THE STANDING SENATE COMMITTEE ON AGRICULTURE AND FORESTRY
EVIDENCE
OTTAWA, Tuesday, November 18, 2025
The Standing Senate Committee on Agriculture and Forestry met this day at 6:31 p.m. [ET] to examine and report on such issues as may arise from time to time relating to agriculture and forestry; and, in camera, for the consideration of a draft agenda (future business).
Senator Robert Black (Chair) in the chair.
[English]
The Chair: Honourable senators, I call to order this meeting of the Standing Senate Committee on Agriculture and Forestry. My name is Robert Black, and I am the chair of the committee. I want to welcome members of the committee to the meeting tonight, and our witnesses — thanks for being here — as well as those watching on the web.
I would like to start by acknowledging that the land on which we gather is on the unceded traditional territory of the Algonquin Anishinaabe Nation. Before we hear from our witnesses today, I would like to start by asking the senators around the table to introduce themselves.
Senator Martin: Good evening. Yonah Martin from British Columbia.
Senator McNair: Good evening. Welcome. John McNair from New Brunswick.
Senator Varone: Toni Varone, Ontario.
Senator Burey: Sharon Burey, Ontario.
Senator Robinson: Good evening. Mary Robinson, representing Prince Edward Island.
Senator Sorensen: Karen Sorensen, Alberta.
Senator McBean: Marnie McBean, Ontario.
Senator Muggli: Tracy Muggli, Treaty 6 territory, Saskatchewan.
The Chair: So that we can prevent acoustic incidents and use our best practices, I would like to ask you all to consult the cards on the table for guidelines on how to prevent audio feedback incidents. I would also like to remind all those participating and our witnesses to refrain from switching languages mid-sentence and to not speak too quickly. Clear audio supports accurate interpretation, transcription and captioning, so we’ll appreciate you doing that.
Today, colleagues, we continue the AG101 spotlight series. We have had one or two, and these spotlight briefings are meant to inform Canadians and committee members about select topics of interest in agriculture. Today we’ll be learning about the free trade agreements related to agriculture such as the Canada-United States-Mexico Agreement, or CUSMA, and the Canada-Indonesia Comprehensive Economic Partnership Agreement, or CEPA.
From Global Affairs Canada, we have the pleasure of welcoming Aaron Fowler, Associate Assistant Deputy Minister, International Trade and Chief Trade Negotiator, and Lynn McDonald, Director General of the North America Trade Policy Bureau. From Agriculture and Agri-Food Canada, we also welcome Matthew Smith, Chief Agriculture Negotiator and Director General of Trade Agreements and Negotiations, and Axel Ndayisaba, Director of the Trade Negotiations Division. Thank you very much for accepting our invitation to appear before the committee.
We will give you up to 20 minutes to tell us a bit more about what you’re doing so it gives us a perspective. This will be followed by questions from the senators. When your time is running out, at about 18 minutes, I’ll put my hand up, and then at about 19 minutes and 30 seconds, when you have about 30 seconds left, I will put both hands up. That means if you’re not done at that point, you should be, soon.
Mr. Fowler, the floor is yours.
Aaron Fowler, Associate Assistant Deputy Minister, International Trade and Chief Trade Negotiator, Global Affairs Canada: Thank you, chair and honourable senators.
Canada’s agricultural sector is a cornerstone of the national economy, contributing over $149 billion annually to our GDP and employing 2.3 million people across the agri-food system. With a population of only 41 million people but the productive capacity of half a continent, Canada relies heavily on exports to strengthen the rural economy, support our national prosperity and sustain growth.
Canada is the fifth-largest exporter of agricultural and agri‑food products globally. Last year, Canadian agri-food and seafood exports reached a record $100.3 billion, reaching almost every country around the world. Nearly half of all Canadian agricultural production is exported. Three sectors — grain and oilseed milling, meat and poultry, and seafood — account for over 54% of these exports.
[Translation]
Canada currently has 15 free trade agreements, granting preferential access to 51 countries and 1.5 billion consumers. Canada’s free trade agreements are critical tools that open doors to global markets, reduce trade barriers and create predictable environments for farmers and agri-food businesses. The Canada-United States-Mexico Agreement and our recently signed Comprehensive Economic Partnership Agreement, or CEPA, with Indonesia are examples of this.
[English]
With respect to the Canada-Indonesia CEPA, this agreement will provide Canada’s agricultural sector with significant benefits. Indonesia is Southeast Asia’s largest economy, and it’s a market of over 270 million consumers. Indonesia is already one of Canada’s top agri-food partners. Over the past decade, Canadian agri-food exports to Indonesia have doubled to $1.2 billion annually. Our world-class Canadian wheat and soybeans make up more than 90% of that trade. Canadian crops are supporting Indonesia’s food-processing industries to make breads, snacks, baked goods and plant-based protein products, helping to create value-added foods for both local and export markets.
On market access, Canadian agricultural exports to Indonesia currently face tariffs averaging 8.6%, with some as high as 30%. Under the CEPA, tariffs on key products like beef and pork will be eliminated within five years, while soybeans, peas, lentils and chickpeas become duty-free immediately. For canola oil, tariffs will disappear upon entry into force, and for seeds and meal, they will phase out over 10 years. Even high-value products like blueberries, cranberries and frozen french fries will see immediate tariff elimination, opening doors for Canadian farmers and processors.
The CEPA also tackles non-tariff barriers. It streamlines import licensing for products like beef and potatoes and establishes robust and enforceable rules and a committee to address sanitary and phytosanitary issues. These measures mean fewer delays and more predictable access for Canadian exporters.
The CEPA will also complement the Government of Canada’s market development initiatives in Indonesia, providing the institutional framework and government-to-government relationships to open doors for Canadian agri-food producers. Our in-market Agri-Food Trade Commissioner resources in Indonesia, in combination with Canada’s new Indo-Pacific Agriculture and Agri-Food Office, will continue to enhance and deepen our commercial relationships in Indonesia and across Southeast Asia.
[Translation]
Lastly, the agreement strengthens investment and services. Canadian agri-food businesses will benefit from robust investment protections, transparent regulations and easier temporary movement for professionals to provide services. This supports innovation, food processing and agri-tech collaboration in one of Asia’s fastest-growing markets.
