Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 31 - Evidence - Meeting of March 21, 2013
OTTAWA, Thursday, March 21, 2013
The Standing Senate Committee on Agriculture and Forestry met this day at 8:04 a.m. to examine and report on research and innovation efforts in the agricultural sector (topic: market opportunities); and to examine the Canadian Food Inspection Agency's User Fee Proposal for Importer Licensing for Non-Federally Registered Sector Products, pursuant to the User Fees Act, S.C. 2004, c. 6, sbs. 4(2).
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Good morning to the witnesses from Agriculture and Agri-Food Canada. Thank you for accepting our invitation and being here and to share information on the fee side of the department.
Honourable senators, I ask that you introduce yourselves, and we will then move to the presentation and questions. I am Percy Mockler, chair of the committee and senator from New Brunswick.
Senator Mercer: I am Senator Terry Mercer from Nova Scotia.
[Translation]
Senator Robichaud: Fernand Robichaud, from Saint-Louis-de-Kent, New-Brunswick.
Senator Tardif: Good morning, I am Claudette Tardif from Alberta.
[English]
Senator Callbeck: Catherine Callbeck from Prince Edward Island.
Senator Plett: I am Don Plett from Manitoba.
Senator Buth: I am JoAnne Buth from Manitoba.
Senator Eaton: Nicole Eaton, Ontario.
[Translation]
Senator Maltais: Ghislain Maltais, Quebec.
The Chair: Thank you. This morning we will be hearing from Ms. Namiesniowski, Assistant Deputy Minister, Markets and Industry Services Branch, Agriculture and Agri-Food Canada.
[English]
We also have with us Frédéric Seppey, Chief Agriculture Negotiator and Director General, Trade Agreements and Negotiations Directorate, and Fred Gorrell, Director General, Market Access Secretariat.
[Translation]
We also have, from the Canadian Food Inspection Agency, Mr. Paul Mayers, Associate Vice-President, Policies and Programs Branch.
[English]
Today, we have two panels. For the first panel, the committee is continuing its study in regard to market opportunities. The second panel will be about the user fee from the Canadian Food Inspection Agency.
I am informed by the clerk that the assistant deputy minister will make the presentation, which will be followed by questions from senators.
[Translation]
Kristina Namiesniowski, Assistant Deputy Minister, Markets and Industry Services Branch, Agriculture and Agri- Food Canada: Thank you very much, Mr. Chair.
[English]
Good morning, Mr. Chair and senators. This is a great opportunity for us to be here. We appreciate the opportunity to come to speak to you in the context of your study of research and innovation in the Canadian agricultural sector. We are looking forward to talking to you about how the Markets and Industry Services Branch, of which I am the branch head, supports industry in taking advantage of new market opportunities. We do that by focusing on specific areas. We work to open access to markets. We promote science-based trade, and we support industry to make the most of these opportunities.
I will not reintroduce the panel since your chair has already done that, other than to note that both Fred Gorrell and Frédéric Seppey work in my organization. We work closely with my colleague, Mr. Mayers, in the CFIA, as well as with many members of his staff.
[Translation]
Let me start by saying that the Canadian agriculture and agri-food sector is highly dynamic — actively seeking new markets and opportunities every day. Preliminary trade statistics indicate 2012 was Canada's best export year on record for the industry.
[English]
In 2012, exports of Canadian agriculture and seafood products reached $47.7 billion, up 7.4 per cent from $44.4 billion in 2011. Growth in canola oil and seed and in wheat exports led the way in helping to achieve this all-time high.
These numbers also reflect a significantly growing share of exports to emerging markets, helping diversify away from the United States. The United States accounted for just under half of our exports in 2012, which was down from 60 per cent at the beginning of the decade.
These numbers are obviously good news for our industry. Just last month, the government reached an agreement with Japan to expand market access to Canadian beef from animals under 30 months of age. This increased access is expected to double the potential market value of Canadian exports to Japan to $150 million a year.
As well, the removal of the single-desk for wheat and barley in Western Canada provides farmers with a greater ability to sell to whomever they choose and to exploit emerging opportunities.
On the horizon, broader emerging trends should provide further market opportunities for the sector.
[Translation]
For example, increasing global concerns about food security provides Canada, as a net exporter, an important role in feeding the world.
[English]
Growing demand for food products, coupled with environmental constraints, is driving new applications for biotechnology. In this context, market and industry services play a key role in helping industry access and take advantage of new and emerging market opportunities at home and abroad, all the while contributing to the development of an innovative and vibrant agriculture and agri-food sector.
The ability to easily and freely access international markets is critical to the ongoing success and competitiveness of the Canadian agriculture and agri-food industry and key to the federal government's strong trade agenda. In support of this agenda, Agriculture and Agri-Food Canada continues to work hard to ensure our producers and processors are able to take advantage of international market opportunities.
Complementing Canada's work at the World Trade Organization, the government continues to pursue free trade agreements bilaterally and regionally to provide new export opportunities for the agriculture sector.
[Translation]
Free trade agreements are key for sectors that face both tariff and non-tariff barriers, such as for pork, beef, grains and oilseeds.
The negotiation of a Comprehensive Economic and Trade Agreement with the European Union is Canada's most ambitious trade negotiation since the North American Free Trade Agreement. CETA holds great potential to deepen an already significant trade relationship in agriculture.
[English]
Last year, Canada also joined the negotiations for the Trans-Pacific Partnership, a regional trade agreement under negotiation by 11 countries. Negotiations are also ongoing with a number of other important trading partners.
To further help industry access international market opportunities, the government has put in place a unique model for coordination of agriculture and agri-food market access issues.
[Translation]
In 2009, the Minister of Agriculture and Agri-Food created the Market Access Secretariat to respond to industry recommendations for a higher level of coordination between all levels of government and industry to grow market access.
[English]
That is the secretariat Mr. Gorrell heads up.
[Translation]
The secretariat serves as a single window for industry, provinces and other government department for issues related to agriculture and agri-food market access.
[English]
It coordinates efforts among the federal market access team, which includes Agriculture and Agri-Food Canada, the Canadian Food Inspection Agency, and Foreign Affairs and International Trade Canada. They work together to reopen, maintain and expand access for agriculture and agri-food products around the world.
To assist with this collaboration, a number of Canadian Food Inspection Agency and Agriculture and Agri-Food Canada staff have been co-located in the Market Access Secretariat. CFIA technical experts have also been posted abroad to allow the delivery of on-the-ground, timely responses to market access issues.
Priority markets are reconfirmed yearly with industry and provinces at the annual market access meeting, and we identify markets that offer feasible, achievable and sustainable gains.
As these agreements are negotiated to grow opportunities for Canada's agricultural exporters, there may be other non-tariff barriers that can prevent them from taking advantage of new market opportunities. To ensure a robust system and level playing field, open trade in agriculture needs to be based on science. We support and promote science- based trade through the development and application of international standards.
Science-based trade is especially critical in creating new market opportunities for innovative agricultural products. As more countries commit to the use of biotechnologies to meet their food, feed and other requirements, we will need to collaborate internationally even more to find ways to facilitate the free trade of these innovative products. That is why Canada advocates internationally for greater collaboration and commitment to regulatory measures based on science, to bring about more transparency, predictability and efficiency in trade.
Once access to markets is secured, the department helps industry make the most of new and emerging opportunities. Our sector specialists and officers across Canada work closely with industry to support individual sectors.
[Translation]
Market intelligence, such as trade data and client-focused research, helps industry make the most of these new opportunities.
[English]
Through a series of reports throughout the year, the department provides industry with access to intelligence on market and consumer trends, such as the size of market changes in consumer attitudes and new products introduced by competitors.
