Agriculture Committee on June 15th, 2006

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Merci.

John.

[John Masswohl]

Thank you.

I guess I think of this as not so much what's happened up to this point, but what could happen. What could happen in the next couple of weeks, and where are the opportunities? And what does Canada have to do to maximize the opportunities to get access for Canadian agriculture exporters and to reduce domestic subsidies?

I'm very glad to see that Minister Strahl, in the public column he writes each week, did mention this week that he is going to go. I believe he said Minister Emerson is going to go to Geneva at the end of this month. So that's very positive, and we certainly appreciate and thank them for doing that. Compare that to a couple of weeks ago. There was a meeting at the OECD of some of the ministers from some of the countries, and Canada wasn't there.

You've mentioned some of these other groups, the G-6. I wonder that Canada could have been in the G-6. If we'd had a different position, if we'd had a more ambitious position from the start, we could have been in the G-6. I would agree that the G-6 is probably the group that's driving this and it might be part of the group where the consensus comes out. So I ask, why isn't Canada there? We could have been there, but we're not there.

Some of those things may be the semantics, as to whether we're isolated on this or somebody is isolated on that. The real question that it comes down to is, what does Canada need to get for its agricultural exporters and its agriculture industry, and then to do those things to get there.

So if we can have our ministers going there.... Basically, the issue of sensitive products is going to be very key in there. As I've listened to this, I've tried to think, well, where is the common ground here? I've heard a bit about the fact that supply-managed industries do provide access into Canada, and it's based on a percentage of domestic support. That's really what we're seeking in Europe. We're seeking a certain percentage of the European domestic market.

Now, we can debate and negotiate over what that percentage should be. We'd like to see in the neighbourhood of 10% of the European domestic beef market be open to imports. That's really what this boils down to for cattle producers and cattle exports on the question of sensitive products for beef. I've become very uncomfortable when the question is asked, “Who are Canada's allies?” and the answer comes back, “Well, it's Europe and it's Japan and it's Norway”, those countries that all want to prevent beef from going into those marketplaces. That makes cattle producers very nervous in this country.

So I guess rather than getting caught up sometimes on some of these peripheral issues, let's get down to the core issue. I don't think anybody would disagree at this table that having better access for beef exports or meat exports or grain exports into Europe would be a bad thing. So how do we make that happen?

[The Chair, Conservative, Gerry Ritz]

Thank you, Mr. Atamanenko. Your time has expired.

We now move to a five-minute round, and we'll go to Mr. Steckle.

[Paul Steckle, Liberal, Huron—Bruce, ON]

First, let me commend you for your presentations, Mr. Lebeau, Mr. Fuller, and Mr. Davis. We've had a lot of great presentations here this morning.

Mr. Masswohl, you touched on something I was going to ask in my first question, and that is whether the absence of a political presence at our negotiations has been a factor in our having been isolated, or at least being left with the impression of having been isolated?

I've been to negotiations. I haven't been to Geneva, but I was to Cancun, and we had ministers there. And we had ministers in Hong Kong in December. Somehow I don't believe that either one of our ministers have been attending anything in terms of negotiations since this government has come in. Has there been a lack of a presence there?

[John Masswohl]

I believe that the meeting at the end of June will be the first ministerial meeting of the WTO. There have been some little side meetings of groups here and there, but this will be the first time that the WTO director general has called ministers and asked them to come.

[Paul Steckle, Liberal, Huron—Bruce, ON]

What is the response of the countries that are talking about over-quota tariffs and the reduction of those? As someone mentioned this morning--Mr. Lebeau perhaps mentioned--reducing a 700% over-quota tariff by 50% is somewhat different from reducing a 100% tariff rate by 50%, which is 50%. There is such a disadvantage to us. Why can we not find some common ground in meeting that point where we come together, rather than leaving us, even though we have reduced our tariffs and they also have, with them still having the greater advantage? How do we come to some sensible common ground on that?