[English]
I’ll turn now to the CUSMA. As you know, Canada, the United States and Mexico are preparing for the CUSMA joint review scheduled to begin July 1, 2026, six years after the entry into force of that agreement. North America’s economic partnership is one of the most successful and deeply integrated in the world. Canada, the United States and Mexico are bound not only by geography and history, but also by extensive trade and investment flows, cross-border supply chains and enduring people-to-people ties.
CUSMA represents the world’s largest trading bloc in terms of GDP. Thanks to CUSMA, total trilateral trade in goods and services has increased 35% to $652 billion Canadian since CUSMA’s entry into force in 2020.
The North American trading relationship has long been anchored in predictability, collaboration and mutual benefit. We have had an agreement that underpins trilateral integration in North America going back to 1994.
But, as you know, recent developments have changed the landscape. U.S. tariffs and the prospect of further protectionist measures have introduced real uncertainty for businesses and workers on both sides of the border. These actions have tested the resilience of our supply chains and the trust that underpins North America’s economic success. The decades’-long drive toward deeper economic integration is not to be taken for granted.
While we are facing unprecedented challenges and a more inward-focused approach to trade policy in the United States, Canada stands ready to conduct the trilateral joint review of the CUSMA in 2026 with our North American partners with a view to strengthening our economies and the region, ensuring the agreement continues to effectively underpin the trilateral economic relationship.
Six years after its entry into force, Canada believes the agreement is working well and delivering benefits for all three parties. Last year, trilateral merchandise trade amounted to $1.7 trillion, which is a 31% increase since the agreement entered into force. Canada’s top export market for agri-food and seafood products continues to be the United States, with 62% of Canada’s total agri-food exports destined for the U.S. in 2024. This performance, especially during a period of global uncertainty, confirms the continued economic significance of the highly integrated North American market.
Given its importance, planning and preparing for the CUSMA joint review is and has been a priority for Global Affairs Canada and the government. Working in close consultation with other government departments, stakeholders, provinces and territories, Indigenous groups and other interested parties, the work is well under way. This review is a planned and deliberate process, one that is explicitly provided for under the agreement. It is an opportunity to review the agreement’s operation and ensure that it remains fit for purpose in a changing global landscape.
[Translation]
To inform our approach, Global Affairs Canada has recently completed a second round of public consultations through the Canada Gazette to refine our understanding of what Canadian businesses are experiencing and how we should proceed. We’ll continue to engage with stakeholders and partners across the country. We’re listening carefully and considering all angles. These conversations are essential to shaping our approach and defending and promoting Canada’s interests and national priorities.
[English]
Canada is approaching the review with a clear-eyed and collaborative mindset. Our preference is to keep the review as focused, narrow and targeted as possible and to seek a prompt renewal of the agreement, secure preferential market access, and reinforce a stable and predictable trading environment in North America for the benefit of Canadian businesses and investors.
Canada’s trade relationships are at a pivotal juncture today. We are prepared to meet this moment and are standing ready to engage with our CUSMA partners to advance our shared economic activity, security and prosperity in North America.
To wrap up, Canada’s free-trade agreements are indispensable tools for the agricultural sector. They unlock access to billions of consumers, eliminate costly tariffs and non-tariffs barriers, and foster competitiveness in global markets, including in this market.
Furthermore, with the entry into force of Bill C-202, the government’s commitment to preserve, protect and defend Canada’s supply management system is strengthened. Government support and proactive trade-diversification strategies ensure that Canadian agriculture continues to thrive. In our current era of geopolitical uncertainty, FTAs help provide stability and opportunity to our sectors, empowering Canadian farmers to feed the world while strengthening the national economy.
I’ll end my comments there. Thank you.
The Chair: That was 10 minutes. You have 10 more minutes if you want it. No? Thanks very much. We’ll proceed to questions now. We will begin with our deputy chair.
Senator McNair: On October 29, 2025, Canada’s Ambassador to the U.S., Her Excellency Kirsten Hillman, appeared before the Standing Senate Committee on Foreign Affairs and International Trade. I had the pleasure of hearing her speak. In her comments, Ambassador Hillman noted that China is both an important export market for Canada as well as a country:
. . . that has adopted certain kinds of economic policies that have created hardship and challenges for some Canadian industries . . . and has made it difficult for our companies to compete internationally.
How would you assess both the opportunities and challenges that China presents to Canadian agriculture and agri-food companies? What supports or policy measures from the federal government are currently in place to help Canadian agri-food exporters manage both the opportunities and challenges associated in the Chinese market?
Mr. Fowler: Thank you very much for the question, senator. I’ll begin by providing a frame and turn it over to my colleagues from Agriculture and Agri-Food Canada to elaborate upon the importance and challenges in that market through the lens of the sector.
China is an essential partner for Canada, not just in the agri‑food space but more generally speaking. It’s an enormous market; it’s one sixth of humanity. There is not a strategy that fails to contemplate Canada’s continued engagement and constructive collaboration with China in those areas where it’s possible to do so.
That said, in many cases, it can be a bit of a challenging environment. Recently, those challenges have manifested themselves in ways that are very clear to key players in the agri‑food sector in Canada. The government continues to constructively engage with China at various levels, including a recent meeting at the end of October between the Prime Minister and the President of the People’s Republic, Xi Jinping. Both leaders have directed their officials to move quickly to resolve outstanding trade issues and irritants. That’s what we intend to do.
We recognize there is a risk here in not getting the situation exactly right, so our pragmatic and constructive engagement with China will also be informed by a very clear understanding about Canada’s interests are and what the risks are that continue to characterize that particular market.
With that introduction, I would like to turn it over to colleagues to perhaps collaborate a little bit from the agriculture perspective.
Matthew Smith, Chief Agriculture Negotiator and Director General, Trade Agreements and Negotiations, Agriculture and Agri-food Canada: Thank you for the question, senator.
I think it’s very clear, as my colleague was just saying, that, with such a big market — China being the largest after the United States — and agriculture being so focused on exports in that country for so many crops and products, it’s inevitable that people have a real interest in that kind of market. We have had a lot of success there over the years, and people are very interested in the sector in seeing all the doors open wherever they can be.
