Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 13 - Evidence - Meeting of June 9, 2016
OTTAWA, Thursday, June 9, 2016
The Standing Senate Committee on Agriculture and Forestry met this day at 8:02 a.m. to continue its study on international market access priorities for the Canadian agricultural and agri-food sector.
Senator Ghislain Maltais (Chair) in the chair.
[Translation]
The Chair: Welcome to this meeting of the Standing Senate Committee on Agriculture and Forestry.
Good morning, everyone. This morning the Standing Senate Committee on Agriculture and Forestry is continuing its study on international market access priorities for the Canadian agricultural and agri-food sector. My name is Ghislain Maltais and I am the chair of the committee. Before we begin, I will invite my colleagues to introduce themselves.
[English]
Senator Mercer: I'm Senator Terry Mercer from Nova Scotia.
Senator Beyak: Senator Lynn Beyak, northwestern Ontario.
[Translation]
Senator Tardif: Good morning. My name is Claudette Tardif and I am a senator from Alberta.
[English]
Senator Plett: My name is Don Plett. I'm from Manitoba.
[Translation]
Senator Dagenais: Good morning; my name is Jean Guy Dagenais, senator from Quebec.
[English]
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
[Translation]
The Chair: Thank you, dear colleagues. For the first part of our meeting, we welcome Ms. Kirsten Hillman, Assistant Deputy Minister, Trade Agreements and Negotiations, Global Affairs Canada; Mr. Frédéric Seppey, Chief Agriculture Negotiator, Trade Agreements and Negotiations, from Agriculture and Agri-Food Canada; and Mr. Jason Flint, Director, Policy and Regulatory Affairs Division, Pest Management Regulatory Agency.
[English]
Kirsten Hillman, Assistant Deputy Minister, Trade Agreements and Negotiations, Global Affairs Canada: Thank you, and good morning, everyone. I am happy to be here today with my colleagues.
Before my other colleagues address you on market access priorities in relation to the Canadian agri-food sector, I am going to be providing an overview of the status of Canada's current trade negotiation agenda and initiatives. In particular, I would like to highlight today the work we are doing to advance the priorities that are identified in Minister Freeland's mandate letter: implementing the Canada-European Union Comprehensive Trade Agreement, the CETA, as it is called; implementing our bilateral agreement with the Ukraine; the modernization of two FTAs we recently completed with Chile and with Israel; and consulting Canadians on the participation of Canada in the Trans-Pacific Partnership.
We are also working to expand trade in fast-growing markets, namely India and China, and we pursue a number of initiatives in the multilateral forum of the World Trade Organization. I will touch on those briefly, as well.
[Translation]
With our trade policy initiatives, Canada seeks to open new markets for Canadian goods and services, and to provide stable and transparent conditions that allow Canadian businesses to compete internationally. We do this through a range of trade policy tools including: multilateral negotiations at the WTO, bilateral free trade agreements, and regional agreements.
A core priority of the government is to bring into force the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA. The EU represents the world's largest integrated market, with a $20-trillion economy and more than 500 million consumers.
On February 29, Canada and the EU announced the completion of the legal review of CETA. The legally-reviewed text is now being translated into French and other EU treaty languages. This should be complete in the coming weeks, which will then allow us to move forward with our respective domestic ratification processes. Canada and the EU are both committed to seeing CETA signed in 2016, and to its entry into force in early 2017.
We are also working to bring the Canada-Ukraine Free Trade Agreement, or CUFTA, into force on a priority basis. The conclusion of negotiations in July 2015 represents a significant milestone in the Canada-Ukraine bilateral relationship and reinforces Canada's broader engagement in the Ukraine. Canada and the Ukraine are nearing completion of the legal review of the negotiated text, along with translation into French and Ukrainian. Once this step is completed, the text will be prepared for official signature.
[English]
Canada and Chile also concluded last year a modernization of their bilateral treaty that dates back to 1997. Since 1997, we have broadened and modernized that agreement on several occasions. Most recently, Canada and Chile concluded negotiations on two new chapters, one dealing with technical barriers to trade and one dealing with sanitary and phytosanitary measures. Both chapters have importance specifically with respect to agricultural trade. We also made some amendments to the chapter on government procurement. We are working with Chile toward implementing that agreement, which, again, is identified as a priority in Minister Freeland's mandate letter.
Let me now turn to Canada and Israel.
Once the Canada-Israel modernized FTA is in force, virtually 100 per cent of our agricultural and agri-food trade with Israel will become duty-free, as well as fish and seafood exports — either duty-free or preferential trade.
The timely signature and implementation of that agreement is also a priority. Parties are completing the legal review of the text and the final translation, and then we will be working toward our domestic ratification processes.
With respect to the Trans-Pacific Partnership, the TPP negotiations concluded on October 5, 2015, and the agreement was signed on February 4 of this year in Auckland, New Zealand. According to the terms of the TPP agreement, it will enter into force two years after signature, if all parties have completed their domestic ratification processes.
In Canada, the government has undertaken a broad process for consulting Canadians on the merits of the TPP before considering whether to proceed with ratification. Since November, the government has had over 250 interactions with over 400 stakeholders and has received over 20,000 letters, emails and comments via the consultation process. As I'm sure you're aware, the House of Commons Standing Committee on International Trade is also holding consultations across the country with regard to the Trans-Pacific Partnership.
In addition to these specific trade instruments that are under negotiation in various stages of implementation, Minister Freeland's mandate letter calls on the government to look at opportunities to expand trade in fast-growing markets, in particular in India and China.
In China, we are taking a rigorous step-by-step approach toward determining how we can deepen that relationship.
In India, discussions towards a trade agreement were launched in November 2010. Nine rounds of negotiations have been held to date. We have also been negotiating a bilateral investment treaty with India since 2004. Work remains to be done on both of those initiatives. In addition to formal negotiated agreements, we are also looking at a variety of other ways to deepen and broaden our trade with this important market.
Finally, I would like to take the opportunity to update you on Canada's activities at the World Trade Organization. The WTO is the global community for international trade rule making, and it's really the cornerstone of most countries' trade policy. There are many trade interests which can only be addressed effectively at a global table, for example, domestic support and export competition, which are core areas of interest in agricultural trade.
The WTO also remains critical for enforcing our rights, as we saw through the success of our long-standing country- of-origin labelling disputes with the United States which relate to beef and pork.
At the December 2015 WTO Ministerial Conference, all 162 WTO members agreed on a modest but important package of changes. In agriculture, the WTO agreed to eliminate export subsidies, tougher rules on international food aid and stricter rules on export credits and guarantees. All of these developments will create a more level playing field for Canadian agricultural exporters in foreign markets.
To assist in a smooth transition for some of these changes, Canada, along with Norway and Sweden, also negotiated the flexibility to eliminate export subsidies by the end of 2020, giving a bit of time to make that transition rather than immediately, which other countries have done.
[Translation]
Moreover, at the 10th Ministerial Conference, WTO members also concluded negotiations on the expansion of the plurilateral Information Technology Agreement.
Finally, two other initiatives should be highlighted. Canada is also committed to concluding negotiations on both an Environmental Goods Agreement and the Trade in Services Agreement. That is an overview of all the important initiatives we are working on at this time.
Now, I will pass the floor over to my colleague Mr. Seppey. After the presentations, I will be pleased to answer your questions.
The Chair: Thank you very much, Ms. Hillman. Just before giving the floor to Mr. Seppey, I would like to introduce three members of the committee who have just joined us: Senator Pana Merchant, from Saskatchewan; Senator Victor Oh, from Ontario, and Senator André Pratte, from Quebec.
Frédéric Seppey, Chief Agriculture Negotiator, Trade Agreements and Negotiations, Agriculture and Agri-Food Canada: Honourable senators, I appreciate the opportunity to be here today and speak to you in the context of your ongoing study of international market access priorities for the Canadian agricultural and agri-food sector. This is my second time appearing in front of this committee on this topic, the first time being at the launch of your study in November 2014.
