Thank you, Mr. Chairman.
Members of the committee, I would like to begin by recalling why Canada established the supply management system 30 years ago. Over 30 years ago, the Canadian and Quebec supply management systems were originally set up to stabilize farm incomes and end the massive injection of government funds to support them, two objectives that were achieved over time and are still applicable today.
Now that the WTO agricultural negotiations have reached a crucial stage, namely establishing a set of modalities, we are urging Canada to move in favour of supply management in this area. The UPA has some concerns regarding the significance, speed and direction that the current agriculture negotiations are taking in this regard. These concerns involve the negotiations themselves and several technical points, as well as the Canadian government's position on this file.
Allow me to present some of the technical issues being covered by the current negotiations.
I will begin with the treatment of sensitive products and the principles in the July 2004 Framework Agreement. It stated, and I quote, “The reforms in all three pillars of the negotiation form an interconnected whole and must be approached in a balanced and equitable manner.” This principle, documented in the July 2004 Framework Agreement, is very important for Canada. While the G10 countries, the European Union and the United States directly subsidize farmers, thereby enabling them to lower costs and tariffs, which ultimately protects their marketplace from imports, Canada must maintain supply-managed sectors by ensuring that they preserve the only protection available to them, that is, tariff barriers.
Why should we have to do more in terms of market access than other countries? Mr. Pascal Lamy, the Director General of the WTO, during a meeting that we had with him on June 5th, told us that in order to maintain our supply management systems, all we had to do was use the blue and green boxes. However, in the same breath, he admitted that in order to protect the whole market, the shortfall had to be made up by direct payments, which is exactly what the Europeans, the Americans and the G10 countries are doing. We are not particularly interested in that.
The second technical point is that of the selection of sensitive products. Canada needs at least 7% of the tariff lines to cover the roughly 100 over-quota tariff lines of supply-managed products. Proposals put forth to date vary this rate from 1%—that's the American proposal—to 4%—that's the European position—and to 15%—the G10's position. We are concerned about the selection of sensitive products being expressed as a percentage. Europe, for example, apparently needs the same number of tariff lines as Canada does, namely 100. This number, expressed as a percentage, is 4% of the European tariff lines, which covers the sensitive products that Europe wants to register with the WTO. If percentage of tariff lines is the method chosen for selecting sensitive products, there will have to be sufficient flexibility so that countries can go about it equitably.
Let us move on to tariff quotas. Let us recall that during the Uruguay Round, the countries established guidelines setting minimum market access at 5% of domestic consumption. However, not all those countries applied those guidelines in the same way. For example, Canada allows imports of approximately 4% of domestic consumption of dairy products, 7.5% for poultry, 5% for turkey, 5% for table eggs and more than 20% for hatching eggs.
The United States allow only 2.75% for dairy products, whereas Europe allows .5% in the poultry sectors. Altogether, those countries gave 2% market access under the tariff quotas. For reasons of fairness, we feel that what is required first is reaching an equal minimum level of access before contemplating expanding access to our markets.
I will now talk about exporting state trading enterprises. Given that our state-trading enterprises are the only tools available to farmers for competing with the large private sector players internationally, in all segments of the chain, we believe it is important to preserve what was learned from the Hong Kong Ministerial Conference, namely that it is not the state-trading enterprises or their monopoly power that are in question, but rather their practices.
In terms of the government's position, the federal Minister of Agriculture, Mr. Chuck Strahl, stated on May 31, with respect to the negotiations, that when the vote is 148 against us, we have the choice: we can give up or we can defend our interests in supply management.
In light of that comment, we are worried that Canada will sign an agreement, regardless of whether it is in the interest of agriculture supply and management. It is also important to remember that, while the Canadian economy as a whole relies heavily on exports, the same cannot be said of the agricultural sector, in spite of what is often claimed. The domestic market is, by far, the principle market for Canadian farmers and processors. Canadian farmers and processors generate more than $91 billion in sales annually, the vast majority, 70%, of which are domestic sales. The same trend can be noted across the world, as only 10% of the world's agricultural production is traded internationally. Why then should we sacrifice our agriculture for that 10%?
Canada must therefore take a firm position on agriculture and, like Norway did in July 2004, invoke the exception if necessary to ensure the survival of its supply management systems. Moreover, a Léger Marketing survey, commissioned by producers themselves and conducted between May 16 and 21 among 1,500 respondents, revealed that 85% of Canadians agree that the federal government should support the supply management approach to dairy, poultry and egg farming. It also revealed that 83% believe that supply management is a better approach to ensuring a stable income for farmers and taxpayer-funded subsidies.
According to our sources, Cabinet has recently renewed the mandate of its negotiators. It is imperative that this mandate be crystal clear in order to ensure that current negotiations do not result in a reduction in non-quota tariff or an increase in tariffs quotas. This objective should be considered before supporting any amendments to the WTO agriculture trade rules. Supply-managed sectors must be able to continue to provide producers with a fair return from the marketplace. It must also be ensured that consumers continue to have access to high-quality products in sufficient quantity and at reasonable prices; that processors benefit from a very stable supply and achieve an advantageous bottom line; and that the state, and therefore taxpayers, no longer pay subsidies to support the incomes of the farmers concerned.
Thank you very much.