Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 15 - Evidence, February 9, 2011
OTTAWA, Wednesday, February 9, 2011
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:15 p.m. to study the political and economic developments in Brazil and the implications for Canadian policy and interests in the region, and other related matters.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, I call to order this meeting of the Standing Senate Committee on Foreign Affairs and International Trade. I welcome committee members and guests.
The committee is continuing its special study on the political and economic developments in Brazil and the implications for Canadian policy and interests in the region, and other related matters. This is our seventh meeting on this study.
We will hear from two sets of witnesses this evening. Our first witness, Federico Burone, joins us via video conference from Uruguay. He is the regional director in Latin America for the International Development Research Centre, IDRC, with which we are very familiar, having been appointed to the position in 2001. He is based in Montevideo. He also spent two years with the United Nations Development Programme as a technical adviser in natural resources management in South America. He has a PhD in economics and a master's degree in environmental sciences from the Universidad de Valencia in Spain.
Welcome to the committee, Mr. Burone. We know that your contribution will be helpful in our study. After your opening remarks, senators will have questions. Please proceed.
Federico Burone, Regional Director, Latin America and the Caribbean, International Development Research Centre (IDRC): Thank you for the invitation to speak with you today on the issue of political and economic development in Brazil and the implications for Canadian policy and interests in the region.
The Senate's study is extremely timely. During your hearings, you have heard from many well-informed speakers about various aspects of Brazil's rapid growth and its transformation into a country whose decisions increasingly determine the future of Latin America, the hemisphere and, I would add, the world. This brings a new dimension to its long-standing relations with Canada.
I will focus my comments today on the role of research in fostering development and the importance of continuing to support it. This is a facet of international cooperation, of modern diplomacy and of development assistance that is often forgotten. Support for scientific and technological innovation is essential to achieving sustainable development in Brazil and elsewhere. That is of great interest to Canada and is, in fact, in our own self-interest.
The International Development Research Centre, a Crown corporation, funds local researchers who are tackling their society's pressing problems. We believe that a strong scientific and technological capacity in developing countries is crucial to social, economic and, I would emphasize, democratic development. As director of IDRC's regional office for Latin America and the Caribbean in Montevideo, Uruguay, I have been fortunate to have been closely involved in these efforts and to manage our portfolio of projects in Brazil and in the region.
IDRC's support for research in Brazil dates back to 1972. Since then, we have funded research activities on a wide variety of issues, including economics, health, social services, forestry and water management.
Promoting democracy, as mentioned before, also concerns us. For example, when Brazil sought to harness the energy of its 34 million young people a few years ago, researchers we funded organized innovative policy dialogues through which young people could voice their concerns about security, poverty, education and other pressing issues on the domestic agenda. The results shattered stereotypes of young people as apathetic and sparked major changes. Among these was the creation of the National Council for Youth, which is reporting to the Brazilian presidency, where young people are now able to sit down with politicians and officials to discuss policies. Also, research centres supported by IDRC are now providing technical support in these policy debates.
It is interesting to note that the research process was initiated in Canada by Canadian researchers who collaborated with their Brazilian counterparts. The success of this project has led to further IDRC-supported research in the whole of Latin America, and the process was later replicated in Canada.
Collaboration between Canadian and Brazilian academics continues through such initiatives as IDRC's International Research Chairs program. Senior academics from the State University of Campinas, close to the city of Sao Paulo, and the Federal University of Rio Grande, in the south of Brazil, are working with Canadian researchers at the University of Manitoba and McMaster University to improve the livelihood of fishermen in Rio de Janeiro state by, for example, developing strategies to control increasing coastal pollution in that part of Brazil and its implications.
IDRC also provided early and sustained support for macroeconomic research at Pontifical Catholic University of Rio de Janeiro in the 1980s. This work contributed to the policies that were the foundation of the Plano Real, Brazil's most successful economic stabilization plan. Its implementation in 1994 was directed by Fernando Henrique Cardoso, then Minister of Finance and later President of Brazil. Interestingly, Cardoso was among the researchers we supported during the years of dictatorship that ended in 1985 in Brazil.
Our support today is also helping Brazilian health authorities increase access to health care, urban communities generate clean energy, governments develop natural resources more sustainably, among others, through the work of research centres. Our aim is to inform policies and enhance their effectiveness. The final goal is to reduce poverty and ensure domestic conditions for inclusive and sustainable development.
Much of the work we support is carried out through regional research networks in Latin America. For example, the Latin American Trade Network, which we helped create in 1998, helps Latin American countries respond to changes in international trade relations. It enabled Brazil's National Confederation of Industries to negotiate domestically better trade terms, for instance. Today, this network has more than 120 partners in 19 countries.
Brazil's interest in regional agreements like Mercosur and the more recent Unasur is clearly broader than just trade and the movement of goods, services and people. All this has implications for our work at IDRC. As a regional leader, these interesting regional agreements extend to issues such as the importance in the region of persistent poverty, the quality of basic public services, the vulnerability of young people, and the sustainability of its natural resources. It also includes ways to coordinate investments and policy choices.
Brazil clearly recognizes that meeting these challenges depends heavily on other countries in the region, and on the capacity of its neighbours to consider policy and institutional changes in order to adapt to the changing global environment.
Brazil also recognizes the importance of supporting researchers working in the country's public institutions and public universities. It recently increased funding to research on both domestic and regional priority themes. For example, between 2002 and 2009, gross domestic expenditure on research and development increased by 10 per cent. It now accounts for about 1.1 per cent of the national GDP, gross domestic product.
Recent indicators show a substantial improvement in the ability of Brazil's scientific institutions to conduct basic and applied research and to administer and conduct scientific policy in the country.
Clearly, progress has been made, but it is not enough. That is why international cooperation with organizations such as IDRC is important for Brazil and for the region's development. Of course, its development is, in turn, important for Canada, because a safe and prosperous Brazil means more favourable conditions for our engagement in the Americas.
Brazil already cooperates with Canada in science and technology through the Framework Agreement for Cooperation on Science, Technology and Innovation signed in 2008. This kind of partnership provides a model for mutually beneficial endeavours.
Brazil also now collaborates with other countries, such as those in Africa. In fact, the Brazilian Agricultural Research Corporation, EMBRAPA, has established an African office, based in Ghana, to share scientific and technological knowledge. Brazil also invests in projects and supports a growing number of researchers focused on Mercosur concerns.
Despite progress, Brazil still faces many challenges. For one, Brazil lacks incentives for responding rapidly to pressing social development issues, including employment, decentralization, rural development and security. Brazil's development and economic growth have generated prosperity and opportunities for social mobility, but not all have benefited. The gap between rich and poor is still one of the widest in the world.
Brazil also needs investment in its small producers and small businesses. This deficit hinders entrepreneurship and limits formal employment. As a result, Brazil has a huge informal sector. Research can contribute to addressing this issue. This is all the more important in that research for development carried out in Brazil spills over national borders to the whole of the Latin American and Caribbean region.
Canada, through IDRC and other organizations, has contributed to Brazil's transformation via networks and alliances in scientific research, innovation and production. We need to continue this support. Facilitating greater cooperation between Brazilian and Canadian researchers is, as mentioned, also in Canada's own enlightened self- interest.