I am going to focus more on the agricultural issues, so as to provide information complementary to Ms. Hillman's general presentation.
In terms of trade, Canada was both the world's fifth largest exporter and importer of agricultural and agri-food products in 2015. The total value of Canada's agricultural and agri-food exports was $56.5 billion in 2015 — an 8 per cent increase from 2014. Over half of Canadian agricultural production is exported, making it evident that international markets are critical to the success and growth of the sector.
As a major agricultural supplier, Canada is seeking a fair and more open international trade environment for Canadian producers, processors and exporters, while working to protect and advance the interests of Canada's agricultural and agri-food sector.
Our efforts are particularly focused on maintaining and improving access to established and new markets, including large, fast growing markets like China and India. Secondly, as Ms. Hillman mentioned, we work at the multilateral level to agree to a reduction of, and disciplines on, trade distorting domestic support, and the elimination of all forms of export subsidies. Third, we advocate bilaterally and multilaterally for the use of science-based approaches to trade, regulations and international standards.
Through our international efforts, we are seeking outcomes that will be beneficial for Canada's entire agricultural and agri-food sector. As such, we are aiming to strategically improve the competitiveness and trade opportunities for export-oriented industries, and to support supply management at home.
[English]
In advancing these strategic objectives, Canada uses a range of trade policy tools. These include the development of international trade rules, and trade promotion and market development; with that goes the preparedness of the industry to tackle the opportunities created by free trade agreements. We have efforts on advocacy. We have bilateral technical discussions that involve our colleagues from the Canadian Food Inspection Agency or the Pest Management Regulatory Agency. And if we have no other choice, we use international litigation.
First, in terms of open and fair trade rules, these are either developed at the World Trade Organization or through bilateral and regional free trade agreements, or they are set at international standard-setting bodies. These are essential for an open, medium-sized economy like Canada's.
The WTO remains a very important forum for Canada, especially when we look at agricultural and agri-food interests. As Ms. Hillman pointed out, there are no other places where we can achieve an ambitious agricultural outcome on issues such as domestic support and create a level playing field in terms of rules.
There is continued interest from Canada and other WTO members to discipline the use of export financing support. These issues are important to Canada, as other members' policies can have a negative effect on Canada's competitiveness in the world agriculture market.
Canada's bilateral and regional trade agreements also provide predictable trade rules and mechanisms to discuss and address issues with trading partners. Canada's trade agreements, enforced, signed, concluded or currently being negotiated, already cover 75 per cent of our exports in the area of agricultural and agri-food in 2015.
As an illustration, in the case of the Canada-European Union Comprehensive Economic and Trade Agreement, when it is fully implemented, over 95 per cent of the European Union's agricultural tariff lines will be duty-free for Canadian products, including for key export products such as meat, grains, oilseeds, fruits, vegetables and processed foods.
Also, if implemented by Canada, the Trans-Pacific Partnership would increase market access to established markets such as Japan, as well as fast-growing markets like Vietnam and Malaysia, providing some form of preferential market access to agricultural and agri-food products of export interest to Canada, such as beef, pork, canola oil, wheat, barley, pulses and processed foods.
Canada is also actively involved in the work of international standard-setting bodies such as Codex Alimentarius, the International Plant Protection Convention and the World Organisation for Animal Health to ensure that the standards for international agricultural trade are based on scientific and risk-based evidence.
A second tool we use to promote the agricultural and agri-food sector's interests is trade promotion and industry preparedness, specifically assisting Canadian industry to take full advantage of the free trade agreements that we negotiate on their behalf.
For example, in light of the future ratification of the Canada-European Union Comprehensive Economic and Trade Agreement, Agriculture and Agri-Food Canada is developing a wide range of products to prepare industry to succeed in the European market once CETA is fully implemented. Our aim is to provide exporters with an integrated set of tools to help exporters benefit from the opportunities created by CETA.
In addition, Agriculture and Agri-Food Canada's AgriMarketing Program provides support for the agriculture industry to expand markets and seize opportunities through the provision of contribution funding for projects, which allows the industry to implement long-term international strategies that they develop. The market development stream of this program is focused on building and promoting Canada's ability to expand markets. Promotional activities help position and differentiate Canadian products and producers and ensure they meet market requirements.
A third tool to advance the agricultural and agri-food sector's interests is advocacy, in other words, using our extensive network of diplomats around the world. AAFC puts significant efforts towards advocating bilaterally and multilaterally for the use of science-based approaches to trade, regulations and international standards.
The application of non-science-based factors in countries' regulations and policy also could lead to significant trade disruptions. For example, differences in regulatory approaches to biotechnology and approval processes and the lack of timeliness and predictability in product approvals can result in situations of asymmetric approvals of genetically engineered crops. Delays in approvals can create considerable trade risks for exporters. Two of our most important markets, China and the European Union, have posed particular challenges in this regard with slow, unpredictable and inconsistent approvals for GE crops. AAFC is using, therefore, all mechanisms at its disposal, working with federal partners, including senior level engagement, to press key partners, including China and the EU, to adopt science-based, predictable and timely approval processes.
[Translation]
Bilateral technical discussions with trade partners constitute the fourth means Canada uses to promote the interests of the sector. Those discussions and the bilateral working groups have proven a useful forum to strengthen cooperation and working relationships between regulatory organizations in Canada and abroad.
The work of two technical working groups that the CFIA has established with its counterparts in China, and which Mr. Paul Mayers represents, relates to plant and animal health and is a specific example of the positive results obtained through bilateral discussions. Canada now has access to the Chinese market for both British-Columbian fresh cherries and fresh blueberries and Canadian bovine genetics to China, for example.
Moreover, CIFA technical experts, including veterinarians, are also posted abroad including in key markets like China, Japan and India to allow the delivery of on-the-ground, timely responses to market access issues, and further develop the working relationship between our regulators.
The fifth and final tool that I will speak about is litigation. Whether at the WTO or in the context of free trade agreements signed by Canada, there are dispute settlement mechanisms that can be a critical tool in defending Canada's agricultural interests. For example, in the case of the WTO, trade challenges, even if they constitute a measure of last recourse, when WTO members do not respect their trade obligations, can be particularly useful tools.
Take, for example, the United States country of origin labelling requirements which discriminated against Canadian cattle and hogs in Canada. These requirements had major financial consequences for Canadian producers. In December 2008, the Government of Canada initiated a WTO trade challenge of the U.S. COOL measures. Since then, the WTO ruled in Canada's favour four times and in December 2015, granted Canada retaliatory rights. While the U.S. repealed COOL requirements recently for beef and pork, we continue to work closely with American authorities and to monitor the situation to ensure the discrimination is removed from the American marketplace and that new restrictive measures are not adopted in the U.S.
In closing, I would like to re-emphasize the importance of the close collaboration between federal market access partners, the provinces and industry in the joint efforts to promote trade and maintain and expand market access in international markets.
Jason Flint, Director, Policy and Regulatory Affairs Division, Pest Management Regulatory Agency, Health Canada: Thank you, I am very pleased to appear before you today to discuss how we, at Health Canada's Pest Management Regulatory Agency, support our colleagues at Agriculture and Agri-Food Canada and Global Affairs Canada in their efforts to advance Canadian agricultural export interests abroad.
[English]
As the branch of Health Canada responsible for regulating pesticides at the federal level, our mandate is to protect human health and the environment. We do this by registering pesticides only after we are satisfied that a science-based evaluation confirms the risks and values are acceptable by re-evaluating older pesticides on a cyclical basis and by conducting compliance and enforcement activities.