What we have been doing over a number of years with partners from industry is talking about the best way to go about the market. There are certainly rewards to be had. There is often a very immense buying capacity, often combined with good prices that make China a very attractive market when the door is open.
People need to be mindful of the fact, though, that it can close — and it has done so in the past — to a number of our important agricultural products. It is the case now for beef, pet food and canola that we have significant restrictions in place. The same applies to pork, peas and a number of our important Canadian ag products.
So even though there is a real demand for the high-quality products in Canada, you also have the reality that there are some risks associated with the market.
The Chair: You have a minute; I’m just giving you the warning.
Mr. Smith: Knowing how important that market is, in addition to the Prime Minister’s outreach, the Minister of Agriculture just returned a few weeks ago from a trip to China having met with the Minister of the General Administration of Customs of the People’s Republic of China. That is part of government outreach to try and make sure that we have the relationship on a better footing and to try to look at how to get more space for Canadian goods to go into that market.
We also have a lot of support for exporters through the Trade Commissioner Service that is linked to trying to connect people with buyers in those markets and some of the smaller product areas. Some of the big-volume traders have their contacts, and they know how the market works very well. They are focused on the tariffs that are in that space.
There is a lot of investment that will continue to go into that relationship.
The Chair: Thank you. Senator McNair, we’ll add you to the second round.
Senator Martin: Thank you very much for your presentation. I have a couple of questions regarding the consultation process, and then I wanted to ask about the Canada-Korea Free Trade Agreement, which is in its tenth year this year.
First, in terms of the consultation process, you mentioned there is public consultation with stakeholders through the Canada Gazette. What about the process with the consultation process with farmers, Indigenous communities and all those involved in the agriculture value chain? How do you fully engage? How do you ensure that the final negotiations work for different regions and types of farms rather than a one-size-fits-all approach?
I’m curious about how you take into account the impacts upon the smaller farmers and the different regions that really will vary from region to region.
Mr. Fowler: Thank you very much for the question. I think it will be a bit of a two-step dance here this evening as I try to frame it generally, and then invite Matt and Axel to speak to the ag specific.
As trade negotiators, we understand that our ability to do our job effectively is utterly dependent upon the extent to which we understand the interests and the challenges of the Canadian private sector. We go to great lengths to ensure that we have the opportunity to benefit from the insights of our businesses, exporters, different communities across the country and different levels of government.
So while we do publish a general consultation through the Canada Gazette prior to launching any trade negotiation, we supplement that public consultation in a variety of ways, some of which are specific to a particular negotiation and some of which are ongoing engagements that cover the whole sweep of our trade agenda at any one point and time.
For example, normally, once the formal opportunity to provide comments through the Gazette period closes, we will keep open a portal through the Global Affairs Canada website where interested parties can continue to make submissions as long as those negotiations are a going concern. That has been the case for a number of the FTAs that are currently or recently were negotiated.
We have a body that we call C-Trade, which is the federal-provincial-territorial committee on trade, which we convene a number of times a year for the purpose of ensuring that provinces and territories are similarly apprised of Canada’s ambitious trade agenda. They have an opportunity to ask us questions and provide us with the perspectives of those jurisdiction dictions with the respect to the various negotiations that are under way.
We have recently reorganized our engagement with Canada’s Indigenous partners into a similar structure we call I-Trade to reflect its parallels to the C-Trade structure. Again, that is a group that will meet multiple times a year with key Indigenous partners to provide them with updates to give them an opportunity to ask questions and to receive their input and advice.
Individual sectors are engaged through the technical negotiating leads that Canada employs on various different tables. The tariff lead, for example, will reach out and have conversations with different groups, as appropriate. Some of those will be much more technical and in-depth in details, but those contacts are well established; we know who to reach out to. We have well-developed relationships with national associations, particularly. Of course, the Trade Commissioner Service has a regional office network across the country that we use to engage below the national association level to ensure we have the benefit of as diverse perspectives as possible to inform our positions.
Once we have that input — that raw material — it’s up to me, other chief negotiators and our negotiating teams to determine how best to crunch those data into a negotiating strategy that will effectively advance the objectives that we in the government have identified in that market.
Senator Martin: I’m trying to follow your explanation. That’s a lot of information that you would have to then put into that negotiating effort for that particular trade agreement.
The Chair: We’re at five minutes.
Senator Martin: One more?
The Chair: I will put you on the next round.
Senator Martin: I didn’t get to the Canada — we’ll do that next.
The Chair: We’ll get everybody through once, and then we’ll be more lenient.
Senator Muggli: I have two things, as well, so we’ll see how it goes. My first question is around supply management and Bill C-202. I’m interested in how you think that will play out in reality when you get to CUSMA negotiations.
Mr. Fowler: Thank you very much, senator. Thank you, in particular, for the very specific reference to CUSMA that you added at the end, which allows me to turn to my colleague Lynn McDonald to answer this question. It could be either of you, actually.
Mr. Smith: I’m happy to say something about that.
We have a history in Canada of protecting supply management. That’s an important part of the mandate that governments have given to trade negotiating teams throughout my career, and it’s no different now having that clear mandate.
What I think is different is that it’s very straightforward for other countries to see that we have a legal obligation that says there will not be a change to the market access for supply-managed goods. That means the law is very particular to say there won’t be an increase in the amount of quota for those products that could come into Canada and neither would there be a reduction of the general tariff that otherwise applies and makes it very expensive to import those products into Canada.
Senator Muggli: How do you see that creating a barrier at the negotiating table? Do you think it will be a barrier? What will we not be able to do because we can’t talk about that?
Mr. Smith: My colleague was mentioning the consultations that have been run in Canada. We have also seen the United States running consultations, as well as Mexico, as part of their processes to get ready for the CUSMA review — and any interactions between the three governments.
That just wrapped up on the U.S. side a couple of days ago. We’re going through all of the input. There is certainly some in there about dairy and their interests. The U.S. has long had an interest in the Canadian dairy market, so it would be surprising if they didn’t have questions for us in that space.