Canada's interest in the security and prosperity of Latin America demands that we pay attention to Brazil and that ongoing challenges like poverty, state inefficiency and natural resource management be addressed.
Through our development work, we also create important linkages that add a value to Canada's diplomatic efforts, and we confirm this country's international reputation for innovation and development.
Clearly, IDRC's mandate is focused on development. Our support has made, and continues to make, a critical contribution to the development of Brazil and the region. Increasing the capacities of research centres in Brazil to address domestic development challenges is critical to furthering its transformation and extending greater opportunity and stability throughout the Americas.
I will conclude my comments here and welcome the opportunity to discuss any points and answer any questions you may have, and also welcome members of the committee to travel to Brazil, as you have to Russia, India and China. I would be delighted to have you visit some of our projects and meet some of our research partners in the field.
The Chair: Thank you.
Senator Downe: Can you tell us about the funding levels? In your opinion, have the funding levels been consistent enough in the region, not only in Brazil but in the region, and in your view, what else could we do to increase our research capacity in that area?
Mr. Burone: The funding IDRC provides for research activities and to research centres in Brazil has remained consistent, though what we fund has definitely adapted to reflect the new realities. We are selecting strategic issues. We are providing research centres in Brazil with opportunities to work on those issues in order to make a difference in the domestic context. However, as mentioned before, we are also creating opportunities for Brazilians to work through regional networks and to take part in discussions about different development models that we are observing in Latin America.
Our level of funding involving Brazilians in regional networks or in supporting projects in Brazil is still being maintained compared with previous investments in the past five years, but our programming is being adapted by, for example, discussions with the national granting agencies that support scientific research, by creating partnerships and by trying to inform their agendas, including on development issues. We are using our resources, our seed money, in order to enlarge the capacity of national institutions to work with IDRC and to create opportunities for critical discussions on development problems in Brazil and in the region.
Senator Downe: With respect to partnerships, has the IDRC linked with any other countries in addition to domestic partners? Do you do any cooperation agreements, for example, four or five countries coming together, creating a larger pot of money and having more detailed research? Have you pursued any of those opportunities?
Mr. Burone: Clearly, we are inviting other countries that are participating in or supporting research or research- related activities to work with us. This is the case of our existing partnerships with institutions like DFID, the international development department in the United Kingdom, with the Netherlands, Switzerland and other countries. Normally, we play that role. We participate in an international forum where the efforts of countries and institutions that support research and research capacities are coordinated. IDRC has always played a critical role in terms of leading, sharing our knowledge, creating opportunities for partnerships, and transferring our know-how in terms of research and research management.
Senator Downe: Could you expand? Obviously, there are benefits to Brazil. In your opinion, what are the benefits to Canada? Do you have any specific examples of recent benefits?
Mr. Burone: As mentioned during my opening remarks, we have multiple projects where we are creating opportunities for Canadian researchers to collaborate and to participate with research that IDRC is supporting in Brazil. There is the example of youth and the participation of young people in policy discussions. The difficulties young people perceive in terms of how political parties integrate their concerns is something that we observe to be a critical factor in supporting democracy at a local level.
As mentioned before, we involved researchers from Canada who worked in Brazil developing a particular methodology that helped Brazilians understand why young people, the next generation of potential workers in Brazil, were not interested in new policies that were being created to stimulate formal employment. We found that young people had a clear difficulty understanding, for example, the internal dynamics of political parties and how policies were being designed and implemented. We created opportunities for engagement and dialogue.
A similar kind of exercise was developed and presented a couple of years ago in Canada, using the same methodology and exploring why, in some contexts, we were also observing this difficulty. That is something we are now prepared to transfer to other realities in the global world.
There are many examples of where our research methodologies are being explored.
I will also mention our support in creating new research centres in several Latin American countries that are focused on the reconstruction of Haiti. As you know, several Latin American countries, including Brazil, have played a clear and active role in supporting and participating in efforts that are taking place in Haiti, but it is difficult to find research centres there that can interact with policy-makers and other social actors to create a proper environment for discussions regarding the future of this cooperation.
IDRC is supporting the creation of the first cohort of research centres focused on the reconstruction of Haiti in different Latin American countries, something I am sure will benefit the key objective in Canada of contributing to the future of this particular country that is suffering the most in the region.
Senator Downe: Could we have a list, chair, that either the witness could provide to the committee or the researchers, of the IDRC projects over the last five years in Brazil, and who their Canadian partners were?
The Chair: That probably could come from the witness or from IDRC. I think there are some representatives here in the room. We have noted the request, and if it could be complied with, or if there is a difficulty with part of it, give us what you can now and work on the rest.
[Translation]
Senator Fortin-Duplessis: Mr. Burone, first I would like to thank you for sending us your brief in advance. It allowed me to get it in French.
On page 1 of your presentation, I see that you have supported research in Brazil since 1972, and that 241 activities have been funded for a total of $60 million. It really is a great success, and I am impressed.
Before I ask my first question, I would first like to make a brief comment. On page 3, you mention that the Brazilian Agricultural Research Corporation, EMBRAPA, has established an African office, and has relationships with Ghana to share scientific and technological knowledge as a means to contribute to sustainable development and food security.
In your brief, you say, ``Brazil also invests in projects and supports a growing number of researchers focused on Mercosur concerns.''
So I would like you to go into a little more detail about the research and development aspect of Brazil's agriculture industry and your role.
[English]
Mr. Burone: Thank you for your question. As mentioned, in our history of collaboration with different research institutions and researchers in Brazil we have dealt with different priorities and different concerns from a domestic point of view.
I would say that our contribution has always been focused on both dimensions, but are not necessarily well considered in national programs that stimulate or create better opportunities for international competition for Brazilian agriculture.
For example, a couple of years ago, Brazil considered diverting some of its water resources in order to irrigate part of the country's dry lands. There were difficulties in understanding the implications for small producers and the poor people living close to the rivers planned for transfer in order to irrigate those areas confronting difficulties and to make good on national plans to expand agricultural productivity.
IDRC, in collaboration with CIDA, supported a project that examined all the impacts that needed to be taken into account in development initiatives like this, including the implications for poor people and small producers in terms of access to proper livelihoods, as well as opportunities to obtain critical food and to assess the impact to food security and nutrition. This is an example of our contribution to Brazil.
The importance of domestic family agriculture associated with new policies and regulations to improve access to land is another aspect where IDRC contributed to critical and extremely sensitive national debates. Again, in collaboration with CIDA, we are implementing a call for proposals in order to stimulate the creation of research consortiums involving Canadian institutions — Brazil is one of the countries listed — in order to understand how the transformation of domestic agriculture can affect food security and food nutrition in the domestic environment in Brazil.
These have been the traditional dimensions included in our programming, vis-à-vis the challenges associated with agriculture in Brazil.
You mentioned a new factor, which is the internationalization of the leading institution in Brazil, EMBRAPA, as mentioned in my opening remarks. This is a huge national corporation, leading global research on agriculture and food production. It is now active in the emerging plans for international cooperation with representation in countries like Ghana, Africa. For us at IDRC, it means a new strategy or strategic component of our approach in organizing our discussions and potential partnerships with Brazilians. This way we can lead, integrate and cooperate with some of the efforts Brazil is putting in place to address the challenges confronted in Africa by African institutions and research institutions.