You have heard previous witnesses voice their concerns with maximum residue limits, MRLs, and how they can impede the free flow of goods to export markets. MRLs are food safety standards that are set as part of the pre-market assessment process prior to the registration of a pesticide. They represent the maximum amount of residues expected to remain in or on food products when a pesticide is used according to label directions, and they are only established if our analyses show that the use of the pesticide will not be a concern to human health.
The science-based MRLs which Health Canada establishes ensure the food Canadians eat is safe and the processes to establish MRLs follow the same approach as most developed countries. Other countries that do not have the capacity to establish their own MRLs may rely on the work of the Codex Alimentarius Commission, which is an international food standard-setting body established by the World Health Organization and the United Nations Food and Agriculture Organization. The Pest Management Regulatory Agency, PMRA, supports Codex by providing exports in toxicology and residue chemistry to conduct independent assessments of scientific studies and recommend new MRLs.
As the lead for the Canadian delegation at the Codex Committee on Pesticide Residues, one of our roles is to ensure that Canadian priorities are put forward and adopted by that committee. It is within this context in recent years that we have been working closely with our colleagues at Agriculture and Agri-Food Canada and Global Affairs Canada to explore ways of working with Canadian stakeholders.
We continue to encourage growers to clearly communicate their priorities to us but, more importantly, to engage with the pesticide manufacturers who are the ones generating the information required to establish Codex MRLs.
We acknowledge that potential trade barriers that may be caused by MRL differences are a concern, and we recognize ongoing work is required to advance Canadian interests.
[Translation]
While our primary objective is ensuring that the food Canadians eat is safe, we will continue to engage on the issue of food safety standards internationally at Codex, other multilateral institutions, and bilaterally, we will continue to provide technical support to AAFC and Global Affairs as they seek to facilitate the free global movement of safe and healthy Canadian food.
[English]
Mr. Chair and honourable senators, thank you for your time.
[Translation]
The Chair: Thank you, Mr. Flint. For the first round of questions, I want to request that senators ask short and specific questions, since everyone wants to have a chance to take part in the debate. I also ask the witnesses to answer in a concise and specific manner so that all of the senators around the table have an opportunity to ask their questions.
[English]
Senator Mercer: Ladies and gentlemen, thank you very much. This is a smorgasbord of the important people who support trade in Canada in the agricultural sector. I am excited to have everyone here.
Ms. Hillman, you mentioned 250 interactions with Canadians on the TPP. What is an interaction? How many people does that involve? How many people have we actually talked to and consulted? And, of course, more importantly, what has the feedback been?
Ms. Hillman: Since November, we have had a variety of different ways in which there are communications with Canadians. For example, Minister Freeland and many of her cabinet colleagues, including Minister MacAulay and others, have had meetings one on one with groups of interested Canadians from different sectors — agricultural, industrial, organized labour, think tanks, automotive — a variety sectors. Minister Freeland has also gone across the country, visiting folks from coast to coast. Parliamentary Secretary Lametti has also taken on some of this role travelling the country.
So there are face-to-face meetings with a variety of different groups of Canadians. I, too, have had — sometimes with the minister or certain ministers and others — meetings with Canadians to talk about the Trans-Pacific Partnership, to hear their views and answer their questions.
There have been some town halls. There was one recently in Montreal on Monday; Minister Freeland and I participated in a town hall open to the public —
Senator Mercer: How many people showed up?
Ms. Hillman: It's going to be a guess on my part, but around 200. Of my 400 Canadians, 250 is closer to 600 now if we count all those people.
There was a town hall in Vancouver and one planned for next week in Toronto.
There is a variety of different formats. We also have a web portal with Global Affairs Canada through which individuals can send questions and comments. Those are of a different nature. Some are just comments — particular views of Canadians on the agreement. Many of them are also specifics questions: "I'm an exporter with an interest in exporting product X to Vietnam. Can you tell me how the Trans-Pacific Partnership will or won't help me?'' We answer those questions. If they are just presenting views and aren't asking for any additional information, we take note of those or log those. That's the scope of that.
And the parliamentary committee, as you know, is studying the Trans-Pacific Partnership.
Senator Mercer: And I'm sure you're monitoring every word we say at this committee.
Ms. Hillman: And I appeared before the Trade Committee a couple of months ago. I think some of you were there.
Senator Mercer: Mr. Seppey, you mentioned in your presentation continued interest from Canada and WTO members to discipline the use of exporting finance support — in other words, subsidies?
Mr. Seppey: Thank you for that question. There are different ways that countries help their agriculture sector in a way that can be — not always, but can be — trade-distortive. One is by paying subsidies to their farmers to offset some of their costs, domestically. That's what we refer to as domestic support.
Another way is that some countries are helping their exporters to be especially competitive in foreign markets. One way of doing that is through export subsidies. As Ms. Hillman indicated, as a result of the tenth WTO ministerial meeting held in Nairobi in December 2015, these export subsidies are being prohibited immediately for all developed countries such as Canada. Canada managed to negotiate some flexibility to transition or phase out our export subsidies with respect to dairy; we have five years to do that, and we are working with the dairy industry to manage the transition.
But there are other forms of what we call export competition elements that can affect things.
My intervention was making reference to export financial guarantees. The best illustration of this is where a country would provide state-backed, very generous financial guarantees when you export to foreign markets, be it a market that is very risky, for example, and where a company may not have access to very favourable guarantees if it —
Senator Mercer: Do you have a specific example?
Mr. Seppey: Yes, I can give you an example of a measure of another country that is detrimental to our interests. The U.S. has GSM-102, which provides extremely favourable terms of credit to U.S. exporters in foreign markets. This is much more generous than what the Export Development Corporation is providing in Canada. That's an illustration.
But there are other ways. One is the way some countries are providing their international food aid. It may have a significance effect by requiring that the recipient countries of food aid procure goods in the donating country, for example. That can have a significant impact on trade.
Senator Mercer: You also mentioned litigation in your presentation. You didn't get specific there, but I want to get specific. Where are we in the negotiations of another softwood lumber agreement? Who is the lucky person to have that file?
Ms. Hillman: That's me. The 2006 Softwood Lumber Agreement expired last year. We are in a period of what's called a litigation standstill, providing a 12-month period that will expire in October of this year where we can seek to negotiate a new agreement.
Back when the former agreement expired last October, Canada sought to roll it over, to renew it. The United States was not interested in doing that. Therefore, we undertook a very extensive consultation at the request of the minister at the time with Canadian provinces and industry across the country. We asked if they wanted us to go back to the negotiating table and try to negotiate. There was an overwhelming and virtually unanimous view that we should do that.
Since then, we have been seeking to negotiate a new agreement with the U.S. To be very frank, we have a lot of work left to do; we are not on the verge of concluding an agreement.
That being said, what we do have now is a very significant commitment politically from the United States. This was underlined —
Senator Mercer: But that's from the Obama administration.
Ms. Hillman: Yes. When Prime Minister Trudeau went to Washington in March, this was a major feature of their bilateral discussion. I don't know if you followed it, but it was one of the first things they said jointly after in the press conference that they would be working toward. In fact, they tasked their ministers and officials to report back in 100 days on progress. Those 100 days are up at the end of next week, and we have made progress. We have had a number of discussions, but we are still far apart on some important areas of the conversation.
Senator Mercer: My final question also relates to softwood lumber. Do we anticipate a challenge from American industry — using our money that we left on the table the last time we signed an agreement? There was some money left in the United States. I've always maintained that it was kind of us to fund paying for their lawyers to challenge us again in the future.
Ms. Hillman: If we do not succeed in renewing or renegotiating a new agreement, the chance of the United States industry petitioning their commerce department for duties against Canadian lumber imports is very high.
Senator Ogilvie: In the first round, I have two questions that deal with clarifying comments that have been made before this committee or in documents that we received during this study. My first one could go to Mr. Flint, Ms. Hillman or Mr. Seppey. I'm going to direct it, I think, to Mr. Seppey.