[John Masswohl]

I guess that's the question I often struggle with. Why can't we find some common ground? Why are we entrenched in our positions domestically at one extreme or the other? I think having this dialogue this morning to try to find that common ground perhaps could be useful in getting to that.

I've seen some of the comments and read some things about whether it's 5% of domestic consumption, as long as it's clean.... You know, there are a lot of these details that we could get to, but we're not getting to those details yet, because we're stuck on the position that Canada cannot accept any cuts to over-quota tariffs. So we don't even get into having that discussion.

I think if we could get past that first psychological barrier and get into that discussion, that would be a very positive thing.

[The Chair, Conservative, Gerry Ritz]

Mr. Steckle, Mr. Lebeau wanted to make a comment on that.

[Serge Lebeau]

I have met many representatives of other countries, and what we have always found surprising is how poorly other countries understand our systems. We have to explain that what we do is different from what the Europeans do. The Europeans have quotas in the dairy sector as we do, but they continue to export. The issue there has really been to reduce export subsidies. In Canada, our goal is not the same at all. Our primary goal is to supply our domestic market. When we tell people that, they say they were unaware of it.

Last week, we learned about the Japan issue, which I mentioned earlier. I did not know that Japan had established what we call specific tariffs. Japan did not have the fixed-percentage tariffs we call ad valorem tariffs. In making the conversion, Japan ended up with very high tariffs.

The mechanisms of individual countries' programs are often poorly understood. We try to standardize systems, and end up with the result we have here. It is extremely difficult to reach an agreement.

[The Chair, Conservative, Gerry Ritz]

Go ahead, Mr. Bjornson.

[Tyler Bjornson]

If I might, I will just comment quickly on how we get there, how we make this an equitable situation.

I think countries have already struggled with that question in the framework agreement, and that's one of the reasons there's a harmonizing formula out there to bring higher tariffs down more quickly than lower tariffs. So that question was struggled with by the entire membership of the WTO, and they came up with what I believe is an elegant way to try to tackle that very question.

[The Chair, Conservative, Gerry Ritz]

Thank you.

We'll go to Mr. Souligny.

[Laurent Souligny]

Thank you, Mr. Chairman.

On the over-quota tariff reduction, and I'm going to speak for the SM5 here, any over-quota tariff reduction would be too much for us, even at 5%, because right now there is already product coming into this country. I'm talking about eggs here, and maybe other products, but more specifically eggs. The amount of eggs imported with the over-quota tariff paid today has more than tripled. For us, it's a big concern. When we say we cannot take any more over-quota tariff reduction, we mean it, because it's already happening.

[The Chair, Conservative, Gerry Ritz]

So you are back to the point that the dispute mechanism has to be better than it was.

Mr. Steckle, one final point.

[Paul Steckle, Liberal, Huron—Bruce, ON]

I quite understand, and I'm trying to come to the defence of that point.

To Mr. Davis, when was the last time we brought in supplementary imports on our beef? We have the 76,000 tonnes and, beyond that, supplementaries. When was the last time we brought in supplementaries?

[Darcy Davis]

I believe 2003 was the last time. I think one was issued since then, but I don't believe any product was brought in under that.

[The Chair, Conservative, Gerry Ritz]

We will move to Madam DeBellefeuille, for five minutes, please.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Thank you for your comments.

Since the committee began its work, I have noted that the agricultural sector and the processing sector find themselves on opposite sides in many areas.

My question is to Ms. Koch. Today, I sense some opposition between the two sectors, the supply management sector and the beef and grain producers and processing sector. We are under the impression that you are asking for the supply management system to be sacrificed so that imports can go up and beef and grain trade can expand. Have I understood this correctly? Do you believe that sacrificing supply management will boost trade in those other areas?

[Alanna Koch]

What we would want to make clear, first of all, is that supply management is not being negotiated at the WTO. What is being negotiated is market access. I don't think it is a matter of one sector winning and one sector losing. It isn't about the exporters winning and our domestic marketing systems losing. I think it's about an overall good deal for Canada. We're not asking to play one off against the other, but what we are asking for is for Canada to stick to the commitment it already made in 2001, when it signed onto the Doha mandate, and again in 2004 when it signed onto the framework, in which it said that it agreed to give substantial market access on all products, including sensitive products.

