CIIT Committee Meeting
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Standing Committee on International Trade
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EVIDENCE
Thursday, February 16, 2023
[Recorded by Electronic Apparatus]
[English]
I call the meeting to order.
This is meeting number 50 of the Standing Committee on International Trade. Today's meeting will take place in a hybrid format pursuant to the House order of June 23, 2022. Members are attending in person in the room, and remotely using the Zoom application.
I'd like to make a few comments for the benefit of witnesses and members.
Please wait until I recognize you by name before speaking. When speaking, please speak slowly and clearly. For those participating by video conference, click on the microphone icon to activate your mike, and please mute yourself when you are not speaking. With regard to interpretation, for those on Zoom, you have the choice at the bottom of your screen of either floor, English or French audio. For those in the room, you can use the earpiece and select the desired channel. A reminder that all comments should be addressed through the chair.
For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding. Please also note that during the meeting, it is not permitted to take pictures in the room, or screenshots on Zoom.
Should any technical challenges arise, please advise me, and we will suspend for a few minutes in order that all members can fully participate.
Pursuant to the order of reference of Wednesday, February 8, 2023, the committee is beginning its study of Bill C-282, an act to amend the Department of Foreign Affairs, Trade and Development Act.
In our first panel, I'd like to welcome the sponsor of Bill C-282, Mr. Luc Thériault. Mr. Thériault is accompanied by Mr. Marc-André Roche, researcher for the Bloc Québécois.
Mr. Thériault, the floor is yours, please, and you have five minutes.
[Translation]
Thank you, Madam Chair.
It is with great pride that I rise today to introduce Bill C‑282.
This bill is really pretty straightforward. It adds to the Minister of Foreign Affairs' mandate the obligation to fully respect supply management by taking away the minister's ability to negotiate these principles in future international trade negotiations.
The minister, therefore, won't be able to sign a treaty that would increase tariff rate quotas, which we commonly refer to as quotas, for supply-managed products, or reduce the tariff applicable to those goods when they're imported in excess of the expected quota.
Bill C‑282 is not a partisan bill.
In principle, in the House, we always agree on the need to protect supply management and not weaken it. In every trade negotiation, the House unanimously called on the government not to weaken supply management.
It did so in 2005 in the context of negotiations at the World Trade Organization, the WTO. It did so in 2017, in the context of renegotiating the North American Free Trade Agreement, or NAFTA. It did so in 2018, this time for the trans-Pacific partnership. Each time, MPs were unanimous, including members of the government, no matter the party in power.
Things inevitably go sideways, however. Whether in the context of the TPP, CUSMA or the agreement with Europe, the government eventually gave up market share.
Even though the Bloc Québécois introduced the bill, it isn't just ours. Supply-managed producers in Quebec and across Canada have adopted it as their own. I know they're listening and I want to salute them. This bill is theirs as much as ours.
I'm pleased by the House's overwhelming support for Bill C‑282, especially that of the Minister of Agriculture and Agri-Food, who has committed to supporting it at all stages.
In practical terms, what effect will Bill C‑282 have?
Signing a treaty is the government's first commitment in negotiations. By signing a treaty, it indicates that it approves of the text and commits to ensuring its implementation. I want to emphasize the word “commitment” within the meaning of the Vienna Convention on the Law of Treaties.
By preventing the government from signing, Bill C‑282 prevents it from introducing an implementation bill that would pave the way for the ratification and implementation of the treaty.
Bill C‑282 proposes that supply management be removed from the bargaining table. Unless the government comes back to Parliament mid-negotiations and asks it to change the law, supply management is fully protected. This legislation is a powerful tool to increase Canada's balance of power in trade negotiations.
The overwhelming support of the House gives me hope that Bill C‑282 will quickly become a bill, unlike the previous one, which died on the Order Paper in 2021.
Bill C‑282 doesn't disarm the government. On the contrary, it strengthens it. Let's not forget that every country in the world protects its sensitive commodities. Just look at cotton and sugar in the United States. Supply management is at the heart of our agricultural model. It is very important for producers.
Human-scale family farms dot the landscape and structure our regions' land use and economic and social development. Producers feed the people, earn a living from their labour and contribute to our food security. These people deserve stability and predictability. They need to be able to plan for the future instead of facing uncertainty every time an agreement is renegotiated at their expense.
The big American dairy producers could fully supply the Canadian market with their surplus alone. The largest American egg producer alone could feed the Canadian market. That goes to show just what a precarious situation our supply-managed farmers are in. That's why they count on you so much.
Supply management is a system whose balance rests on three pillars. We have to control production, price and what crosses the border. As my colleague Yves Perron would say, it's like a three-legged stool. If the third leg gets shorter with every breach, then the whole thing is liable to collapse.
I'm prepared to answer your questions.
[English]
That was right on the five-minute mark, sir. Thank you very much.
We'll have Mr. Seeback, for six minutes, please.
Thank you very much, Madam Chair.
Mr. Thériault, thank you for the private member's bill.
I'm the proud representative of many dairy farmers in my riding of Dufferin—Caledon. I know how hard they work. I know how innovative they are in bringing fantastic quality products to Canadian tables.
I do have some questions with respect to this bill.
My first question is this. Did you consult any other agricultural groups with respect to their views on this piece of legislation, and if you did not, why not?
[Translation]
If memory serves, the other groups stated their positions during the study of Bill C‑216. One only has to look at the blues to see what their views are.
[English]
I have read the blues. My question was whether you got in touch with any of them to discuss the bill.
[Translation]
[English]
[Translation]
We went to agricultural fairs. We haven't travelled across Canada, if that's what you mean.
With respect to supply-managed farmers, the Canadian Federation of Agriculture and the Union des producteurs agricoles, or UPA, support Bill C‑282. So there are many groups that support the bill. There is a fairly broad consensus. I should have brought a list of all their names, which I had at the press conference the other day. I don't know if you saw the press conference in the foyer of the House of Commons. A lot of people and producers came to support the bill.
I would argue that the bill has a very broad consensus among supply-managed producers across the country.
[English]
Outside of agricultural groups, did you consult any other industries—for example, aluminum or steel—on whether they thought that taking supply management out of the minister's ability to negotiate an international trade agreement would affect their opportunities within a trade agreement?
[Translation]
No, absolutely not. I didn't want to insult supply-managed producers by telling them that we were going to consult other people, that we were going to put ourselves in the government's shoes and be at the negotiating table to get the agreement of all the other sectors so that we wouldn't sacrifice our producers yet again.
I don't understand the meaning of your question. I think that supply-managed producers have given enough. What they lost in three successive agreements will never be recovered. Compensation won't help them recover that.
As I said earlier, these people need predictability. Quite often, they have a lot of debt. There are tools they need to purchase. When they see the threat of losing market share at every negotiation, it's hard for them to bear that pressure, and that's understandable.
In fact, in Quebec and Ontario, for example, they've had to set up farm outreach programs. There's a reason for that.
[English]
I understand the concern.
If I look at—from Statistics Canada—the cash receipts for dairy products from 2010 to 2021, they were $5.5 billion in 2010, and they're $7.39 billion in 2021. This was after the trade agreements had been negotiated that you suggest are problematic. That's an increase in revenue of over 40%.
If we look at actual milk production from the farm—again, this is from Statistics Canada, the Government of Canada—from 2014 to 2021, there were 78 million hectolitres produced in 2014, and in 2021, 95 million hectolitres were produced.
Where's the damage that you're talking about as a result of these agreements?
[Translation]
Because of overproduction, 500 small farms per week were lost in Wisconsin.
Nevertheless, from what you're telling me, it's clear that the system is working well. Despite all the breaches in supply management, we've been able to turn the situation to our advantage.