It deals with the maximum residue limit issue. I have recognized information during this process that suggests that there are countries that put in an arbitrary limit on maximum residue — zero being the number — and we know with today's analytical techniques that it's impossible to find zero residue. You can name any compound in the world you want, and you will find above zero. It may be in parts per trillion, but it won't be zero.
Can you clarify to what degree is this arbitrary use of non-trade barrier regulations a real, negative impact on the international trade of Canadian farm products, grains and so on?
Mr. Seppey: Thank you, senator. I will start, and perhaps Mr. Flint will want to answer because he's working very closely on these issues.
You identified the nature of the problem very well in terms of maximum residual levels. Zero is very difficult to achieve on any product. Also, it's important to recognize that there are different reasons why a product, a pesticide in this case, is not necessarily approved in a country and yet is approved in another one. It can be for safety reasons. It can be because the developer of that pesticide has not seen the economic value of registering a specific pesticide in a given market; hence, that product is not yet authorized. So it's not necessarily for safety reasons.
This is the impact that a zero tolerance on any type of residue can have as a significant trade barrier. That's why we work closely at the federal government level with a wide range of industry interests, to see how we can address in practice a regulatory issue that in itself is very complex. You will have a maximum residue level. You can have a maximum residue level for each individual pesticide in combination with each product that may contain that level, and the importance of the MRL may change depending on the countries, given many factors.
Senator Ogilvie: Is this a problem for Canadian trade?
Mr. Seppey: It is one of the top priorities when we speak of foreign regulatory measures that affect trade. In my intervention, without talking about maximum residual levels, I made extensive references to the importance of science- based, evidence-based approaches and the importance of international standard-setting bodies such as Codex, which is where the issue of the harmonization of MRLs among countries ideally would have one MRL applying for all the countries. This is a very tall order in terms of objectives, but this is why we're working very closely, regulators to regulators, as well as within international standard-setting bodies.
Senator Ogilvie: I understand all the technology. I understand all the jargon. My question was simply, how significant is this? You've answered it. It's a significant issue.
Mr. Seppey: Absolutely.
Senator Ogilvie: Thank you very much. I'm going to direct this to Mr. Mayers. We have heard a number of times that false labelling on food products is a major issue. I will take one example, and that is spent chicken, which seems to be a very significant issue. The label on the product is spent chicken. In fact, it's not. It comes in, is repackaged and sold within the Canadian market. This is an import issue.
Having crossed the border by auto many times, I see the lineup of trucks coming and going on both sides is enormous. To what degree do you feel you have adequate capability to inspect at the border with regard to the validity of the labels on food products entering this country? What is the major challenge you see facing your organization in maintaining the effectiveness of Canada's regulations within our trade agreements in this area?
Paul Mayers, Vice-President, Policy and Programs Branch, Canadian Food Inspection Agency: Thank you very much for the question. To clarify, the Canadian Food Inspection Agency doesn't carry out inspections at the border. Our colleagues at the Canada Border Services Agency carry out those inspections on our behalf in terms of our food legislative and regulatory framework.
The issue of labelling is an important one, and there are distinctions with respect to the issues of labelling. The legal requirements for labelling are significant. They require that products be presented in a manner that's truthful and not misleading. However, some issues, such as the issue of spent fowl, are really a tariff management issue as opposed to a consumer labelling issue, because of course the product is not presented to consumers as spent fowl.
I don't know if any of my colleagues from Agriculture or Global Affairs would like to comment specifically on the spent fowl issue, but that is not a labelling issue. It is an issue of tariff in that specific example.
We do, however, see very significant issues in terms of the representation of products. You may have noticed in the media this week a very significant charge to a company that was presenting imported product as product of Canada with a resultant fine to that company for that behaviour. That is an action that the Canadian Food Inspection Agency pursued successfully.
We have the resources and the focus to address those issues which fall within the context of the labelling requirements of the Food and Drugs Act and the Consumer Packaging and Labelling Act. However, as I said, some of the issues, such as spent fowl, fall outside of those particular pieces of legislation that the agency delivers.
Senator Ogilvie: Thank you, Mr. Chair. I think I didn't ask the question quite the way I should have. May I go on the second round?
[Translation]
The Chair: Next week, we will hold a special one-hour meeting with border officers on the topic you have raised, Senator Ogilvie, to clarify the situation, so that we can all leave in July with the correct information to contribute to making our report more interesting.
Senator Dagenais: I want to discuss trade agreements with Ms. Hillman. There is the Trans-Pacific Partnership Agreement and the agreement concluded with the European Union. You know that these agreements have triggered reactions from processors, such as cheese manufacturers in Quebec, who are feeling a certain pressure as to prices that may affect the supply management system in Canada, and I am referring to the problem of diafiltered milk.
Do you not think that the trade agreements that will be signed will exert pressure on the supply management system we have in Canada, which keeps the prices of dairy products, poultry, eggs and other Canadian products artificially high for consumers? People travel outside the country and realize that when they cross the border, dairy products are much less expensive, as are poultry and eggs.
I would like to hear your opinion on this; do you believe that trade agreements will exert pressure on supply management in Canada, and whether at some point we will have to change the supply management system, because they do inevitably exert this pressure?
Ms. Hillman: I am going to reply on the negotiation policy in general, and I will then give the floor to my colleague, Mr. Seppey, if he wants to add comments on those industries in particular. As for our negotiating policy, since NAFTA, we recognize that Canada has a mixed agricultural industry, that is to say that there are sectors seeking export markets and other sectors managed with supply management, who made other choices. Their choice was to organize with a system that does not look for export markets. The consequence is that, to keep the system in place, we have to protect imports, which we were able to do in CETA and the TPP. We have always been able in these negotiations to present things to our interlocutors to find a way of protecting the interests of the export agricultural sector, while keeping intact the supply management system for the sectors that have chosen to maintain it.
It should be said that all of the other countries or other groups of countries who negotiate with us also deal with different realities. They want more exposure for some of their sectors on the international scene, while they want to protect others that are more fragile. Please be assured that we are not the only ones to react according to that dynamic.
However, perhaps it would be best to put the question to the various sectors, but in my opinion, we have always managed to find the balance that works well for the entire Canadian agricultural sector.
Senator Dagenais: Thank you. Mr. Seppey?
Mr. Seppey: Ms. Hillman aptly described the way international negotiations proceed. However, I want to add two things. First, throughout both the Canada-EU agreement and Trans-Pacific Partnership negotiations, I was responsible for the agriculture component. We worked very closely with those sectors to understand their situation, in case we needed to make market access commitments to finish the negotiations. Also, in the event of arbitration, we needed to be able to preserve the sectors' ability to keep developing and prospering. In Canada, we have certain tools to make the transition as smooth as possible.
Under the free trade agreement with the European Union, as you said, we anticipate the Canadian market will show greater interest in European cheeses. Ms. Freeland, Minister of International Trade, and Mr. MacAuley, Minister of Agriculture, said the sectors affected by the market access commitments would be consulted. Since May 2, Mr. MacAuley has attended many meetings with producers and processors throughout the country. I and two members of his team also attended the meetings.
We are working on developing ways to help the sector deal with the transition and prepare for the increase in cheese imports, once the agreement is in place.
The work involves the modernization of our dairy processing sector and other support measures to encourage innovation at the farm. These measures have been established with the industry, provincial governments and federal government to mitigate the impact of the transition while enabling us to participate in the agreements.
From Canada's perspective, and considering the beef or pork sectors mentioned earlier, the Canada-EU agreement presents incredible potential for future growth.
Senator Dagenais: Do you think, sooner or later, the trade agreements will affect the prices consumers pay for Canadian products?
I am referring to milk and poultry products, among others. Like it or not, the signatory countries will eventually want to bring their products onto the Canadian market. Compensatory measures may be implemented, but the fact remains that consumers are currently paying high prices. Will the different trade agreements lower the prices of various goods?