It’s interesting to look back over the last five years. There have been two instances of trade litigation where the U.S. has taken a challenge under the CUSMA against Canada in the dairy space, and those have focused not on those two areas of Bill C-202 — the access — they were focused on how we administer the quotas in Canada. I think part of that is U.S. dairy groups looking at the ways to try and get the most out of the access that’s provided by the CUSMA.
It will be interesting to see. There will be different voices from U.S. dairy asking for different things. We’ll be looking at the full range of comments coming in from the U.S. government, but we’ll also be looking at what the U.S. government asks of Canada in that space. I don’t think it has been made clear at this time exactly how they would approach it, so we need to be prepared for any kind of request on the American side.
They are also coming into an environment where they have seen the vote in the House and the way that there has been support from all parties for that law. That all goes into the mix.
Senator Muggli: CEPA sounds like it will be good for Saskatchewan. How are we going to action that? Are we going to set up more trade offices? How are we going to get our product there, knowing that they may very much want Saskatchewan product? How do we go from having an agreement now to actioning that agreement and getting our product there?
Mr. Fowler: Thank you very much for that question.
The first step is that we need to bring this agreement into force. The concluded and signed treaty is before the House, subject to the treaties in Parliament policy. Following that, the government will introduce the legislation. There is a similar process that the Indonesians will need to go through on their side, and at some point — I think the expectation is in 2026 — it’s likely that both countries will ratify, and the agreement will enter into force after that point.
Part of ensuring that the opportunities we believe the agreement creates are, in fact, taken up is by making sure that they know what those opportunities are. So post implementation, we will do a broad campaign in Canada to try to familiarize our exporting community, agricultural and otherwise, to the terms of that agreement, and then we do have, of course, the original office network that works with export-ready Canadian companies across the country to help them navigate international markets. We similarly have trade commissioners that are in Indonesia already and who know the landscape there very well who can help exporters and investors and other business people navigate that market in light of the benefits that the agreement will provide to them.
Senator Muggli: Do we have enough infrastructure over there to really move that along in Indonesia?
Mr. Fowler: We have a pretty good representation in Jakarta as well as in the broader ASEAN region including as a result of the agri-food office that is now open in Manila. I would never say no to additional resources, but we have an awfully good team on the ground, and I suspect they will be able to move the needle in a significant way.
Senator Varone: What I know about trade is I know nothing about it. I’m going to start this question — the question that I was going to ask, senator, you stole it from me. So we always kind of recalibrate our questions just to try and make sense of it, but you ended your comments to Senator Martin’s question about a negotiating strategy. I wanted to dive more into that because we have a Prime Minister who is quite conciliatory. He is very measured. I like his style, but given the events of the past week, where President Trump capitulated on things like coffee, fruits from the Caribbean, fertilizer and beef, where he reduced the tariffs for Americans, if Prime Minister Carney is a great conciliator, we have some gladiator premiers in our midst — Premier Ford, Premier Smith. And knowing that trade negotiating is very nuanced, who has got the better style? What is the magic sauce in getting across the finish line? Is it being tough? Is it being conciliatory? Just seeing President Trump renege on tariffs was an eye-opener. Does that change your calculation as you negotiate?
Mr. Fowler: Let me try to come at this in a way that may result in me having a job tomorrow.
I would say that in my experience as a negotiator, I have sat across the table from and worked on the Canadian side with negotiators who favour a wide range of negotiating styles. Some of them are antagonistic and competitive negotiators. Some of them are collaborative negotiators. Some of them have a zero‑sum mentality. Some of them have “a rising tide lifts all boats” mentality. I will say that none of those styles are inherently superior to any of the other styles. Some of them work in better combination together than others. It’s very difficult to have a conciliatory negotiating style when the person across from you has an antagonistic one, but I think that as long as you have a style that is effective for you and that allows you to communicate your expectations. interests, your objectives, what you have a capacity to do and what you don’t have a capacity to do and what the price is to do or not do those things clearly to the other side, then you can be an effective negotiator.
So I don’t think there is any monopoly on the right or the wrong way to negotiate, and if there were, I would not presume to tell those people how.
Senator Varone: Knowing what President Trump just did, does it change the manner in which you approach trade?
Mr. Fowler: I will invite Lynn to jump in on this one, but I will say very quickly that I think you have to be confident enough in your negotiating approach that you’re prepared to stick with it through some turbulent moments in the negotiations and not to necessarily spin off, chasing whatever the latest development may be. Over the long run, sticking your ground is probably a more successful strategy, from my perspective. Specific to these negotiations, I don’t know if there is anything to add.
Mr. Smith: I have one thing to add as an observation. The example you gave, senator, was the recent change by the United States to remove certain tariffs, and we’ve been doing a huge amount of consultations in the Government of Canada, and we are hearing from different stakeholders, different priorities. Some of the priorities they will bring to the Government of Canada will be, “Let’s wait. We’re able to wait. Our business is able to have a bit more time, and there could be some pressure on U.S. interests because of prices.” And other stakeholders will say, “My business faces a tariff or a problem into the U.S. right now, and it’s a question of dates before we have to make layoffs, before we have to make difficult decisions.” So there is going to be, on the Canadian negotiating strategy, a need to weigh those different voices, and people are asking for different things.
Lynn McDonald, Director General, North America Trade Policy Bureau, Global Affairs Canada: I can just add one additional observation to what my colleagues have said, which is that underpinning the strategy that Canada takes is also a good and continued understanding of what may be informing and driving some of the approaches that the U.S. administration is taking. And with respect to some of these recent moves by the president, there is an understanding of some of the domestic pressure he’s feeling in terms of price increases in these commodities.
I think that watching and continuing as we have been doing, and through our embassy and other contacts, to get further information and as that evolves over time, about what are the different voices and pressures that are also feeding in on the U.S. side, also helps to inform our negotiating strategy as well.
Senator McBean: I’m going to go with my second question first because I think my first question won’t be Senator Robinson’s. When I was an athlete, I remember my agent telling me once that the easiest contract to sign is a renewal, and so you have a relationship with the company. So you always want to make sure that’s a good partnership.