We are engaged in dialogue with institutions like EMBRAPA in order to combine technical and financial resources to enhance this trans-regional north-south cooperation that we see as part of the future. IDRC wants to play a key and critical role in that respect.
[Translation]
Senator Fortin-Duplessis: I would like to know whether the findings of the agricultural research are used to benefit the small producers you have spoken to us about, those who benefit little from water irrigation for farming, or whether the findings of the research done in Brazil were focused only on the large farmers or large producers.
[English]
Mr. Burone: I must say that our focus is on those that have been neglected by national plans and initiatives. Therefore, poor producers, poor farmers, small producers and small farmers, are the key and principle beneficiaries of our analysis and the way we distribute information.
However, I think we need to look at this from a systemic point of view. In the end, it is obvious that we are improving Brazil's ability to integrate and conceive a new production strategy and to introduce initiatives that are inclusive of various social actors and that go beyond simply focusing on agriculture's role in responding to domestic demands or participating in international markets. Part of our contribution is linked to the national strategies and the way Brazil has been playing a critical role in food production. Our aim and key objective is to enhance the role and the opportunities for small farmers, all farmers, to be integrated and taken into account in the promotion of national policies and, hence, in the promotion of national development strategies.
Senator Johnson: Mr. Burone, in terms of your activities at IDRC, how have your priorities and activities regarding Brazil changed in the light of the country's recent economic growth and global aspirations? They are not exactly a Third World country right now, any more than we are, in some instances.
Mr. Burone: Our approach to Brazil and our contribution to Brazilian research centres have been adapted, first, by considering that we need to leverage the interests of what we think are critical entry points to deal with development priorities. We need to leverage the interests of national institutions.
We are collaborating with research centres in order to help them dialogue with national institutions that support research. As mentioned before, there is an important role that has been played by the national granting council and the big public corporations in Brazil that also support, to some extent, research.
We are focused on development priorities and critical issues that will help Brazil improve on and advance through a sound development strategy, which is important considering its immediate influence at the regional level, but also taking into account that Brazil is participating actively in many different international and global forums.
The dialogue maintained among Brazil, India, China, South Africa — all these new arrangements — is leading our approach. We are trying to gain insight into the role of these emerging countries in cooperating with Third World countries.
Research, the importance of development, the importance of national capacity, the importance of openness to discuss alternative views is something we want to promote and include in our discussions with Brazil. This is how we are adapting and working with Brazilian research centres in order to have relationships with countries in different regions to explore the development models being promoted, particularly in the case of Latin America.
Senator Johnson: Brazil is largely collaborative and we are lending our expertise where necessary in terms of what we are doing there now. Is that it?
Mr. Burone: When we describe, for example, the number of activities we have in our portfolio of support or collaboration with Brazil, that means a constellation of different projects. Some could be clearly defined as research projects, where we are supporting research, facilitating the role of researchers in order to have access to different data — to analyze, for example, why the importance of informal unemployment is not included in the statistics we are receiving that show Brazil is advancing, having a very low rate of unemployment. What are the real elements that we must take into account?
We are stimulating analysis and debate, improving the quality of data taken into account in order to have national discussions. However, we are also promoting and collaborating in seminars and workshops, where we are bringing partners from different parts of the hemisphere in order to better understand the reality in Brazil, how it is evolving, what a transformation means, what are their weaknesses and how we can react. Again, we perceive that Brazil will play a critical role in the future of the whole region.
Senator Johnson: With regard to Manitoba scientists working in the Rio de Janeiro state, can you tell me how that project is going? It involves fishing and the fishers.
Mr. Burone: Two states are involved in this project — Rio de Janeiro state and Rio Grande do Sul in the south of Brazil. Due to increased consumption in these two states, we are observing an extraordinary expansion of the urban or metropolitan areas in the main cities of Brazil. This is adding to, or increasing, pollution and affecting the livelihoods of some of these fishermen. Fishing is one of the few activities that, so far, has not been involved in or associated with the presence of illegal networks in Brazil. From the point of view of security, it is critically import that we support the conservation of their livelihood and their jobs.
This is a key objective and this is why researchers from different parts of Canada are working on coastal management issues in Brazil. By this, I do not necessarily mean only seacoast management, but also basin management of the rivers and waterfronts in all these water systems. They play a critical role in the way we see some of the challenges confronted by Brazil.
Senator D. Smith: Brazil is not on CIDA's list of 20 countries of focus. I support the concept of having countries of focus; whether it should be 20 or more or less or which ones it should be is another matter, but there was still $14.5 million there in the last year.
What I think some people will wonder about strong emerging economies like China and India — Russia is a little different category — as time goes by in Brazil and as the economy gets stronger, some Canadians would wonder why we are doing aid projects in China. We would never think of doing one in the United States, I do not think, but if you look at the debt of the two related countries, who is more in the hole?
I am curious about your thoughts on whether there are criteria that at some point the focus is more on the Haitis and Bolivia, where no one would question having aid as opposed to these strong emerging countries, where you might have a great rapport, but how do you rationalize where the money goes to Canadian taxpayers as these countries' economies continue to grow stronger? It is a general question; do you have any thoughts on that?
Mr. Burone: From my perspective, that is an extremely important question. I will respond, first, by providing to the committee an example of the rise in communicable diseases. I am speaking of vector-borne diseases such as malaria, dengue and Chagas disease. These diseases are associated with, and linked to, the mobility of people in the region at the global level.
In order to understand the social and cultural drivers of the emergency of these diseases, we need to work with those countries that are trying to tackle the same kind of issues that are being confronted by countries like Honduras, Bolivia and Haiti, but have, as in the case of Brazil, some existing domestic capacity to find solutions, to test solutions and to understand the drivers of those communicable diseases.
In addition, we must take into account the mobility of people from Brazil, some of whom are potential transporters of these communicable diseases. This is critical and important. That is why we work with institutions from countries like Brazil and, I would add, Chile and Mexico, not necessarily with those countries suffering most.
Today we are receiving news about the presence of a new variety of malaria affecting part of Peru. We need to work and associate with those countries that can multiply our resources to rapidly understand what is occurring, how we can tackle some of these issues, how people from this country who are increasingly travelling out of the country could be exposing the whole region to risk.
That is why in some particular issues, in dealing with some critical concerns, it is mandatory that we work with existing capacities in countries like Brazil. I could also mention similar situations in China dealing with pandemics, or India. IDRC is persisting in working, perhaps adapting its approach, but consistently working with countries with some capacities, as is the case of Brazil.
That is how we are taking into account those countries that are considered the focus of international cooperation and assistance for development. We are focused on thematics in terms of working in association with countries like Brazil and its institutions in an effort to understand the drivers of this pressing issue.
I am responding, using this example, to your question about how we are combining the interest of those countries that are the focus of international cooperation, in the case of CIDA, with our approach of dealing with research, thematic issues and problematic issues.
Senator D. Smith: I was thinking more about economic development as opposed to what you were referring to, but I understand what you are saying.
Senator De Bané: Mr. Burone, am I right in saying, in a nutshell, that the mission of IDRC is to help alleviate poverty and obstacles to development through research? Is this the big picture?
Mr. Burone: You are right. Our mission is to increase and support the creation or the expansion of research capacities in order to understand the drivers of poverty, to alleviate poverty and to inform policies in terms of how to deal with poverty and inequality.