Mr. Seppey: I am an economist by training, so I must first determine whether participating in free trade agreements would be beneficial. The benefits would include lower border transaction costs, which would have a positive impact for consumers.
In general, if a free trade agreement is in place, the Canadian food or manufacturing processing inputs are lower. Since you are importing, the competition is increased, so lower prices can be anticipated.
However, the fact remains that, in the supply management sector, the market rules are slightly modified. They are not market rules in the purest sense. However — and I believe some witnesses pointed this out — let's compare, for example, the price of milk in countries like Canada, which has a supply management system, with the price in countries like New Zealand or Australia, which have very liberal systems. The consumers in those countries do not necessarily pay less for milk products, even though the countries are leading producers and major world exporters.
This shows that it's difficult to attribute a product's price to only one factor. However, free trade agreements are undoubtedly negotiated not only to pursue opportunities abroad, but also to help our manufacturing sector access a wider range of inputs at the best possible price.
[English]
Senator Oh: Thank you, witnesses.
With regard to our canola oil exports, the change from 2 per cent dockage or threshold due to blackleg fungus to 1 per cent will be implemented in some of the countries. This is going to create concern from the importers about contamination in their countries.
We were in China three months ago, and we talked about this. The issue has now been extended to September. I think there was a six-month extension when we were there in March.
What is the outcome now? Are we able to negotiate so that the canola oil can be exported continuously overseas?
Mr. Mayers: Thank you very much for the question. It's quite timely. I was in China just last week. Minister MacAulay was there. This was one of the items discussed extensively both at the officials level and by Minister MacAulay in terms of his meeting with the competent authority in China.
The issue is not yet resolved. We continue to work very diligently with China in collaboration with our colleagues in Agriculture and Agri-Food Canada and Global Affairs Canada. It is a very important issue for canola exporters from Canada for the export of canola seed for crushing. It's also an important issue for China for having access to Canadian canola seed to ensure that their crushers continue to be able to operate at capacity.
We believe the issue of managing the blackleg risk is effectively managed by the entire continuum of controls as opposed to simply through the expedient of a limit on dockage, but to take into account all of the risk mitigation measures.
We've been working very hard to explain the effectiveness of those mitigations to our Chinese colleagues. Indeed, they will be undertaking a mission to Canada in the coming weeks to see the entire continuum of controls in Canada. We understand the importance to them of protection with respect to the potential emergence of blackleg in their canola growing regions. As you know, canola for crushing is imported to non-canola growing regions in China.
However, there is the issue of finding an approach that respects their phytosanitary protection — which we agree should be respected — while at the same time being practical for Canadian canola exporters, and we recognize that an extremely low level of dockage is not practically achievable in terms of the supply chain management.
This work will continue with our Chinese colleagues on an urgent basis, given the September time frame to which we work, but it is not yet concluded.
Senator Oh: Are we able to do it from 2 per cent to 1 per cent in a timely way?
Mr. Mayers: The industry is very concerned about the practicality of a 1 per cent level. We are not at this time focused on simply moving to 1 per cent. Instead, we are looking at finding a reasonable solution that gives China the assurance it needs in terms of phytosanitary protection, while being practically achievable for Canadian exporters.
Senator Oh: What other countries are involved in this 2 per cent to 1 per cent?
Mr. Mayers: Australia is also facing the same issue in terms of an expectation on the part of China that they reduce the level of dockage.
In terms of the export of canola seed internationally, Canada is exporting canola seed at the current dockage levels quite safely into several jurisdictions. Those are not pressing for a change. The international practice in terms of trade in this product recognizes that it can be safely traded with dockage levels in the 2 per cent to 2.5 per cent range.
Senator Merchant: My question will go to you, Mr. Seppey. Thank you for being here with us this morning. This is in regard to GMOs. We talk about this all the time, and we Canadians say that we want people to look at the scientific basis. Are we able to overcome this issue? Is this an issue only with the Europeans? Are we the only country that has a GMO issue? Is this an issue in the TPP or with your other agreements that you are signing?
Can you maybe respond to that?
Mr. Seppey: I will speak generally, and perhaps Mr. Mayers can talk about the rigorous regime that we have for approval of GMOs.
In general, we are not the only country to use the biotechnologies — GMO being one of the approaches — in agriculture; there are at least 28 countries right now using biotechnologies, across all continents. It is quite prominent in Canada, the United States and Latin America in countries like Argentina. But it's also done within the European Union in countries like Spain and the Czech Republic, which are using biotechnologies for certain crops.
It's very important for Canada, because when you take a crop like canola in Saskatchewan, 95 per cent or more of the canola grown in Canada is from GE technology. It is very important.
In terms of the import markets, I would say it is not exclusively the European Union. It is an area of focus because of the relatively slow and unpredictable regulatory approval in the European Union that poses a number of challenges. But we have other markets where we have challenges and where we put our advocacy efforts.
To give you an illustration of how concrete barriers in the regulatory processes in other countries can pose a problem, I will use two examples. We have a number of types of GE soy that are in the late-stage process of approval in the EU, but it is not there yet. We had our soy growers in Canada waiting with a lot of anxiety before putting the seed in the ground. They were hoping that they would be able to get the approval in the European Union, because it affects the planting decisions.
Another example of the problem of lack of predictability is the fact that different countries will take different timelines to get approval. Some countries like China will require that before they even start the process of approving a crop in their country, it needs to have been approved in the country of export. If you have a country like China that has not yet approved a trait that has been approved in all the other markets, such as the European Union, the United States and Canada, that absence of approval in China is sufficient to prevent our farmers and our growers in Canada from planting that type of trait and benefit from that type of trait because of the risk of not wanting to have any traces of that unauthorized GE crop into China.
These are the types of challenges we face. That is why, given that we are a significant exporter of grains and oilseeds, we put so much effort toward this in that regard.
Senator Merchant: Is this also a consumer issue? When you travel in Europe and some other countries, the minute the consumer hears the word "GMO,'' they push back. Is it a bit consumer-driven?
Mr. Mayers: The consumer perceptions with respect to genetically modified foods differ from one market to the next. In the European Union, the issues related to GM and consumer perception related to GM are very different than the consumer perceptions in North America. North American consumers have been quite accepting of the technology in terms of their behaviour in the marketplace. I believe that contributes to the uncertainty in terms of how quickly approvals will occur.
If you look at the process the European Union undertakes in terms of reviewing and approving a GM crop, at its foundation it is exactly the same process that we use here in Canada: It's founded, as is ours, on the guidance provided by Codex Alimentarius with respect to the safety assessment of the products. But after the safety assessment, there is a further process in the European Union that involves the support of the member states, which introduces a fairly lengthy period. Consumer perceptions play into how quickly that process unfolds.
There are differences, and they do impact the timeline. What it doesn't change is the foundational basis in terms of whether the products present risk. It does, though, create tremendous uncertainties, as described, for trade.
Senator Pratte: I am curious about the Indian market Ms. Hillman mentioned. We often hear about China as an extraordinary market and the opportunities and challenges that it poses, but we hear less often about India, and the opportunities are huge. However, I suppose the challenges are also important.
I would like to know a bit more about the opportunities and especially the challenges, and if there are any that are different maybe from other markets.
Ms. Hillman: I can speak a bit to India generally. Perhaps Mr. Seppey will speak to agriculture in relation to India. I will leave that to him.
The Indian market is a dynamic market. There are a lot of opportunities for Canadian businesses and Canadian exporters in India, as well as for Canadian investors. We have significant investments into India, and we have a number of investors who are interested in expanding their investments. We have put priority — as I mentioned in my opening remarks — on a bilateral investment treaty to ensure stable, predictable investing environments for our investors.
Investment relationships are two-way, and we would welcome investment in Canada from Indian investors.