However, if the government keeps opening new breaches, the system won't hold. You know the risks as well as I do. Indeed, major operations threaten to take over what we know as human-scale agriculture. We don't want to see farms disappear because they can't compete.
[English]
[Translation]
Good morning, Mr. Thériault.
I'm pleased to see you here and to discuss this bill, which was also introduced by your colleague, Mr. Plamondon, in the previous Parliament.
I'd like to begin by saying that it was our party that created supply management. It goes without saying that it will always defend it.
I found your exchange with Mr. Seeback interesting.
Based on what you've seen in Quebec and, if possible, in Canada's other provinces, could you tell us whether the threat to supply management affects small and medium-sized farms more negatively than big farms?
You mentioned family farms a number of times. Are small businesses more at risk and, if so, can we do more to protect them?
That's what I was trying to explain.
In Quebec, to stick with what I know, we mainly have small and medium-sized operations. There aren't any big farms like there are in the United States, for example. I'd say that producers have 80, 100 or 200 cows. Their herds are modest. Therefore, if the attacks and breaches continue to pile up, it will be much more difficult for them to overcome.
Even if, by some miracle, they manage to evolve within the system, I think that the issue today isn't simply how they're being affected, but rather whether we can leave them alone and ensure that they can eventually enjoy some predictability and grow. Otherwise, the breaches and successive concessions will lead to these farms shutting down. When a farm disappears, more often than not, a village disappears shortly afterward. In Quebec, the entire organization and use of the land depend on agriculture, which also drives up economic development.
I didn't provide any numbers today because I wanted to talk about the principle of the bill, but it's clear that these people won't be able to continue to face current pressures, stress and anxiety. There's a lot of folks who suffer from this instability in Quebec's farming communities. The system is working. As far as we're concerned, we think it's a concept that should be promoted, possibly exported abroad.
We've seen the effectiveness of supply management when it comes to food security, particularly during the pandemic. There are benefits to this system. We could decide to adopt the American model, but I would point out that the American producers themselves, who dropped the system in the 1990s, would like to go back to supply management.
That's my answer. I think that because of the way Quebec agriculture is organized, we would suffer even more from negotiations that have the effect of sacrificing our sectors.
It's interesting that you highlighted the situation with the United States, because now I'd like to ask you whether, in the current context or in the context of Mr. Plamondon's bill, you became aware of other jurisdictions in North America or elsewhere that use a supply management system like ours and are now having to protect their agriculture. If so, I'd like to know whether they adopted best practices that we might consider emulating.
You know that the Americans are heavily subsidized. They chose to grant subsidies, whereas in Canada, we chose supply management. It's a balanced system that allows us to ensure quality as well. The American system leads to overproduction and waste. It's that very overproduction that they'd like to send us.
Our producers back home are very proud of the quality of their products because there's production control. It allows everyone in the chain to get their fair share in an equitable manner.
Obviously, if we decide to intervene on market access and let other countries' products come in—the Americans would be first in line—the three supply-managed sectors would be destabilized.
Our supply management system is much more efficient, because it eliminates the possibility of overproduction.
I agree on that.
It's extremely rare. It happened early in the pandemic, and producers adapted very quickly, as usual. Let's not forget that producers in the U.S. dump milk on a regular basis.
[English]
[Translation]
Thank you for being here today.
My questions are for Mr. Thériault, but Mr. Roche is always welcome to respond if he wants to comment too.
I feel like I'm watching the same movie I saw two years ago, where a part of the House of Commons, under pressure, will vote in favour, but is doing everything it can to tell us that Bill C‑282 is ultimately a bad bill.
In fact, I also heard that the breaches were a good thing. Ever since, the dairy sector has apparently never worked better. I suppose I should feel reassured now.
Mr. Thériault, could you explain the intention of your bill to the committee?
Is it true that the two governments we've had over the past 15 years openly support supply management?
Is it also true that the House unanimously reaffirmed its support for supply management on several occasions?
Indeed, I mentioned this several times earlier. The House voted unanimously in favour of protecting supply-managed producers.
It's at the negotiating table that problems occur. That's where decisions are made to sacrifice market share. However, Bill C‑282 seeks to legislate what happens before treaties are signed. That's why it's important.
In fact, if a government, be it Liberal or Conservative, decides to support supply management, the bill would prevent that government from negotiating the three protected sectors once at the table. It would be non-negotiable under the bill, as is the case for other products in other countries. The government would then have a mandate to not put it on the table, but also the ability to say, “It's my Parliament; let's move on to another issue.”
If there were ever any intent, be it malicious or perverse, to not respect the legislative authority, this bill would force the government to go back and table new legislation in the midst of negotiations. That would be somewhat futile. It would bear the blame for that decision.
You used the U.S. as an example. It has legislation officially protecting cotton and sugar. U.S. negotiators wouldn't allow any breach into those sectors.
Have you heard that the U.S. would be weakened during negotiations because of that legislation, that it would undermine the U.S. or make them weak negotiators?
The EU doesn't have similar legislation. Instead it holds fully transparent debates and votes to decide the negotiators' mandate, including which sectors they want to open up, which ones they want to protect and which ones are untouchable.
Have you ever heard that the EU would be weakened as a result of that process?
The Comprehensive Economic and Trade Agreement between Canada and the European Union has often been cited as an example. It's said to favour western beef at the expense of cheese. Canada said it was prepared to open a few small breaches, to accept a few small adjustments in percentage, because that would allow it to make considerable progress.
However, as we've clearly seen, the European market is closed anyway due to non-tariff barriers. In the end, it won't even have produced the desired effect.
Personally, whenever I hear people say not to put all the cards on the table and to keep the door open, I fear that this is just a way of saying that they're prepared to sacrifice little pieces yet again.
Are you drawing the same conclusion as I am?
If I did not think the same thing, I would not have introduced this bill. We need to stop letting people think we can negotiate on the backs of supply-managed producers. It's important.
Moreover, it is a system that works, it is balanced, and it has implications beyond just milk, egg, or poultry production. It structures the social and economic development of Quebec's regions.
At the end of the day, this bill fills a gap or void. Words are no longer enough, and the motions made in the House are strictly symbolic.
Don't you agree?
You are right.
I'm not a negotiator, and I don't think anyone here was at the table for NAFTA. You have to put yourself in the shoes of the producers, who were duped three times. Those producers trust us, and they trust you.
All 293 MPs must agree that we need a bill to do this, because it will empower the negotiators. It is the people's assembly of Canada that will have told its negotiators not to touch this anymore. Then we can move on. In my opinion, this is the only way to ensure that there will be no further breach.
Basically, in a democracy, when a country goes to sit at a negotiating table, it is normal that parliamentarians have rights and that they have a say in the story.
Correct?
Usually, this is how it is done. The executive branch has to respect what the all-party legislature of the people's representatives states and wants.
However, since on three occasions this was not done, this private member's bill will give negotiators one more mechanism to enforce the word of elected representatives.
[English]
Thank you, Mr. Thériault, for being here today, and for your bill.
I'm from southern British Columbia, the dry interior. There's not a lot of.... I have one small dairy producer, and I don't think I have any poultry or egg producers, not on a large scale anyway.
I'm more interested in other countries, the foreign markets, how they affect us, and how those countries support their agricultural producers.
My son lives in New Zealand, in the middle of the north island. It's in the middle of the dairy-producing part of New Zealand. It's one of the big dairy-producing countries in the world. It deregulated its dairy industry 20 years or so ago. There's been an enormous amount of consolidation. Right now, there's basically one company, Fonterra, that dominates the New Zealand dairy industry. Over 80% of its products go through that company, so it leaves producers with not much power in terms of how they negotiate prices, from what I understand.