I don't think that CAFTA or its members, as exporters, farmers, processors, are asking that supply management be gone. We clearly understand that supply management is a very important part of the agriculture sector in the country, but what we are saying is that Canada needs to stick to what it has already said it was going to do, because if it doesn't... the problem is our sensitive products, like grain and wheat, won't be exported.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Ms. Koch, forgive me for interrupting you. When we read, look around, and read all the research done, it becomes very clear that many people question what you are telling me. Many farmers, including farmers from Quebec, UPA representatives and the representatives of many associations, believe that the supply management system will be destroyed if we expand market access. As a result, even though we may not negotiate it as such, there will be a direct impact on the supply management system, which is extremely important in the farming industry, particularly for Quebec farmers.

My other question is this: what do you think about the fact that Canada still played the game by the rules, as Mr. Lebeau said, and expanded its market access by 5% when other countries did not? Unlike you, I am quite proud of that. I find that Canada is very ambitious, stands tall, cares about its agricultural sector and tries to defend it. I believe we should put pressure on other countries to show good will in their turn. I do not believe that following this trend downward is going to do anything to protect and develop our agricultural industry in Quebec and Canada.

[Alanna Koch]

You indicated that Canada is a fair player and that we should be satisfied with that and shouldn't be looking at more access. I guess I have a couple of points on that.

The reality is that all of the countries, unfortunately, could be considered fair players, because they are all playing by the rules. All the countries basically are playing by the access rules that have been outlined in past agreements. In fact, I could give you some examples of where Canada actually hasn't fulfilled its commitments in a couple of products. We could get into that, but it's a bit of a mug's game.

Basically everyone is playing by the rules. So what we need to do is to ensure that the rules are better, that we get a better deal, and that overall we get the deal that we said we were going to get as part of the Doha Round, which was to bring down subsidies, bring down trade distortions, and to improve market access for all products.

I think you spoke to the 5% question, and I will just say quickly that the idea of limiting access to 5% has not gained any support internationally. It's not part of the current negotiations, nor has it been mentioned in the market access papers that the chair has recently put out. With most of the markets that are important to Canada, both where there are tariff rate quotas or where there are high simple tariffs, we already import more than 5% of the domestic consumption. So a simple 5% limit across the board would actually have very little positive impact on Canada's exporters. Though 5% sounds like a good basic starting point, it really would do very little for Canada, and it's actually not even part of the negotiation process right now, anyway.

[The Chair, Conservative, Gerry Ritz]

Thank you, Madam.

Is there anyone else on that point?

[Darcy Davis]

Just quickly, I think it's too bad that the myth gets perpetuated that we as exporters are against supply management. I don't think we are. As a producer who's elected by producers, I'm trying to represent the people who put me there and to look after their livelihoods as well.

Supply management has been described as a unique system in the world. I think that's probably true, but to break this impasse or the problems we're having may require some unique solutions or some unique ideas. Those have to come from both the people involved in supply management, I think, and our leadership.

[The Chair, Conservative, Gerry Ritz]

Mr. Lebeau.

[Serge Lebeau]

With regard to compliance with the Uruguay Round Agreement, I doubt it. We always cite the US as an example; the US awarded ice cream import quotas to Jamaica. But you know full well that Jamaica does not produce ice cream. It barely has any cows. So you can see the kind of circumvention war we are facing. We come up against this at every turn.

There is another important aspect, which I think is going to change. At present in the European market, 5% is for red meat, but no distinction is made among beef, pork, horse meat and lamb. This makes it very difficult for Canada to enter the market. They tend to award import quotas—particularly to eastern Europe—for products they need, or for which there is less competition. That applies particularly to pork, and probably to beef as well.

If 5% of the market were specifically set aside for individual products, Canadian pork and beef would have a better chance of penetrating the European market. I'm sure of it.