Senator De Bané: I find that all the different projects in which you have been involved, particularly in Brazil, are very worthwhile. However, the most acute one for Brazil by far is the unequal distribution of wealth. As is said in your document published by IDRC, the country of Brazil still has one of the highest rates of inequality in the world.
What is the GDP of Brazil and Canada at the moment?
Mr. Burone: In 2010, the GDP of Brazil was US $2.0 trillion.
Senator De Bané: What is Canada's GDP? Am I right in saying that it is about US $1.4 trillion?
Mr. Burone: I follow your rationale.
The Chair: What is the question?
Senator De Bané: I am asking for the comparative GDP of Brazil and Canada.
The Chair: You are being asked a factual question. If you do not have the answer at your fingertips, we can get that information later.
Is there a question to the witness?
Senator De Bané: You have agreed that the core mission of IDRC is to help alleviate poverty through research. When I see the great variety of projects you are involved in, I say that IDRC recognizes that the rate of inequality in Brazil is among the highest in the world. Do you really think that Brazil, with its economic wealth, needs the assistance of IDRC with all the valuable projects in which you are involved, when the most serious problem is that there are states where the per-capita income is the same as in Canada and other states that are poorer than Haiti? Should IDRC not expend its resources on reducing that inequality, which is one of the major challenges of this dynamic country? Do you not think that should be the priority?
The Chair: That is a very big question. I will ask the witness to summarize his answer, because we are running out of time, which is my biggest challenge at the moment.
Mr. Burone: I agree that Brazil is confronting critical challenges, one being that to which you refer, the level of inequality. Inequality is associated with other dimensions that we are observing, such as the lack of security in the country. Security and extreme poverty are all dimensional faces of a common problem, which we see as linked to the mandate of IDRC.
Senator Finley: Senator David Smith and Senator De Bané have asked one of my questions, probably much more eloquently than I could have. Given the relative GDP, is it not time that Canada stopped contributing toward research in Brazil? Does Brazil support similar research and, if so, to what extent, in other less-developed countries?
Mr. Burone: As you probably know, Brazil is implementing a new agency to promote international cooperation, and on some projects is working in association with the national granting councils supporting research. As I mentioned before, its planning is supporting some activities in the Mercosur regional area. We are working with researchers in Brazil by creating opportunities and mechanisms in order to leverage the interest of the national growing institutions that will support research, as has been done by IDRC.
This is part of our strategic objective, and the way we conceive our contribution, as I said before, is to leverage political will to do what IDRC has been doing for more than 40 years at the global level, including in Brazil.
Senator Finley: In your presentation, you mentioned reaching out to 34 million young people in Brazil. I think that part of the issue was to get them engaged politically. As you are probably aware, we have the same problem here in Canada, and I am not sure how much research we are doing to change that.
Can you give me a broad-stroke cross-section of employed versus unemployed and well educated versus uneducated of those 34 million young people?
Mr. Burone: The research we supported was probably one of the first research projects trying to understand the reality of young people in main metropolitan areas in Brazil, which accounts for approximately 80 per cent of the number of young people that I mentioned in my opening remarks. The research proved that approximately 70 per cent of those between 15 and 24 years of age had only completed the first degree of primary education. The opportunities for them to progress, to find employment and to participate in the formal economy are subsequently quite low.
National statistics show that Brazil is reducing its rate of unemployment, but we are observing that this has not necessarily corresponded to a growing demand for participation in the formal economy. The majority of those individuals, including Brazilian youth, are participating in informal mechanisms to obtain a livelihood. This is a pressing issue. This is a critical component of the reality in Brazil, associated with some critical challenges, such as a lack of security and the growing importance of organized crime. This is why we are tackling some of the issues. We are enlightening policy-makers and creating opportunities to reflect upon and to improve education, and to enlarge the scope of issues formally associated with education. We want to understand why the education system is not attracting the new generation of Brazilians. There is also the issue of the implications at the regional level because we observe that these illegal networks, managed by people at that age, have an incidence and are associated with other illegal networks operating in the region.
This is an extremely complex problem that requires this kind of external collaboration and support in order to put potential solutions onto the national agenda for discussion.
Senator Finley: Could you tell me, if you have the numbers close by, what percentage of GDP does Brazil spend on education?
Mr. Burone: Unfortunately, I do not have this information, but I will follow up and provide you with exact figures.
The Chair: You have made a case, over 40 years with IDRC, that we have in our hemisphere now a country that is tackling its problems, becoming more developed, is a multilateral player and, therefore, is not the Brazil we had known in the past. Many of those signals are positive. There are still some negatives.
We see the benefit of Brazil as a multilateral player and a hemispheric player. We are not quite sure whether that is to Canada's benefit or not, but we believe in the long run it could be.
Do you see where the bilateral benefit is? We have had witnesses who indicated that, while the relationship is not a negative relationship, it is not as positive as it could be. If we have had this impact on civil servants, politicians, society, researchers and policy-makers, how has that strengthened the bilateral relationship?
Mr. Burone: Based on our own experience, collaboration and interaction with Brazilians and research centres in Brazil, as well as our participation in domestic debates, when they try to influence and engage policy-makers on discussions aimed at improving policy decisions through research, Brazil is clearly a country that has a critical role to play, participating actively in every international forum. However, its primary focus continues to be increasing its national sense of social cohesion. That means that any decision is considered in light of its impact and how it may be perceived by different people living in different parts of Brazil. If you compare with Canada, Canada is probably on the other extreme or has made an enormous effort to increase domestic social cohesion.
Brazil is in an early stage of that particular effort, and international and bilateral decisions are being processed from that perspective, namely, the need to maintain domestic social cohesion. It is not a minor factor in the current context where many development initiatives and models are being compared and tested in the region.
It is a country that, thus, has internal difficulties engaging in bilateral conversations or negotiations. A case in point: Brazil is only now opening the floor for discussions on a trade agreement with the European Union after more than 10 years of little interest in any kind of bilateralism, if I can use the expression, since Brazil is actually leading discussions on behalf of the whole Mercosur. This week, in fact, we have delegates from the European Union in the region discussing with Brazilians and organizing an agenda. It is the first time that Brazil has indicated that they want to engage in that kind of discussion.
Definitely, we need to take our experience into account. In the case of bilateral relations with Chile, an agreement was signed, but it took time and persistence from Canada in order to obtain the expected outcomes. I know patience is sometimes not easy to find, but persistence is what we need in terms of maintaining a line of collaboration with Brazil, being engaged with Brazilians and Brazil, and preparing a much more prosperous opportunity for a country in the region to also benefit from what we are observing at the regional level.
The Chair: Mr. Burone, we have run out of time. Thank you for bringing a totally different dimension to the table than we have had in the past. That helps us in our study of Brazil with special emphasis on Canadian foreign policy. I thank you for coming by video conference. As we sit here in Ottawa, we envy you for being in such a beautiful city as Montevideo, particularly as we look outside and see the temperature difference.
Thank you for being here, and we look forward to those pieces of information that you have promised to give us.
Honourable senators, we continue our study on political and economic developments in Brazil and the implications for Canadian policy and interests in the region and other related matters.