Trade commissioners, who are on-the-ground support in key markets, are key to facilitating business-to-business connections, acquiring and disseminating commercial export opportunities and trade leads to industry.
[Translation]
Promoting Canadian products in new markets helps expand awareness of our industry. By leveraging the Canada brand, industry can differentiate Canadian food products from the competition, raise their profile and increase sales.
[English]
Finally, the department is helping industry pursue new market opportunities by funding international missions and activities through the agri-marketing program, which is targeted to national associations and small-and medium-sized enterprises.
A renewed agri-marketing program will continue as part of Growing Forward 2, our federal-provincial-territorial framework set to launch in a couple of days. To be effective, this work cannot be done in isolation. We are constantly working with industry partners to ensure a coordinated and consistent approach.
We use different mechanisms to engage industry, particularly our value chain round tables, which draw together producers, processors, retailers, government departments and provinces to identify market opportunities and to develop collaborative strategies to address market challenges.
In conclusion, I would like to underscore that in undertaking these activities we work closely with our federal colleagues and with industry and the provinces. All of our efforts combine to ensure the highest possible returns for our Canadian agriculture and agri-food sector.
[Translation]
We appreciate the opportunity to appear before you today and are happy to answer any questions you may have.
[English]
The Chair: Thank you very much, Ms. Namiesniowski.
Senator Plett: I want to thank all of you for being here this morning.
I have two questions. In your presentation, you did not talk about country-of-origin labelling. Recently there have been some issues in that regard again. Could give us a brief on how we are dealing with the issue and whether there is a way for us to get the United States to see things our way?
Ms. Namiesniowski: As I believe everyone knows, Canada and Mexico did challenge country-of-origin labelling at the WTO and both the review panel and the appellate body ruled in Canada's favour. In response to that ruling, the United States has until May 23 to respond to the decision of the WTO bodies.
Canada, in the meantime, has been actively pressing the U.S. government in making clear to them our expectations with respect to responding to the ruling. Our expectations are as follows: We believe that to be compliant the U.S. government needs to introduce legislation. We have been quite consistent in our messaging to the U.S. government with respect to that.
The U.S., in return, up to this point, has chosen not to legislate but instead to regulate. They recently introduced a notice of proposed rule making, which we feel does not go the distance. In fact, we feel that it has the potential to discriminate further against our industry.
Canada is working to formally respond to the rule, as are others, including Mexico. We are certainly considering all of the potential actions that we can take from a retaliatory perspective to push the U.S. government in the direction that we feel will mean that they would be compliant with the decision. I think it is fair to say that it will take some time, but we are hopeful in the meantime that the U.S. will listen to us and will be responding positively to the requirements as stipulated by the WTO.
Senator Plett: The minister has been great on this file and is continuing to do a good job. In his comments, he also talked about retaliatory action. Can you tell us what some of those things might be if we did retaliate in any way?
Ms. Namiesniowski: I will ask my colleague, Mr. Seppey, to provide further details.
Frédéric Seppey, Chief Agriculture Negotiator and Director General, Trade Agreements and Negotiations Directorate, Agriculture and Agri-Food Canada: In fact, as the assistant deputy minister indicated, the U.S. was found in its legislation to be inconsistent with its WTO obligations. The U.S. has until May 23 to bring itself into compliance with the WTO rule. We expect that by that time that will not be the case, given the nature of the proposed rule.
We then have a number of other options that are available to us at the WTO. For example, if they are not in compliance as of May 23, we can seek a compliance panel; that is, seek the establishment of a group of experts that would confirm most likely that the U.S. is not in compliance. Following that, if they are still found not to be in compliance, then Canada has the right to seek a right of retaliation under the WTO.
We do not have to wait until that time to consult with Canadian stakeholders in order to identify the potential items that could be used in retaliation at the appropriate moment. That is what we are currently doing.
In the past, in a couple of instances of a similar nature, we have taken steps to get ready for retaliation. Most of the time we did not have to go all the way to retaliation because just the indication of intent was sufficient to bring the other party into compliance, be it the U.S. under the Byrd Amendment or Brazil in the case of the export subsidies under their program of support to their aircraft industry.
What we would be entitled to is to impose surtaxes on a number of items that are imported from the United States up to a value to be determined by a retaliation panel of the value of the injury.
You may be aware that the industry estimates at around $1 billion the impact that the COOL had so far on our meat, pork and beef industries in Canada.
We are looking into what items could be potentially put on a list of retaliation. However, when you develop that list you take a number of factors into account. For example, given that a number of Canadian industries are dependent on input from the United States to produce their product, you are trying not to include those base products, but there are a number of products where, if we were to impose a surtax on these elements, it would send a clear signal to the United States that we take this issue seriously and that it has an impact on our export interests.
Senator Plett: I appreciate that, and I am sure that is all we can do. This type of retaliation may send a message to the United States, but it really would not help the hog farmer who is being impacted with this. He would still be out whatever penalties he would be facing as a result of this. We really have nothing that would help the farmer in a retaliation.
Mr. Seppey: You are absolutely correct. A retaliation is never a first best; it is a second best. It never compensates for the harm done by the primary measure. That is why retaliation is only one tool that we have in terms of remedying the situation. We continue to have ongoing advocacy efforts to influence the decision-makers, and the decision-making process is very much in the hands of Congress as the legislator. We are trying to do that.
However, a notice of intent to retaliate may be a powerful tool of advocacy to bring to the decision-makers the fact that this measure is significantly hurting Canadian interests and that it may not be in the interests of the U.S. itself to have a measure that is not in full compliance with its international obligations.
We are looking at a series of measures to try to have the United States modify the legislation in such a way that it brings itself into conformity. That is the main objective. We have various things at our disposal to try to influence the decision-makers in Congress.
Senator Plett: As a supplementary question on farm-to-port traceability, how doable and how important is it?
Ms. Namiesniowski: In terms of its importance, it is important. Relative to other countries, our perspective is that Canada has moved significantly in relation to industry putting in measures that would allow them to trace product back.
I had the pleasure of being with our minister recently in Japan. One of the points that he consistently made to the Japanese representatives that we met with was the strength of the Canadian system. Is it perfect? Probably not, because I am not sure any system is perfect, but it is safe to say that in relation to Canada's approach with respect to the security of its food supply, traceability is a critical element and it is an element that is important for our colleagues at the Canadian Food Inspection Agency. Mr. Mayers may have additional comments to offer.
Paul Mayers, Associate Vice-President, Policy and Programs Branch, Canadian Food Inspection Agency: Briefly, we see traceability as having great value in facilitating a response when problems arise, such as when those problems are an animal health issue where we want to quickly contain and demonstrate to our trading partners that indeed an animal health event has been contained in order to regain markets quickly.
In terms of effectively withdrawing products from the market that might present a risk to consumers, the Safe Food for Canadians Act has provided a new opportunity for us in that regard in that it presents the authority that we previously did not have in terms of full traceability in the food system. That, for us, is a tremendous opportunity.
Senator Eaton: Mr. Mayers, there is something that Professor Charlebois could not answer yesterday when we were taking about food traceability. Will it be part of the free trade negotiations at the TPP or even with the EU? Is that something they have brought up?
Mr. Mayers: The issue of traceability itself is not unique in the context of negotiations.
The approach that we take with respect to traceability is really on a systems basis as it relates to issues. Whether or not a particular jurisdiction has traceability is not in itself a key item. What we are focusing on instead is whether the system has the tools to provide the protections that are necessary, because there is more than one way to achieve the same levels of protection.
Senator Callbeck: I want to ask about the Canada Brand strategy that has been launched. There is a domestic and international initiative here. With the domestic, how long has it been since you launched it and how do Canadians know about it?
