Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 30 - Evidence - Meeting of June 4, 2015
OTTAWA, Thursday, June 4, 2015
The Standing Senate Committee on Agriculture and Forestry met this day at
8:30 a.m. to continue its study on international market access priorities
for the Canadian agricultural and agri-food sector.
Senator Percy Mockler (Chair) in the chair.
The Chair: Welcome to the Standing Senate Committee on Agriculture
I am Percy Mockler, senator from New Brunswick and chair of the
committee. At this time, I would ask the senators to introduce themselves.
Senator Merchant: Pana Merchant from Saskatchewan.
Senator Beyak: Lynn Beyak, Ontario.
Senator Tardif: Good morning. I am Claudette Tardif, a senator
Senator Moore: I am Wilfred Moore from Nova Scotia. Welcome.
Senator Oh: Victor Oh, Ontario.
Senator Maltais: Good morning. My name is Ghislain Maltais, and I
am a senator from Quebec.
Senator Enverga: Tobias Enverga from Ontario.
Senator Unger: Betty Unger from Alberta.
Senator Dagenais: Good morning. Jean-Guy Dagenais, and I am a
senator from Quebec.
The Chair: Thank you, honourable senators. I would also like to
thank the witnesses for joining us today.
The committee is continuing its study on international market access
priorities for the Canadian agricultural and agri-food sector.
Canada's agriculture and agri-food sector is an important part of the
In 2013, the sector accounted for one in eight jobs in Canada, employing
over 2.2 million people and close to 6.7 per cent of Canada's gross domestic
product. Internationally, the Canadian agriculture and agri-food sector was
responsible for 3.5 per cent of global exports of agri-food products in
Furthermore, in 2013, Canada was the fifth largest exporter of agri-food
products globally. Canada is engaged in several free trade agreements, or
FTAs. To date, 12 FTAs are in force, the Canada-European Union Comprehensive
Economic and Trade Agreement is concluded and 11 FTA negotiations are
The Standing Senate Committee on Agriculture and Forestry received an
order of reference from the Senate to study, and report on, international
market access priorities for the Canadian agricultural and agri-food sector.
The study will focus on the agreements and concerns that exist across the
industry, sustainable improvements to production capabilities, diversity,
food security and traceability.
Honourable senators, we have with us this morning, Martin Lavoie,
Director of Policy, Innovation and Business Taxation for the Canadian
Manufacturers and Exporters.
Mr. Lavoie, thank you for accepting our invitation and agreeing to share
with the Standing Senate Committee on Agriculture and Forestry your views,
comments and recommendations in relation to our study.
I would now ask you to go ahead with your presentation, after which
senators will have the opportunity to ask questions.
Martin Lavoie, Director, Policy, Innovation and Business Taxation,
Canadian Manufacturers and Exporters: Thank you, Mr. Chair. It's always
a pleasure to contribute to the studies of Senate committees, which are
known for their comprehensive examinations. In addition, I always try to
ensure follow-up in terms of their recommendations because that is also a
very important piece.
It's a pleasure to be here with you today to talk about the
competitiveness of the agri-food sector in Canada. Today, I will focus on
food processing, the specific sector that our association represents.
I am the Director of Innovation and Advanced Manufacturing Policy at
Canadian Manufacturers and Exporters, Canada's largest industry and trade
association. We represent approximately 10,000 companies across all
While manufacturing accounts for just 10 per cent of GDP, it makes up
over two-thirds of Canadian exports. Our sector represents over 5 per cent
of private sector investment in research and development in Canada.
First, I have a few words about food processing in Canada. You summarized
the importance of the sector well. We totally agree with what you said.
Today, it is definitely Canada's largest and one of the most important
manufacturing sectors in the country, accounting for more than 15 per cent
of all manufacturing activity in Canada.
Food processing has also been one of the fastest-growing manufacturing
sectors in the country in recent years. To give you an example, from 2011 to
2014, food processing sales rose by 12.2 per cent compared to 8.6 per cent
for all other manufacturing industries combined. Growth has continued into
2015. For the first three months of this year, manufacturing sales of
processed goods are up 4.9 per cent compared to the first quarter of 2014.
By comparison, total manufacturing sales were down 0.2 per cent over the
Within the food processing sector itself, the three largest industries
for sales in 2014 were meat products manufacturing, dairy products
manufacturing and grain and oilseed milling.
In 2015, to date, seafood products have been the fastest-growing food
processing industry. When we look at the statistics in the food processing
industry, it varies from year to year, especially with exports. Some sectors
are highly concentrated in certain commodities.
Exports of manufactured food products reached a record of $26.8 billion
in 2014 and have doubled in the past 15 years. Processed food products
account for 5.1 per cent of Canada's total exports. Within the sector, the
largest exporters are meat products, grain and oilseed milling, and seafood
As you will notice, dairy products are not in the exports because of the
internal regulations and supply management.
If you look at exports by destination, the U.S. accounts for 71 per cent
of Canada's food processing exports, and Japan and China are the next most
I would like to say a few words about one of the initiatives that CME put
forward in recent years to help manufacturing products, including food
processing products to be exported abroad, especially in Europe.
We were commissioned by the European Commission to set up what we call
the Enterprise Canada Network. The network is the Canadian component of a
much larger initiative called the Enterprise Europe Network. It is a single
window, industry-led matching platform that helps to create international
partnerships by connecting Canadian SMEs, including in the agri-food sector,
to international companies. The platform allows Canadian SMEs to reach out
to other companies in Europe and elsewhere, including the U.S., Mexico,
Brazil, India and China. In total, there are 60 countries represented in the
We started that about a year ago and have about 850 Canadian SMEs
registered on the platform. Last night, I found 75 in the agri-food sector.
There are, of course, about 25,000 business offerings in the whole database
if you include the 60 countries.
To give you an example, yesterday I found a quote indicating that a
Danish seafood import and export company was looking for a Canadian supplier
of snow crabs. The company needs a 40-foot container a month to begin with.
These are the kind of opportunities for Canadian SMEs. We work with EDC and
other government agencies to try to get more SMEs to register in the
database and find business opportunities in Europe.
I would like to say a few words about the challenges that the food
processing sector is facing. The food processing sector is no different from
other sectors, if you look the macroeconomic challenges that this country is
facing in general. I include in there an aging population, a shrinking
active population as a consequence, and more difficulties to bring foreign
workers into Canada and a keep them in the country as highly skilled people.
The sector, as with other sectors in manufacturing and in the economy in
general, needs to improve its labour productivity, and companies must pay
more attention to industrial automation solutions for their businesses. I am
sure you have heard that from other witnesses.
