while some seem to think the government has an obligation to pour untold amounts of money into promoting our products, when you establish a free trade agreement with a country like Jordan, I would assume that there are entrepreneurs in Jordan just waiting for opportunities to deal with new countries via a free trade agreement. I think you could safely say that the business could possibly be self-propelled through the efforts of entrepreneurs in the country that's going to enter into a trade agreement, and of course the industries in Canada--in this case beef and grains and pulse--are doing their homework too.

    Having been in private business all my life, I tend to think that people in business, who have to answer to the banker, tend to spend the money a lot more wisely than government does most times, so I'm thinking that with the free trade agreement, the entrepreneurs on both sides of the agreement will do what it takes to get the products in there. Is that a fair assessment?

    In fairness, if you compare us to the United States, there are a lot of American agricultural associations coming to the USDA and having the USDA do their promotion for them. In Canada, it tends more to be each of the groups. Pulse Canada, for instance, has a big push.

    As well, because pulses are a little bit more of a cooler-season crop, the Americans can't really grow them. The Americans are more a monoculture in the stuff they grow--wheat, a lot of corn, a lot of soybeans--and don't really do a lot in pulses, so we have a big advantage in Canada. It's a huge growing crop across the prairies and has displaced a lot of the wheat acres that disappeared because of the markets. The market price has been down on wheat, malt barley, and barley, so that's what a lot of producers have gone to as their saviour in business.

    Pulse Canada has done a fair bit of promotion to areas that are important to them, as have the Canola Council of Canada and the beef guys. It tends to be more association-driven. It's driven by the producer groups that put the money into it. That's just the way our system has evolved over time.

    It's a good way of doing it. I would hazard to say that a private organization could probably spend 25¢ and get more of a bang for it in promoting their product than the government could by spending a dollar. That was my point. We do quite well with self-propelling our goods and services, and while it's always good to get free money, sometimes it's not spent in the best ways.

    Thank you.

    I guess the big problem is that money from the government isn't free: it's got to come from me.

    Yes, that's right.

    Is that it?

    Yes.

    Thank you.

    Go ahead, Mr. Phillips, absolutely.

    Could I say one last thing? I think I speak on behalf of Mr. Masswohl as well.

    We go to the agriculture committee quite a bit, and we recently wrote a letter chastising the members at the agriculture committee for not paying attention to witnesses. I want to say that I and the Grain Growers are really pleased to come here and see all of you engaged and interested in what we have to say, and we really enjoy the dialogue. That's what we're here for: to learn from one another. We really appreciate what you guys are doing at this committee here today. You're a pleasant change from the agriculture committee.

    [Inaudible--Editor]...everybody say that?

    Voices: Oh, oh!

    Mention names.

    I just wanted to congratulate you.

    We'll get a raise when they hear that.

    I'm sure that's without exception. It leads me to my comment--it's a day for these kinds of compliments--that what you do on an ongoing basis, providing information regarding your industry to the committee, is very helpful to us, and we thank you.

    I just want to give you a heads-up and say that I expect the committee will be back in Washington to meet with our congressional colleagues, probably within a month to six weeks. We'll be pursuing COOL, to be sure, and possibly any other matters you would like us to go over. If there are things on your agenda that we are not yet aware of, or that are particularly troublesome to you with regard to Canada-U.S. relations, let me or the clerk know, and we'll try to add them to our agenda for our next meeting in Washington—which we will all discuss in committee, if these come as a surprise to anybody.

    In any event, thanks again so much for being here today.

    I think that will conclude our business for today. We will meet again next Tuesday to talk about Canada-U.S. trade relations and to consider our report on procurement.

    Thank you.