I hear you saying that with the CEPA — I think you said this — in the last decade, we’ve doubled our exports to Indonesia, something like that. We have all this, and like Senator Muggli says, how do we get the product from Saskatchewan to Indonesia, because we’re constantly having disruptions on the rail lines and in the ports. I was actually thinking specifically about the limited number of boats that are going through the ports and in the waters off the B.C. coast.
What is Global Affairs Canada doing to ensure that the system works in Canada to get it out but also to make sure that our partners can trust us that we can continue our supply of the stuff we’re trying to sell? Have you trained me well, or did I poach your question?
Senator Robinson: That’s amazing.
Mr. Fowler: Thank you very much for the question. It’s a really good one. The truth is, as I said in my opening remarks, we have a suite right now of 15 FTAs that cover 51 countries, about two thirds of the world’s GDP. I increasingly find myself saying we don’t really have a market access problem in this country, and as much as we welcome Indonesia, it’s not like that was the one everyone was waiting for. We have quite a lot of access into global markets as it is.
What we have is a bit of market penetration problem. Part of the challenge is that the opportunities presented by the United States for many years have been sufficient to occupy the attention of a pretty large proportion of the Canadian exporting community such that they didn’t necessarily in every case feel the need to explore some of these other markets. But that deepening integration between Canada and the United States, going back to at least the 1980s, the infrastructure has followed the economic activity. So the investments that we’ve made enabling infrastructure, particularly in recent decades, have largely been north-south and designed to facilitate movement between Canada and the United States and then onward to Mexico and so on.
If we want to take advantage of the market access that we already enjoy into these 51 countries, and the market access we intend to negotiate into a large number of other countries soon, then we have to ensure we have the infrastructure that will allow us to take advantage of that market access and actually get Canadian product into these markets. That means being able to get product to port, having the rail lines, having the storage facilities, having the port facilities, having the rolling stock, all of these things.
That is a policy challenge that goes well beyond what Global Affairs Canada is capable of speaking to. It involves other parts of the government like Transport Canada and others, but we are trying to play a role by ensuring that our partners across the federal government family have an understanding of what the trade demands are on that infrastructure to inform the decisions that they make and where they put their money.
I don’t know if there is a more ag-specific response that you may want to add.
Mr. Smith: No. Absolutely, we gather a lot of information about the difficulty and frustrations that agriculture exporters have in getting their product to market. It’s part of that federal family conversation, as my colleague was just referencing, to make sure that our colleagues in other responsible ministries hear just what a challenge it can be and where investments deliver the most value from an agriculture perspective.
Senator McBean: You mentioned a storage facility. I know in Halifax there is a grain storage facility that’s being decommissioned, I believe. How much does Global Affairs tread in and say, “Look we’re over here trying to trade this stuff. You have to have the storage facilities for us to move the product if we’re going to go across the Atlantic Ocean?”
Mr. Fowler: I doubt we would engage on a specific question like that, to be honest, senator. Colleagues at Agriculture might feel closer to a specific decision around whether to decommission or not or to make a specific investment. Our approach is to provide a broader kind of analysis to inform decisions that other government departments will make, but we’re not a domestic agency, and so I think we have to be a bit judicious in terms of the advice we provide and how we engage with our partners to ensure they have the information they need to inform their decisions.
Senator Robinson: I’m trying to come up with a question after Senator McBean was heartless in her stealing of this. This is an ongoing thing at this committee. We steal each other’s questions.
First off, I want to say thank you. In Prince Edward Island in 2024, Indonesia was in our top five export markets for potatoes, and CEPA is going to improve that. It’s pretty amazing when you started off by saying $100.3 billion in exports, so we are an exporting nation.
We’ve seen our performance drop. We used to say we were in the top five, and now I think we’re seven headed for nine. Do you know these numbers, Mr. Fowler?
Mr. Fowler: Not off the top of my head. But I know what you’re talking about.
Senator Robinson: Moving away from that, I want to talk about what Senator McBean was talking about but with a different flavour.
When you go in to negotiate an FTA, how are you viewed as far as representing a reliable trade partner? Specifically, I’m thinking about we’ve seen this mosaic of cool rules in Italy and talk about the EU trying. How do we get into that market?
But my bigger question is really the labour issue we face here in Canada and how we see these work stoppages happening in our value chain in rail and marine port activity. We know for every one day there is a work stoppage, it takes six days for our grain farmers, beef and pork processors to get back to where they were before that stoppage happened. One day equals six days of clean-up.
When you go to trade negotiations, we hear from our exporting commodities that we’re being viewed as unreliable because of our internal issues in labour as far as getting product from fields to port to port across to wherever we’re going.
Mr. Fowler: Thank you very much for the question, senator. First of all, I am familiar with the statistics that you’re referencing. When I started my career at the department, we were in the top four international trading countries in the world and I don’t like to say we have fallen down, but we’re a little lower on the list right now.
I don’t see that as an indication that Canada is underperforming. It is natural that a country like China is trading more than a country with 41 million people. India, 1.5 billion people should be trading more than a country of 41 million people. So some of this is other countries taking their natural role in the global economy and it is not something to lament. It creates opportunities for this country, and it’s something that should be celebrated. That’s a good thing.
When we talk about reliability in the eyes of our trading partners, I see that two ways. One, to what extent is Canada going to live up to the obligations that it’s taking on in this agreement that it’s negotiating with us? Can we have confidence that the Government of Canada will live up to the standard that it is putting on paper here? Do we have any reason to believe that these commitments are not going to be respected. I think in that respect, we’re very held in very high regard.
Our track record for many years has been that we respect our international trade obligations. Sometimes countries can disagree on the specific details of what an obligation entails, but when panel decisions have gone against Canada, traditionally we’ve put ourselves into compliance and we’ve made the adjustments to demonstrate to our partners that we are reliable.
The other aspect of reliability is security of supply reliability, which I think is more the direction your question was going in at the end. In that respect I would probably turn to my colleagues to see, because the reality is that the supply chain for agriculture is quite a bit different than it is for, say, industrial products. I wouldn’t want to generalize in that respect.
Mr. Smith: Well, you have the trade negotiators with you today. From that perspective, we don’t have comments and concerns brought into the negotiations. But as my colleague was saying, you do have the opportunity in the committee to hear from exporters who are there trying to make the commercial transactions. It’s very much the case that we hear from them in the department and that there are a lot of challenges in being able to get product to market.