Ms. Namiesniowski: The Canada Brand initiative, as I understand it, is in its fourth year. There is a Canada Brand Advocacy Initiative that received five years of funding and we are in year four; next year will be the fifth year.
You are right; there are domestic elements to that strategy as well as international.
We have done a fair amount of work in terms of the development of the Canada Brand, which is a marketing tool. For example, a Canada Brand logo is featured prominently at international trade shows and at the Canadian pavilion at those international trade shows. We have Canada Brand members. In fact, we recently hit the 500 mark of Canada Brand members. Those members have the right to use the Canada Brand logo.
In terms of domestic branding activities, we have worked with various small grocers across the country to do promotional work in-store that would allow them to identify — I do not want to use "labels" because "labelling" perhaps has a different connotation for this committee — what we call wobblers. They are stickers that will identify Canadian product in a store so that a Canadian consumer coming into a store is easily able to identify what is a Canadian product on the shelf. We also use that same strategy in international markets abroad.
Senator Callbeck: You say you have 500 Canada Brand members. If you are a Canada Brand member and you have five different products, does that give you the right to use that on the five products? Are there certain criteria that must be reached before you can use that?
Ms. Namiesniowski: Do you mean in terms of the content of the product?
Senator Callbeck: Yes.
Ms. Namiesniowski: We have product labelling within Canada where there are requirements in terms of the extent of Canadian ingredients within that particular product. There is some flexibility around that labelling in terms of how Canadian companies are able to identify that there is Canadian content. Companies do that.
From a Canadian consumer perspective, it provides them with the ability to recognize a Canadian product.
Senator Callbeck: Do you have any indication whether this program is effective with Canadian consumers or how effective it is?
Ms. Namiesniowski: I do not have it at my disposal, but we can potentially provide it to the committee. We have done some analysis of the impact and reach of the Canada Brand program in terms of its effect on consumers.
My understanding of that analysis is that if Canadian consumers are made aware of a Canadian product relative to a product from another country on the shelf, they are more inclined to purchase the Canadian product. For us, that is a measure of success.
Senator Callbeck: This is a five-year program, so will the evaluation be done before the end of five years to determine whether that will be continued? Is it five years and then you do an evaluation?
Ms. Namiesniowski: In terms of the branding, there has been some evaluation work done within the department on market development, which includes branding as an element of that. In terms of the Canada Brand Advocacy Initiative, my sense is we feel that we have the products out there and industry can now use them.
In terms of additional promotional materials beyond those five years, we probably will not be in the world of creating new products. We will be using the existing labels and promotional materials that we have, and continue to make those available to industry.
In the context of the new Growing Forward 2 framework and the agri-marketing program, the industry will now be able to access that program for the purposes of domestic marketing, which had not been the case in the past. We feel that is a positive step forward in terms of providing industry with the tools that they can use both domestically, within Canada, as well as abroad.
Senator Buth: As we are negotiating more free trade agreements and getting rid of tariffs, and as countries are becoming more concerned about food safety and protectionism, we are seeing more and more non-tariff barriers. Could you give a brief update on where we are at with the canola blackleg issue, with which I am familiar, but more importantly tell us how you are working to pre-empt non-tariff trade barriers? What strategies and techniques are you using?
Ms. Namiesniowski: In terms of the specifics around blackleg, I will turn to my colleague Mr. Gorrell.
I will just make a comment with respect to the strategies we are using. We actively use our trade commissioners as a window into markets. Through our trade commissioners, as well as our Canadian international footprint abroad, our embassies, we are monitoring quite closely what countries may be contemplating from a legislative or regulatory point of view that could have an impact on access to our markets. We are monitoring that in an effort to, through advocacy and other strategies, try and influence other governments not to put in place non-tariff barriers that would be detrimental to our industry's ability to export abroad.
We have that mechanism as, I would say, one of our key strategies. Perhaps Mr. Gorrell can amplify and talk specifically about blackleg.
Fred Gorrell, Director General, Market Access Secretariat, Agriculture and Agri-Food Canada: Relative to blackleg, senator, obviously you are well aware of it from the start. Our goal has always been to maintain the market open, specifically to China and its $1.5 billion, $1.8 billion a year market for us. We have been working with the Canadian Food Inspection Agency, the plant health group, our colleagues at Foreign Affairs. We have maintained the market open, and it is our hope that this year we will finally finish some of the research we have done to prove that blackleg cannot be introduced by Canadian canola into China.
We have been doing heat treatments with the canola seed, and when it is crushed the blackleg is destroyed and would not be a risk to China. The Chinese have signalled that they are very pleased with the results we have been getting so far, and there is an indication that they will be approving a crushing plant in the major rapeseed-growing areas in the Yangtze River.
This is an important policy change by the Chinese. For the last three or four years they have restricted us to areas where we have not had access in the past. If they go forward, this validates our research, and it would be our hope that we would be able to have access to the markets, the crushing plants, as we used to.
Also of note is that the Chinese have approved a number of new crushing plants, so the capacity to take imported canola is approximately 4 million tonnes. The best case we have ever had of exports to China from Canada has been 2.9 million tonnes. The ability for China to take Canadian canola now is larger than it has ever been.
As you said at the beginning, and as the assistant deputy minister indicated as well, non-tariff barriers will continue to be a challenge for us. However, I think the mechanisms we have in place, both through the market access secretariat but the larger interdepartmental team, allows us to respond in a really coordinated, comprehensive way. It would be our hope that we will minimize them going forward.
Senator Buth: Could you comment on how you work with private industry and what kind of role they play?
Mr. Gorrell: That is a good question because often we talk about the government doing this or the government doing that. In the last number of years we have entered into what I would call close to a full partnership with the industry and the provinces in how we respond.
The industry has a number of intelligence-gathering abilities that we do not through the traders, so we use that. At the same time, when we are making decisions, when we are contemplating our strategy, we realize that, with colleagues like Mr. Mayers, we regulate the industry but we are not the ones taking the risk, so the industry needs to be "inside the tent" when we are making our decisions.
I think you will find that the industry has a lot of access to us, but they are also part of the discussion of how the strategy is going forward. We realize the impacts that happen or do not happen are something they would bear directly, so they are a full part of the team.
Senator Buth: Industry has often held up the Market Access Secretariat as something they are very supportive of. Considering the budget issues we are facing nowadays and everyone is tightening their belts, what are you doing within the department to preserve dollars on the market access side of things? Do you have enough resources?
Ms. Namiesniowski: I think always the answer to that question is we have the resources that the government feels are necessary for us to do our job.
I have mentioned a couple of times this morning that the Growing Forward 2 policy framework recognizes the importance of the Market Access Secretariat. For the first time we have dedicated funding for that purpose, which pleases me to no end.
I think you are absolutely right in relation to the industry's response to the secretariat. In fact, the secretariat was created in large measure because of industry's demands for that kind of an integrated, single-window approach into the government that would allow for a very timely, coherent response to the kind of challenges that prevent them from achieving their potential in terms of market export opportunities.
I am recently new to the department, but I have heard consistently from industry about the success of the market access team and how important they view that team to their overall success. I think Mr. Gorrell and his team are supported very much by colleagues from other departments. We have, within our secretariat, staff from CFIA embedded in the organization. It just allows for such a quick, efficient response when an issue comes to our attention that needs to be addressed.
Senator Robichaud: To follow up, if you were to have more resources in your department, that means you could do a hell of a lot more work, would it not? You do not have to answer.
Mr. Gorrell: If I may, senator, it is a good question. The thought is that with more resources you can do more, but what we have learned is better coordination gets you further. By having coordination among the departments, among the agency, the portfolio, we are now working exceedingly well.
It is a challenge because we all have our own mandates, but I think the key point is that greater coordination and working with the industry and the provinces together will get us further than just resources, but thank you, senator.