The trade negotiations have also been going on for a number of years now, as I mentioned. The challenges there are complex, because there are Canadian priorities that raise concerns for the Indian government. We tend to strive toward highly liberalizing agreements — what we call, in trade terms, very ambitious agreements.
As you have heard in some of our presentations, significant tariff reductions in all areas of export interests or tariff elimination is always our goal in any area of export interest — strong commitments for our service suppliers, that is, market access commitments in all areas of service supply. About 70 per cent of the Canadian economy is driven by services. This is the area of growth for us that we want to focus on as trade professionals. Everything else as well, but this is an area we are paying particular attention to.
It is important with any large and growing market to get strong, stable, enforceable rules with respect to services trade and then market access openings for our engineers, IT professionals, environmental professionals and any other kind of service you can imagine, even our major goods suppliers. A lot of their profits come from the services that follow goods trade.
India is not quite where we need them to be on that. There are other areas as well. We are working hard there. I think there is huge potential, but it will still take some time.
[Translation]
Mr. Seppey: As Ms. Hillman mentioned, the negotiation objective in general applies to agriculture. India is a country with major food requirements. Sometimes, it unilaterally reduces its tariffs to encourage imports at reasonable prices. It reserves the right to raise its tariffs, given its flexibility in relation to its international commitments. In agriculture, one of our goals is to ensure greater predictability for trade. To give you an idea of the volatility, I would point out that, in 2014, agricultural exports totalled only $900 million. Last year, they stood at $1.5 billion. Our exports increased by almost 50%. However, 95% of the exports were legumes, since they're part of the Indian diet.
We also want to diversify our exports, reduce tariff volatility and benefit from the growing middle class, who consume more processed and meat products. Regulatory cooperation is important for meat products. The CFIA and the Indian authorities have been working hard and have set more science-based rules for things like handling processed and meat products and detecting signs of animal disease.
Senator Tardif: My question is for Mr. Flint and Mr. Mayers. Our committee recently conducted a study in Calgary. Public hearings were held in which a number of witnesses from the agriculture and agri-food sector appeared before our committee. Some witnesses raised concerns about the loss of expertise and lack of resources at the Canadian Food Inspection Agency. They believe the lack of resources is generating delays and extra costs for the Canadian meat sector and for other agricultural products. Is the Canadian Food Inspection Agency lacking expertise and resources?
[English]
Mr. Mayers: The agency has the resources it needs to deliver on its responsibilities. We recognize that the pace of trade is increasing. For many industry sectors — and the meat sector is certainly one of them — the expectations with respect to the service that the agency provides are increasing. We provide services currently in regular business hours. The industry, because of just-in-time delivery approaches in terms of trade, is interested in more off-hour services, for example for certification of exports. We've indicated we are prepared to look at this as part of a review of our service standards. Our service standards are, of course, also associated with the fees we charge for those private beneficiary services. We will look at this issue as part of a consultation with industry with respect to our service standards and the associated fees.
However, we meet the mandated responsibilities of the agency with the resources we have. Of course, meat inspection is the most intense area of activity for the agency because every federally registered meat slaughter facility has a full-time CFIA presence. So every minute they operate, a CFIA person is there. That allows the industry to operate. We continue to deliver that service.
Some services, such as export certification, are demand services. The pace of industry requests relative to our demand can sometimes create this view that they would like more, which I fully understand on the part of the industry. They are looking at that, but we are looking at it in the context of our service standards.
[Translation]
Senator Tardif: We've heard about a shortage of inspectors. How many inspectors are there now compared with two years ago?
[English]
Mr. Mayers: The inspection staff in the agency has increased every year over the last five years. We report the field inspection staff of the agency annually. At the most recent report, we were just under 3,500 field inspection staff. That is the level of field inspection staff we have had previously. We have continued to see increases in those as a result of continued investment in the agency with respect to front-line inspection.
We do see fluctuations in our field inspection staff, largely as a result of the opening or closing of facilities. I mentioned meat inspection a moment ago and the fact that we have a full-time presence. If a plant opens, our staff goes up. If there is a new registered facility, we put staff in it. If a plant closes, our field inspection staff number will go down for a period of time because that staff is no longer required because of the absence of a plant.
We also see significant seasonal fluctuation in our field inspection staff. That seasonal fluctuation is directly related to the seasonality of agriculture.
Senator Tardif: Among the field inspection staff, how many would be meat inspectors?
Mr. Mayers: Meat inspection, as a proportion of field inspection staff, is somewhere around 50 per cent.
Senator Tardif: There is an increased demand for expert certification. With all of the agreements that will be signed and the TPP if it comes forward, there will be greater expectations. You will need increased staff. How will you meet that need?
Mr. Mayers: The agency is undertaking a significant modernization and transformation of its inspection delivery in order to increase the overall efficiency in how we deliver the program and in our approach for delivering the program.
A major component of that effort is an electronic service delivery platform. We currently manage export certification on a paper basis. Moving to an electronic service delivery platform, and importantly electronic certification, will allow us to deliver the services without a significant increase in the human resource complement.
Senator Tardif: Thank you. I encourage you to do the review as soon as possible. We have heard many concerns about the whole inspection issue.
Senator Beyak: Thank you for your presentations and your expertise. As witnesses have come to our committee over the past couple of years, the praise has been overwhelming for the trade agreement. Thank you for the hard work you have done on this. There are concerns, as always, but Canada is renowned for the professionalism and the way you have protected our industries.
My question is about the TPP and the consultations you are doing. There are 35 million Canadians, and 20,000 is impressive, but I think the support was quite good when it was announced. In the past when others have been ratified, Canadians have been overwhelmingly supportive, too. What are the challenges and the concerns you are hearing for the most part?
Ms. Hillman: Thank you very much for the question. The comments that we are hearing fall into a few different categories.
There is a certain category of comments that relate to the process of negotiations, and certain individuals in civil society feel that the negotiations were not as open and transparent as they would have liked. There are others who have made that comment, too, but it largely, I think, comes from public civil society, academics, some organized labour groups and a few others who make that general comment.
In the business sector, such as the industrial and agricultural sectors, we find that Canadians have mixed views. All of our large export-oriented industries and sectors and the associations that represent them are fairly firmly supportive of the TPP. That includes both goods and services and sectors of our economy that are investors abroad. They are broadly supportive. There are some geographical dynamics, too. B.C. and the West in particular are very strong, but Quebec, Ontario and the Maritimes and the fish and seafood sectors are very supportive across the country.
We are hearing that, but we are also hearing some elements of the Canadian business sector that have concerns or mixed views. In particular, the auto sector has mixed views. There are some within the sector who are looking forward to opportunities for export in the region, and there are others that are concerned about increased competition from Japan, in particular, as our tariff goes down but also concerned about effects of the integrated North American supply chain for auto manufacturing and whether or not this will cause concerns there and perhaps be a disincentive to reinvestment in the auto sector. That is a more mixed picture.
With respect to the agricultural sector, we talked a bit about that here today. One segment of the agriculture sector is very enthusiastic. As for the supply managed sector, my perception is that the sector is accepting of the TPP outcome, as they always have been in trade negotiations, understanding that provided that the supply-managed system is maintained and the government takes responsibility for assisting them in dealing with the changes that may come. They are helpful partners and well engaged in the overall benefits for the Canadian economy. That is my experience. We found them to be very engaged and constructive partners, from my perspective.
Moving outside of commercial interests, there are general concerns with certain features of trade agreements. We often hear concerns about investment rules and, in particular, the investor-state dispute settlement, which is this particular mechanism whereby foreign investors can challenge Canada or another country that is party to the trade agreement for non-enforcement of some of the rules in the treaty with respect to investment protection. That tends to be an area of considerable concern in some communities because there is a view that that will allow foreign interests and foreign companies to challenge Canadian regulation making in areas such as environment, labour or other social standards. That continues to be an area of concern and not just in the TPP. That is an area of concern, I think, with respect to trade agreements generally. We have it in the NAFTA, and it has caused concern.