We continue today with our second panel, from the Canadian Food Inspection Agency, Dr. Louise Carrière, Director, Bilateral Relations and Market Access; and from Agriculture and Agri-Food Canada, Blair Coomber, Director General, Bilateral Relations and Technical Trade Policy Directorate. Those are both heavy titles.
We are pleased that you are here. You have been advised of our study and, perhaps, the areas with which you might be helpful to us as we study our relationship with Brazil and a broader South America. Who will go first? Mr. Coomber, if we can have a short opening statement. We are running a touch late and I want to be able to get all the senators in with their questions and vacate the room in time for the next committee, which is a large task.
Blair Coomber, Director General, Bilateral Relations and Technical Trade Policy Directorate, Agriculture and Agri- Food Canada: Thank you for the invitation to be back before this committee to have a discussion around the important trade and agricultural partner that we have in Brazil.
As you are likely aware, agriculture plays an essential role in Brazil's economy, accounting for 6.5 per cent of the GDP and 36 per cent of Brazil's exports by value.
In 2003, Brazil replaced Canada as the world's third largest exporter of agricultural products.
[Translation]
Brazil is the world's leading producer of sugar, orange juice and coffee and is also a significant producer of soybeans, ethanol, beef and poultry. Brazil exports more beef, poultry and ethanol than any other country.
Canada's top agri-food and seafood imports from Brazil are raw sugar, coffee, frozen orange juice, frozen chicken cuts and cocoa butter.
[English]
In 2010, Brazil imported $9.2 billion in agriculture and agri-food products, primarily from Argentina, Uruguay, Paraguay, Chile and the United States. Canada was Brazil's fifteenth largest supplier of agri-food and seafood products, with a 1.7-per-cent market share.
Processed food imports, in particular, have continued to grow in recent years, reaching $4.6 billion in 2009. Major processed food imports in Brazil consist of malt, wheat flour, bottled wine, milled rice and food preparations. Argentina, Uruguay and the United States were the largest suppliers of processed food, accounting for over 48 per cent, while Canada supplied less than 1 per cent of Brazil's processed food products.
Canadian agri-food and seafood exports to Brazil in 2009 were $147.9 million. Our largest exports included wheat, barley, lentils, canary seed and food preparations. Canada registered an agri-food and seafood trade deficit of $642.2 million with Brazil in 2009.
With respect to the multilateral trading system, Brazil, as was mentioned earlier, is a key player in the World Trade Organization, WTO, agricultural negotiations, as the de facto leader of the WTO agriculture G20 group of developing countries, pushing for more market access in developed countries' markets, along with India, China and South Africa. Brazil is also a fellow member of the Cairns Group of small to medium-sized agricultural exporters who are committed to agricultural trade reform, and is part of the G11 countries promoting a constructive approach to the negotiations at the WTO.
As a WTO agriculture G20 member, Brazil has argued for the elimination of all forms of export subsidies and deep reductions to the level of trade-distorting domestic support provided by developed countries, particularly the U.S. and the EU, European Union.
While interested in better access to all markets, Brazil has taken a less ambitious approach to developing country market access, due in part to its alliance with more protectionist G20 members, including India.
Over the past two years, the overall WTO negotiations have remained at a standstill, despite repeated commitments from leaders to continue to push towards an ambitious and balanced conclusion. In November 2010, the G20 Seoul Summit seems to have created a renewed momentum to resume serious efforts to conclude the Doha Development Agenda in 2011. Intensive negotiations on agriculture resumed in Geneva in the week of January 17 of this year, with a view to bridging differences among key WTO members. No breakthrough has been achieved yet.
[Translation]
Canada and Brazil share an interest in continuing reforms to world agricultural trade started in the Uruguay round. A substantial result would be to eliminate all forms of export subsidies, significantly reduce trade distorting domestic support and achieve better market access across all WTO members. This is in both our interests, and would contribute to achieving an ambitious outcome for the Doha round.
[English]
On a bilateral level, Canada seeks to maximize our relationship with this rising agricultural producer. In 2005, Canada's deputy minister for agriculture visited Brazil on a fact-finding mission. In 2009, again the deputy minister travelled to Brazil, further signalling the importance Canada places in this market.
When considering the need to strengthen the Brazil-Canada bilateral relationship, it is important to examine the relationship from three different perspectives. First, Brazil is a competitor and, therefore, Brazil's government and industry's competitive thinking must be thoroughly understood.
Second, Brazil is an important partner and, therefore, Canada needs to build its relationship with Brazil to influence their positions and actions, both domestically and internationally.
Finally, Brazil is a market and investment destination. Therefore, Canadian companies can capitalize on needs derived from the expansion in the agricultural sector and on potential opportunities derived from the demand created by high-income households that traditionally seek value-added products.
Based on these three pillars, I would like to take this opportunity to share some of the key initiatives that have been undertaken by Agriculture and Agri-Food Canada, AAFC, to further strengthen this important bilateral relationship.
First, the meetings of the Canada-Brazil Consultative Committee on Agriculture, the CCA, which was established by a memorandum of understanding, MOU, in 2006, take place on an annual basis, with the last one having occurred in September 2010 in Ottawa. The CCA is chaired by Agriculture and Agri-Food Canada for Canada, with the Canadian Food Inspection Agency, CFIA, and the Department of Foreign Affairs and International Trade also represented at the meetings.
[Translation]
The CCA advances Canada's interests through pursuing the resolution of bilateral trade issues and by engaging in policy and cooperation discussions with Brazil. Our objectives are to ensure that the present level of access to the Brazilian market is maintained, and to secure meaningful, new market access for Canadian exporters.
In addition to addressing Canada's export interests, the forum also serves as a forum for information sharing, which assists in identifying new opportunities for market development.
[English]
Brazil has demonstrated a high level of engagement in this forum. Canada and Brazil are currently engaged in dialogue to define new research activities, as well as discussions on opportunities to strengthen the links between Canadian and Brazilian universities and biotechnology companies.
In the area of science cooperation and innovation in the agri-food sector, there is an important element of the Canada- Brazil bilateral relationship as well. In 2009, an MOU on scientific and technical cooperation was signed between AAFC and EMBRAPA, the research agency of Brazil's Ministry of Agriculture. This MOU establishes a framework for Canada-Brazil cooperation with regard to training and exchange of personnel, the exchange of genetic materials and other collaboration of mutual benefit. The MOU identifies six areas for research cooperation: sharing and conservation of genetic resources, sustainable agricultural practices, development of energy-efficient cereal cultures, dynamics of soil micro-organisms, post-harvest technology, food safety and quality traceability. Canada and Brazil are currently exploring options for new initiatives under this MOU.
Finally, Canada and Brazil share many opportunities and challenges related to agri-environmental issues, and have recently taken steps to increase their collaboration in these areas for mutual benefit.
One area that has been identified for collaboration is reducing agricultural greenhouse gases. Both countries have been actively engaged in the recent establishment of the Global Research Alliance on Agricultural Greenhouse Gases and have agreed to pursue opportunities to work together to find ways to reduce greenhouse gases while, at the same time, improving efficiency and productivity of agricultural systems.
Brazil and Canada have a common interest in collaborating on earth observation that serves agri-environmental purposes, such as monitoring crop conditions in near real time and targeting programs and policies to places where they will have the greatest impact. Both countries have made significant contributions to the global earth observation satellite network and, considering the extensive overlap in interest and expertise between the two countries, there is great opportunity to benefit from working together on earth observation-based monitoring. The most recent Canada- Brazil Consultative Committee on Agriculture was used to identify these and other areas for increased collaboration on agri-environmental issues.