There is no specific data on automation levels in the country, but in
general, if we talk to our members, even if you look at the larger companies
that are more likely to look at automation solutions, they clearly say that
we seem to be lagging behind compared to other countries, when we look at
automation and adopting industrial robotics.
Another challenge faced by the industry, and it is more a structural
challenge present in many other sectors of our economy, is the reliance on
small firms and the overrepresentation of very small firms in the industry.
We see again, in Canada, to have a hard time growing those small firms into
Consider this: There were about 5,700 food processing companies in Canada
as of 2014. Of this number, only 625 have more than 100 employees, while the
remaining 5,100 companies have under 100 employees and many of them have
less than 20.
In conclusion, I would like to make three recommendations for the
committee or for the government. We think that the federal government should
adopt its innovation support programs for the food processing sector,
especially with a particular focus on marketing innovation, which is
definitely needed to help our Canadian producers expand internationally.
One thing we hear a lot about food processing in Canada when we cross the
border or go into Asia or other countries is that they do not know about
Canadian food outside of maple syrup and lobsters. Our sector needs to brand
itself a bit better. As you know, there is a lot of marketing going on in
food. None of us go to the grocery store and taste the product before we buy
it, so we rely on the message and what we are told by the producers.
We also think that the federal government should look at providing loan
guarantees and other funding mechanisms to SMEs interested in financing
automation and robotic systems for their plants. One thing that we hear a
lot is that SMEs don't have the financial capacity to acquire large
automation systems and sometimes it can be expensive. We hear a lot that the
traditional financial institutions will not finance them for a variety of
reasons. We need to find a way to provide loan guarantees so that the
private sector can step up and provide more funding. We started some
discussions with the BDC about that. It is important because the capacity to
finance those industrial robotic solutions is crucial.
You mentioned trade agreements. The third recommendation is that the
federal government has to continue to aggressively pursue trade agreements
with key emerging markets so that we do not lose competitive advantage over
countries that may sign FTAs with those countries before Canada. We have
seen this in the case for Korea and the pork producers, for example. Given
that the U.S. signed the FTA before us, they have a competitive advantage
We live in a world of bilateral or regional FTAs and it is no longer
large, multilateral FTAs. Timing is important here. We need to sign those
FTAs with emerging markets as soon as we can.
I will stop there and am happy to take questions, comments, or
The Chair: Thank you, Mr. Lavoie.
Senator Tardif: Thank you, Mr. Lavoie, for being here today and
for delivering such an informative presentation. It's quite impressive to
hear about everything the processing industry is working on and just how
many processing companies there are. You said there were 5,700 food
processing companies in Canada. Do those agri-food companies use solely
Mr. Lavoie: Are you referring to the ingredients used in the
Senator Tardif: Yes.
Mr. Lavoie: The most common ingredients are dairy products, eggs
and meat, all of which are Canadian. One of the concerns our members often
raise is the cost of ingredients, which is subject to supply management and
limits productivity. Ingredients aren't as affordable as our members would
like, especially eggs and dairy products such as cheese.
Obviously, processors would welcome reforms in that regard. It's a tricky
subject, it's sort of the elephant in the room. At some point, it will be
necessary to examine the free trade agreements. As an association, however,
we don't have a firm position on the matter. We understand the purpose of
supply management and the history behind it. Recommendations were made to
reform the supply management system, to enhance the sector's competitiveness
and make products more affordable. I have to sing the praises of producers
who sell to large processors at a discount. Some dairy producers have
established a discounted pricing scheme, and already, that's a great first
Companies like Maple Leaf Foods buy large quantities of eggs on a weekly
basis. I don't know the number, but I know it's a huge amount. It's quite a
sector. Unfortunately, under supply management, companies can't bring them
in from outside the country, as they would have to pay import tariffs.
Senator Tardif: In April 2015, three associations, including
yours, wrote a letter to the Prime Minister to reiterate the value of the
Trans-Pacific Partnership, arguing that Canada should make concessions. Is
that still your position, and if so, why?
Mr. Lavoie: Things are coming to an end in terms of that
agreement. I've often heard it said of late that supply management is an
offensive interest for the U.S. and other countries in Europe. As I see it,
reforms aren't possible under those agreements. In fact, we saw what
happened with the free trade agreement with Europe, which changed the rules
governing cheese import quotas.
Free trade agreements have to be treated as a whole. It's quid pro quo.
In our view, if reforming the supply management system, slightly or
significantly, translates into gains in international markets, it has to be
viewed as having an impact on the whole and not just a single sector.
Senator Maltais: Welcome, Mr. Lavoie. Yours is by far the largest
industry association, with nearly 10,000 member companies in Canada who are
responsible for two thirds of exports. That's a lot of money. The work you
do is necessary and important. Are interprovincial barriers a problem for
Mr. Lavoie: Clearly, some major barriers exist. I always like to
differentiate between barriers and irritants.
You have irritants, things like trucking associations, and then you have
barriers. One of the barriers that our smaller members encounter has to do
with food safety and certification. When that falls under provincial
jurisdiction, it's impossible to sell products in another province.
I live in the National Capital Region and I see it every day. I have a
friend in Chelsea who used to own a fish- smoking business. He would have
liked to be able to sell his products in the Byward Market and to
restaurants in Ottawa but he couldn't because he didn't have federal
certification. Obtaining federal certification is a costly and intensive
process involving a number of steps. The rules around food safety, hygiene
and traceability are much stricter. The company has to be of a certain size.
So that's a significant barrier. So, those of us who live in the region
wonder whether we are more at risk of being poisoned if we eat out in
Ottawa, as opposed to Quebec City. The provinces should have a mutual
recognition system for food safety and hygiene rules. That's a major
The issue of supply management came up. Even though I realize it wasn't
really part of Industry Canada's initiative and may be the elephant in the
room, it's an issue we have to discuss domestically because it's something
that arises a lot when it comes time to sign free trade agreements. It's
almost as though other countries force us to confront the issue
domestically, and it seems to me that we should use this forum on internal
trade barriers to discuss that important issue.
Senator Maltais: I won't get into supply management; I'll leave
that to our resident expert on the subject, Senator Dagenais, who will no
doubt discuss it with you. One of your recommendations is that the federal
government should give the sector innovation support geared towards
automation and robotic systems to improve processing methods. In order for
the food processing sector to face the challenge posed by Canada's existing
and upcoming free trade agreements, will its methods and equipment have to
Mr. Lavoie: People always assume that exports will go up because
we have a free trade agreement. As I see it, however, in order to export
more, we have to produce more. We aren't, all of a sudden, going to be able
to produce enough to feed a billion Chinese with small-scale companies that
have four employees. We have to produce more, and in order to produce more,
we have to operate on a larger scale.