Senator Robichaud: You would be a good politician.
Senator Mercer: Thank you for your presentation; it was very informative.
I want to go back to Senator Plett's original question. I did not interrupt with a supplementary then because I wanted to hear the answer.
Country-of-origin labelling is an issue, but you seemed to indicate, Mr. Seppey, some hope that the United States Congress might be able to fix this. I recently came back from a trip to Washington with the Canada-U.S. Interparliamentary Group. We met with about 50 members of Congress over a couple of days. We were not talking mainly about agriculture. We were talking mainly about exports of oil, but, when we did get to agriculture and country-of-origin labelling came up, I saw no appetite from anybody down there to change anything.
I also know that if you look at the situation in the American Congress today, they have not passed any meaningful legislation in years. The place is in a deadlock with one house being controlled by the Republicans and the other house being controlled by the Democrats. They have a farm bill that has expired. It kept getting an extension.
I hope that you are operating on better information than I saw when I was in Washington. We had officials from the embassy travelling with us as well, and they were able to see that this is not a happy story. Every time we say the word "retaliation" with respect to a primary industry, I go back to softwood lumber. Governments — it does not matter which one — say that we won this battle, but we left a billion dollars on the table for the people who were fighting against us to fight again. I am very nervous, when we get to retaliation, as to whether we have learned some lessons from our softwood lumber debate, which might come back. I do not think COOL is on the agenda for American parliamentarians.
Do you have any insight, Mr. Seppey?
Mr. Seppey: There are a number of things that are certain about COOL. One is that it is completely inconsistent with U.S. obligations under the WTO, as proven by a panel and the appellate body. That is one element of certainty.
The second element of certainty is that it is dramatically affecting our meat industry.
I think the third quasi-certain element is that if there is no pressure from either the trading partners or from the specific influential congresspeople — senators or representatives — things will be hard to change.
In answering Senator Plett's previous question, it is clear that it is a complex issue because, on the one hand, retaliation will never be best to address the concerns of our industry, but on the other hand, if we are unsuccessful in getting the changes, we do not want to leave things as is and essentially get the United States off the hook.
That is why we have a multi-pronged approach. There is a period right now for comments on the proposed rule. We have until April 11 to make our comments. We are working closely with the industry, with the Canadian Pork Council, with the cattlemen and with the meat council to make sure that we have a well-coordinated set of comments to take back to the United States, with the hope that they will be taken. We also coordinate closely with the Mexican government because Mexico is as equally affected and unhappy about this measure. We are trying to influence the United States to change their measures. We will exercise our WTO rights as soon as possible if the United States does not bring itself into compliance with their obligations by May 23.
However, the retaliation element can be an effective tool. The indication of intent to retaliate, if we get to that point, might be something that can influence Congress. I was mentioning the Byrd Amendment; it was key. At the time, we issued a Canada Gazette notice in which we carefully indicated what type of tariff items we were considering putting on the list for retaliation or the type of obligations we have under the WTO that we were ready to suspend.
Senator Mercer: Was that public?
Mr. Seppey: Yes, it was a notice of intent to retaliate that came out when the Byrd Amendment did, around 2003-04. When the Americans had that measure in place, it was a similar situation to COOL. The United States was found to be in breach of their WTO obligation. We published a notice in the Canada Gazette. We consulted stakeholders on a potential list of items or things we could do to retaliate. Just that indication of intent was sufficient to influence key decision makers on the hill. It helped to bring things into conformity.
This is one of the tools that we have, and when we talk about an injury, our right to retaliate will be a direct function of the value of the injury. It will have to be determined by a WTO panel, but we are talking in the range of a billion dollars. A billion dollars of trade is not insignificant, especially if it affects items that are very specific to certain states and certain electoral districts. That is the type of analysis that we are doing right now, and we know that our other trading partners are considering how to tailor the retaliation in the most strategic fashion, if we have to get to that point.
Senator Mercer: I want to be clear that I support your efforts on this. Perhaps you could, via the clerk, share that list with us afterwards. I am sure that we might have seen it at some point, but if it is public, we should just have another look at it.
I know that you can get the attention of the Secretary of Agriculture in the United States fairly quickly. It is those other people that you might have trouble with.
My last question is on COOL, but it is also on Canada Brand. Is there an inconsistency here that we are against country-of-origin labelling at the same time as we are promoting Canada Brand and are proud to have 500 members of Canada Brand now? We are saying, "Let us stick maple leaves on 500 different company products," but we do not want country-of-origin labelling on our agricultural products in the United States? Is there an inconsistency there? That might be too political for you to answer.
Mr. Seppey: I think it is a very valid question. I would stress that the key feature of COOL is that it is mandatory. Meat processing plants in the U.S. have to put on a label that clearly indicates the origin in a very prescriptive and burdensome manner. The discriminatory nature of COOL is that having such stringent requirements, which do not exist in Canada in the same fashion at all, creates de facto discrimination. It deters meat processors in the U.S. from taking full advantage of the North American integrated market for meat. The way the North American system operates is that cattle are born in Canada, fed in the U.S. and again cross the border. It is very complex and integrated. With a measure such as COOL, processors have to change their operations, and it really deters processing plants in the U.S. from using cattle or meat coming from a Canadian carcass. That is the challenge. That was found by the WTO panels to be the discriminatory nature of the measure, and that is why the proposed rule, which seems to increase that factor of discrimination, is in our view increasing the inconsistency of the measure, as proposed, with the U.S. WTO obligation.
Senator Plett: I appreciated your comment. I come from an area that is very dependent on agriculture and livestock, particularly pork. You said in your comments that you were also dealing with the pork council in your responses. Do you also deal with these councils in relation to helping them benefit from some retaliatory action?
Mr. Seppey: Yes, absolutely. In fact, in the past, when the Canadian government has considered the possibility of retaliation, there was always a notice issued in the Canada Gazette seeking comments from a broad range to ensure that any potentially affected party could express their views. In the case of COOL, beyond that process of the Canada Gazette, as I indicated, in terms of submitting comments, in terms of advocacy, in terms of other legal means we can exercise, we are always very closely consulting with the three main organizations, the Canadian Meat Council, the Canadian Pork Council and the Canadian Cattlemen's Association to ensure that we fully understand what is at stake for these organizations and their members, but also that we do our advocacy efforts in the most effective way.
In a previous question from Senator Buth, there was the question of how important is the coordination with the industry. When we had our challenge in the WTO, we could not win at the WTO without all the expertise and the evidence that was collected at the level of individual producers. Likewise, in our advocacy efforts, without the organizations and their unique business relationship with importers and processors in the U.S. that are almost equally affected and hostile to COOL, we cannot hope for success. Therefore, we are definitely consulting and coordinating very closely. If we get to the point of retaliation, it would definitely reflect close coordination with these organizations.
Senator Plett: Wonderful. Thank you very much.
Senator Eaton: I believe Ms. Namiesniowski mentioned science-based products. We are just about to sign a free trade pact with the EU. How much is scientific research in universities across Canada affected by non-science-based decisions in the EU? I am thinking about GMO seeds and honey.
Mr. Mayers: It is a very interesting question, senator. We have some issue with a number of the positions that our colleagues in the European Union take in terms of the science. We have an ongoing advocacy with them in that regard. The extent to which one might characterize that that market has created a chill on innovative research in Canada is difficult to assess, so I would not want to put an actual estimate on it.
Senator Eaton: Can you put a percentage on it?
Mr. Mayers: That would be pure speculation.
I can say that we have continued to see excellence in innovation in Canada as it relates to the introduction of GM products, and that continued excellence has also afforded us the opportunity to demonstrate that these products can enter the market, can be safely produced and consumed, and the issues that others fear can be effectively managed. We are using that evidence in our continued advocacy with others.