Thank you for this opportunity to speak with you, and I would be pleased to answer your questions.
The Chair: I will turn to Dr. Carrière to speak on behalf of the Canadian Food Inspection Agency.
Dr. Louise Carrière, Director, Bilateral Relations and Market Access, Canadian Food Inspection Agency: The CFIA is a science-based regulator and is dedicated to safeguarding food, animals and plants, which enhances the health and well-being of Canada's people, environment and economy. Our work is trusted and respected by Canadians and the international community.
I appreciate the opportunity to speak to the committee today from a CFIA perspective on Canada-Brazil bilateral relations and trade issues regarding food safety, animal and plant health.
Food safety is of the highest importance to the Government of Canada. The CFIA's crucial role is to ensure that imports into Canada meet the same high safety standards required of our domestic industry. This is critical both for the protection of public health, and to ensure our domestic industry is not placed at a competitive or economic disadvantage.
The CFIA has had a long-standing collaborative relationship with its Brazilian counterpart in a two-way sharing of best practices in areas such as risk assessment and traceability.
It is of benefit to Canada, for example, to see that risks to food safety and animal health are addressed at the source before products arrive in Canada. The CFIA can share its expertise in that area. When inspection and testing programs can be determined to be equivalent at source, for example, it results in higher standards, higher quality and higher confidence in the food being imported into Canada. In that vein, in December 2009, the CFIA hosted a delegation of Brazilian technical experts for a seminar on recent developments in sampling and testing methods for residues in meat.
The CFIA is actively nurturing a strong collaborative and science-oriented relationship with Brazil at both the bilateral and multilateral levels. The CFIA co-chairs the sanitary and phytosanitary, SPS, subcommittee, of the Canada-Brazil Consultative Committee on Agriculture along with Agriculture and Agri-Food Canada, and the Department of Foreign Affairs and International Trade. My executive director is the co-chair on behalf of CFIA.
Last year in September, the CCA met in Ottawa. The CFIA talked about issues for which it is responsible. SPS subjects that were discussed included access for Canadian cattle as well as access for Brazilian beef and pork, addressing the foot-and-mouth disease status of Brazil, and poultry issues.
At the international level, Canada and Brazil are both members of the World Organization for Animal Health, OIE, and the International Plant Protection Convention, IPPC. In these fora, both countries are active contributors to the development of international science-based standards in areas of mutual interest, such as animal disease control and reporting, and low-level presence parameters for plant products derived of biotechnology.
It is beneficial to examine Brazil in terms of our commonality. Both countries are blessed with significant arable land and access to clean water to grow crops. Both have significant animal production.
Similarly, Canada and Brazil are both exporters to world markets, and we produce a number of agricultural and agri-food products traded internationally, crops and animal products, including beef, pork, poultry and soybeans in particular. That makes us export competitors for such products, but it also makes us see and experience market access from a mutual perspectives. Brazil faces the same difficult import requirements to access countries like Russia and China, for example, as does Canada.
The CFIA is interested in hearing Brazil's challenges and success stories in these export markets because that can assist in improving the way we service the same markets. It can also lead to creating a ``common front'' that can allow us to work toward improvement and change.
It should be noted that today, countries like Canada, Brazil, the U.S. and Australia work collaboratively by discussing experiences and challenges faced in export markets that we have in common, again, like in Russia. When we do this, it yields positive results.
When Canada's experts take the time to share their knowledge and best practices with a country like Brazil, there is a trickle-down effect, especially in areas like food safety, because Brazil has great influence in the region, and its knowledge about food safety and plant and animal health is passed along.
There are additional benefits to sharing information about market access issues and challenges about countries to which we export. It tends to level the playing field internationally and allows industries to focus on their areas of expertise and compete on pricing.
Brazil is home to huge herds of cattle, and its cattle population is some 200 million while Canada has just over 13 million. However, Brazil faces challenges with certain animal diseases that have occasionally occurred, such as foot- and-mouth disease, a disease that the CFIA is monitoring actively to prevent its entry into Canada.
Canada does not, at this time, recognize Brazil to be free of that disease. As a consequence, Brazil currently exports only cooked beef to Canada, mostly canned corned beef.
Brazil is interested in exporting more beef and, now pork, to Canada. We are working with Brazil to review surveillance and disease control information in order to assess the risks and necessary controls related to such expansion, including impacts such as the risk of the potential introduction of foot-and-mouth disease.
The CFIA is also active in participating and supporting the role of an organization called PANAFTOSA. This is a pan-American organization dedicated to eradicating foot-and-mouth disease from South America. There is already collaboration at the veterinary expert level where some staff from the CFIA work with PANAFTOSA. We also work with the organizations at the laboratory diagnostic level. The CFIA's National Centre for Foreign Animal Disease in Winnipeg and the PANAFTOSA laboratory in Brazil work together on research into diagnostic methods and vaccines.
The CFIA is sharing other expertise, too. Brazil is a major supplier of beef, and it turned to Canada to learn about its experience in cattle traceability. In March 2010, the CFIA participated in a technical visit focused on traceability that involved Brazil as well as representatives from Agriculture and Agri-Food Canada and Agri-Traçabilité Québec.
Such collaboration lays solid groundwork for sound stock management and production.
Another area of particular interest to the CFIA is Brazil's export of poultry meat to Canada. Before 2002, only the United States was allowed to export fresh poultry meat to Canada. What is really interesting about this relationship with Brazil is how market access has evolved. Canada exports hatching eggs to Brazil. The genetics for Canadian chicken and turkeys are especially good to make them grow fast and produce lean meat, and Brazil exports poultry meat back to us. In this way, we are diversifying to some degree the supply of poultry meat for Canadians, while staying on top of genetic improvements in our flocks.
I mentioned earlier how Brazil's leadership in the area of science and technology is of high interest to the CFIA. Brazil is doing a lot of work in the area of genetics, as well as in new crops and new varieties. Brazil's thinking is much in line with Canada's with regard to productively using biotechnology and with genetically modified organisms.
Brazil is also generous with sharing these new scientific discoveries. For example, Brazil has developed draught- resistant cultivars of pulses that it is now sharing with Africa and other dry countries of the world. This is benefiting a lot of people.
Brazil a presenting itself as a good world citizen. It is also an important player in many of the fora in which the CFIA is itself involved, such as the previously mentioned International Plant Protection Convention, the World Organization for Animal Health, as well as the Codex Alimentarius Commission for food, and the World Trade Organization's committee on the agreement of the application of sanitary and phytosanitary measures.
Canada and Brazil share similar approaches on many issues. While our countries are located on different continents, because of the alphabetical seating arrangements by country name, Canada and Brazil are often seated together at these international meetings. Partnering is constructively fostered because we work together, side-by-side, on many occasions.
Due to its growing import-export industry and its influence on other emerging Latin American countries, Brazil is an increasingly important part of that international community. With over 191 million people, Brazil is part of the BRIC countries. These are countries deemed to be at a similar stage of newly advanced economic development. The BRIC countries are Brazil, Russia, India, China and South Africa.