Can you tell us how countries like New Zealand, Australia and the United States are forced to support their agricultural producers, when they don't have a supply management system? What mechanisms do they have to use, and how effective or ineffective are they?
[Translation]
I've already talked about the United States. As for New Zealand, I'd rather yield the floor to the Bloc Québécois expert.
The beauty of the supply management system is its stability. When production, imports and prices are not regulated, we end up with prices that fluctuate a lot. When they are low, small producers die, if I can put it that way. Market fluctuations invariably lead, as you mentioned so well, to a concentration towards the biggest producers.
That said, regarding New Zealand, to get through periods of low prices, it offers massive subsidies to producers, which we don't need to do here. This costs their taxpayers money and allows their producers to sell at prices below the cost of production, as the difference is made up by subsidies. This makes it difficult for our producers to compete if they are not subsidized to the same level, hence the importance of protecting them.
Every time supply management has been breached to open up 1%, 2%, or 3% of the market, all of that market share has been filled, because a subsidized producer is always going to undercut them, inevitably. That's exactly why we need to maintain the system, including the border barriers, because our producers are not supported by the government, unlike their competitors.
[English]
Thank you.
I would like to also talk about.... One might think, if one didn't know much about the whole system, that a producer under a supply management regime has life easy. They wouldn't have to innovate or do things like that. It strikes me that it might be the other way around.
I wonder if you could comment on whether and how innovation takes place in either system.
[Translation]
Earlier, I said that our producers deserved some stability and predictability. It's expensive to buy and operate a farm, not to mention the farm equipment. These people are often heavily in debt. How do you expect them to make more investments and hope one day to pass their farm on to the next generation when they never know when an agreement might come along and saw their legs off? Stability and predictability are important for these people to become increasingly financially independent.
When I read about the American model, I got chills. I thought, this doesn't make sense. People have been made to disappear. How can you control the quality of a product when everything comes from the same person? We know very well that there are a lot of problems with milk produced in the United States for this very reason.
[English]
I have one more question. It strikes me there are a lot of co-operatives involved in these supply management systems, especially in milk. That's how a lot of them started.
I wonder if you could comment on how that works and how beneficial it is to producers.
[Translation]
The farms are family farms. The marketing process involves pooling of milk. The largest cheese or milk producers, for example, are mostly co‑operatives.
Just here, nearby, there is the Laiterie de l'Outaouais, which is a co‑operative. Agropur, which is one of the largest co‑operatives in Quebec, has actually bought up several cheese factories in the United States, where the small cheese factories were going bankrupt one after the other because of prices that fluctuated too much. This means that part of its production is in the United States, because our system is more solid.
[English]
Thank you, Madam Chair, and thank you, Mr. Thériault, for being here.
Thank you, Mr. Roche, for joining us. Like my colleague indicated earlier, there are a number of dairy farms and farm families in the Niagara region. Previously, prior to getting into elected life, I had the pleasure of working with representatives of the Dairy Farmers of Ontario for a number of years. I know the importance of the supply management system and those it impacts, particularly in the farm families.
I wanted to follow up with some of the questions that were asked earlier on the notion of consultations that you undertook prior to the design of the legislation. Did you seek a legal opinion on the legislation and whether or not it would be WTO-compliant?
[Translation]
We could send you a legal opinion we obtained. There was a question that had been raised about Crown privileges. I don't know if that's what you're getting at.
A voice: It's about compliance with WTO agreements.
I will let Mr. Roche answer that question.
Bill C‑282 does not question the concessions already made in the agreements. We are not changing anything at all.
Of course, the bill would limit Canada's ability to negotiate a new agreement under the WTO, if that agreement were to make new concessions.
[English]
Would there not be the fear, though? You indicated earlier that predictability is important and certainty is important, but by enacting legislation such as this, you bring unpredictability into the equation, because you may bring about challenges to what the government is doing in any of its new negotiations.
[Translation]
What Mr. Roche just said is important. The bill does not affect agreements that have already been concluded. An agreement was already made at the WTO. If we ever wanted to open up a market with the United Kingdom, it is within the framework of what has already been granted that the United Kingdom should find its market share.
So the bill will apply to the next agreements, the next renegotiations. In that sense, we're doing the same thing that all the countries are doing, the people in the European Union, the Americans. We just have to decide whether or not we take supply management off the table.
If you were a negotiator, would you want to have the ability to undermine supply management up your sleeve?
Is that what you want?
Is this where you are going with your questions?
[English]
No, no. I'm just trying to avoid the question. For example, Niagara is home to the grape and wine sector. The government had an excise exemption. This government decided to put in an escalator clause, which brought about a challenge. We ended up losing that excise exemption under WTO rules. Now we're looking for certainty. The industry now has to be subsidized for that.
I'm trying to avoid that whole situation in which unpredictability then comes back into the equation. That was simply my question with regard to whether or not you have—yes or no—in terms of the legal opinion. You said you have. If you have, can you table the opinion that you received?
Also, trade deals are renegotiated. Would your legislation then apply to renegotiations of existing trade agreements?
[Translation]
[English]
Thank you, Madam Chair.
International trade is very important to Canada. Almost two-thirds of our GDP comes from international trade. Our prosperity and the standard of living that we enjoy today are basically due to international trade.
What your bill proposes will almost kill the ability of Canada to further our international trade, not only in terms of the new trade agreements we need to negotiate but even for the existing ones. There will always be issues there that need to be looked into.
Even with our small number of Canadian farmers, we are ranked fifth largest worldwide in terms of exports. There is a tiny number of Canadian farmers.
Have you consulted with Pulse Canada, the Canola Council, the Grain Growers of Canada, the Canadian Pork Council, Cereals Canada or the Canadian Cattle Association? These are the sectors that work hard and that are the first to leverage every new international trade agreement Canada signs so we can increase exports from Canada. Have you consulted with any of them?
[Translation]
What I understand from your question is that you are against the bill. You are against protecting supply management and taking it off the table.
Is that what I am to understand from your question?
[English]
The Canadian Agri-Food Trade Alliance, which represents 90% of Canadian farmers, producers, food manufacturers and agri-food businesses that depend on trade strongly opposes Bill C-282. What do you say to its members?
[Translation]
I think that is inaccurate. Provide us with that information. We will look at it and do some checking.
All the people who were with us at the press briefing last week, and they came in large numbers, were in favour of the bill. They included people from the processing sector.
I don't see exactly...
[English]
Sorry, Madam Chair.
I would like to ask the witness again: 90% of the farms and agri-food businesses that are represented by the Canadian Agri-Food Trade Alliance say they strongly oppose Bill C-282. When I was listening to the witness's comment, Madam Chair, I heard the fluctuations and how, when it fluctuates downwards, small producers will get decimated.
The same thing applies to every single industrial and business sector, so every single sector can demand a clause like this, barring the government from negotiating anything to do with their sector when it goes in for new free trade agreement negotiations. It means that Canadian international trade has to collapse. Is that not the case?
[Translation]
I don't agree with you. I think the solution we are proposing today is much simpler.
The fact that there are people who do not agree is fine with me. But I would remind you that we are talking about the people who feed us. We are talking about the people from whom consumers demand quality. People want us to bring producers closer to their plates. It doesn't seem to bother you that we are losing small and medium-sized producers. If that's the case, that is your problem.
[English]
[Translation]
[English]
I apologize. The witness talks about people who are providing food. I am also talking about people who are providing food: Pulse Canada, the Canola Council of Canada, Grain Growers of Canada, the Canadian Pork Council and the Canadian Cattle Association. They are saying they're strongly opposed to Bill C-282. They not only provide food to Canadians; they provide food to people across the world, which is how they made Canada number five worldwide in terms of these exports. That is what I'm talking about.
[Translation]
Madam Chair, in the last negotiations, beef producers thought they might have access to markets. It appears they did not get that access.