Interestingly enough, in the CETA, most recently when it was brought to conclusion, we succeeded in working with the Europeans to make some important changes to that particular chapter in response to these concerns, to reinforce the government's right to regulate and to reinforce that these issues are not subject to challenge. That, I think, was very helpful. We worked with the Europeans to also tighten up the dispute settlement process itself.
Beyond that, there are concerns with the IP chapter in some quarters. Under the TPP, if it comes into force for Canada, we would extend the term of copyright protection by 20 years. Some have had concerns about that. That, again, is mixed, so those who own the copyright are pleased with the additional protection, but those who want to use the material are less pleased with that.
In IP there are always concerns around patents, public health and drug costs and concerns that drug prices could go up; that is a vigorous conversation with the government. There are a number of levers in place to deal with drug costs. Patents are one feature, but there are many other levers at any government's disposal to deal with that issue.
Generally speaking, that is what we are hearing.
Senator Mercer: Mr. Mayers, I want to talk about the Canadian Food Inspection Agency and its interaction with inspections that happen at the border for imports as opposed to exports.
Many people in the agriculture sector are concerned, particularly people in supply management, about the inspections that happen at borders. You say you have 3,500 field inspectors. I know they are not at the border; they are out doing their job. We need to talk about the interaction between the CFIA and our people at the border who are interacting with the people bringing products in.
Is there an integrated training program so that CFIA is actually training border officials, saying, "Here is what you need to look for. Here are some concerns''? We have at least one or two good examples where honest mistakes were made at the border, which had a tremendous effect on supply management, dairy in particular, where a product was allowed in. It was assumed by people at the border not to be a dairy product, and indeed it was a dairy product. Now, because of that mistake, some supply-managed products are coming into Canada that weren't coming in before.
Tell me about the integration of training, or is there integration of training? If there is not, we should talk about that more.
Mr. Mayers: Thank you very much for the question. There is a high degree of collaboration. Indeed, CFIA organizes and delivers training to CBSA officials in order to support them in fulfilling their responsibilities on our behalf at the border, so we do carry out training for CBSA front-line officials at the border. We also work very closely with our colleagues in CBSA to support them in that delivery.
While CFIA doesn't carry out the front-line inspection at the border, CBSA can and often does refer to CFIA issues for further inspection in-country. We do that as a matter of routine, because the oversight of imports is a critical protection for Canada's people in terms of food safety and Canada's environment in terms of plant and animal health.
Therefore, for sanitary on phytosanitary protection, it's important that any questions about the safety of a product — for example, when an animal is presented at the border, that animal is first confirmed for entry by CBSA but then moves into CFIA oversight, where we will oversee the quarantine, et cetera, with respect to that product.
As it relates to product characterization for tariff purposes, as I noted, that's a different issue that doesn't fall under CFIA's authority, because it's not part of the acts and regulatory sets that we govern. So the issue of product classification at the border is quite different than our inspection oversight.
Senator Mercer: So you don't do that.
Mr. Mayers: No.
Senator Mercer: And Canada Border Services Agency doesn't do that. No one seems to do it. A practical example is spent fowl. If spent fowl is coming over and being described as one thing as it gets across the border and then, once across the border, is being sold as something else, which changes the price and profit margin for certain people in the chain, some of us think there should be spot inspections by CFIA, including testing of spent fowl, to determine what it actually is, the history of the animal before it's arrived at the border, et cetera.
I'm not suggesting that we take your 3,500 agents and put them all at the border, but you don't have to do a lot of spot-checks across all of our border sites before the word gets out to the people on the other side of the border who are breaking the rules that they could be next. Spot checks work.
Can you tell me whether there has been any discussion at all about using your agents to do some spot checks on certain products?
Mr. Mayers: My colleague can speak to the issue of tariff line oversight.
Mr. Seppey: How we address the issues related to supply management and ensuring effective border controls in order to ensure the effectiveness of supply management is really something that falls more under CBSA than CFIA, which can be called in for its expertise and where it can play a role, like with DNA.
Senator Mercer: But does the CBSA have the expertise?
Mr. Seppey: They rely when they need the expertise from other agencies; they work with the other agencies.
I want to step back, because you spoke about the treatment of dairy products at the border. We have two types of products that are coming at the border. For most products, we have no tariff or a very low tariff. For a few products under supply management, we have significant tariffs in place, because we need to have effective predictability of the imports. These products are on the Import Control List.
CBSA is an agency operating on a risk-based management system. They tend to focus their inspection where there is a risk of circumvention. I can tell you that with respect to any products on the Import Control List, be they dairy, poultry, egg products — they're especially attentive to make sure there are controls in place, and they do the appropriate spot check to ensure that the declaration — the product that is up for import declaration — is the right one.
On the spent fowl — and I understand that we would be called upon to appear before this committee next week — I can tell you that there's very intensive work involving all of the relevant federal agencies, including CBSA, CFIA, AAFC and Finance, to work at practical solutions with the industry for how to address this issue, namely, that there seems to be much more spent fowl imported into Canada than what has been the traditional trend over the years.
Senator Mercer: It seems that our American friends export well over 100 per cent of their spent fowl. That's good work if you can get it.
I'm surprised at your answer. I'm happy with your answer, and I think people in the sector will be surprised with your answer, but we'll wait for further witnesses to follow up.
Senator Ogilvie: I have another question for clarification of general information that has come before our committee, either direct or implied, and it has to do with GMO and the European situation.
I will stick with grains. Grains can either enter the human food distribution directly or enter the animal feed direction. We have heard that certain European countries have a ban on GMO products from entering directly into the human food chain market but do, however, allow GM grains to enter for animal feeds. Is that true, and, if so, which countries are they?
Mr. Seppey: I cannot provide you today the exact list of countries that have such an element, but we can definitely provide this information to the clerk of the committee.
But I can tell you that it is the case that the importation of GM crops for feed purposes is a fairly broad practice. The European Union is very dependent on imported grains for animal feed, and certain crops have a high degree of penetration by biotechnologies.
Senator Ogilvie: That's the answer I expected to hear. I just wanted it confirmed before the committee. I won't go into how fascinating I find this kind of approach, but thank you, Mr. Seppey.
[Translation]
Senator Dagenais: We studied bee mortality and noted a slight delay and even confusion concerning the approval of the use of certain pesticides. Do you have the same issues, or do you believe this situation could hinder the control you wish to have under international agreements?
[English]
Mr. Flint: I think you're talking particularly about the neonicotinoid pesticides that are registered — and others, yes — with respect to the study of the bees conducted by this committee last year.
There are varying approaches as to how people are dealing with the issue of the bees and the different pesticides that may be implicated in bee health. Bee health is a much broader issue than just the pesticides, but we are working with colleagues in France and the U.S. to try and look at the best way to address the issue of pesticides. Our colleagues at Agriculture and Agri-Food Canada are doing some of the work on the bee health initiative.
At the moment, there is not a concern with respect to trade agreements and those pesticides, but that could change in the future.
Senator Terry M. Mercer (Deputy Chair) in the chair.
The Deputy Chair: Before we move on to the next questioner, I want to go back to Mr. Seppey for a moment.
It was mentioned that there were a number of countries that would accept GMOs for animal feed. Could you provide that list?
Mr. Seppey: As I indicated, I don't have this information with me, but I will provide it to the clerk.
The Deputy Chair: And he will provide it to the committee. I didn't want that to slip by.
Senator Tardif: Mr. Mayers, in October 2015, the agency decided to lift the temporary emergency protocol that required the cleaning and inspection of empty swine trucks to be undertaken in the province of Manitoba. I understand, according to your agency, that the outbreak of porcine epidemic disease no longer requires an emergency response. However, just in May of this year, there was an incident of porcine epidemic diarrhea. Why did your agency remove the temporary protocol in effect?