Indeed, we know that issues like the low-level presence of a GM product in a non-GM product has resulted in market interruption with the European Union. As a result, we have tackled that with a fairly significant amount of policy work here in Canada around the approach to managing the low-level presence. We have undertaken significant consultation in collaboration with our colleagues at Agriculture and Agri-Food Canada around how to manage that because we know that we need to demonstrate to others that these approaches can, indeed, be successfully managed. When one looks outside of the European Union, internationally we see that the global uptake of that innovation continues to grow.
That said, the impact of the EU position certainly has slowed that. It has not stopped the innovation from occurring, but it most certainly has had some effect on it. I just cannot put a percentage on the level of effect.
Senator Eaton: Have you had any successes in reversing non-science-based perceptions of our products in Europe?
Mr. Mayers: I would say yes.
Senator Eaton: Can you give us an example?
Mr. Mayers: However, it is a very slow process.
I will stay with the GM example. In Europe, there continues to be GM production. There continues to be a very significant challenge in terms of consumer acceptance, but that said, our minister has been very active in his continued engagement with European counterparts. They have sought us out in terms of exploring how they might begin to address potential future food security considerations in terms of overcoming the concerns that exist around GM products. We have seen some successes in that regard, in direct engagement with European parliamentarians, in terms of their interest in finding solutions and moving forward. While I would not characterize this as a position where we are yet running, there are some positive signals.
Senator Eaton: Do you feel that you will have or you are getting the same preliminary pushback with countries involved in the TPP negotiations or with Japan? Are they more open to GM foods, or do they have fewer non-tariff barriers?
Mr. Mayers: Within the countries participating in the TPP negotiations there is diversity with respect to their positions on GM. I would not characterize that as a single position in that regard.
Mr. Seppey: Of the 11 countries that are participating in the TPP negotiations, 5 are producing GMOs, including the main producer of GMOs in the world, which is the United States. Canada is number 4. Australia is number 13. Chile is significant as well.
It is true that there is a diversity of views in the TPP in terms of receptivity of the biotechnologies. In the context of these negotiations, this is definitely an item on which we want to be able to introduce rules that ensure good principles of trade based on science and predictability of regulations, and that ensure that the synchronicity of approvals are taken care of in the context of these negotiations.
I will make a brief comment about the European Union. In my previous incarnation I was responsible for innovation policy. One factor that is interesting to note is that the very strong position sometimes expressed in regulations in the EU that is sometimes cool on biotechnologies has the potential to have a real economic effect on the Europeans. Some companies that are developing new technologies are either considering moving or are moving their research facilities outside of the European Union because the regulatory regime is so tight.
When you look at the map of who is developing biotechnologies, which goes beyond GMOs, the question that comes to mind is how to address the challenges of agricultural production using the newest technologies. You see that there is almost a realm of countries involved. It is very developed in the Americas. It is developed in Asia. In the middle is Europe, which is almost empty. There is a little bit of production there, but very little. The question that Europeans are starting to ask themselves is whether they are missing the train of innovation in agriculture.
[Translation]
Senator Robichaud: I would like to continue on the topic of GMOs. I read an article in the Discover magazine about all of the efforts made by Europeans in this field. Some groups are very actively opposing any type of genetic modification. You touched on this issue, Mr. Seppey. Do these efforts have an impact outside of the European community?
Mr. Seppey: They do have an impact considering that the European Union is a huge market, probably the most lucrative market for agricultural imports. It is the largest importer of agricultural goods and an extremely wealthy market, with a high and mature standard of living. As a result, when businesses and exporters must, for a purely commercial reason, make marketing decisions, it is important that we not confuse this with a scientific regulatory decision. When an exporter asks whether he can, under the current regulations, export to the European Union, this question could have an impact on his production methods. This is what is being done in certain regions of Canada, in the pork sector, for example, where we are trying to have a production line that does not make any use of a veterinary drug called ractopamine, because its use has been banned in the European Union.
We feel that the ractopamine ban is not based on science. In Canada, studies have been done and the Canadian Food Inspection Agency and Health Canada have approved it. There is, however, an international CODEX standard. So when a particular business wants to export its products to the European Union, it could do so in the hope that the regulations will change. Meanwhile, however, it has to adjust its production methods.
To answer your question, yes, these efforts do have an impact outside the community given that this geographic zone is a big importer of agricultural food products.
Senator Maltais: Welcome. I am very pleased to have you here with us this morning. We have talked at great length about free trade, be it with the United States, Europe or Asia. We have, however, forgotten about this small market of $34 million people in Canada. That is what I am interested in.
This morning I would like you to answer a question that I have been asking myself here, in this committee, for the past year. No one has been able to answer it yet, but you are the highest authority with respect to food health and safety in Canada.
A woman is doing her groceries, pushing her grocery cart around the supermarket. She has three children and prefers Canadian products, even though they are at times a little bit more expensive — because people like to buy Canadian.
I am going to ask you about a field that you never discussed, namely, aquaculture.
We know that in Canada aquaculture is carefully monitored by your department and provincial ministries. We know what Nova Scotia salmon, western trout, Pacific salmon and oysters eat. We know how it all works, since you are the one that monitors it.
Can we provide Canadian consumers with a guarantee that you monitor how foreign imported fish are fed?
[English]
Mr. Mayers: Thank you for that question. The Fish Inspection Act and regulations set out the same expectations for imports as they do for domestically produced products. The assurance of controls for Canadians is provided by those legislative and regulatory instruments.
Imported products are subject to the same requirements as Canadian products. The Canadian Food Inspection Agency carries out an active inspection program with respect to imports, and the purpose of that inspection program is to provide assurance to Canadians that, indeed, those products meet Canadian requirements.
[Translation]
Senator Maltais: I understand what you are saying. I do, however, ask myself some questions. Would it be possible to put a label on the tilapia from Thailand, indicating what it has been fed, prior to its export to Canada? Could the fish counter have a sign indicating what the tilapia from Thailand has eaten in order to become a beautiful white, odourless, colourless and tasteless fish? What does this fish eat? When given this information, I am not sure that the woman I was referring to in my example would buy several pounds of it.
Can you provide me with some assurances that the public will be informed about what this fish is eating?
[English]
Mr. Mayers: In terms of the assurance that we can provide, it is based on the programs that we can operate.
As we have discussed in relation to COOL, there are obligations with respect to labelling as it relates to country-of- origin, and those differ from commodity to commodity. In being able to provide the assurance that you seek —
[Translation]
Senator Maltais: I will stop you there. This labelling is mandatory for western beef, pork, poultry and all products made in Canada. Could we not do the same for imported products? If the other countries are requiring that our products be labelled, could we not ask them to do the same thing, namely, to indicate what the tilapia is eating, morning, noon and night? Then Canadians would be able to decide whether or not they wanted to buy it.
Can you provide me with this guarantee?
[English]
Mr. Mayers: The approach that we have taken in that regard is actually the reverse. Instead, we have introduced an approach for the identification of products of Canada so that, in the domestic context, if a Canadian consumer wants to avoid products from a particular jurisdiction or to avoid imported products, there are rules with respect to products of Canada. These are the same concerns that we raised with the U.S. in terms of how they characterize imported products. We have to meet our WTO obligations in that regard and not discriminate against products inappropriately. Hence, the approach we have taken is to allow Canadians who wish to choose to avoid imported products to focus on products of Canada as opposed to an across-the-board, mandatory country-of-origin labelling approach.
[Translation]
Senator Maltais: Our audience is listening. I have not had an answer to my question. We should be able to label products sold in Canadian grocery stores because the other countries are demanding this of us. This should be a two- way practice.