We believe that we should not fall into a fool's bargain and that it is better to protect what we have in a concrete way.
We are aiming for a balance in terms of agri-food and food. It is better to bet on a balance that ensures our food security than to bet on the desire of certain beef producers to access the European market when, in the end, they do not succeed and farms in Quebec have been sacrificed in the meantime.
[English]
[Translation]
Thank you, Madam Chair.
Thank you, gentlemen, for being with us today.
I think we need to put some things in context. When we talk about people who represent producers, we have to talk about the type of production. In Canada and Quebec, there are different production models.
I would like to know, Mr. Thériault, if you are proud of your pork, grain and beef producers who export.
Does helping these sectors prevent you from adopting measures that are more suitable for other types of production, such as those under supply management?
Put yourself in the shoes of supply-managed producers who listen to what is said in the committee when it comes to consulting with representatives from other industries.
I'll take a completely zany example, but it's still a reality check. You are negotiating with a roofer to have your roof repaired, and I ask you if you consulted your third neighbour before agreeing on the price. How do you feel?
I have the same impression, generally speaking. Thank you for confirming my fears.
We know that WTO rules allow countries to protect certain sectors, so the U.S. protects its cotton and sugar, and Japan, for example, protects its rice. I would like this to be confirmed by Mr. Roche, who is an expert on the subject, or by Mr. Thériault, who surely knows the file inside out.
By the same logic, is Canada not fully entitled, in the world of international trade, to protect its supply-managed systems, which have already been partially sacrificed? It would be a partial protection of what remains, while the system still works.
Absolutely.
I am introducing Bill C‑282 precisely because, in the past, our representatives, after mouthing allegiance to supply management with their hands on their hearts, decided to sacrifice it.
This time, we're asking you if you want to hold on to this system. We are going to do what every other country is doing, we are going to take it off the table. That's all.
[English]
Thanks again.
I wanted to get some clarity around the future negotiations you talked about. There was a question about whether this bill would apply to them.
Obviously, if we have negotiations ongoing with the U.K. right now, I assume.... Is that one of the next agreements that we're facing and one of the main ones that would be affected by this bill?
[Translation]
Indeed, if we were to pass the bill fairly quickly, it could strengthen the position of our negotiators at the table. Given the fact that when the UK was in the EU they were given shares, I think they should be negotiating some of what was already conceded.
The quick passage of Bill C‑282 could give us an interesting lever. That's how it could be done.
Mr. Roche, would you like to add anything?
In 1994, the Canadian government had conceded just over 5% of its market, and that quota was distributed to some countries. When we entered into the Canada-European Free Trade Association Free Trade Agreement in the mid-2000s, the agreement was that those countries were entitled to a share of the openings that had already been granted, and they were happy with that. It didn't open up our market further. So everybody was happy with the deal.
It is likely that this sort of arrangement could be made with the UK, so that they could continue to export their cheddar here, if they wanted to, without one extra kilogram coming in.
[English]
On the agreements we have in place—CUSMA, for instance, or the Pacific partnership—we've given up 3% or so in each of those. When those come up for renegotiation, would this bill set those back to zero and would they be out, or would they just say that it's no more than whatever has been agreed to?
[Translation]
No, it is not retroactive.
Unfortunately, what has been done cannot be undone. However, going forward, there would be no more talk of supply management at the negotiating table, and no more concessions. This is not retroactive, and we are not going back to zero. We're staying at the currently agreed limit, full stop.
[English]
[Translation]
Thank you, Madam Chair.
Thank you for being here, Mr. Thériault and Mr. Roche. This is an interesting discussion.
I would like to know how supply management helps small farms and promotes vitality in rural areas.
It's a matter of getting a handle on the three pillars I was talking about earlier. As for production, we can actually monitor prices, and each link in the chain will go and get what is due to them fairly.
The ability to control borders properly creates a balance. So producers can produce what they have to produce and predict their income. This has led to the emergence of villages all over Quebec, which are often surrounded by farms. After three or four farms were established, schools would emerge.
If the supply-managed sectors are undermined and this balance is disrupted, we will see farms slowly disappear. It is villages and schools that will disappear. It is the dynamic occupation of the territory that will disappear, because our rural economy is based on this balance. We have decided to feed ourselves according to an agricultural model. These are basic products. Moreover, even if farm products are also affected by inflation, I think they are the most successful. They can feed families.
In your opinion, what is the relevance of supply management, not only in the Quebec economy, but in the Canadian economy?
It's the same thing. It depends on the sectors. We know that the dairy sector is very strong in Ontario too. You have to remember that there are egg and poultry producers from coast to coast in Canada.
Of course, to answer your questions, I'm talking more about what I know and what I observe when I walk around the Quebec countryside. That's why I was locating the model in this province, but there's no question that this agricultural model provides food security for people from coast to coast. That's fundamental.
It's unfortunate that people thought that because there were markets for certain products, something exportable had to be sacrificed. We can feed people, thanks to this balanced system.
Have you retained consultants such as lawyers or legal advisers, especially in constitutional law?
Have they spoken to you about the potentially negative effects on trade agreements that are due to be renegotiated in the coming years?
We have obtained a legal opinion on one of the objections that was raised last time about Crown privilege. We will send it to you.
The Supreme Court has also looked at this. So we're well enough informed to know that what we're doing is perfect.
As for the other part, Mr. Roche—
If you tell me you're going to send us some documents, that's good enough for me.
Would this bill still be necessary if the government compensated farmers more effectively and quickly?
Yes, of course.
If you ask producers if the compensation is enough, they will tell you that it never replaces what they have lost in the long run. Remember, compensation often comes three or four years later, or even later in the Maritimes.
No matter which government is in power, the bill would come into play before an agreement was signed. If my bill passes, no matter which party is in power, no matter what its agenda is, the government could never again go back on its promise and throw supply management to the wolves.
Some think that this can all be corrected in the implementation phase, but that's wrong. This bill would serve its purpose at the negotiating table, before an agreement is signed.
Earlier, I referred to the commitment under the Vienna Convention on the Law of Treaties.
[English]
[Translation]
That's what I mean when I say that we need to hold governments to the promises that have been made, unless, one day, your government doesn't want to be bound by legislation like this.
[English]
Thank you, Madam Chair.
First I'd like to say, coming from the west coast of British Columbia, that we as parliamentarians hear so much about the success of Canada's supply chain management system. I'm wondering about someone from Quebec. What does supply management actually mean to producers in Quebec?
[Translation]
Supply management is synonymous with products of unquestionable quality and human-scale farming.
It also ensures that farmers are able to pass down their farms. When the effect of a trade agreement is to pull the rug out from under farmers, they can't pass on their farms to the next generation. Do you think their children would want to take over the ailing family farm?
Supply management provides social and economic stability as well as stability vis-à-vis food security. That's what it does in Quebec and everywhere else in Canada, in my view.
[English]
Thank you for that. According to Farm Critic Canada, farm receipts in 2022 reached a record high of $95.5 billion, which is an increase of nearly 15% from 2021. In your opinion, what are the best strategies for continued growth in the agriculture sector?
[Translation]
Farm receipts have risen considerably because of inflation, which doesn't mean that farmers are any richer because of that increase. A large portion of what their inputs cost has also gone up a lot.
The effects of the breaches created under the various trade agreements aren't felt immediately. It's a seven-year process, so the negative effects of recently signed trade agreements that undermined supply management haven't yet been fully felt. We will probably be in a position to assess the repercussions in the years ahead. As the industry increasingly churns out high-quality products and higher value-added delicacies, farm income will not grow as it should because subsidized competitors are going to scoop up market share.
I can't answer your question when it comes to products that are not supply-managed, which aren't covered by the bill.