Mr. Mayers: There has been a long-standing regulatory requirement that trucks returning from the U.S. after having transported swine must be cleaned before they enter Canada, and that requirement is in place because biosecurity at the earliest possible opportunity for intervention serves as an important protection against many animal diseases. There are a number of swine diseases that are present in the United States that are not present in Canada, and several of these diseases are what we call "OIE-listed diseases,'' so the World Organisation for Animal Health. I know it's not obvious that its acronym is OIE. However, these listed diseases, if they were to emerge in Canada, would result in significant restrictions on Canadian exports.
The requirement for the cleaning of vehicles returning from the U.S. is in place to protect Canada from the entry of these OIE-listed diseases. PED, porcine epidemic diarrhea, is not an OIE-listed disease, nor is it a reportable or notifiable disease at the federal level. It falls under provincial responsibility, and our provincial colleagues did an excellent job with respect to the management of PED events in Canada.
When the original emergence of PED in the U.S. occurred, concern was expressed by producers in Manitoba that truck washes on the U.S. side of the border in relation to two entry points into Manitoba were using recycled water in their processes. So there was a question as to the effectiveness of recycled water in terms of managing the virus.
Recognizing the scientific uncertainty, the agency agreed to implement the interim protocol that you referred to, which would allow the trucks to be washed on the Canadian side of the border.
We undertook at the same time to review the science with respect to the use of recycled hot water, and the results of that study then formed the basis for the action that we took. The result of the study showed that no evidence was available to suggest that recycled water would not work when used appropriately, meaning it reached a temperature above 60 degrees and was followed by an appropriate disinfectant.
As a result, we lifted the interim protocol, and we provided a transition period to May 2 of this year to give the industry time to adapt back to the existing regulatory requirements.
That's the practice and the reason why the interim protocol was lifted. It was put in place because of scientific uncertainty. It was removed after the scientific study was undertaken with respect to effectiveness. I note that the emergence of PED cases this year post the change back to the existing regulatory requirements is concerning and is being well managed by Manitoba. However, there is no evidence to date — and the investigation continues — that would link those cases to trucking.
We will see, and we follow and work with our Manitoba colleagues closely. However, I would note that even during the application of the interim protocol, four cases of PED occurred in Manitoba. Trucking alone is not the single risk factor. We take all of the evidence into account in making our decision.
Senator Tardif: Thank you for the explanation. I'm not sure that the swine industry in Manitoba is reassured at this point, so you may have some work to do in reassuring them that there is no concern.
Mr. Mayers: I absolutely agree. We have been very much engaged with the industry. We appreciate their point of view that they have greater confidence with respect to the truck washes available in Manitoba. They know them well, and there are good truck washes available in Manitoba. However, our concerns about disease much more broadly than PED and the importance of bio-security at its earliest intervention lead us to believe that the current regulatory framework is important.
However, we are not blind to the continued evolution of the science. As a result, an initiative has been started to review the biosecurity of animal transport in North America. The Council of Chief Veterinary Officers of Canada, so that is the Chief Veterinary Officer for Canada, who works in CFIA, along with the provincial chief veterinary officers right across the country, is currently undertaking that review, which will provide recommendations that might lead to advice with respect to any amendments to that existing regulatory framework.
Senator Merchant: I have a question regarding the country-of-origin label. Was that uniquely an issue with the U.S., or have you had the same issue with other countries? I know we have resolved it with the U.S., or is it in effect right now?
Mr. Seppey: Thank you, senator, for your question. The problem was specific to the United States because of the way they structured their mandatory country-of-origin labelling. You have a number of countries that have either mandatory or voluntary country-of-origin labelling measures. Australia is one example where they have that type of measure, and it hasn't yet generated the same types of concerns.
Our issue with COOL was very much the de facto discriminatory effect it had on our pork and beef producers, and we waited, working with Global Affairs Canada and other partners in the industry. We had to consider things very carefully. When you launch litigation, you have to extinguish all the other measures. We were careful in launching it, and it was specific to the specific characteristics of the U.S.
Last December, they abrogated some elements of their legislation, followed by related adjustment in the regulations in March. Right now, the discriminatory element has been removed. That's very positive. We welcome that element.
There is discussion among the members of Congress that perhaps they can reintroduce certain elements. That's why I mentioned in my remarks that we are following very closely through our embassy in Washington as well as direct contact to ensure that discriminatory elements of the COOL measures are not coming back through the back door.
Senator Beyak: You gave us very comprehensive details on all of the work with China, Israel, India, the United States and the European Union, and you mentioned Japan in a couple of the concerns. I wondered where we are with the Japan negotiation.
Ms. Hillman: Thank you for the question. Canada launched a bilateral negotiation with Japan before we joined the Trans-Pacific Partnership. That was back in March of 2012. We have had, I believe, seven rounds of negotiations with them, the last of which was in 2014. That is because we were negotiating with Japan bilaterally and at the table in the Trans-Pacific Partnership, and, at the time, it was decided we would focus our attention on working together at the Trans-Pacific Partnership table.
That has obviously been completed, and we are now moving to the next stage of the process in the TPP, with all countries considering ratification and undertaking their domestic processes, including us.
The question now becomes, what will we be doing with our bilateral with Japan? The answer is that we are looking at it, and we're talking to Japan about it and considering how we would like to proceed. It's a very important relationship, in agriculture specifically but in a variety of areas. We have many complementarities between our two economies. So it's something that is under consideration, and we are working with both the government here and the Japanese to determine next steps.
Senator Beyak: Thank you. Once again, we are in good hands.
The Deputy Chair: To wrap up, I want to talk about the approval of pesticides briefly. On May 5, 2016, the committee heard from Mr. Craig Hunter, a research adviser with the Ontario Fruit and Vegetable Growers' Association. Mr. Hunter stated that the Canadian horticultural producers face ruin — those were his words — if the current re-evaluation process of eight pesticides goes ahead as published, and he feared that these proposals were completed in a hasty fashion.
A couple of quick questions: How do Health Canada and the PMRA respond to such criticism? If re-evaluation proposals for the eight pesticides go ahead, are other pesticides available to the Canadian horticultural industry, and, in your opinion, could the PMRA decision with regard to the eight pesticides put Canadian horticultural products at a disadvantage in the global market?
You thought you were going to get away without us picking on you today.
Mr. Flint: To respond more generally, pesticides, when they're registered in Canada, are required to undergo a re- evaluation every 15 years, at a minimum, to ensure they continue to meet current standards for scientific evaluation.
Recently, we have been putting out decisions, trying to close off some of the re-evaluations that have been hanging on for a long time, and so we have published proposed decisions, some of those to which Mr. Hunter was referring, where we have indicated that we have concerns sometimes because it's a lack of information. So we've put out a proposed decision to finalize the re-evaluation so that it does not continue to go on too long.
With the consultation period, it does give stakeholders the opportunity to provide additional information to better inform our decisions before we finalize them. I don't know the specifics of those eight pesticides and what alternatives to those are available in particular and what the impact would be, but stakeholders do have the opportunity to have input into the process. That's why we do consult on the re-evaluation decisions.
The Deputy Chair: Thank you very much. I'd like to thank the four of you for being here. This has been a very good meeting of the committee. I think that is because we had the right people here, and you were very forthcoming. We appreciate that.
Also, I want to encourage you, when you go away from the table, if you have one of those, "I wanted to say this,'' moments, don't hesitate to send us your comments via the clerk, and he will circulate that to us. We want to benefit from your knowledge and expertise. We would encourage you to keep monitoring our process, and if you see anything along the way that you think we need to hear, don't hesitate to get in touch with us. Thank you all.
Colleagues, we stand adjourned.
(The committee adjourned.)