The fact that we don’t have countries saying, “We don’t have time or interest in dealing with Canada, we don’t want to have a negotiation,” that’s not happening. People do want and we have covered three quarters of the world’s GDP. So there is an interest in doing business with Canada.
Senator Burey: Thank you for being here. I’m learning a lot and I know absolutely nothing about trade, but I’m sure I can use some of the other things that I know something about, maybe bring something here.
In any event, I’m from Windsor-Essex. We have large greenhouses, probably the largest in North America, but I’m going to give you sort of a higher-level question in terms of your long-term strategy. We’ve been talking about your strategy in looking at tariffs.
One of the main ones you talked about is diversification. I wanted to kind of drill down and ask how committed or strong is your recommendation to stick to diversification as a strategy?
You did mention that we have traditionally done the north-south because it is easy. You talked about 62% of trade going north-south, and the Prime Minister now saying that we want to get $300 billion in trade in the next decade.
I want to try to and build on that with your recommendations. How committed are your recommendations to say that we have to stay the course with diversification instead of sliding back?
Mr. Fowler: Thank you, senator, for the question. I think it is an extremely firm commitment to the diversification agenda. It’s been one that successive Canadian governments have tried to advance going back many years.
The degree of reliance of the Canadian economy on our partnership with the United States has been pretty clear to many people for a long time. While that has often been a great source of strength and a foundation for our prosperity as a nation, any degree of dependence at that level entails a degree of vulnerability as well. So to avoid being caught with all of our eggs in one basket, it is prudent to start to weave some additional baskets. That is what we have been doing and that’s what we will continue to do.
What we need to focus on now is not just opening the door but ensuring that our trading community has the skills to be able to turn the latch and walk through that door themselves.
Senator Burey: Are there any other comments?
Mr. Smith: Mr. Chair, the senator mentioned in her question greenhouses specifically, and in that space, I would say we have a very clear message coming into the Department of Agriculture that, yes, it’s good to have the choice of markets. Yes, it’s good to diversify. For some products there is a natural market which, in the case of a lot of greenhouse produce, is the United States.
There’s no relaxation of our dedication to try and make sure that we have a smooth path into the world’s largest market and our neighbour, and we can and will pursue both avenues at the same time.
Mr. Fowler: I should clarify, senator, that while we’re focused on diversification, the goal is in no way to reduce the absolute size of our economic and trade partnership with the United States. It is simply to diminish its relative size and to ensure that our other partnerships are equally capable of sustaining Canadian prosperity and competitiveness.
Senator Burey: Lynn, did you want to say anything?
Ms. McDonald: No, nothing at this time, senator.
Senator McNair: When you were talking about CUSMA and the fact that the current CUSMA agreement was anchored in predictability, I was struck by the comments from my colleagues that the President’s actions on a good day sometimes represent unpredictability.
I take it the goal is to get as narrow of a review finalized as quickly as possible and get away with a signed agreement, get back to Canada and do what you say, continue the volumes that we’re exporting, and 62% to the U.S. is huge.
Ms. McDonald: Senator, thank you very much for the question. I’ll start and then my colleagues may wish to add on a bit.
You’ve characterized it correctly. The position, the feeling of the government is, as my colleague pointed out, that the agreement has brought great benefit to all three parties. This mandated review that’s coming up in 2026 is to look at implementation and operation of the agreement.
Canada’s view — and we believe this is shared as well by our Mexican colleagues — is to try to preserve the agreement, preserve the preferential market access that is there, keep it as a focused review rather than reopening and putting everything out on the table.
We will, of course, have to see how the U.S. approaches the exercise, but to date, it has been following the regular course in terms of holding public consultations, in terms of preparing, as they will, a report to Congress in January. It has been taking the steps that it would normally take in that type of approach to the review.
That’s how we are taking a look at it, recognizing that we’ll need to potentially adjust, but coming into it, our view is that we’ll preserve this more narrow-focused approach.
Senator McNair: I thank everyone here on the panel and the whole team of people behind you that are doing this work. I wish you a happy Canada Day now for next year, because I think you’re going to be down in the U.S. at that time.
Ms. McDonald: Thank you, senator.
Mr. Fowler: Thank you.
Senator Martin: I want to talk about the Canada-Korea FTA. I know it took about a decade to conclude the negotiations, and I was able to witness a big chunk of that through two international trade ministers and Ian Burney, who was there from start to finish.
Mr. Fowler, I know you have 20-plus years of experience on the Canada-U.S. negotiating file. I think we’re very lucky to have our very experienced trade negotiators.
The FTA is set to eliminate tariffs on 99.75% of Canada’s exports by 2032, and it’s one of our most comprehensive FTAs for agri-food. This is the tenth year. What are the successes from that FTA, and how is that informing what you’re doing in the Indo-Pacific agreements?
Mr. Smith: The Korea FTA was certainly useful from an agriculture export perspective. There is a significant market there and one which continues to grow and which affords good prices for high-quality Canadian product.
Our trade with Korea in ag is now a little over a billion dollars, and it continues to grow. The biggest exports are pork and wheat. They have other grains and some finished food products going in. As the agreement continues to come into effect, we are looking at more opportunities for some of the meat products.
At this time, both the United States and Canada concluded trade agreements around a similar time. Some of the concessions that the Korean government agreed to came with a phase-in period that is significant, in terms of years, for agriculture products, but we see increased sales of imports. Korea is a net food importing country and that continues to be a driver for us to see real prospects in terms of growth down the road.
Senator Martin: With that FTA, is it just ongoing? Are there different aspects revisited, or is it just a successful FTA that will be in place? By 2032, we expect 99.75% of tariffs gone, so what do we anticipate going forward with that?
Mr. Smith: It’s quite unusual. The Canada-United States-Mexico Agreement is the only trade agreement we have with this automatic built-in review function. What we have in the Canada-Korea FTA is a number of committees that can meet as necessary when the two partners think there is something to go through. On occasion, we’ve been able to have our Sanitary-Phytosanitary Committee, for example, bring officials together from both governments to talk through a non-tariff issue, for example.