That means two things. As far as automation is concerned, the technology
is mature and ready for adoption; all that's missing is the financial
resources and larger scale production.
Innovation, however, is another story. What I was trying to point out
with the recommendations was that, in reviewing federal innovation support
programs, it became clear that a lot of focus was on product innovation
without much consideration necessarily being given to what that would mean
for the agri-food sector.
I often visit our members' plants. I visited a Maple Leaf Foods plant.
They're doing some very innovative and unique things. They're working, of
course, on product innovation to come up with more delicious products, but
they're also doing a lot of innovative work in terms of marketing.
They have to understand what their customers want. They want to
understand how ethnic diversity in some regions affects their product
offerings and how long people spend making dinner when they get home after
picking up the kids. So there's a lot of innovation happening as far as
But that kind of innovation doesn't qualify for the research and
development tax credit, which is more tailored to science-based solutions to
more traditional manufacturing challenges. That's why the sector invests
very little in that regard; the government doesn't offer any innovation
support to complement those activities. It's important to look at this
sector, specifically, and figure out what companies need.
In terms of investment in machinery and equipment, we have seen somewhat
of a resurgence since 2011. According to a CAPI report, that is largely
attributable to the accelerated capital cost allowance for the purchase of
machinery and equipment. The tax measure allows for a shorter depreciation
period for machinery and equipment.
That report also talked about the fact that the aging plants and
facilities across the sector could hinder equipment modernization. You don't
bring $2 million worth of new equipment into an aging facility in need of
renovation. That's another issue that needs to be looked at. When you walk
through older neighbourhoods in Montreal, down Notre- Dame Boulevard, for
example, you see all the older food processing plants, which are really
showing their age. Just like with houses, sometimes it's cheaper to build a
new one than to renovate an old one.
Senator Maltais: Do your members invest enough in modernization?
Mr. Lavoie: We think they need to invest more. But one of the
things preventing that investment, especially in automation, is financing.
And that extends beyond the agri-food sector. Companies just starting out
invest a lot of personal equity in order to obtain the financing they need.
It happens all the time: business owners put up just about everything they
have as collateral in order to secure financing. And if the company grows
quickly, it has to apply for a loan in short order. Those are the companies
that often run into problems obtaining financing; there is nothing left to
give the bank as security, no other assets, and the bank can't really extend
credit on the basis of future growth. So companies end up turning to the
BDC, which sometimes offers more flexible solutions. But they don't want to
dilute ownership and have to look for outside partners; they want to retain
control over their company. So that's something that hinders our members'
Senator Merchant: We have had witnesses who have talked about
traceability and that gaps exist in the food chain, particularly around
abattoirs and processing plants. Could you explain to us what some of these
difficulties are? Are you doing something to improve the system? Can the
federal government do something to improve the system? How are the consumers
affected by all of this?
Mr. Lavoie: To be honest, we have not looked at traceability in
particular. I don't have much to say on that, but I have heard about other
people in other reports talking about this. I would be interested in looking
at our membership to see what they think about this, because there have been
a lot of discussions about that. Of course, it becomes an important factor
In general, how much you trust the traceability system will affect your
ability to export. We hear, especially about meat products, that a lot of
products get stalled at the border for inspection and testing. That becomes
another factor that limits our ability to export.
It is definitely an important factor that we need to look at in more
Senator Merchant: When Senator Tardif asked you about when we do
the EU agreement — CETA and the EU — the products that we export must be 100
per cent Canadian. Is that correct? You spoke about it in the periphery, but
I would like to pursue this a bit more. Do any processed food manufacturers
use only Canadian ingredients?
Mr. Lavoie: If you look at primary processing — live animals —
those are probably the ones that are mostly Canadian. This is probably why
the primary processing companies export much more than the secondary
processing companies. This is one of the contradictions.
If you look at the food processing sector, we have a positive trade
balance in primary processed foods and a huge negative trade balance in
secondary processed foods. That might be a factor. For example, if you take
lobster, pork and others, the primary processing will make 100 per cent
Canadian product, but once you have a secondary processing sector, you are
more likely to import ingredients from other countries.
Senator Merchant: You will not be able to do that, though, when
you trade with Europeans if they insist that everything be Canadian.
Mr. Lavoie: Yes. With regard to the secondary processing products,
that would be a challenge if you are looking at 100 per cent Canadian,
because there are more ingredients involved and probably many of them are
not available in Canada, or are not available at the same price.
Senator Unger: Mr. Lavoie, you have given us so much information
in such a short time. It is extremely interesting.
In our meetings, we've had some very small firms setting out to export
internationally. They talk a lot about the need for funding, and yet they
didn't have any focus on the domestic market at all. They wanted to go
global. What can be done to maybe get them to build up a good market
domestically and then look globally?
Mr. Lavoie: I would start by saying that one of the reasons why
today we have such an overrepresentation of small firms is because, as
you've heard from other witnesses I'm sure, between 2006 and I think 2014,
143 plants shut down in Canada, and 90 per cent of them were owned by
multinationals. They just left the country. That's one factor why we have
such an overrepresentation today.
I think there are two things we must do: attract more investments from
multinationals in Canada, and help those small firms to grow and go from a
more labour intensive production to a more automated production, which means
growing facilities and equipping them with automation.
You're quite right about the domestic market. But I wonder if at some
point in certain sectors it's easier to export to the U.S. from Quebec than
export to Ontario because of these internal trade barriers. If you're not
nationally certified, there's no way you can sell a meat product from Quebec
I myself own a business. We sell sausage made in Montreal. We're the last
one in Quebec because we can't sell in Ontario.
It's not a small company. They provide sausage for about 35 stores across
Quebec, but they don't have the national certification even at their size.
So it becomes a major issue. You're quite right; if we could resolve that by
mutual recognition of standards, we would open up a lot of domestic
opportunities for those SMEs for sure.
Senator Unger: Why did those multinationals leave Canada?
Mr. Lavoie: I haven't seen any reason. Some people were saying it
was because our dollar went up quickly. That might be a reason.
Investment in the sector started to slow down at the beginning of the
2000s, late 1990s. It was kind of a longer trend. As I said, the cost of the
ingredients in Canada was quite high also, and of course the global
recession made a lot of countries repatriate production closer to either
their head office or other plants.
I think what also happened in Canada is that a lot of old plants required
a lot of investment to be revamped, and I think some multinationals wanted
to spend their money in other plants.