[English]
Thank you very much for that. Do you have any other suggestions as to how we can strengthen our farming sector in Quebec, given the importance of the sector, and also in Canada as a whole?
[Translation]
Earlier, in response to a question from Mr. Cannings, I talked about the importance of predictability in farmers' ability to make investments. I also mentioned that in my opening statement.
If there is a guarantee that the production balance will no longer be tampered with, I think we will definitely see more growth there. We could see farmers making investments to improve their production and innovation capacity. They, too, want to do things with as much respect for the environment as possible, and it's very expensive to make those changes.
This is something that would pave the way for that transition. Ultimately, what it will do is help to harmonize human-scale farming.
[English]
Thank you very much, Mr. Miao.
Thank you, Mr. Thériault and Mr. Roche for your information. Thank you for the bill. It looks like it will be a very interesting study.
I will suspend for a moment while the next panel comes to the table, please.
I call this meeting back to order.
On our second panel, from the Department of Foreign Affairs, Trade and Development, we have Aaron Fowler, associate assistant deputy minister; Doug Forsyth, director general of market access; and Carolyn Knobel, director general and deputy legal adviser.
From the Department of Agriculture and Agri-Food, Tom Rosser, assistant deputy minister, market and industry services branch.
Thank you all for coming back to see us.
Mr. Fowler, I'll give the floor over to you for an opening statement of up to five minutes, please.
Madam Chair and honourable members, thank you for the invitation to appear before the Standing Committee on International Trade on its review of Bill C-282.
The bill proposes to amend the Department of Foreign Affairs, Trade and Development Act, such that the Government of Canada cannot make any commitment in an international trade treaty that would have the effect of increasing tariff rate quota volumes or reducing over-quota tariff rates for dairy products, poultry or eggs.
The intent of the bill is consistent with the long-standing Government of Canada policy to defend the integrity of Canada’s supply management system. In practice, this policy has allowed Canada to successfully conclude 15 ambitious free trade agreements covering 51 countries while preserving Canada’s supply management system, including its three pillars of production control, pricing mechanisms and import controls.
New market access for supply-managed products has been provided only at the WTO and in three free trade agreements, which are the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA; the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP; and the Canada-United States-Mexico Agreement, or CUSMA.
The decision to provide increased market access for supply-managed goods in the context of these negotiations was not taken lightly. Such commitments were accepted only where it was deemed necessary to conclude free trade agreements that were in Canada’s overall economic interests. For instance, these agreements allowed Canada to maintain its preferential access to the United States market and to secure significant new access to the EU, Japan and other important foreign markets. It is important to highlight that while new access for supply-managed products was provided through these agreements, the integrity of the supply management system itself, including its three pillars, was fully maintained.
In recent years, the government has made clear its commitment to make no further market access concessions for supply-managed products in future trade negotiations. In line with this publicly stated commitment, Canada’s most recently concluded trade agreement, the Canada-United Kingdom Trade Continuity Agreement, did not provide new market access for cheese or any other supply-managed product, even though this was an important issue for the United Kingdom in the negotiations.
In conclusion, Bill C-282 proposes to make the government’s commitment to make no further market access commitments for supply-managed products into a legal requirement by amending the Department of Foreign Affairs, Trade and Development Act. This would strengthen the policy of defending the integrity of Canada’s supply management system by enshrining it into law.
Along with my colleagues here today, I welcome the committee's questions. Thank you.
[Translation]
Honourable members, I appreciate the opportunity to appear before the Standing Committee on International Trade on its review of Bill C‑282.
Agriculture and Agri-Food Canada, AAFC for short, works closely with and supports Global Affairs Canada in advancing Canada’s free trade agenda, playing an important role in trade negotiations, particularly in areas related to market access for agricultural goods.
As said by my counterpart Mr. Fowler, the Government of Canada has had a long-standing policy to defend the integrity of Canada’s supply management system for dairy products, poultry and eggs. This includes clear commitments made by the Prime Minister and the Minister of Agriculture and Agri-Food to not provide any new market access for supply-managed products in future trade agreements. The bill is consistent with this policy.
Canada’s supply-managed dairy, poultry and egg farmers are part of the backbone of rural communities across the country, generating almost $13 billion in farm-gate sales in 2021, and creating over 100,000 direct jobs in production and processing activities across Canada.
With respect to the market access provided to Canada’s trade partners, it has only been provided in exceptional cases in regard to landmark trade agreements, such as the Agreement Establishing the World Trade Organization, or WTO, CETA, the CPTPP and CUSMA. While not taken lightly, these trade agreements are overwhelmingly in the interest of Canada and to the overall benefit of Canada’s agricultural sector.
[English]
Furthermore, in the case of CUSMA it's important to remember that the original negotiating position in the United States was the full elimination of the supply management system. The outcome in CUSMA, while difficult and challenging, allows the supply management system to continue functioning with respect to its three pillars.
The Government of Canada is also fully and fairly compensating producers and processors with supply-managed commodities who have lost market share under the three agreements. As announced this past November, dairy, poultry and egg producers and processors are expected to share more than $1.7 billion in direct payments and investment programs in response to the impacts related to CUSMA. This is in addition to the over $3 billion in direct payments in investment programs for CETA and CPTPP. These programs will help drive innovation and growth in the supply-managed sectors.
In conclusion, the integrity of the supply management system has been successfully defended during multiple trade negotiations. The Government of Canada is working hard to ensure that the supply management system remains strong and that producers and processors operating in the system remain productive and sustainable.
Bill C-282 would protect these sectors from additional market access concessions in the context of future trade negotiations, and as such is fully consistent with existing policy.
Thank you again, Madam Chair. Along with my colleagues, of course, I'd be happy to answer any questions that committee members may have.
Thank you very much, Madam Chair, and thank you to the witnesses for being here.
First of all, I think everybody is in agreement that we have to support our farmers. They work really hard, and without them there's no food on the table.
I'm getting a lot of emails, though, from constituents, on the price of things these days. A pound of butter, I think, is $7.99. They see this dumping of large quantities of milk on TV, and they're saying there's something not right here.
When you think of supporting the farmers, I think a lot of them are skeptical. I've listened to the farmers in my caucus. They have to compete. They have these carbon taxes to pay. They're being told they can use only a certain amount of fertilizer. Costs are going up.
When we make these trade agreements, we make agreements with the sector. One thing we agreed on when we conceded market share was that farmers would get compensation.
You mentioned the compensation, Mr. Rosser. I want to ask you about the status of the compensation for CETA, CPTPP and CUSMA. How much has been paid out to the farmers so far?
In terms of compensation for the three agreements and the five sectors under supply management, the total announced compensation to date is $4.7 billion. Because this was done in multiple programs targeting multiple sectors of both producers and processors, in terms of the actual quantum that has been fully paid, it would be into the billions of dollars.
I would be delighted to provide the committee with a detailed written response in terms of the quantum of funds committed to date under the various programs that were established.
That would be great. Thank you.
Could you do it for each agreement with regard to how much has been paid out and how much is outstanding? Right now, farmers are saying there are a lot of costs. They have to be competitive, and we want to be supportive.
Regarding another thing they were promised, the minister promised the dairy sector that she would not include caps on the export of milk protein concentrates in CUSMA.
I am wondering, were these caps included in CUSMA and, if so, what impact will those caps have on future value-added milk and protein concentrates?
There were export-related provisions included in the CUSMA that applied to three specific dairy products set out in that agreement. Those are not caps as such, but rather they establish an export threshold for the products in question. Exports below that threshold are free to leave the country. Exports above that threshold attract a specific export charge, which depends on the product in question.
All right. Are we looking at semantics? There's a threshold and a cap, and I am wondering whether there's a difference.