It delivers benefits, and it gives us contacts into Korean ministries that are really useful for the ongoing improvement of the regulatory side of things, but the tariffs will not be an issue when both parties are respecting that very high tariff elimination.
Mr. Fowler: When you have the opportunity to look at the Canada-Indonesia Comprehensive Economic Partnership Agreement, you will see that it, too, contains review clauses. One is to review the tariff outcome three years after entry into force, and one to review the agreement as a whole five years after entry into force, if I’m not mistaken.
I think, senators, that you will see these review clauses become an increasingly common aspect of our free trade agreements. One, because it allows us to acknowledge that the situation does change sometimes after agreements enter into force but also, sometimes our ambition is beyond what our negotiating partners can accommodate immediately. Rather than delay the conclusion of agreement and the benefits that would flow immediately to those sectors that are ready to take advantage of it, in order to wait until we put everything exactly where we think it needs to be, we will try to rely on review clauses that allow us to come back once that relationship is a bit more established and they know that they know what Canada represents as a trading partner.
Senator Martin: One last thing. I know it’s the tenth anniversary, but I know since 2019 it has become a comprehensive strategic partnership. The FTA is a good foundation for other things to happen. Thank you.
Senator Muggli: I’m wondering if you can talk about research and market analysis you conduct to identify what ag exports are expected to see the strongest growth. Which exports do you identify as the most poised for growth in the coming years? If you have time, perhaps you can talk about what our opportunities are in Africa.
Mr. Smith: Okay. We’re constantly working across the Agriculture Department to orient our international policy to where it can deliver the most value for the sector. We have established a series of sector groups, round tables where we’ll bring in representation from industry on a regular basis, and that’s in addition to work that my team will do to specifically talk about the trade agreement agenda and look at where can we have the most growth possibility and where we’re facing barriers as well. So there is constant engagement with associations, with provinces, with individual companies. We do a lot of outreach to try to put that together.
But the numbers tell a pretty clear story. We have some crops, grains, oilseeds and meat, which are always a major part of the trade makeup when we look at any new trading partnership. So just as we see a lot of trade in pork and wheat into Korea, we also see wheat and meat products leading the possibilities in Indonesia. And that is part of the infrastructure and just the amount of crops seeded across the country where we have some real competitive advantages in oilseeds that allow us, for example, to move a lot of that product into different markets.
With that, we try to mix in an understanding of where smaller businesses might be able to grow as well and try to make sure that the FTAs offer opportunity for everybody. There may also be chances where it’s not going to move our GDP number or the total amount traded, but for an individual business, they may bring us an issue about a permit or a charge that they face that a conversation between groups or even an effort to make our system look a little more familiar to the importing countries can give an advantage to smaller countries as well.
Senator Muggli: And the African opportunities?
Mr. Fowler: Just on the question of Africa, I will say obviously it’s a market of over a billion people, but it’s over 50 countries. It has been a complex set of economies to navigate for many Canadian exporters for a long time.
We have excellent relationships in Africa. Recently the African Union concluded the African Continental Free Trade Area, which Canada has supported with technical and capacity-building assistance.
The implementation of that agreement requests that the participants, for the next 10 years following the entry into force of the African Continental FTA, refrain from entering into free trade negotiations individually with outside parties to allow time for this agreement, the continental integration, to consolidate. The opportunities to negotiate things like a free trade agreement in Africa are more limited than it is in some regions of the world. But there are certainly opportunities in Africa, to be sure.
Senator Varone: My question is for you, Mr. Fowler. This is more about technical housekeeping to keep my brain straight. You opened up saying that the agri-food sector represents $149 billion of GDP, 2.3 million jobs that are sustained by it. I read somewhere that the supply-managed sector within that is about 20%, which puts it at around $30 million. This is where I’m speculating.
You also made the comment that exports are $100 billion of that $149 billion. What do we export in the supply management side? What jobs are at risk in supply management?
Mr. Smith: Supply management is focused primarily on making sure that we have the right amount of supply for the Canadian domestic demand and trying to match those things. None of the supply-managed industries have at their core a focus on exporting product.
Senator Varone: Just to be clear, if we’re exporting $100 billion out of the $149 billion and out of the $149 billion, $30 billion is the supply-managed sector, that only leaves another $19 billion for domestic consumption of the sector? Is my math correct or am I mixing apples with oranges? No pun intended.
Mr. Smith: I think that we see $100 billion in exports overall of agri-food products. But in terms of the makeup of those exports and how they fit with the domestic economy, an awful lot of those numbers for our trade overseas are going to be in the grains, oilseeds and the meat space.
There is a big footprint of supply-managed industry economic contribution to the GDP in Canada. I don’t have the numbers in front of me. But I would say there is definitely the focus on the domestic side and the production largely stays here. We don’t have significant imports in the supply-managed areas either.
Senator Varone: Is there anything you can speak about in terms of the U.S. as you negotiate?
Mr. Smith: Even though Canada is a powerhouse exporter of food, we are a serious importer of food as well. That is to provide the mix of products that people are used to seeing in grocery stores. We do have that ability to supply our market in the supply-managed industries, and there will be other agriculture spaces where even if we might be able to supply the domestic markets here, commercial choices might say let’s prioritize moving some products out of Canada because we can get an even higher price in another market.
Senator McBean: Senator Muggli took most of my question. Thanks for the third question follow up. It has to do with Africa also. I respect your answer, Mr. Fowler, about it is 50 nations and that’s a challenge to work with for many other reasons.
I’m wondering, with the shutdown of the U.S. Agency for International Development, USAID, is there a strategy for leveraging the resulting global void in international food development and food assistance going in that road, if there is a moment here that can be used to Canada’s advantage to influence global food security policy, and how we could make better opportunities for Canadian agriculture products in this area?
Mr. Fowler: We are trying to figure out who is best placed to answer the question. Maybe I’ll start and then colleagues can join in.
I’m not an international development expert. I wouldn’t want to imply to the committee that I am one. Obviously, I think the situation with respect to USAID has significantly changed the landscape for international assistance around the world, both for recipient and donor countries like Canada.