Don't forget that at the same time our dollar went up and our labour
costs went up dramatically in Canada as well. In manufacturing in general,
if you look at labour cost of unit per production, Canada was half the cost
in the United States back in 2000-01. Today we're even more expensive than
the United States in terms of labour. Combine that with skills shortage,
labour shortage, the restrictions that have been put into the Temporary
Foreign Worker Program and the rapid access program, and these reasons
together probably played in the picture.
Senator Unger: Regarding labour costs, I heard this morning on the
radio that a study was done about what union workers get paid in Canada
versus people in the private sector. Union employees earn 10 per cent more,
plus they get very good benefits. That would factor into what you just said,
I assume, or would it?
Mr. Lavoie: I wouldn't blame the unions for this. Is the solution
to bring everybody down to lower wages?
Our solution is if you want to become less labour intensive, you have to
go into automation. Even if you were getting rid of all the unions in the
country, bring down your labour costs by 10 per cent, it's just a matter of
time before it comes back.
We've seen, for example, all these companies that went to China for low
labour costs back 15 years ago, and now they find that labour costs in China
are almost as expensive as they are here. They are not as cheap as they
I think it would be a short-term solution to look at unionized versus
non-unionized. The only long-term solution has to be automation with
industrial robotics. Over the long term, that's the only way you can become
less labour intensive and more competitive.
Senator Unger: Personally, I'd like to see private-sector jobs be
able to be paid similarly. They used to be more and now, of course, it has
Senator Moore: Thank you, Mr. Lavoie, for being here.
You mentioned one of the elephants in the room was supply management, but
we know that the United States and a number of the countries with which
Canada is doing business in the European Union heavily subsidize various
sectors of their economy. I read recently about the TPP and Australia
targeting our supply management and other countries with regard to the TPP
and the European agreement targeting Canada. What are we doing and what do
you think we should be doing with regard to the subsidization by these
nations of the key sectors of their economy? There must be some reciprocity
here. It's not all us.
Mr. Lavoie: My view is that direct subsidies to agricultural
companies or food processing companies, or if you look at supply management,
they're both subsidies. However, one of them is a subsidy from the
government and the other one is a subsidy paid by the customers. Supply
management is an indirect subsidy paid by the customers. We set the price
and the ones who buy the products are indirectly subsidizing the producers
by paying a price that might be a bit higher than what they would get maybe
if it was imported.
That's an argument I hear a lot, every time we talk about supply
management: Other countries subsidize so we have to do supply management.
Again, I'm not a negotiator. I don't know what is on the table. I'm sure the
Canadian negotiators are addressing those subsidies. As I said, it's a give
and take. If we're going to attack supply management but we don't win
anything and we don't end those subsidies in other countries, I don't think
that's a good deal. As you said, there has to be reciprocity.
Senator Moore: I don't think you're recommending that we
subsidize, are you? If the other countries are subsidizing, say,
agricultural areas, should the federal government be doing that?
Mr. Lavoie: Why do you subsidize in the first place? Do you do it
because other countries do it or because there's a market gap? To me,
subsidies are when there's a market gap. If there's a market gap on
financing, sure, let's have the government intervene. You could probably
find subsidies in all the sectors of the economy anywhere in the world.
That's not a reason in itself to subsidize everything in Canada.
Senator Moore: Some of these sectors, I would suggest, are heavily
subsidized by their nations, particularly in the U.S. and some of these
European countries. They load up and that creates an unfair advantage for
Canada. I don't think we should just cave and say, "Oh, well, we'll give you
this,'' because they're not changing. They're targeting us, but they're not
changing their own system.
Mr. Lavoie: We're not looking at getting rid of the whole system.
For example, you can look at the import quotas or the tariffs. You can relax
the rules a bit so we can make some gains in other sectors.
When you talk about supply management, sometimes the problem is the
notion of getting rid of the whole thing. I don't think you could get rid of
the whole thing. The quotas have a lot of value for the farmers and the
banks lend money based on the value of those quotas.
Senator Moore: Exactly.
Mr. Lavoie: It's not like you could just get rid of it tomorrow
morning because you would affect the finance industry and the producers.
Anything would have to be transitioned over a very long period of time.
Senator Moore: When Canada decides to negotiate a trade agreement
with a country, I wonder what drives that. Is it the population of the other
country? Is it the trade of products?
We had a report earlier this week in the Senate that said most of these
trade agreements we've entered into have resulted in a deficit trade
imbalance, a couple on the positive side, but they're nominal. So I wonder
what we're giving up.
I'm thinking about that in the context of NAFTA. Does that expire in
October of this year? I get that confused with the softwood lumber deal. We
got killed on that. It's to the tune of $5 billion, which the U.S. has yet
to give back.
You've got NAFTA, and there are many forces in the United States that
don't want that renewed, and yet we're trying to say, "Buy North American,
Canada, Mexico and the U.S.''
I was involved in a meeting, the first one of Canada-U.S.
interparliamentary people, and trade was the biggest discussion. But it
really morphed into a situation of the U.S. making demands on Mexico,
because the Mexicans have lower labour. Have you thought about that? If that
agreement is different than the current provisions, what would that mean for
your sector or your organization?
Mr. Lavoie: At the time of NAFTA, the trade agreements were mostly
focused on tariffs. That has changed a lot. The new trade agreements put a
lot of emphasis on non-tariff barriers, including government procurements.
All the things we're addressing now in our trade agreements were not
addressed under NAFTA. In a certain way, NAFTA, if you compare it with CETA,
is an incomplete trade agreement. CETA looks at government procurement,
federal, provincial and municipal. NAFTA only looked at federal procurement,
which is not much compared to all the money thrown at transportation
infrastructure by municipalities and provinces, for example.
I take your point. I think what's driving it in the food sector is that
tariffs are still big. A lot of Asian countries have high tariffs on certain
products and we would like to get better access. For example, in the case of
Korea, the pork industry was keen on this. It becomes a competitive
But with the U.S., to be honest with you, the non-tariff barriers we have
not addressed will have to be addressed at some point. With manufacturing in
general, one of the most important non-tariff barriers we're facing in
government procurement is the Buy American Act. It was excluded from NAFTA
because it wasn't a tariff barrier; it was a non- tariff barrier.
Unfortunately, we're stuck in sectors like public roads and highways,
airport infrastructure, water and waste water infrastructure, with Buy
American requirements that don't allow Canadian SMEs to get in the market.
I've had discussions with American companies about it, and unfortunately
I think what happens when the —
Senator Moore: What happens when you have those discussions? Do
they realize the situation? How do they justify continuing that policy?