You are the highest authority when it comes to health, and I am no further ahead. Could you inform Canadians about this matter? People do not have time to worry about this. However, as a government, we must ensure that the products sold on our shelves are healthy for us and that they are not being fed substances that may prove to be toxic, since we demand that our meat and fish be of very high quality. We should be demanding the same thing from others.
[English]
Mr. Mayers: Absolutely, we firmly agree. Indeed the act and the regulations require that demonstration that the imported products meet the same requirements as domestically produced products. Consumers are assured that imported products that are permitted into the Canadian market are subject to the same rules, the same requirements and provide the same level of safety as a domestically produced product.
[Translation]
Senator Maltais: That is right, thank you.
The Chair: Thank you, Senator Maltais. I have a comment for the deputy minister further to Senator Maltais' comments, namely, whether or not you think it would be possible to send us additional information to clarify the comments and the question, through the clerk, please.
[English]
Honourable senators, as chair of the committee I have to relay this comment: The performance of Ms. Namiesniowski and her officials this morning was very reflective of Canada's reputation in the world as a country. Our leadership in Agriculture and Agri-Food Canada and its officials are seen and always tagged as professional and informative and we saw that this morning. Thank you.
Honourable senators, the committee will now hear about the Canadian Food Inspection Agency's User Fee Proposal for Importer Licensing for Non-federally Registered Sector Products. We have before us Paul Mayers, Associate Vice-President, Policy and Programs Branch of the Canadian Food Inspection Agency.
Mr. Mayers, thank you for accepting our invitation and for bringing clarity to the changes. I am informed by the clerk that you will make a short presentation and following that we will have questions from the senators.
Mr. Mayers: Honourable senators, it is a pleasure to be here with you to explain the context of our proposal on licensing fees regarding imports.
First, the committee should understand that the regulatory proposal for an importer licensing approach was a key deliverable of the Food Safety Action Plan, the Canadian Food Inspection Agency's portion of the Government of Canada's broader Food and Consumer Safety Action Plan announced in December 2007.
While the establishment of importer licensing will provide a significant contribution to food safety oversight in Canada, it is but one of many announcements that we anticipate in the near future. The authorities provided by the Safe Food for Canadians Act will allow the CFIA to move on many more fronts to enhance Canada's already excellent food safety system.
Allow me to give you a snapshot of Canada's current food import environment. Canada is the sixth largest importer of agricultural and agri-food products in the world. Over 40 per cent of food products sold in Canada are imported; in addition, most domestic food products contain imported ingredients.
[Translation]
There has been a 45 per cent increase in food imports in the last nine years. A great deal of complexity has been introduced, due to the increasing scale of global supply chains resulting in food-safety incidents that can be broad and far-reaching. Now many foods need to be traced back transnationally in order to find their origins.
[English]
There has also been a shift in overall consumer demand for foods that reflects our multicultural and multi-religious society. It is clear that the demand for imported food in Canada is great and will continue to grow.
To give senators a sense of the scope of this regulation, they should know that in 2011-12 nearly half, basically 44 per cent, of all recalls were related to food products that would be covered by this regulatory approach.
In the last several years we have seen repeated risks within the global food networks, including clostridium botulinum, the organism responsible for botulism in carrot juice; melamine in infant formula, with that significant event that occurred in China and globally; DEHP, a plasticizer that was included as an emulsifier in sports drinks and jams; glass fragments in vodka beverages; salmonella in chocolate and peanut butter; and undeclared allergens in pine nuts and oatmeal.
Canadians generally feel confident about the safety of the food supply. A Decima research poll taken in 2010 revealed that 90 per cent of Canadians feel that Canada's food safety system works. A Leger poll taken in 2011 further revealed that most Canadians are aware that imported food must meet the same food safety standards as domestic foods before they can be sold in Canada. Canadians should feel confident about imported foods, as the vast majority of Canada's importers provide safe food products.
[Translation]
Canada's food importers have already voiced their support for an importer licencing regime. In previous appearances before this committee, key stakeholders such as the Canadian Association of Importers and Exporters and the Canadian Association of Regulated Importers went on record with their approval of the government's intentions.
[English]
The proposed regulations would form the basis of a federally regulated system for the imported food sector in Canada. Food commodities governed by the regulations are agricultural products by the authority of the Canada Agricultural Products Act and are not currently regulated by the CFIA under federal commodity-specific food regulations.
The proposed regulation would create a product licensing scheme that will include a responsive industry that accepts responsibility for the safety and proper labelling of the foods they import; increased confidence of Canadians in the safety of food products regardless of source; confidence of trading partners in Canada's food safety system; and a level playing field where imported and domestically manufactured foods can better be demonstrated to meet Canadian requirements.
The new regulation will mandate that food importers in the non-federally registered sector hold a licence to import, implement a preventive food safety control plan, develop a recall plan, maintain records, written or electronic, and notify CFIA of unsafe food.
The CFIA, through border blitzes and its regular risk-based inspections, may determine that certain importers should have their licence cancelled or suspended when unsafe foods are detected. This approach is similar to those taken by our major trading partners such as the United States, New Zealand, Australia and the European community. Both the United States and Canada are working cooperatively under the auspices of the Regulatory Cooperation Council to develop new importer regulations that include requirements for preventive controls. Canada has also notified the World Trade Organization of its intention to pursue this licensing approach. All the while, we will be adhering to the government's policy of pursuing red tape reduction.
[Translation]
As I have noted, this licencing approach is important in supporting food safety and a level playing field between domestic and imported food commodities. Consistent with Treasury Board policy, the CFIA intends to implement a user fee for the issuance of an importer licence. That is the matter which is before you today.
[English]
The proposed fee for the licence, which would be valid for two years, is $259. An import licence issued by the CFIA is of direct benefit to importers as it will allow importers of imported food sector products to perform importation activities. The proposed service standard for delivery of the licence will be 10 working days, which is consistent with the WTO agreement on importer licensing.
I hope that I have used my time to inform you of our current environment and the attendant rationale for this user fee, and I look forward to your questions.
The Chair: Thank you, Mr. Mayers.
Senator Plett: Mr. Mayers, you did inform us well. I have a few questions with regard to your consultations.
In your package you cite the number of people who responded to a questionnaire. It seems rather low. You then say that you invited 12,000 subscribers to comment on the fee proposal after publicizing this in the Canada Gazette. How many of these subscribers did comment on your fee proposal?
Mr. Mayers: I do not have the figure in front of me, but we can provide that through the clerk.
Senator Plett: Thank you very much. You do have the one on the web.
On page 7 of your document I see, "Did the respondents support the user fee?" Forty per cent said they did, 40 per cent were unsure, and only 20 per cent said no. That is an excellent response.
Could you briefly touch on the responses of the 12,000, even if you do not have the numbers? The number is not that important to me. I am more interested the general response.
Mr. Mayers: Many of those who responded positively saw the benefits in terms of consumer confidence and in terms of the opportunity to reduce the potential market impacts of negative events. Of course, a negative event impacts more than just the individual company involved; it typically impacts the whole sector for a period of time, and that was recognized. The opportunity for a more level playing field was recognized as well.
Of those who expressed concern, several saw the licensing approach as a tax. As well, several perceived that it would not have a beneficial food safety impact.
Senator Plett: Why would that be?
Mr. Mayers: I will not speculate on their views entirely, but they may feel that some importers who hold licences would not necessarily take appropriate responsibility but would rather be willing to be in the area of activity for only a brief period of time until something went wrong and then would be prepared to exit; a fly-by-night type of approach.
Senator Plett: My last question is more in line with any type of business. I have been a businessman most of my life. I needed licences in every province that I worked in, so I see this as being more consistent with every type of industry and business. Do you agree with that?
Mr. Mayers: I certainly agree.