Across Canada, the Canadian trade commissioner service is promoting Brazil as a key partner for science and technology. That, of course, is of high interest to the CFIA.
I would like to thank you once again for allowing me to speak to you, and now to answer any questions you may have.
Senator Downe: Doctor, can you elaborate on how you protect Canadians from imports. For example, you referred to poultry and the shipments coming in from Brazil. Obviously, you cannot check them all. Do you depend on records from Brazil? Do you do a random check in Canada? Can you explain how the system works?
Ms. Carrière: In order to import poultry meat into Canada, there are two aspects we look at. First, we want to prevent the introduction of foreign animal disease. For poultry, there is avian influenza or other disease that, if introduced, would have a negative impact on our industry.
We also look from a public health perspective, ensuring the food is safe. Before we even allow poultry meat, we review the animal health status of that country. For diseases of concerns, what are their measures? Do they have any outbreaks? If so, are they able to control the outbreak and do surveillance? We evaluate the veterinary infrastructure to ensure there is a capacity to manage and that they have a good system in place to monitor. We also evaluate the meat inspection system. Is their system of slaughtering and processing and controls in place equivalent to Canadian standards?
We do desk reviews and then we go on site. We meet the people; we ask questions. We go on farms; we visit slaughter plants; we go to the central government office and review records. Once it is deemed equivalent, then we can open trade. Before that, we have to ensure it is equivalent.
Once we open trade, of course we continue to monitor. We do surveillance at the border, but on the basis that we have already ensured the system of inspection and the disease control measures in place are equivalent to Canada.
Senator Downe: When the poultry arrives in Canada, do you do any testing here?
Ms. Carrière: We have a sampling residue program. Unless there is something specific, we monitor on a regular basis for imports. It is random sampling, so there is an ongoing program during the course of the year where the system generates whether in that specific shipment we need to take a sample of poultry meat. We also inspect visually to make sure that the product matches with the export certificate. We look at the condition of the product to ensure it is in good shape.
Senator Downe: For example, do you have any restrictions on what is in the feed that is being fed to these animals in Brazil? Do you have any tracking of what injections? You referred to growing poultry faster and leaner, which would be more appealing and easier to sell. Do you monitor the chemical injections and the safety levels of those injections for Canadian consumption?
Ms. Carrière: This is part of the sampling plan. We verify for heavy metals, veterinary drugs, microbiological standards, ready-to-eat products. Basically, it is more by the residue that we look specifically for residues of drugs that could be used in the production. This is what we look for and we monitor those.
Senator Downe: There is no variation, I assume, between the standards of imported poultry and domestically grown?
Ms. Carrière: No. They have to meet the same Canadian standards. They are set up by Health Canada. They set the standards and we monitor them.
[Translation]
Senator Fortin-Duplessis: First, Mr. Coomber and Ms. Carrière, welcome to the committee. I enjoyed your presentation very much.
From your point of view, what impact has Brazil's recent economic growth had on creating a broader free-trade area in the Americas? What are the repercussions for Canada?
[English]
Mr. Coomber: No doubt you are correct in saying there is large growth, particularly in the agricultural area, over the past number of years in Brazil. As you know, Brazil is part of the Mercosur countries. That includes Brazil, Argentina, Paraguay and Uruguay. Currently, Canada exports about $162 million to $163 million a year into those four countries so it is a fairly significant market, particularly, as I mentioned earlier, for things like wheat, lentils and other products.
As far as a trade agreement, discussions are under way, as you are aware, between Canada and Mercosur about entering into a trade negotiation. Canada is involved in many bilateral negotiations to improve our market access and also to gain preferential access into a number of markets. Certainly, for many agricultural products that we export into the Mercosur area, it would be a benefit to Canadian exporters to have tariffs and other market access issues addressed. It would not only ease the flow of agricultural products into that area but also perhaps provide, hopefully, an opportunity for the exports into the area to grow.
[Translation]
Senator Fortin-Duplessis: As we have seen previously, the increase in food prices brings about global inflation, not to mention political unrest. Do you predict an increase in prices this year in sectors like wheat and soybeans?
If so, what might be the rate of this increase, and what might the prices be?
[English]
Mr. Coomber: I really do not know if I can predict the prices going up. They have reached significant levels. I believe I read this morning that the U.S. price for wheat had reached a record high of nearly $9 per bushel. The prices could go up, but it is hard to predict the future. It is dependent on a lot of factors.
One of the main issues out there right now that is causing a rise in prices has been production problems in a number of the large exporting countries that produce wheat. For example, in Russia they have had serious problems so they stopped exporting. Last year Saskatchewan, you will recall, had a significant number of acres that were out of production for the entire year due to flooding. Drought in Australia has also caused significant production costs. When the production is down, of course the price will go up. It is hard to predict what the factors will be out there in the next year or two with respect to world prices, but the important thing we are seeing right now is that the market is determining those prices.
[Translation]
Senator Fortin-Duplessis: I know this is very difficult for you, but without giving me a percentage, should we expect prices to skyrocket in Canada, or will the situation remain stable?
[English]
Mr. Coomber: In Canada, our prices are determined based on world prices for most of our commodities, so it is very dependent on what happens globally as to whether or not prices in Canada will rise or fall.
Senator Wallin: I have a question to both of you in the sense that it is the same one. Dr. Carrière, you talk about all of the relationships that now exist, the shared standards, and these kinds of things. When that is not there — and, I hate to use the word, but protectionist measures do keep products out if it will be a challenge competitively or economically. Again, Mr. Coomber, you talked about the shared programs that we have, with all the stuff going on. From either one of you, can you make the elevator pitch, the 50-second case for free trade with Brazil or not?
Mr. Coomber: I probably cannot make the 50-second pitch. There are ongoing discussions, but we can get into discussions on the benefit. A lot of analytical work goes into it. With respect to agriculture, we have more to do. On the surface, as I said earlier, any time we can reduce tariffs and quotas and deal with SPS and sanitary and phyto-sanitary measures that are limiting our exports through a free trade agreement, generally there should be some benefit from that.
Senator Wallin: That is what I am looking for. From your vantage points, as you look at these issues, you think it is a plus?
Mr. Coomber: Do I think it is a plus? I think from an export point of view it is a plus. Trade is two ways so I would have to look at that.
Senator Wallin: Dr. Carrière?
Ms. Carrière: When we engage in free trade agreement talks from SPS, we work hard in terms of opening the markets for Canada and to engage at the technical level. For instance, on the beef exports, because of BSE, we have gained a lot of markets; there is still some work to do. We have our technical experts ready to engage actively with our trading partners, travelling there to explain our system and the measures that we have in place, for example, the fact that we have recognized there is a controlled risk for BSE and the safe food we are able to produce. We are quite active on different files and there are good success stories, from a CFIA point of view, where we opened the markets.
Mr. Coomber: I wish to add one more point to that question because I half answered it.
With respect to imports and two-way trade agreements, a lot of products coming in from Brazil right now, from the Mercosur region, are coming in tariff free because they come in under the General Preference Tariff, GPT, which is basically zero. There are a lot of commodities that we do not produce, so we do not have particular interest in them.
In all of our trade agreements, there is always interest in our supply- management sector. Of course, the government, as you are well aware, supports the sector and we continue to defend the importance of these interests in all of our negotiations. Even with the position that was taken, we have been able to conclude some aggressive trade agreements with other countries like Peru, Colombia and Panama.