Mr. Lavoie: The first thing they tell me when we raise the Buy
American issue is that it is focused on the steel fabrication. They say that
they want to keep these steel products and raw steel from — they say Asian
countries, but I think they mean China — countries that are heavily
subsidized and under dumping measures. They want to keep them outside the
U.S. My response to that is, "Do I look Chinese to you?'' We're Canadians.
We have the same labour costs, even a bit higher. We have the same
environmental regulations as the U.S. Our companies are fully integrated,
both from internal and external supply chains. So I get your point about
keeping Asian steel out of the U.S. market, but we're not Chinese. We're
I found U.S. companies that were directly affected by Buy American
because they have plants in Canada. As an example, last year there was a
bridge built in Morrison, Colorado. The steel structure, all the steel parts
were given to a local company. That local company had a plant in Ontario.
They couldn't meet the demand for all the steel, so they asked their
Canadian plant to provide some steel and export it to Colorado for the
bridge, and the company was penalized under Buy American for asking their
Canadian subsidiary to meet the demand.
On the one hand you have the U.S. government saying take advantage of
free trade agreements, fully integrate your supply chains with Canada and
Mexico because that's where we want you to go. On the other hand, when they
give a big bridge contract or big road building contract, they have a stick
and if you don't buy from the U.S., "We'll beat you up.''
Senator Moore: They legislate it. They slide that into a totally
unrelated piece of legislation over a little lie.
Mr. Lavoie: That's what they do now.
Senator Moore: It flies in the face of the whole spirit and rule
of law. Anyway, thank you very much.
Senator Oh: Mr. Lavoie, thank you for being here. Your information
The government, EDC and the Business Development Bank of Canada have been
doing a lot to help the manufacturers export to the international market.
Are your members aware of all these tools that they can get, and are they
using them or could there be better tools to use that your members are
Mr. Lavoie: EDC has done a fantastic job in the last years to
reach out to companies. What I think has changed with EDC is that in the
past, EDC would only enter into discussions with a company that already
exported. Their mandate was to help companies that were already exporters.
We've had a lot of discussions with them. There are a lot of companies out
there that are not exporting now, but obviously if they want to grow and
survive, they will have to export. We have a small market in Canada. Maybe
you want to start having discussions with those before they export. I
mentioned that they will become your customer.
They bought that argument. That's why they came on board with the
Enterprise Canada Network, because they want to better identify companies
that have export potential. They know they will become their client. This is
We do a great job with EDC. I would say most of our members are aware of
what they do. We run Go Global sessions with our members across Canada and
we bring between 50 and 100 companies each time, and EDC is always there
BDC has done a lot of work with our members for financing. As I said,
they really close the gap where traditional banks are not there or don't
want to step up. They also have a bit of an international mandate as well.
For example, with a company that wants to open a plant somewhere else, they
can finance some real estate projects.
BDC has been doing well. Now I think the next step for them is to step up
in automation adoption, industrial robotic systems. We would like to see
something more customized, especially for the food processing sector. We
started discussions with BDC and they're really open. As you know, in the
last federal budget there have some new programs on the go to help SMEs. I'm
confident we'll get there with BDC at some point.
Senator Oh: Do you agree that the FTA is very important, and
governments should always be on top and developing more FTAs? Because our
farmers need exports. Our population base is only 36 million. We have a vast
farmland for producing food, and they have to export.
Mr. Lavoie: Absolutely. That's what I said about needing those
FTAs and we need them fast as well.
Senator Oh: Another thing about innovation on food processing, if
you are aware, is that in Asia, the new international market or the new
emerging market, KFC or McDonald's have already gone far ahead on
innovation, adapted to the local market. KFC in Asia is huge. You're talking
about 40,000, 50,000, 100,000 square feet, compared to the KFC here in
Canada or the U.S., and 2,000 square feet you would consider a big one.
Mr. Lavoie: If you take the food retail market in China, it's so
diversified. It's one thing to say "export to China,'' but who do you talk
to? You need some advice.
I read somewhere that the top five Chinese grocery retailers only account
for 6.5 per cent of all grocery sales. Compare that with Canada, where the
top three largest grocery chains account for 70 per cent of all food retail.
It's quite the opposite in China; the five biggest account for 6.5 per cent.
It's the Wild West for Canadian companies that want to go there, and they
need advice for sure.
Senator Oh: My point was that in order to export you need to adopt
innovation in food processing. How do you get into that market? Their market
is huge; the emerging market is tremendous.
Mr. Lavoie: If you look at the meat sector especially, I think the
Chinese would welcome more Canadian products because of the trust they have
in the safety and the traceability.
Senator Oh: Or the Canadian brand.
Mr. Lavoie: The good Canadian brand.
I mentioned the Agriculture Resource and Innovation Centre. They did an
interesting study on China. They interviewed a lot of Chinese distributors,
some of which have offices in Canada. The biggest problem they see with
Canadian foods is that there's no branding around them. We know here that
Canadian food is safe, but they say the Chinese population is not
necessarily aware of that. They were saying Canada has to put together a
good branding campaign about their products in Asia.
Senator Oh: We need your help.
Mr. Lavoie: You need my help. I'll start learning Chinese.
Senator Dagenais: Good morning, Mr. Lavoie. Coming back to what
Senator Maltais said, I wouldn't call myself an expert on supply management
but, when I was a Conservative candidate in Saint-Hyacinthe, a farming
heartland in the eastern part of the country, I had to speak to the UPA.
You've had dealings with the UPA, you know about supply management. Just a
quick sidebar, since the UPA has been around, it's had to adjust its
I want to ask you about the WTO. In May, it ruled in favour of Canada and
Mexico regarding the U.S.'s country- of-origin labelling policy. Canada is
going to ask the WTO to authorize retaliatory measures against U.S. exports,
in other words, Canadian imports from the U.S., and that includes agri-food
products. A U.S House of Representatives committee has voted to repeal the
country-of-origin labelling policy. Were you aware of that? Will those
retaliatory measures have an impact on your members?
Mr. Lavoie: Obviously, I can see both sides of the issue. A lot of
companies say retaliatory measures also hurt the imposing country, let's
just be frank. On the one hand, producers will be affected because they
import products from the U.S. On the other hand, if we win our case at the
WTO and don't put retaliatory measures in place, what message are we sending
countries like the U.S., who are in the bad habit of taking unilateral
action against Canada, as we saw with softwood lumber? That, too, comes at a
hefty price. If we don't impose retaliatory measures, what will happen going
forward? We would be telling other countries that they can do whatever they
want. Countries that aren't satisfied will simply have to go to the WTO,
knowing full well that the measures will be in name only.
