Evidence of meeting #56 for International Trade in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was c-282.
A recording is available from Parliament.
4:20 p.m.
Liberal
The Chair Liberal Judy Sgro
Thank you very much for being here. You have my apologies.
We'll go back to Mr. Seeback.
March 30th, 2023 / 4:20 p.m.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
Thank you very much, Madam Chair.
I always find it very interesting and curious when members from the Liberal Party say, when we're trying to do due diligence, debate or look into issues, that it's obstruction and that we're against things.
Nothing can be further from the truth. I will be visiting farms in my riding over the break, in particular dairy farmers, who I know work so hard. I doubt that the parliamentary secretary will be visiting dairy farmers in his riding over the break.
To go back to where I was, this was Mr. Dhaliwal's question. He said:
My question is for Mr. Forsyth. He mentioned numerous times that there are some risks involved. One of them, he mentioned, is a narrow outcome. I would like to ask him to explain or elaborate on those risks and the potential impacts.
Mr. Forsyth replied:
I'd be happy to elaborate on some of those risks and what would happen in a trade negotiation if one were to be negotiating with not the full basket of items on the table. I highlighted it in one of my earlier answers, but I'm happy to flag it again.
I think that as a trade negotiator you like to start the negotiation with as many items on the table as possible. It does potentially allow for trade-offs and allows for a broad discussion with your trading partner in order to understand what is within the art of the possible.
It is incumbent on us as trade negotiators to make sure that our trading partners understand our key defensive interests and what our red lines are and what things we cannot do. As I've said, throughout my negotiating career, it's been clear that concessions made in the supply management sector are red lines. That is what was in my mandate for the Canada-UK TCA and that was what was respected.
If we were to start from the position that we would not be dealing with 100% of the items that we would negotiate on, it does risk having an agreement that's not necessarily completely beneficial to Canadian exporters and producers and it does risk being an agreement that does not necessarily provide the full economic benefits to Canada that one might have expected.
This is, to me, just an absolutely incredible paragraph. It sets out how deeply concerned Mr. Forsyth was with respect to Bill C-216, which is now effectively the exact same as Bill C-282, yet we did not get 10% of that concern when we were hearing from government officials when we were talking about Bill C-282.
The answer continued:
We have not faced that yet to date, but it is possible that if we were to go down the path provided in Bill C-216, that is in fact what we would do. It would be quite likely that our trading partners would take off the table something of interest to Canadian exporters and producers, and then we would be faced with the situation of negotiating an agreement that might not be as beneficial to Canada as it could be.
Here we are today, talking about what's been studied with respect to Bill C-282. What we've talked about is that we need additional meetings. Why do we need additional meetings? Well, for one thing, we did not get evidence like this during the study of Bill C-282. We got nothing like this from government officials.
What is something that we proposed? We proposed that we should have some trade experts come to the committee to talk about this. That's what we're asking for. We've been asking for this for quite some time.
Madam Chair, if you recall, I had a similar motion with respect to this. The committee meeting was adjourned, and the committee did not recognize the need to have additional meetings as a result of that adjournment.
Nothing, quite frankly, could be further from the truth, because—and this is the really critical part of that statement—we would be faced with the situation of “negotiating an agreement that might not be as beneficial to Canada as it could be”.
That's the effect, from our government officials with regard to Bill C-216, which is identical to Bill C-282, yet we're moving through here on Bill C-282 without seemingly any consideration for this or any desire to have a more in-depth conversation with, perhaps, trade experts.
We certainly have Mr. Verheul on our list of witnesses. He would be an expert and someone who could give us very clear guidance on how serious an impact this would have on our negotiating positions.
He went on to say, “Maybe I'll turn to my colleague from Agriculture Canada to see if he'd like to add anything.” Mr. Fowler then went on to say, “Thank you very much. No, I fully agree....” He fully agrees.
We can ask what he fully agrees with. Well, I would say that he fully agrees that if we were to go down the path provided in Bill C-216, if that is in fact what we would do, it is quite likely that our trading partners would take off the table something of interest to Canada, and we would be faced with a situation of negotiating an agreement that might not be as beneficial to Canada as it could be. Under Bill C-216, we have very clear agreement from government officials about the significant consequences that this bill could have. Well, actually, I think it's what they think the consequences of the bill would be if it were passed, and we got just a modicum of that concern when they came back to talk about Bill C-282. Again, this gives me grave concerns, grave concerns about what we should actually believe.
Quite frankly, the only way to get an answer to that is if we have these gentlemen come back to committee and give them pointed questions with respect to the evidence they gave under Bill C-216 and the evidence they gave under Bill C-282 and have them answer those questions. That's the only way we will get to the bottom of this inconsistency.
The rest of Mr. Fowler's answer is as follows:
No, I fully agree...trade negotiation has reached what we call a balance of commitments or a balance of concessions or a commensurate level of ambition with your trading partner.
That's an important phrase: “level of ambition with your trading partner.”
He continued:
To the extent there are issues that are of interest...that we're not in a position to discuss, the reasonable conclusion would be that the overall level of ambition of the agreement would necessarily be diminished as a result of that position.