One of the great benefits that this presents for us as regulators is that it addresses what we see as a potential area of vulnerability. For these products that do not fall under any of the commodity statutes it means that at present our activities are generally reactive.
A licensing scheme creates greater clarity of the responsibility of the importers and, importantly, allows us as an agency to have a better rapport with the importing community. Through them having licences, we know who they are and we can share information with them on developments. Using the melamine example, our opportunity to share with the importing community that that event was starting to emerge, that they should be cautious with respect to imports from a jurisdiction experiencing a problem, is hampered today by the fact that we do not have an ongoing, existing relationship with them as importers. What a licensing approach allows us to do is to have that ongoing relationship with them, to remind them of their responsibilities and, importantly, to share information with them when things go wrong.
[Translation]
Senator Robichaud: You talked about the import licensing process. I suppose that the importer has to provide information about what he is importing and the origin of these imports. You also indicated that there should be a product recall system, in the event that there are problems. You said that you can issue the license within a 10-day period. How are you going to do that?
[English]
Mr. Mayers: The approach for the issuance of a licence will be on the basis of, as you have noted, an application on the part of the importer, the provision of information and their commitment to us with respect to the conditions of the licence. Our ability to turn that around in 10 days and issue the licence is based on us putting in place the infrastructure necessary to support that, and that infrastructure involves an information technology tool. This will be a web-based approach. There will also be the creation of a specific, dedicated team in order to process licence applications. It is on that basis that we can ensure that turnaround.
Senator Robichaud: There will be a team put in place to look specifically at those import licences.
Mr. Mayers: That is correct. Keep in mind that this will not be on the basis of each individual import but, instead, will be a two-year licence that then enables an importer to participate in the importation of food.
Senator Robichaud: You have mentioned border blitzes. How often do they happen? Will there be more to exercise control over the new importers?
Mr. Mayers: The answer to the second question is yes, border blitzes will continue, but let me make an important distinction. Border blitzes are not the only mechanism that we use in terms of control. The border blitzes have been an addition that allow us to focus on a particular area of activity — the importation of a particular type of commodity — in a much more targeted way in response to any potential emergent issues.
Over the last three years we have undertaken a number of border blitzes, and we can certainly share with the committee, through the clerk, the information in terms of the metrics for our border blitzes. Those border blitzes have allowed us to undertake targeted inspection activity, with respect to particular commodities coming in, to supplement our more generic inspection activities. They are a supplement to our regular activities as opposed to the sole means by which we control imports.
Senator Robichaud: You mentioned "generic." In most cases, it is the Canada Border Services Agency that does the initial inspection, is it not?
Mr. Mayers: That is correct. The Canada Border Services Agency is the first point of engagement. We work very closely with the CBSA in terms of their responsibility in the area of the import of agriculture and agri-food products.
[Translation]
Senator Rivard: Before I ask my question, I would like to make a point. My question pertains to exemptions for the Akwesasne reserve. I sincerely believe that more than 90 per cent of the citizens in Akwesasne are honest. As for the others, that is debatable.
Let us take the example of the cigarette trade. It has been shown that if all of the cigarettes that pass through or are made in Akwesasne were intended for local consumption, everyone aged 10 and up would have died of lung cancer, given the tremendous number of cigarettes involved.
This leads me to the next question. If we allowed Akwesasne to import American food commodities providing that they did not weigh any more than 20 kilos, could you reassure me about one thing? The exporter who sends these products to Akwesasne is generally American. Americans could bring in these products, from Asia or elsewhere, which may not be fit for consumption — and I am convinced that Americans would not do such a thing. Nevertheless, what guarantees do we have that, for example, 20 kilograms of a product that could have been imported by the Americans are safe for consumption, whether it be intended for them or anyone else, once it has been sent elsewhere? The potential clientele is Quebec and Ontario. I do not think that they could import a product intended for export to the Maritimes or the west.
My first question is as follows: are you troubled by this situation? Reassure us if there is no reason for concern.
My second question is whether or not some people could in fact make several deliveries, but respect the 20-kilo limit? For example, could a container have 200 packages, each weighing less than 20 kilos, which would be acceptable given that each package weighs under 20 kilos?
[English]
Mr. Mayers: Let me deal with the second question first. The container would be treated as the import, and so that circumvention of the intent would not be possible.
As it relates to the first question, we can continue to provide assurance that that exemption, which is intended to recognize the position that the Akwesasne reserve takes and to facilitate residents' ability to make choices as to where they make food purchases, is similar to the exemption that applies for all Canadians in terms of personal importation.
The scenario that the honourable senator is concerned about, I understand. I do not know the cigarette file, and so I will not make any attempt to compare in that regard. However, the other thing that I will note that gives us great assurance is in the context of products derived from the United States. As I noted in my remarks, we are working very closely with our colleagues in the U.S. because they are similarly exercising controls with respect to imports to the U.S. Therefore, the potential that the U.S. can serve as a transboundary source of inappropriate imports from third jurisdictions is very low. Our collaboration in the context of the Regulatory Cooperation Council furthers the interest that we have in taking a North American approach to the management of imports of food in order to assure North American consumers of their safety.
[Translation]
Senator Rivard: I will conclude by thanking you. I am more reassured and confident that our American neighbours, our main clients, will not be able to put one over on us by sending, through Akwesasne, products unfit for consumption.
[English]
Senator Callbeck: Mr. Mayers, I know that Senator Plett asked about consultation. However, I want to refer to the website questionnaire that you had. According to the document, I see 145 individuals logged in and 51 participated. How many importers would this licence affect?
Mr. Mayers: Our estimate is that we would ultimately license 25,000 food importers.
Senator Callbeck: Were you surprised at the low number of 51 who participated?
Mr. Mayers: Keep in mind that the web consultation was only part of the overall consultation approach. We had significant ongoing engagement with the association of importers and exporters who, of course, represent the import- export community quite significantly. While I cannot speak for them individually, the choice to be engaged through their association rather than directly has to be taken into consideration as well.
Senator Callbeck: I see here that there were no responses whatsoever from five provinces and the Northwest Territories. There was no response from Atlantic Canada. Could you tell me about the consultations that took place with the importers in Atlantic Canada?
Mr. Mayers: Given the detail that you are interested in, I do have with me a colleague who I might, with the chair's agreement, invite to the table to provide that level of detail.
Senator Callbeck: Sure.
Mr. Mayers: It is Mr. Mark Burgham, who is the acting executive director of our Food Safety Strategies Directorate.
The Chair: Thank you. Would you please answer the question?
Mark Burgham, Acting Executive Director, Food Safety Strategies, Canadian Food Inspection Agency: Honourable senators, we were working in consulting with the industry across the country, so we have been engaging with industry associations. We have been in most of the provinces, including Atlantic Canada, talking to the provincial ministries of agriculture, as well as our provincial colleagues in health departments.
We have also been talking with individual companies as well as the associations, including trying to reach out to the small- and micro-sized companies because we recognize that that will be a particular challenge to some of them. We have been talking to the Canadian Federation of Independent Business, for example, as well as larger companies that form the bulk of imports by value.
Senator Callbeck: Can I be assured, then, that all Atlantic provinces have been consulted?
Mr. Burgham: That is correct. We also intend, if the regulation is published in Canada Gazette, Part I, we currently have a plan to actually visit every province during the comment period to ensure that all stakeholders that are potentially impacted by this have an opportunity to engage with us and better understand the regulatory intent.
Senator Callbeck: Who do you plan to consult with in Atlantic Canada?
Mr. Burgham: We are setting up a public forum in all of the provinces and we will be making notification for a couple of weeks of advance notice that we will be present at particular venues. It is an open invitation.
Senator Callbeck: Have you consulted all the governments in Atlantic Canada?
Mr. Burgham: Yes, that is correct.