We fall somewhere in the middle, reasoning that for the greater good of
the country, at a certain point, it's necessary to impose some retaliatory
measures on the Americans, lest we send them the message that they can just
keep doing what they've always done and that all they have to do is figure
out another way to go about it. It's a bit like the Buy American Act, which
Senator Moore was talking about. Canadian firms have been subject to
discriminatory practices for 25 years now, even though we never impose
Canadian content requirements on anything. Any American company can
contribute to our infrastructure projects, and yet when we try to do the
same, we aren't allowed to export.
We should probably make it clear that we aren't going to be pushed around
Senator Dagenais: Canadian agri-food manufacturers use a lot of
inputs from the U.S. Could the proposed measures affect the cost of those
Mr. Lavoie: We've heard other industry associations talk about
that. Some are even beginning to come out internally against imposing any
retaliatory measures. I think they need to be careful. I realize that they
have to stand up for their members' interests but, at the same time, they
are dealing with an issue that has a broader impact, Canada's ability to
prevent future unilateral action from, let's face it, the U.S.
The Chair: Senator Unger has a supplementary question and Senator
Moore has one as well.
Senator Unger: I had read very recently that a bill amending the
Agriculture Marketing Act was repealed. Chairman Conway said:
We must do all we can to avoid retaliation by Canada and Mexico, and
this bill accomplishes that through full repeal of labelling
requirements for beef, pork and chicken.
Alberta has a lot of beef for export and the industry has been affected.
Assuming that that bill has been repealed, how long will it take for things
to normalize in those areas?
Mr. Lavoie: I can't answer that question.
Could you repeat the bill in question? Is it a federal piece of
legislation? Oh, are you talking about COOL?
Senator Unger: Yes.
Mr. Lavoie: I don't know how much time it will take, to be honest.
They probably have a deadline, which the WTO gave them, to repeal that as
soon as possible.
Senator Unger: He goes on to say:
I appreciate all the support from my colleagues on both sides of the
aisle. We will continue working to get this to the House floor as
quickly as possible to ensure our economy and a vast range of U.S.
industries and the men and women who work for them do not suffer any
economic implications of retaliation.
I did hear recently that it had been repealed.
The Chair: Are they on the right track? This is what Senator Unger
wants to establish.
Mr. Lavoie: How much time it's going to take.
The Chair: That's the question.
Senator Moore: Further to that discussion, early in March of this
year the chair and others, including me, were part of a Canadian delegation,
and we were in the office of Mr. Conway and met with his top representative,
his adviser, who encouraged us to encourage Canada to take retaliatory
action. If we don't, he said we'll be stumbling along trying to get through
the legislative process. His committee is in favour of getting rid of it,
and then it has to go through the House of Commons and the Senate.
He made it clear that the time to get through that legislative process
could take who knows how long. He said that if we started some sort of
retaliatory process, it would get their attention immediately and we'd get
the proper results.
So it's the same thing. When you go there, they're 10 times our size and
they have 10 times the issues we have. If you're not there pushing your
thing, they just move on to the next issue, so we have to keep our trade
issues with them in the forefront.
We've had WTO decisions before. It didn't matter. On softwood lumber, it
didn't matter. Rule of law, you have to stay in their face. They understand
the economic hurt and the retaliation, and I think then they would move on
Chair, I just wanted to make that point.
Mr. Lavoie: I agree with that. To go back to our discussion about
Buy American, I remember companies telling me the day Canada starts having
its own Canadian content, the U.S. will react. That's how it plays out in
the U.S. It's about who is hurting them. Their system is much different.
Senator Moore: It's easy politics in the U.S. to say "Buy
American.'' They always say, "Oh we didn't mean Canada; we're just trying to
stop trade with the Chinese. We didn't mean to hurt you guys.'' But they
don't put that in. They never accept us and they never say, "Buy North
American.'' They could do that. They could just stick the word "North'' in
there and we would be happy.
Mr. Lavoie: Would that include Mexico?
The Chair: Thank you for clarity, Senator Moore.
Senator Moore: You were there, chair.
The Chair: Yes, I was.
Senator Beyak: Thank you, Mr. Lavoie, for an excellent
presentation. Your organization is as old as Canada, almost, founded in
Mr. Lavoie: We were, but I wasn't there at the time. So there is
an official and unofficial story about this, but I will say it off the
Senator Beyak: It is very impressive and I think it is impressive
for Canadians that watch this.
I am always given practical questions in my riding. I am amazed how many
Canadians actually watch CPAC and these Senate committee hearings. I think
it is because they are unbiased and unfiltered; they are just the facts.
Consumers come to me and don't understand why Maple Leaf products may
have chicken and turkey in vacuum packs, but not beef. Is there a reason why
they can't put beef? Is there a reason, or is it just their decision?
Why is milk expensive in cities, but not in small town? Comparable to the
U.S., in Toronto or other cities, but in small towns, milk is almost half
the price in some cases.
Do you know the answers to those practical questions?
Mr. Lavoie: Honestly, I see a difference in the price of milk and
butter sometimes between Super C and Loblaws. To be honest, the retailers
have to explain their pricing strategy because I don't understand sometimes
why you can buy three pounds of butter for $10 at the Super C, but at the
Metro and it's like $4.25 for one pound. What explains the difference?
At the same time, this government has put a lot of focus on the
Canada-U.S. price gap. To your point, I would argue, how do you explain
price gaps within our own country?
If you look at the price of milk, because I live here, I always see a
huge difference between Ottawa and Gatineau, for example, because the two
systems are a bit different. Again, there is no reason.
What I don't like from a customer point of view is when you were talking
about subsidies, who drinks milk the most? Kids. You are kind of asking
people who drink a lot of milk to indirectly subsidize this sector. It seems
to me that we shouldn't be asking those people, who are sometimes single
moms with three kids, who buy a lot of milk because they eat cereal and
drink a lot of milk. From a consumer perspective, it's something that we
hear, and I kind of agree with that.
Senator Beyak: I think the questions sometime make the matter
personal. We talk about supply management, free trade and competition, but
right down at the real roots, they see it first-hand and they don't
understand it. I can never explain it, either.
Second, can you elaborate a bit more on the problem with temporary
foreign workers? We heard from other agencies but not yours, and I am
impressed with your knowledge.
Mr. Lavoie: What we hear from our members, in the past, is that a
lot of companies were bringing foreign workers into the country. There were
a certain number of workers — I can't remember how many — that you could
bring in during any given year. These people could stay in Canada for two
years and those companies would train them, hoping they would apply for
permanent residency and stay as a worker here. As you know, in certain
sectors like meat processing, the turnover rate for labour is something like
50 per cent. It is huge. Sometimes immigration is one way to get those
people. If they find a good job here and they are trained, then they will
stick to the company.
