Madam Chair, members of the committee, thank you for having me here today on Canada's Agriculture Day.

Cereals Canada is the national industry association for wheat, durum, barley and oats in Canada. We represent the full value chain, from farmers to crop development companies, grain handlers and exporters. Our members focus on the benefits of export-led growth facilitated by access to diverse global markets. Canadian cereals are a staple food exported around the world to over 80 different countries. In an average year, our wheat, durum, barley and oats sector generates $68.8 billion in economic activity in Canada, including more than 370,000 Canadian jobs.

Wheat production in Ecuador is insignificant. Their milling industry depends on imports to mill high-quality bread flour. Canada's cereals industry has established itself as Ecuador's leading wheat supplier and holds a 60% market share on imported wheat. Our industry views Ecuador as a market with significant growth potential. During the last five years, Ecuador's average annual imports of Canadian wheat were valued at over $285 million, a consistent top-10 export market for our industry. The nearly 750,000 metric tonnes of Canadian cereals exports to Ecuador each year account for 55% of Canada's exports to that country.

Cereals Canada supports bilateral trade negotiations with Ecuador to remove any remaining cereal import tariffs and to cement a rules-based trading system that protects market access for high-quality Canadian cereals. A key opportunity for FTA negotiations is the removal of remaining duties on Canadian oat imports. Ecuador retains an ad valorem tariff of 5% on oats other than those used for seed. Canada currently is the primary oat exporter in the Americas, and increasing market access to Ecuador will support market diversification of Canadian oat exports in South America.

Our sector has been supportive of the government's work to grow FTAs. These agreements have worked to reduce cereal import tariffs in the relatively few remaining markets where these tariffs still exist. The Canadian cereals industry has witnessed a shift in trade barriers from tariff-based to non-tariff-based, NTB, as the primary means of controlling imports. Unfortunately, there have been instances when, despite an FTA, market access has not increased. In these cases the use of NTBs frustrate potential gains from an FTA. While Canada has been able to grow our market share in Ecuador, experience in other wheat-importing markets, such as Peru, has shown that the imposition of import barriers through non-tariff measures remains a concern. In other regional markets, such as Mexico, we have seen government policy move away from science-based decisions and towards import restrictions on safe agricultural technologies.

When negotiating future trade agreements, and in implementing already agreed-to FTAs, Canadian trade officials—who do fantastic work, by the way—must increase their focus on including provisions governing the use of non-tariff barriers, risk-based scientific assessments, and timely, binding dispute resolution processes to reopen borders when barriers are put in place. These provisions would create the framework for a fourth-generation trade agreement, if you will.

The Canadian government and officials must continue to support the use of harmonized, science-based standards relating to maximum residue limits, MRLs. Science-backed MRLs harmonized at levels consistent with international guidance, such as Codex Alimentarius, provide transparent levels that protect consumers and support predictable trade. Canada's negotiators must recognize the trade-restrictive impact of setting MRLs and import tolerances at levels below harmonized international standards, and the market access obstacles this would create if Ecuador were to adopt this approach.

An effective binding dispute resolution mechanism to address non-tariff barriers, such as those based on sanitary and phytosanitary, SPS, issues, would be an important outcome in bilateral Canada-Ecuador negotiations. Canada's trade agreements should seek to provide an enhanced mechanism to effectively address these types of concerns. Rather than resorting to a multi-year international arbitration to determine whether an SPS claim is valid or not—as I'm sure committee members can appreciate, that would be quite challenging—a mechanism through which a panel of scientific experts, who can be quickly convened to consider the issue and quickly rule on whether there is a scientific basis, would be a preferable outcome in this sort of agreement. A bilateral trade agreement that includes good regulatory practices for non-tariff barriers would foster a stronger, predictable trade environment with Ecuador that allows food to reach markets where it is needed and contributes to global food security.

On behalf of our members, Cereals Canada expresses our gratitude to the committee.

Thank you, Madam Chair, for the interest in learning about the opportunities for a potential Canada-Ecuador free trade agreement. I look forward to your questions.

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