Yes. A cap is a hard ceiling on the amount of a product that can leave the country. A charge above the threshold changes the economic calculus associated with the export, but it does not prevent that export.
In practice, there have been no exports above the cap since CUSMA, so there have been no export charges collected on those products since the agreement entered into force.
Okay, so there is a limitation on the exports.
Out of curiosity, do the Americans have any input or control over caps in Canada under that agreement?
The provisions of the agreement are as negotiated between the parties to the treaty and therefore represent an agreement between Canada, the United States and Mexico regarding this particular outcome.
Well, the provisions that are contained in the agreement are legally binding and enforceable provisions, so they are not subject to change by one country. Similarly, the United States cannot unilaterally change aspects of the agreement that are of interest to Canada.
Okay. Right now, I think everybody is aware that we have a bit of a dispute with the United States. I think it was on December 20, 2021, that a dispute settlement panel determined that Canada contravened CUSMA's obligations but we could retain the supply management system.
On January 31, 2023, a week ago, the United States again requested establishment of a dispute settlement panel relating to Canada's dairy policies. I was wondering, if we enacted this bill, Bill C-282, would it affect the Canada-U.S. trade relationship concerning dairy products? If so, how? What is the probability that, following enactment, the United States would seek to renegotiate certain CUSMA provisions? What are your thoughts on that?
I would have to speculate as to what the reaction of the United States would be to this particular bill. If it becomes law, it does not affect the legal commitments that are contained within the CUSMA. Those would continue to be binding legal commitments on Canada.
I don't see that this bill would have any particular impact on the issues that are being discussed in the context of either the initial dairy panel or the ongoing dispute settlement process, because they don't relate to the questions that are addressed in this piece of legislation.
Thank you very much.
I'm sorry, Mr. Carrie. Your time is up.
We have Mr. Virani, please, for six minutes.
Thank you very much to all four of you for your appearance today.
Can you tell me when supply management first entered the Canadian lexicon? When was it first implemented?
Madam Chair, thank you. It's a very good question.
I'm not sure that I have a precise answer, but the Farm Products Council of Canada, for example, which runs the supply management system for many of the products under supply management, celebrated its 50th anniversary last year, so it dates back to the early 1970s. It was in the 1960s and 1970s—in that era—that the system came in as the forerunner of its current form, but I'm afraid I can't offer a more precise date.
That's okay, so we're talking about either the Pearson government or the government of the elder Trudeau.
All four of you were working on either the after-effects of or the ongoing trade agreements, and I appreciate some of your opening comments about what has happened in the past but also what is going on as we go forward. When you see the mandate to enter into these trade negotiations, that mandate is to defend and protect the supply management system, as you've listed in some of your opening statements. Is that fair?
I'll direct that to Mr. Fowler.
It is a long-standing policy of the Government of Canada to defend the integrity of the system. I won't speak to specific mandates that are given to negotiators.
Okay.
You can tell me how much detail you can go into, but we are actively negotiating a new free trade agreement. In the interim, we have a U.K.-Canada continuity agreement and, as you mentioned at the outset, there has been no increased access for U.K. cheese into the Canadian market pursuant to that continuity agreement. Is that correct?
Okay.
We're also pursuing a few other areas, particularly given our Indo-Pacific strategy. There is an early progress agreement with India. Do you have any sense of whether access to supply-managed sectors is being granted or even contemplated with respect to an early progress agreement with India?
Negotiations with India are ongoing, and we don't speak to specific positions that are put forward by either party in the context of ongoing negotiations, but of course the government continues to advance the policy that it has traditionally advanced with respect to these sectors.
I'll ask you the same question with respect to ASEAN. We are elevated to the level of a strategic partner within ASEAN. That's good news. Thank you for your hard work in terms of that.
We're hoping to conclude a deal there. Is there any sense or determination that supply management would be jeopardized with respect to what we're doing with ASEAN?
We have consistently been able to conclude high-quality trade agreements and support the supply management system. I don't think there's any reason to think we could not continue to do so with or without this piece of legislation.
Just to close out the natural hat trick that is in the Asian area right now, we're pursuing something specifically with Indonesia on a bilateral basis, between Canada and Indonesia.
Is there any reason to believe that supply management wouldn't be defended in the context of a deal with Indonesia?
There is no reason to think that the supply management system would not be defended in that and every other negotiation.
Okay. Thank you.
I'll just echo the comments of Mr. Carrie that clarity on the compensation piece is important.
We just heard from the mover of the bill, actually, that compensation is slow in coming. I think he said three or four years in coming, if I understood, but also, according to some of the other testimony we just heard in the previous hour, the full impacts of the limited market access that was granted under, for example, CUSMA, take place on a staggered basis over the course of seven years, so is it logical to think that the compensation would also be staggered, Mr. Rosser?
There was a very elaborate process of discussion with the affected sectors about what the nature of the impacts would be and what the magnitude was, which formed the basis of the quantum for the compensation.
It is true that for those who received direct payments, those payments have flowed over a period of years, but the structure of those has been announced.
Some of those programs that took the form of support for investments in projects for transformation facilities or other types of production facilities, just by their very nature, will extend over years. In many cases, sector stakeholders asked that the funding be put over many years so that, for example, it would align with the cycles for replacing barns or other pieces of equipment—the natural capital lives of the pieces of equipment being replaced. Their preference was for the programs to have a longer life.
Can I take you back to the CUSMA negotiations? I think you provided some useful reminders about CUSMA. I remember times during that first Parliament that I sat in, when people, including parliamentarians in certain parties in the House of Commons, were urging Canada to just take any deal, and that any deal was better than no deal.
That being said, the starting position of the United States was actually to eliminate supply management altogether, and what you indicated is that supply management was retained. A bit of market access was granted in compensation that has flowed or is flowing, based on that.
To the extent you're able to, can you walk us through a bit how that supply management negotiation worked and how Canada stuck to its guns in terms of protecting the bulk of our supply management system?
I think it was a fairly public position that the United States took with respect to the goals it was advancing. Under CUSMA, with respect to the Canadian supply management system or, more specifically, to the supply management system as it applies to the dairy sector, their goal, as stated by the administration, was to see that system dismantled.
Although that position was moderated over the course of the negotiations, as a negotiator who was at the table, I can tell you that well into the fall of 2018, the United States' negotiating team continued to advance proposals and positions that would have had the effect of undermining the integrity of the system. It was for the Canadian negotiating team to put forward counter-proposals that addressed the underlying U.S. concerns while preserving the operation of the system, including the three pillars that are at its heart.
[Translation]
Thank you, Madam Chair.
Thank you all for being here today.
In response to Mr. Virani's question earlier, the supply management system came into force in 1972.
Mr. Fowler, you said that the system's integrity had been maintained, that doing so would remain the policy and that some market access concessions had been granted.
I had my doubts, so I looked up the word “integrity” in the dictionary. Le Robert, the authoritative reference in French, defines integrity as “the condition of being unimpaired and whole”. According to my dictionary, in order for the words “unimpaired” and “whole” to be applicable, the proportion of supply management breaches would have to be 0%. However, that number is about 10% for poultry and eggs, and 18% for dairy.
According to your dictionary, at what percentage would the word “integrity” no longer apply?
[English]
The system continues to work as it is designed to work. The import pillar provides predictability to Canadian planners and the Canadian Dairy Commission with respect to what the requirements for Canadian production will be to meet the needs of Canadian consumers, and with respect to dairy and other supply-managed products, because the volume of imports is finite, fixed and known, and therefore predictable for planning purposes. On that basis, I consider the integrity of the system to be intact.
[Translation]
I'm going to ask my question again.
At what percentage would you consider it to be too late? Where is the point of no return? When is the integrity of the system no longer maintained or protected?