What I am hearing is, for example, industrial butchers are no longer
eligible for the fast-track program within the Temporary Foreign Worker
Program. So that is an issue. The number of people that you can hire through
the program is lower. Instead of two years, now it is only one year that you
can keep them before they can apply for permanent residency. Everything has
been restricted, and that is exacerbating this problem of labour and skill
Senator Beyak: Is your agency doing anything to work with the
government to try to show how important the problem is?
Mr. Lavoie: Yes. We have had a lot of discussions with the
minister of the ESDC, at the time, and we wrote pieces in the newspapers. A
lot of this had to do with the restaurant business.
Sometimes you have one thing happen and everyone else is affected by a
decision of the government. Unfortunately, a lot of our sectors were
affected. I think the food processing industry is paying their people well.
They are not looking at cheap labour. They are just looking at labour — good
labour they can rely on. They are willing to train them if they know they
will stick around. We have had this discussion.
The government has showed some openness, but I know it is a tough
political question. As I said, the only other way to cope with this problem
is to automate your plants. There is no other way.
Senator Enverga: Thank you for your presentation. Most of my
questions have been asked already, but I want to follow up with regard to
temporary foreign workers.
With this ruling, do you know of any lost opportunities for manufacturing
companies, what percentage of their income, or has it affected the industry
Mr. Lavoie: No, I haven't put a number on it. Just in meat
processing there is probably a shortage of over 1,000 people right now, in
some big companies that I spoke to. I don't know how that translates into
lost opportunities, but again, it is part of the picture of a large
multinational looking at investment. Are you going to throw $100 million
into a new plant when you know you are going to have a hard time finding the
right people to be there? That is part of the picture.
The more you get into automation, the more you need high-skilled people
to operate that industrial robotic equipment. Where do you find those
We are trying to close that gap right now. Last year, we went to Germany
with one of our members, Siemens. They were talking to us about the German
system and how it works. The kids have to choose a path early on in high
school. We saw how they integrate the kids into their plants at an early
age. We were fascinated because in Canada we don't really do that.
We went there and came back with the idea of doing a pilot program with
Siemens in Canada. We call it the Siemens Canada Academy. It was announced
in the last federal budget. The federal government announced $65 million for
industry associations like CME to better adopt the curriculum in colleges to
the needs of the private sector, the market.
Our first cohort of 30 students started in May. We will see how it goes.
The idea is to use those companies, especially from Germany, that have this
experience with this educational system and to try to implement it in
Canada. If it works for us, it will work for many other industries as well.
Senator Enverga: As a follow up to that, we may have some problems
with workers. We have a shrinking population. Have these manufacturing
companies thought about outsourcing it to where there is cheaper labour?
At the same time, one of issues regarding why people are not working in
far-flung places, like remote areas, is that they are too far from where
they are. Has the manufacturing industry thought about moving maybe closer
to the poorer areas to get more workers?
Mr. Lavoie: No. This is not something I have necessarily heard.
Moving from rural to urban areas, is that what you mean?
Senator Enverga: That's right, in order to attract more workers.
Mr. Lavoie: No. Moving production plants is not cheap. A lot of
multinationals, if they are about to shut down a plant, they will consider
other countries as well. It is not just about staying just in Canada. They
have the flexibility to invest in other countries as well, as you mentioned,
maybe in some countries where they can better cope with labour costs, for
A lot of companies that shut down in the U.S., in general, were
headquartered in the U.S. What we have also seen in the United States is
that they were aggressive in repatriating production in the U.S. because the
government was pretty aggressive. We have seen, not necessarily in food
processing but in other sectors, where local cities, especially in Tennessee
in the southern States, where they build the plants for the companies. They
tell the company, "If you do production here, we will build the plant and
lease it back to you for 10, 20 or 30 years, and help you out if you need.''
That is what we saw with Electrolux, when they left Montreal, and Kruger.
They all went to the southern states. They've been very aggressive. Textron,
the headquarters of Bell Helicopter, just opened a brand-new plant at a
Louisiana regional airport. The plant was entirely built by the regional
government there, and they lease it back to the company. That is $100
million of capital that they don't have to spend. That is a huge incentive.
I would say if a company has an old building and they are thinking of a
new building, they look at Toronto and the southern states. It is difficult
to compete sometimes.
I am not arguing that Canada should start building plants for companies;
that is not my point. I just want to raise the fact that some other
countries are getting very aggressive in what they call "reshoring'' in the
United States, and it is affecting Canada and other countries as well.
Senator Enverga: On the trend now, are you saying we are not
giving enough incentives to our manufacturing companies?
Mr. Lavoie: As I said, I think we need to better customize our
government support for the food processing industry, because if you look at
innovation, there are not many programs where you can go and get government
I have to give a lot of merit to the Ontario government, which announced
the new Jobs and Prosperity Fund. One of the three streams of the fund is
just for beverage- and food-processing industries. I think they got that in
Ontario; there will be money available just for this industry.
At the federal level, what you see in the direct support programs, again,
it is focused on sectors like automotive, aerospace and forestry. All the
other programs are not a good fit for food processing, and I think that is
becoming a problem. We will have to look at this sector in a unique way, I
think, because they are very different. You cannot really compare food with
metal-bashing companies or automotive. They are different.
Again, when I talk about automation, it is much easier to automate a car
factory than it is to automate a meat- processing factory. We are thinking
about very hostile environments for robotics and electronics. A
meat-processing factory has a lot of water and humidity, and that does not
cope well with electronics in general. An automotive plant is much easier to
automate. So this is a unique sector.
If we look at automation in the food-processing industry, I would
strongly argue that we need to put together a demonstration program first,
because a lot of companies will not invest hundreds of thousands of dollars,
or millions of dollars, on something that might not work well in their
The aerospace sector got a demonstration program in the budget before
last. I think that is a great program, and we should use it as an example as
something to do for the food-processing industry.
The Chair: I have a few questions that I would like to ask, with
the indulgence of all the senators.
We have a lot of questions for you, given the number of food processing
companies in Canada, 5,700, according to you.
I would like to relate a fact, because you do put a lot of emphasis on
innovation and also robotics for the challenge that we have with the
displacement of labour.
In 2012, the OECD talked about Canada and its science and innovation
side. This week, comments were made that we were not doing enough innovation
A chart has been shared with me by our research people. When we look at
the role of the Government of Canada and universities, which would also
include provincial governments, we are above the average when it comes to
innovation and R&D as we consider our 500 most important universities in
When I look at the role of the private sector, we are building a bridge.
What plan do you have with your membership to encourage more investment in
R&D and innovation in Canada?