One recent innovation with respect to Canada’s approach to international assistance is evident in the Indonesia CEPA. This is the very first agreement where Canada has agreed to take on an obligation to furnish technical assistance and capacity-building support to Indonesia through our international assistance activities to assist Indonesia in implementing and living up to the obligations of the agreement.
In the first instance, this is designed to ensure that the benefits that we think we negotiated into that market are realized and practised. Second, it is intended to provide our Indonesian partners with understanding, at a technical level, of some of the directions of travel we would like them to consider when we come back to the negotiating table with them down the road, and so to help familiarize them with the approaches Canada would like to be able to advance in our negotiations.
That is something our negotiating partners have done for many years. We had not previously done it. It is likely to be a feature more frequently in our FTAs going forward, to marry our international development efforts in a way that benefit the recipient country while also moving the yardstick in a way that will make a meaningful difference to Canadian economic relations with that country. But in the ag space in particular, I would have to defer.
Mr. Smith: I don’t have much to add. I’ll just say that it’s an interesting space and one which I think Canadian exporters would be interested in seeing the government explore more. There are going to be some different considerations for countries that may have been receiving international development assistance about how this might look and how it might fit into a commercial conversation with Canada, but it’s certainly something that I could see being of great interest.
Senator McBean: Just seeing a loss of trade going down to the States —
The Chair: Do you have something to add, Ms. McDonald?
Ms. McDonald: Briefly, there is effort certainly under way at Global Affairs Canada, but also working with other colleagues across government, to see where we can further expand what we’re calling sort of a trade development nexus. For example, if there would be opportunity, say, in terms of Canadian technology on clean energy or on waste management, et cetera, where there may be opportunities to — for a development type of infrastructure project in, say, Africa or another developing country, but to organize whether it’s the loans or the financing or the way that the deal is structured to offer an opportunity where, if suitable for the project, Canadian technology would be able to be used to support that goal.
So it is to try and see, in a sense, where the international assistance efforts of the government can also work to enhance or promote some of the commercial and economic opportunities for Canadian business.
The Chair: Thank you.
Senator Robinson: I was wondering about Mercosur. We started in 2018, and we kind of put the brakes on it. I think you have 11 FTAs currently under negotiation, and Mercosur is one of them.
The Chair: Very quickly, folks around the table may not know what that is.
Senator Robinson: Mercosur is a trade agreement with Argentina, Brazil, Paraguay, Uruguay and Bolivia. Is that right?
Mr. Fowler: Yes.
Senator Robinson: That’s what we’re negotiating?
Mr. Fowler: Yes, although Bolivia is not part of the group with whom we are negotiating. They are still in the process of implementing their obligations as a Mercosur member.
Senator Robinson: From an agriculture perspective, when you look at Mercosur, what opportunities and what red flags might you see? I’m also wondering about Bill C-202, which we heard recent mention of. If we could talk about that for a little bit.
Mr. Fowler: I can start with Mercosur more broadly and then we can dig a bit into the agriculture considerations. That is an important group of countries. Canada has pretty extensive free trade coverage across the hemisphere, but, obviously, there are some remaining gaps, and Mercosur countries are a significant gap in the Americas, and one that we would like to fill in. We were actively negotiating between 2018 and 2021. I would say the wind was taken out of our sails a little bit by the pandemic. An effort was made to keep those negotiations going in a virtual manner, but, eventually, they sort of paused under the weight of our lost momentum, if I could put it that way.
Obviously, there are some significant opportunities in both the industrial and agricultural space into the Mercosur countries, in particular Brazil and Argentina given the size of those markets in relation to Uruguay and Paraguay. There is also a fairly significant degree of similarity between the economic structure of the Canadian economy and those of Uruguay, Argentina and Brazil, and what that implies is that some of the opportunities that we would see into those markets represent sensitivities from their perspective and vice versa.
So as we prepare to go back to the negotiating table with a view to concluding an agreement in 2026, the question that we need to grapple with is how to ensure that those areas where perhaps our interests are not ideally aligned don’t become stumbling blocks so that we find ourselves again having to push the pause button. I think the answer to that is to ensure we go in with a very good, clear-eyed understanding of what our commercial priorities are, and we focus on how to harvest meaningful commercial priorities in both directions.
I was in Brazil not long ago. The principles that I shared with my counterparts that I said I would hope would inform these negotiations are, one, that they are quick and we expeditiously conclude something, because the work is well advanced. Two, that they deliver meaningful commercial benefits in both directions. That doesn’t need to be exhaustively harvesting the commercial opportunities that we see, but that they do something real. Three, that we return agreements that can be passed through the legislatures of all five countries, which means they can’t trample indiscriminately on the sensitivities, the domestic sensitivities that I mentioned earlier, because if they do, then they will give rise to political opposition in one or more of the five countries, and we will find ourselves with a deal that can’t be implemented. Frankly, that’s even worse than not being able to get an agreement concluded, is that you have concluded one but it never comes in force.
The Chair: Any other comments from anyone else about this question?
Mr. Smith: I’ll just say that we have opened our efforts once again to collect exactly that kind of information — what are the sensitivities potentially in agriculture? What are the opportunities? We did do consultations to support the initial launch of negotiations pre-pandemic, but we’re not taking for granted that things remain as we were told many years back. It’s actually something that we’re actively pursuing right now.
The Chair: Thank you.
Senator Robinson: Everyone here knows that aquaculture is agriculture. Where does aquaculture fit in the Mercosur market? Is it a potentially good market for aquaculture? Do you know?
Mr. Smith: I would have to look.
Senator Robinson: Thanks.
The Chair: With that, thank you very much. You might know that this is the most fun committee we have at the Senate. Everyone around the table will tell you that.
Folks, we’re very lucky to have friends from Global Affairs Canada and Agriculture and Agri-Food Canada who are negotiating on our behalf. To each of you, thanks very much for your participation this evening, and your testimony and insight are very much appreciated. We’ll be back at you with further questions for other studies and things like that. We really do appreciate your participation this evening.
This is new for us, and it’s a good thing. Thanks again. Now we’ll briefly suspend to proceed to the in camera portion of our meeting.
(The committee continued in camera.)