Madam Chair, as Mr. Fowler mentioned, the pillars of the system are what's important. We maintained the pillars in the negotiations. It's true that our trading partners were granted some market access, but the system can work.
There are examples of supply-managed systems that work well, where we saw a rapid rise in domestic demand. In other cases, the system can function normally even when domestic demand drops.
Since that didn't answer my question, I'm going to rephrase it.
Other trade negotiations will take place in the future. In order for you to say that the system was still intact, what percentage of market access would be tolerable, in your view?
Madam Chair, in my eyes, the integrity of the system is what matters. It's tough, impossible even, to identify the percentage at which market access concessions would jeopardize the system's integrity. The system is still working, as was pointed out. Demand for supply-managed products rose.
In other words, granting additional market access would jeopardize the system.
Even just the tiniest bit more market access would be a real threat.
Is that right?
Madam Chair, the government decided that no further market access concessions would be granted, as Mr. Fowler mentioned.
I have here a quote from October 4, 2015, something the man who would become the Prime Minister of Canada a few weeks later said. It's from a Radio-Canada article, the title of which basically translates to “Trudeau says TPP won't touch supply management”.
As we know, though, it was touched.
Without legislation, we have to take the Prime Minister's word. Why would his word carry more weight in 2023 than it did in 2015?
Madam Chair, I was just trying to communicate the government's position that those concessions were granted in exceptional circumstances and that full compensation was provided.
That means that the bill would still fill a gap. It would strengthen the government's position and give promises to protect supply management a legal foundation should exceptional circumstances arise in the future, which could always happen.
Great.
I think I've gotten some answers thus far, but not all of them.
Right now, does the compensation fully cover the losses?
Madam Chair, if I understand the question correctly, the answer is yes.
The level of compensation provided to the affected sectors was balanced to account for the total estimated value of lost market access.
[English]
Thank you for being before us today. I want to get my head clear around the U.K. situation. After the U.K. left the EU, we had the CETA. You said the continuity agreement provided no more access, no greater access.
How much access does the U.K. have right now, and where did that access come from? What agreement does it come from?
Prior to leaving the EU, the U.K. had access to the CETA quota, which was negotiated as part of the overall agreement when they were members of the EU. That was 16,000 tonnes of cheese and 1,700 tonnes of industrial cheese. Having left the EU, they were no longer entitled to that access. We suggested to them that they approach the EU about that. They did, and the EU said, “You are not entitled to this. You're not an EU member anymore.”
That leaves them with access to our WTO quota. Our WTO quota is for cheeses of all types. It's 20,412 tonnes. That WTO quota is divided into two pools. One pool is for EU members. It's about 70% of that total—approximately 14,250 tonnes. Given that the U.K. is no longer a member of that, in theory they should no longer be entitled to it. However, as part of the trade continuity agreement negotiations, we allowed them to continue to access that pool while we are in discussions over a bilateral agreement.
As of today, they have the ability to access that part of the pool—approximately 14,270 tonnes.
The WTO quota is in Canada's control, for administrative purposes. That's correct, but it's only a temporary arrangement.
I think Mr. Baldinelli raised a question about challenges, before. He and I have a lot of wine produced in our ridings, and Australia put forward a WTO challenge on our excise tax. A lot of Canadian wineries didn't have to pay excise tax. Australia challenged that, so now they have to.
Have there been any successful challenges to the supply management system in Canada, in the past? I'm trying to find out how this bill might affect.... That was the question he had: Would this bill make those challenges more likely, or has nobody challenged it? Every country protects its farmers in various ways.
Again, I want a sense of that question: Will this expose us to more challenges?
The way the bill is structured, it would apply prospectively. It would apply only to future negotiations and commitments the government may consider with future partners. As such, it should have no particular impact on Canada's existing commitments contained in agreements that are already concluded. I see no reason to believe the passing of this bill would subject us to any greater risk of a challenge to the commitments we've already taken on.
There have been challenges in the past—both at the WTO and under our FTAs—focused on aspects of the Canadian supply management system. The initial panel under the CUSMA, which was referred to in an earlier question, was brought by the United States and focused specifically on aspects of Canada's TRQ allocation and administration regime for supply-managed products—for dairy products.
This bill, however, in my view, would have no impact on existing commitments, or subject us to any higher level of legal risk in that regard.
What about the other countries and their subsidies? How are they protecting their sectors, and what does Canada do about that?
Countries deploy a variety of tools and policies to protect and advance the interests of their agricultural sectors. In some cases this includes subsidization, and in some cases it's tariff protection for the domestic market. When we negotiate with these countries we try to secure concessions from them that respond to interests that are brought to our attention by Canadian agri-food stakeholders and other stakeholders. It has been suggested that other countries have legislation in place that is similar to the bill that is before the committee. I must say that to the best of my knowledge, I am not aware of any Canadian trading partner that has a legislated prohibition on the negotiation in a specific area.
Thanks very much.
I know these are tough questions, so I appreciate the answers that we're getting here today. It's a really important issue.
I have a quick question first. Is there a sunset clause in either CPTPP or CETA? I know there is one in CUSMA. Do we know if there are in those other two?
I just wanted to look at my counsel to make sure I had it right.
No, neither of those agreements contains a comparable clause.
There is one in CUSMA, though—is that right? I think it's 16 years is the sunset, but it can be reviewed in six.
There is a clause in the CUSMA that requires the parties to complete a review after six years, at which point in time the parties will determine whether they want to extend the period of application of the agreement. Should they determine after six years that they do not want to formally extend the period of application of the agreement at that time, then the agreement would nevertheless remain in force until the 16-year anniversary, during which time the parties could discuss whatever topics they want.
This bill would mean that if we went into that negotiation, supply management is off the table completely, even though they've had access previously. Is that correct?
I don't think it is correct. I think the commitments that exist in the CUSMA today, to the extent that they continued to form a part of the agreement going forward, would not fall afoul of this.
For 16 years. In 16 years it's sunset, and you renegotiate, like we just did. Would this bill then mean that supply management is off the table?
If the CUSMA were to sunset, then any subsequent agreement would be a new agreement, therefore it would be subject to the provisions of this piece of legislation.
I think one of the things you said in your testimony, and I don't have it all, is that the concessions made in supply management allowed Canada to conclude deals that are in the overall economic best interest of Canada.
I know this is hard, but if we went back in time and we didn't have access—if supply management was off the table and this bill existed and we were renegotiating CUSMA—how difficult would that renegotiation have been?
It's a difficult question to answer and it requires me to speculate, which I don't like to do when I'm sitting in this chair—
—but as the lead agriculture negotiator at the conclusion of those negotiations, it is my opinion that there was no deal that did not include market access commitments for dairy.
Would you say that that's the same thing that happened with CETA as well as CPTPP? If supply management had been completely off the table, would it have been extraordinarily difficult for Canada to make a deal?
Madam Chair, I was not a part of the negotiating teams for either of those negotiations. However, the stated policy of the Canadian government during both of those negotiations was that it would—
—make no concessions. Therefore, having ultimately determined that such concessions were necessary, I can only conclude that failing to do so would have put the deal at jeopardy.
If supply management is off the table in any future deal, completely off the table, presumably then there have to be concessions made elsewhere if you're going to make a deal, so some other industry is going to be disadvantaged as a result of that, either with increased access or not getting any access. Would that be correct?
It depends very much on the position taken by Canada's hypothetical future negotiating partner and the importance they attach to gaining access to the Canadian market for these products. For some future hypothetical negotiating partners, exports of dairy, poultry and egg products are not a high priority, and it might have limited impact on our ability to conclude an ambitious agreement. For others, it is a significant commercial interest, but only part of their objectives in a negotiation, and it therefore might be expected to affect the overall outcome in a way that would affect the level of ambition, but I couldn't speculate as to how. In some cases, the country may determine that they do not want to go forward with an FTA with Canada in the absence of Canada's being able to make commitments in this sector. It depends on the hypothetical partner in question.