Mr. Lavoie: That is the million-dollar question. If we take a step
back, we asked this question to the Jenkins panel in 2011. The report has
driven a lot of government measures since then in the last three budgets. We
have had a mixed reaction with respect to how well the report was
implemented by the government.
A lot of the measures adopted not received well by our organization. One
of them is the exclusion of capital expenditure under the Scientific
Research & Development Tax Credit. When we talk about automation and R&D in
the manufacturing sector, we are not talking about desktops and research as
you see, for example, in the video game industry. We are talking about big
machines that cost a lot of money, so capital is a big part of your R&D. The
elimination of capital means that companies no longer receive a tax credit
for machinery and equipment used exclusively for research and development.
That has had an effect on the adoption of adaptive manufacturing
technologies and automation robotics for R&D purposes.
When you mention the government is over-performing in R&D expenditures,
our universities are doing great. They publish how many articles and they
patent a lot of innovation. But if that doesn't translate into economic
growth, who cares? Who cares if we are publishing all these articles?
I spend a lot of time looking at Canadian patent database. I was looking
at all the university patents. I found about 350 patents filed every year by
all the universities in Canada. Honestly, I am still trying to find a couple
that were successfully commercialized. Who cares? All these patents are
sitting there. If you look at the cost of patenting the innovations from
universities versus the revenues generated from those patents, it cost them
more money than they generated. So what is the point?
We seem to have this incapacity to translate all these good things we are
going from government and university research into the private sector.
One of the interesting tax measures that floated around in recent years
was that in other countries like in the U.K. and the Netherlands, they have
put together the Patent Box measure. It is a tax incentive. Any company that
commercializes a patent in Canada has a lower corporate income tax rate on
their revenue-generated product for a certain period of time. For example,
if I license a patent from the University of Toronto and I build a product
in Canada and commercialize it from Canada, in the U.K. or the Netherlands,
I would pay like a 5-per-cent income-tax rate on the revenues associated
with that product for five years. So it becomes an incentive for companies
to commercialize the Canadian patents in Canada.
I think Communitech went to Industry committee five years ago. They said
that 65 per cent of all start-ups in Canada end up, on average, after five
to seven years, being sold abroad for the value of their IP. Again, great
companies. As a society and as a government, we throw in a 35 per cent
refundable SR&ED tax credit and a lot of direct support, and at the end of
day they take a lot of the value of their innovation, and they are sold
elsewhere because their investors don't see the value of commercializing
their products in Canada.
The last thing I would say about some of the reforms the government has
been doing in research and innovation support, they have set up a lot of
great programs for companies to take advantage of. Especially if you look at
FedDev Ontario, they put together the $200-million Advanced Manufacturing
Fund and some other programs. There have been a lot of problems in getting
the money out of the door.
The Advanced Manufacturing Fund started last year, so has already been
one year. They have only spent $10 million of the $40 million they had
available last year. It is only one company. That is not going to change the
game of innovation in Canada. They need to get the money out the door
What we find in talking with those direct support mechanisms is that they
have 150,000 criteria, and if you don't meet 149 of them, you don't get the
money. My point is to try and be flexible. Those working for the companies
know what they need to do for innovation. Public servants should not be the
ones deciding what companies are best for doing innovation. They should be
more flexible in the kinds of projects they support. That is my view on it.
The Chair: There is no doubt, when I look at the impact of
economic contribution in Canada, there is $2.3 billion in farm cash receipts
and that is the chicken industry. They have quite a challenge. We have had
some comments at the committee and I would like to know, what is the
position of your association when it comes to the import of spent fowl
poultry? Are you aware of that process?
Mr. Lavoie: No.
The Chair: Reforms have targeted poultry. Small changes have been
It is in a package of 10 or 15 per cent, and the balance is chicken. It
is imported from other countries, namely here and the U.S. It is comes in
most of the time not to be labelled as a chicken product because we
misreported or underreported what we call marinating, glazing and sizing of
the products. The different yields result in less chicken for our Canadian
producers, less export, and we are sometimes flooded by some of those
products coming in. They are not labelled "chicken.'' Has that been brought
to your attention?
Mr. Lavoie: Not this one in particular, but I understand the
concept. This is one way companies are finding to go around the supply
management rules. We saw that in the cheese sector in the past. Some
companies were importing cheese that was not made with milk. They would go
around the supply management rules to bring in cheese for frozen pizza, for
example. If they are doing that, it's because they find the ingredients they
buy from Canada are too expensive and they are trying to find ways to become
Senator Moore: I am thinking of our guest's comments. At the
beginning, you had a customer looking for snow crab. I have a couple of
ideas that I will tell you after the meeting. I know some Nova Scotia
companies that might be able to help your customer.
Mr. Lavoie: Yes, a container every month.
Senator Moore: I will tell you after the meeting.
The Chair: I think there was a question in that.
Senator Merchant: Someone told us that some European countries and
the U.S. have established non-tariff barrier monitoring committees. Should
we be doing that? Would that help your concerns, and why do you think that
is a good idea?
Mr. Lavoie: Yes, I think that is a good idea. I have been
following more closely the regulatory council work around the joint action
plan between Canada and the U.S. in order to have a more common approach
around food safety. As I said, lots of meat products are being stalled at
the border for testing and inspection. A lot of non-tariff barriers need to
be addressed on a bilateral or multilateral basis. I would absolutely
support those initiatives.
As I said, trade agreements in the past only looked at tariffs and we
realized that tariffs don't mean much when you have a lot of tariff barriers
that don't allow your product into the country.
Senator Merchant: Is something being done with such a committee?
Mr. Lavoie: Maybe not as fast as we wish, but these are complex
questions involving a lot of people. These joint action plan committees have
been going on for a little while. We think they are on the right track and
we will get there at some point, yes.
Senator Tardif: I am curious as to why seafood is the
fastest-growing food processing sector.
Mr. Lavoie: The fastest growing this year? That is an interesting
one. I was talking about good branding for Canadian products, and I think
seafood is one of the best. It is recognized internationally. I think that
now you can even track down the person who caught the lobster in Gaspésie.
That is part of the building of trust from customers. Internationally,
Canada has a good reputation for lobster and seafood products.
Senator Moore: The maritime international certification has to do
with traceability and we are part of that, a number of our companies.
Mr. Lavoie: It's about good branding, and we need to use that as a
I don't know why, but I also heard that frozen potatoes from Canada are
growing fast as well.
The Chair: Are there any other questions?
Thank you very much, Mr. Lavoie, for being here today and sharing your
views and insight with us.
With that, honourable senators, the meeting is adjourned.