Senator Wallin: That is great; thank you.
[Translation]
Senator Robichaud: Dr. Carrière, you spoke about research being done in Canada and Brazil on GMOs. You said that the influence of both countries can complement each other to further all the research that is being done.
In Europe, GMOs are a forbidden topic. And not just when it comes to agricultural products, because we have heard it mentioned in reference to forest products as well.
Ms. Carrière: Definitely, we are producers of genetically modified crops, and this has created non-tariff barriers. Brazil is in the same situation as we are. We are trying to work together, and when we talk about food security and opening markets, we expect it to be based on good science and not non-tariff barriers.
Agriculture and Agri-Food Canada is quite involved in GMOs and my colleague could talk about that. But in Canada and Brazil, we are on the same wavelength, what we call ``like-minded countries,'' but there is still a lot of work to do in this respect. As you mentioned, there is zero tolerance in the European Union. There is a great deal of work to be done when it comes to agri-food security.
What is important in public health is knowing that there are risks. These days, our methods of detection are so much more refined that the slightest little particle is recovered without there necessarily being a health risk. Everything must be managed and discussed actively with Brazil and the European Union, where positions basically differ.
[English]
Mr. Coomber: That is a good question. I can probably spend an hour alone talking about because it is a critically important area for our industry, particularly our grains and oilseeds industry, which has developed and prospered a lot through innovation and products of biotechnology.
As you have mentioned, there are a number of markets out there that are not receptive to these products. The interesting thing is that — and, we have worked and this for a long time — we are starting to see this change. About 10 years ago, the discussion was kind of a Canada-U.S. issue because we produced the genetically modified products and we exported them. Although other countries are not exporters of GMOs, they are starting to realize that they need these products for food security and that they will have to feed nine billion people and they will probably not be able to do that through traditional technologies.
We are starting to look at it through the frame of how to manage these things. Interestingly, even the European Union, which has been strongly opposed to genetically modified products coming into their market and who we have gone to the WTO with, is now starting to move a bit.
The most recent thing is they are now looking at a proposal within the European Union to deal with something called ``low-level presence.'' You probably know what that is but for those who do not, that is when there are trace amounts of unapproved genetically modified products going into the market. If they detect it, there is a zero tolerance and the shipment gets stopped.
With our grain handling system, if a shipment of canola goes out on a ship or through the storage system to the Lakehead, it is absolutely impossible to thoroughly clean out every grain. The detection methodologies are becoming so sophisticated now that they can pick up dust, so it is becoming important to do that.
All that is to say that even the European Union realizes they cannot stop these crops from coming in because they need them for agricultural inputs; they need them for feed. They are now looking at a policy whereby they may raise the tolerance level from 0 per cent to .1 per cent to allow these unapproved events in for feed.
We have been working closely with the European Union over the past year to try to influence that policy and to primarily broaden the scope beyond just feed, to also include food. We have a ways to go but we are starting to see a bit of an opening in the door there, even in the European Union.
Senator Mahovlich: You came before us in 2009 and argued that some countries use technical standards as protectionist barriers. One example given was the inability of Canadian pork producers to export their product to China due to the use of a growth enhancement product that is forbidden in China. Is the witness aware of a similar issue with Brazil?
Ms. Carrière: We do export pork to China. There is one particular product that is called Paylean, which is creating a bit of activity because they have a zero tolerance and it is used here and it is approved by Health Canada.
Brazil is in the same situation as us. We have access to export pork meat to Brazil. I do not think we export much, but between Canada and Brazil, it is not a big issue because we are like-minded for that specific product. When we go to Codex Alimentarius, for instance, where those standards are discussed, we are on the same wavelength.
Senator Mahovlich: Recently in The Economist, it said that Brazil experienced a 365-per-cent increase in the value of its crops between 1996 and 2006. How has agriculture in Brazil changed over time and what have been the implications for Canada?
Mr. Coomber: Certainly, we have seen a lot of growth. Talking about the value of crops, there are two things there. A part of that growing value is production, but also the value could be due to price increases in certain crops.
Senator Mahovlich: What has Brazil done? Have they cut down their forests and started farming?
Mr. Coomber: Possibly they have done a bit of that; I probably do not want to get into it but I believe they have cleared some land. However, there are some measures now in place in Brazil to stop that.
One advantage that Brazil has over a country like Canada is that they can get two to three crops a year off the ground because they have a warmer climate. They also have very large farms, particularly in areas of wheat, so they gain a lot through economies of scale. They also have lower production costs, generally speaking, than Canada does. They do have factors that are in their advantage which are a challenge for Canada and other countries that are competitors with Brazil.
The Chair: If I could follow up, both of you have made the case that when we go internationally, we are partners — the Cairns Group and on the safety issues — and that we are sometimes in the same markets. There is strength in the messaging coming from both countries.
The question that has been put to this committee and elsewhere is the fact that it may be the case that, overall, there is a net benefit globally. However, if you are selling something in Saskatchewan, a province that you and I know well, would you put your emphasis on Brazil?
Are we coming up with the same kind of products so we are not really going to maximize the exports into Brazil because they will be maximizing theirs, having used some technologies to increase theirs, to compensate for the increasing population, or are we missing the boat? Is there something we should be telling traders through our report — that Brazil is a place where they can do business, despite some impediments and competition?
Mr. Coomber: Traditionally, the thinking was that Brazil was a large agricultural producer that produced primarily the same products we produced at a cheaper cost. Therefore, bringing in higher-value products into Brazil may not be a place you want to concentrate our effort. That may be changing. Brazil is starting to get out of lower-cost products and moving into the high-end products.
Also, we are seeing a growth — as we are seeing in many of these developing countries — in a middle class. There is more income, people looking for higher-value and higher-quality foods, which we can provide.
I do not know definitely the answer there, but I believe there are opportunities over the long term in Brazil, and it is certainly a place that we should be looking toward.
The Chair: Is their federated structure, with the variety and capabilities from one region to another, another inhibitor? The fact that they are federated, they have strong states, and the disparity between some developed states and some very difficult states to work in yet — does that add to the dimension of difficulty for Canadians to plunge into that market?
Mr. Coomber: I do not know if it adds difficulties as far as getting in there. That is a significant issue for Brazil and their agricultural policy, recognizing that they have this disparity region to region. They are concentrating much of their agricultural policies, and their investment in their agricultural industry, to try to bring up those more disadvantaged areas so they have a more level playing field across the country.
As far as exporting into the country is concerned, I do not think we particularly look at which region it is going to. It is going in there and it is being distributed wherever for processing or food or whatever. I think the opportunities are there.
My colleague just passed me a note. In the case of hard red spring wheat, they cannot get enough from Argentina, so they are looking more to us. Within Mercosur, they operate like a common market, so they can have a free flow — not completely free — of goods among the countries.
It will depend on demand. If they cannot produce enough or get enough, and if there is a demand by consumers for high-value products, I think the opportunities are there.
The Chair: Dr. Carrière and Mr. Coomber, thank you for coming again to the committee and providing us with information on agriculture and food safety, which have been issues that have been raised throughout our hearing. Thank you very much for your testimony.
Senators, we are adjourned until tomorrow.
(The committee adjourned.)