You did a very good job of all hypothetical questions, between the two of you.
Mr. Arya, go ahead for five minutes, please.
Thank you, Madam Chair.
Mr. Fowler, you indicated rightly that without this bill, Canada has been able to limit access and protect the supply management that we have today.
Why do we need this bill at all?
I am quite certain I am not the person to ask that question of, Madam Chair. I can speak to the effects of the bill from a negotiating perspective.
Okay, I'll ask this one.
If this bill is passed as is, you are going to say that it will not affect you in any way. Is there no constraint on you at all in negotiating any new agreement?
I think it would be disingenuous for me to suggest that a piece of legislation that's before the Canadian Parliament would have no impact. I believe that the intent of the bill is to have an impact. My conclusion is that it will have an impact.
I can't speculate on precisely what that impact will be, because I don't know who we might be negotiating with in the future or what their interests would be in the context of those negotiations.
Based on the previous experience you had in negotiating contracts with CUSMA, CETA, CPTPP, etc., what do you think the situation would have been if this bill had been passed then?
Those negotiations all involved significant producers and exporters of products that are under supply management in Canada. In the CUSMA and CPTPP context, that included the United States and/or New Zealand. In CETA, of course, with the European Union, many member states are significant producers.
In the context of those negotiations, these issues were of significant interest to our negotiating partner. With other countries it would be potentially less significant.
You are stating that your hands would have been tied, sort of, if this bill had been there.
Coming back to the CUSMA, the next president of the United States might tank this again and seek to renegotiate.
If this bill passes, what will Canada's position be in those negotiations?
I believe, Madam Chair, that the position would, by necessity, be consistent with what is set out in the piece of legislation that is before the committee. That is to say that Canadian negotiators could advance no additional market access in these sectors, nor could the government of the day accept to make such concessions.
My concern is that it will affect negotiating an overall trade agreement with the United States and Mexico with terms like the current one, which are favourable to Canada.
Given the United States' interest in the dairy sector in particular in Canada, I think an inability to discuss those issues would make it more difficult to reach a conclusion.
There will be a negative impact.
The Canadian Agri-Food Trade Alliance, which represents 90% of Canadian farmers, producers, food manufacturers and agri-food businesses that depend on trade, says it strongly oppose Bill C-282. It stated, “This legislation creates a dangerous precedent and diminishes Canada as a free trade partner.”
Do you agree with this statement?
Thank you, Madam Chair.
I am familiar with this statement, the views of the Canadian Agri-Food Trade Alliance and its concerns. I have discussed these issues with the alliance in the past.
I think it is the job of Canadian negotiators to ensure that we operate to the maximum advantage of Canadian industry stakeholders, irrespective of the mandate and operating environment in which we have to work. We will continue to do that.
The Canadian agri-food sector is a small number of people who have made Canada the fifth largest in exports worldwide.
If they say that this bill is going to affect Canadian farmers and the agri-food industry, do you think they're wrong?
Perhaps I could just offer this. We've already discussed the position of the agri-food alliance. My understanding is that the Federation of Agriculture has expressed support for the bill. They represent both supply-managed and non-supply-managed sectors.
I think it's fairly typical, given the structure of Canadian agriculture and agri-food, that there's a diversity of views within segments of the sector on different questions of trade policy.
[Translation]
Thank you, Madam Chair.
Thank you to the witnesses for being with us.
I'd like you to keep your answers brief.
The Canadian Cattle Association represents 90% of exporters, not 90% of all producers. I think it's important to make that distinction clear for the committee.
Mr. Fowler, before these breaches in supply management, 16 agreements were negotiated without granting any market access concessions for supply-managed products. Isn't that proof that agreements can be negotiated without granting concessions?
[English]
[Translation]
Thank you.
You said earlier that the government's intention was to protect supply-managed sectors in negotiating the last three agreements.
My understanding is that, initially, the government planned to give up 0% in market access. Nevertheless, the intensity of the negotiations was such that you had to grant concessions on supply management, given the exceptional circumstances.
Do I have that right?
[English]
Yes, market access commitments were made with respect to the dairy, poultry and egg sector in the CUSMA negotiations.
[Translation]
Thank you very much.
As mentioned a few times, the U.S. seems to be challenging the system yet again, so there's still an appetite to go after those sectors.
Is that an accurate statement?
Would you agree with that statement?
[English]
In my experience, the United States has export interests in virtually every sector in virtually every country, so yes, I would agree.
[Translation]
Thank you very much.
Do you think the passage of Bill C‑282 would strengthen Canada's position in future negotiations in order to avoid new breaches in supply management?
[English]
I believe Bill C-282 would render into law what has been government policy for some time. It would remove any question as to whether Canadian negotiators have flexibility beyond what they're expressing at the table.
Whether that will make it easier for Canadian negotiators to conclude FTAs in the future is a different question, and I choose not to speculate on that at this time.
Thank you very much.
I'm sorry, Mr. Perron, but your time is up.
Mr. Cannings, you have two and a half minutes.
Thank you.
I have one question, really, of Mr. Rosser. Monsieur Perron brought this up very briefly, I think, at the start of his time.
You mentioned the diversity of opinions within the entire agri-food sector in Canada about these agreements. I take it that the ones concerned about this are, largely, the export market sectors, whereas the supply management sector is almost, by definition, a domestic sector.
Thank you to the witnesses for being here and for the excellent work they do.
I have a couple of questions.
Both Mr. Fowler and Mr. Rosser mentioned that the legislation is consistent with government policy and the actions that the government is taking with regard to any negotiations it undertakes. I just, ultimately, would like to ask the question: Is this legislation therefore needed?
Is it required? You're saying that the government is doing it. We're asking that we defend supply management. In your opinion, would this legislation even be required?
Canada has, in the past, regularly concluded ambitious, comprehensive free trade agreements that do not make commitments with respect to market access for supply-managed goods in the absence of this piece of legislation; therefore, I would conclude that this legislation is not required in order to achieve such outcomes.
Thank you for that.
I'd like to ask a question. Is it true that the government recently opened up supply management in its Ukraine goods remission order?
In the context of its support for Ukraine in the face of Russia's illegal invasion, the government has taken a number of steps to make it easier for Ukrainian businesses to enter the Canadian market, and that includes a temporary remission order that would cover supply-managed products as well as other products of Ukrainian origin.
Would Bill C-282 have prevented the government from including supply management in the Ukraine goods remission order?
No, it is not our belief that it would. The access to the Canadian market that has been provided to Ukraine is a unilateral action taken by the Government of Canada. It is not a treaty obligation, therefore I do not believe it would be covered by Bill C-282.
Mr. Miao, I have one minute left, if you or someone else on this side has a question. Does anybody have an outstanding question?
I can ask a question. As we know, the Government of Canada has a long-standing policy to defend the integrity of Canada's supply management system for dairy products, poultry, and eggs. Knowing this, can you tell us how Canada has successfully negotiated new risk-free trade agreements?
Canada and Canadian negotiators deploy a variety of approaches and strategies to conclude FTAs that are in the best interest of the Canadian economy overall. When we encounter difficult issues and there is a sensitivity to Canada or to our negotiating partner, we try to identify alternate means of addressing the underlying interest.
There have been different strategies that have been deployed in different negotiations that have satisfied the interests of both parties sufficiently, so that they felt comfortable concluding the agreement without including market access for supply-managed products.
That is always our goal when we sit down at the negotiating table. Our goal is to find a way through difficult issues. We can often put these at the end of the negotiations, and it's possible to trade off some of the difficult issues on both sides. That's how we often manage it.
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