The Chair: Thank you very much for the clarification.
Senator Eaton: I will pick on where Senator Robichaud was going. A license is required by an importer regardless of the number of products. If I am an importer, I go to you for a licence and I may that say I have 5 products. Six months later I have 10 products. There is nothing further I have to do because if I have proved myself worthy for the first product, I am worthy for the next 10.
Mr. Mayers: You are correct. Keeping in mind that all the licence does is gives you the authorization to import, you are still subject to oversight inspection. Your commitment with respect to the licence relates to the ongoing assurance that you have put in place a preventative control plan to ensure that the products you import meet Canadian requirements.
Senator Eaton: As I increase the grocery basket of products that I am importing, do I have to let you know that I am importing additional products into the country?
Mr. Mayers: At your licence renewal, you would update the type and scope of products that you are importing.
Senator Eaton: Is that every two years?
Mr. Mayers: Yes, that is correct.
Senator Eaton: Do you feel completely confident that two years can go by? I suppose you do not want to make it too onerous or bureaucratic for the importer, but I find it surprising. That is giving the importer complete responsibility for the traceability and manufacture of the products they import.
Mr. Mayers: That is right. Our expectation is that an importer has a relationship with those from which they purchase products so that their ability to provide assurance that the products they import meet Canadian requirements is addressed through their supply chain. They are still subject to our oversight, therefore it is very important that we not view that the licensing approach is the only control. It is only one element in the suite of controls.
Senator Eaton: What are the other controls?
Mr. Mayers: The other controls are the existing suites in terms of inspection, investigation where issues are raised, and product recall if products in the marketplace present a risk to consumers. All of those would still apply.
Senator Eaton: If I was an importer of 10 products, would I be subject to surprise audits?
Mr. Mayers: You could be subject to routine inspection. That is the mechanism that we use as part of our response. You could also be subject to specific investigation in the event a problem was identified with a product that you are importing.
Senator Eaton: I think this is very important. When you do an inspection, does that mean the inspector actually goes and follows the traceability route, or do you actually take the product, open it up and examine the product?
Mr. Mayers: It depends entirely on the particular product. When you say "the traceability route," do you mean back through their supply chain, back through their countries of origin?
Senator Eaton: Yes.
Mr. Mayers: No, we would not send inspectors back to the country of origin. We rely on the regulatory authorities in the countries of origin for information as opposed to sending inspectors to those countries in terms of regular inspection. We might undertake an audit in certain commodities based on risk.
Senator Eaton: I am thinking that with all our free trade agreements we are going to a much larger grocery store, so to speak, with all these new products that will come into Canada. Part of your free trade negotiations is inspections and standards in each of these countries, obviously.
Mr. Mayers: In terms of standards, in the international space we rely on international standard-setting as the primary mechanism. We work in the UN Codex Alimentarius, along with the other member countries, which sets international standards for foods.
Canada's food basket, if you will, is already quite diverse. We already import food or ingredients from over 140 countries, therefore the free trade agreements do not necessarily broadly expand that number because we are engaged in free trade discussions with countries with which we already have a trading relationship.
Senator Eaton: Thank you very much.
Senator Mercer: Mr. Mayers, I appreciate your presence here. This seems like a straightforward thing, but it is a little more complex than it looks. We are just seeing this for the first time. I do not want to confuse the issue, but this is a new cost on importing foods. According to your estimates, it will be about $3.2 million a year for the first couple of years. If I read this correctly, you say that it costs about $3.2 million to operate and that the revenue will be $3.2 million, so it will be revenue neutral. Is that the plan?
Mr. Mayers: Absolutely. In fact, the User Fees Act and Treasury Board policy with respect to user fees requires us, in our costing, to only recover our cost for delivery.
Senator Mercer: It is only revenue neutral for the federal government, and it is a cost to the importer.
Mr. Mayers: That is correct.
Senator Mercer: The importer gets his or her money from the consumer, right?
Mr. Mayers: You are absolutely correct. This is a new cost for importers. We should not be shy about recognizing that. It is a new cost against a background of approximately $1 billion a month in terms of food imports to Canada in this sector.
Senator Mercer: Some of your respondents saw the proposed fee as a new form of taxation. If we are going to do this, I want to see a benefit on the other side. If people have to give the government an extra $3.2 million every year, I want to know that food safety will be better, and I do not see that here. You have the power now and you have the regulations in place to get the job done. All this is doing is getting more money through this licensing scheme to implement it. Am I right or wrong?
Mr. Mayers: No. I respectfully disagree with you in that regard. This has a very significant food safety benefit in that these foods are not covered by any of the commodity statutes. That means that there is currently no registration requirement prior to engaging in this business. The licensing approach provides the opportunity for proactive action on food safety, which did not exist prior to this introduction.
You will recall that after the melamine incident in China, Canadians expressed tremendous concern around the ability to proactively address risk in terms of imported foods. This responds directly to that interest. It responds to the Food and Consumer Safety Action Plan of the government at that time and, indeed, responds to and complements quite effectively the Safe Food for Canadians Act, which also includes the authority to undertake licensing in this regard.
Senator Mercer: Let us assume that I am an importer. I get a licence and import two products. They are safe products and there is no problem with them. The next year, or even the day after I get my licence, I expand my portfolio. You have no idea what those products are until I renew my licence in two years' time.
I see a gap here. If the object of the game is to protect consumers, then we need to protect them 24-7 rather than having this gap that Senator Eaton pointed out. How do we protect Canadians for those products that Senator Eaton pointed out?
Mr. Mayers: I very much appreciate that point. We, of course, had to strike a balance between weekly licence renewals, which would be impractical, and a reasonable time frame. However, keep in mind that this gives us something that we did not previously have, that is, a direct relationship with each importer. That means that if an event is emerging, we have the ability to engage with the import community. We do not have to restrict ourselves to those who simply said, "I am importing prawns from Thailand today." If an issue is emerging on prawns, we can communicate to the entire food import community our concern that something has emerged that they should be including in their considerations about what they bring in.
Senator Mercer: Thank you.
Senator Buth: I am more familiar with the commodity side of things. Are commodity importers licensed?
Mr. Mayers: It depends on the commodity. We have a range. In terms of meat, for example, only federally registered facilities may import meat into Canada. There are different approaches commodity by commodity. You will recall in the discussions around the Safe Food for Canadians Act our interest in consolidating all of those individual commodity standards into a single food approach. With the passage of the Safe Food for Canadians Act we are actively engaged in that regard, but each of those registered commodities have differing mechanisms that allow us to have that ongoing interaction with that community.
Senator Buth: I would see this as essentially addressing a gap in the system where you have that relationship with companies that are importing larger or raw products, essentially. I assume that what you are doing is addressing this gap.
Mr. Mayers: That is correct. We are addressing what we saw as a vulnerability that did not allow us to be proactive in our response.
Senator Buth: How do these fees compare with those of other countries, especially with our number one trading partner, the U.S.?
Mr. Mayers: The U.S. takes a different approach. At present, they do not charge a fee. They undertake an approach based on the facilities as opposed to the importers. However, with the new Food Safety Modernization Act in the U.S., they have recently received the authority to charge fees for licences in this space, so we anticipate that they will be moving there. They do not have fees at present in the U.S.
Australia operates on an import permit basis. There is an associated fee, but that permitting regime, as opposed to a licensing, is more transactional. I cannot give you a direct cost analysis. The intent is the same, but the approaches applied are different in different jurisdictions.
Senator Buth: But it is fairly consistent in terms of countries taking this approach one way or the other.
Mr. Mayers: That is correct.
The Chair: Mr. Mayers, thank you very much.
Senators, we will go in camera to review our draft report on user fees.
(The committee continued in camera.)