They are very clearly stating that not only is it going to be challenging from a negotiating perspective, but the level of ambition of the agreement would be diminished, which I think is interesting, because when we had Mr. Troy Sherman come to talk about this at our committee—Mr. Sherman is from the Canola Council of Canada—this is what he had to say:
My name is Troy Sherman, and I am the director of government relations for the Canola Council of Canada. The council encompasses all links in the canola value chain. Our members include canola growers, life science companies, grain handlers, exporters, processors and others. Our shared goal is [to ensure] the industry's continued growth and success, and [to do this] by meeting global demand for canola and canola-based products, which include food, feed and fuel.
Canola's success is Canada's success. Our industry represents almost $30 billion in economic activity annually, 207,000 jobs across the country, $12 billion in wages and the largest share of farm cash receipts in the country. With over 90% of Canadian canola exported to as many as 50 different markets, the canola industry depends on ambitious and fair science- and rules-based trade.
For many years, we have worked with Canada's trade negotiators to make sure that Canada and Canadian canola are well positioned to help feed the world. Central to these trade negotiations is the foundational principle that negotiators should be empowered to reach the best agreements for Canadians and the Canadian economy. Negotiators have been able to achieve this by availing themselves of all the tools in our trade-negotiating tool box, working closely with industry, academics and civil society to ensure [that] Canada's trade agreements achieve what is in our national interest.
This is what is being said to achieve the national interests, and we go back to what Mr. Forsyth said, which was that “it does risk being an agreement that does not necessarily provide the full economic benefits to Canada that one might have expected.”
Mr. Sherman went on to say this:
Bill C-282 risks undermining Canada's reputation as a trading nation and, consequently, [undermining] our national interest [in] trade negotiations. [Bill C-282] does this in a number of ways, including putting in place legislative prohibitions on what our negotiators [are able to] discuss at the negotiation table and diminishing Canada's desirability as a market with which to pursue trade agreements.
When you talk about the level of ambition, Mr. Sherman was saying exactly the same thing: “diminishing Canada's desirability as a market with which to pursue trade agreements.”
He went on:
On the first point, Bill C-282 [is proposing to prohibit] what Canada's trade negotiators can discuss at the negotiation table. To the best of our knowledge, and as noted by officials at Global Affairs Canada, no other country legislatively prohibits negotiators from discussing certain topics during trade negotiations. Canada would be an outlier, and needlessly so.
In [March] 2021, an official from Global Affairs appeared before this very committee on Bill C-216 [a] predecessor [to Bill C-282]. At the time, they stated the following, “Canada has been able to successfully conclude 15 trade agreements that cover 51 countries while preserving Canada's supply management system”.
So Mr. Sherman was also aware of the evidence that Government of Canada officials had given under Bill C-216. He went on:
The official went on to say:
If we were to start from the position that we would not be dealing with 100% of the items that we would negotiate on, it does risk having an agreement that's not necessarily completely beneficial to Canadian exporters and producers and it does risk being an agreement that does not necessarily provide the full economic benefits to Canada that one might have expected.
He said:
What was true when [that] was said two years ago remains true today. Bill C-282 is a solution in search of a problem and...risks undermining other industries and sectors of the economy, including Canadian canola. Passing Bill C-282 will set a dangerous precedent for additional amendments to the Department of Foreign Affairs, Trade and Development Act, [in order] to either protect certain industries or mandate restrictive language in trade agreements in specific areas of interest.
Regarding the second challenge mentioned, Bill C-282 will significantly diminish Canada's desirability as a country with which to pursue trade negotiations.
Let's go back. Canola represents $30 billion in economic activity for this country annually, 207,000 jobs across the country. Think about that for a second: 207,000 jobs and $12 billion in wages. They are very deeply concerned with this bill.
I've lost my spot here. Mr. Sherman continued:
By legislating that our negotiators are not able to include supply management as part of the negotiations, Canada is significantly shrinking the trade prospect pie and potentially forcing Canadian concessions in other areas of interest. If Canada is viewed as an obstacle for new entrants to plurilateral agreements, or less attractive to engage with—given our legislated red line on supply management—our trading partners may question the value of having Canada at the negotiation table.
To conclude, Bill C-282 represents a significant departure from Canada's principled, fair and rules-based...trade posture. No industry, sector or issue should be off the table during trade negotiations. Our trade negotiators have delivered tangible results and benefits for the Canadian economy and industries, including canola.
Mr. Sherman is right on point with what Mr. Fowler said with respect to Bill C-216, that the reasonable conclusion would be that the overall level of ambition of the agreement would be diminished as a result of that position, that position being that we take a certain sector of the Canadian economy off the trade agenda.
Mr. Dhaliwal then asked—and this I think is quite interesting, because this also never came out in the discussion with government officials with respect to Bill C-282. He said:
Madam Chair, it's also mentioned that in introducing specific policy objectives, the proposed amendments wouldn't fundamentally change the nature of the departmental act. I would like to hear an elaboration on that particular issue as well, please.
Mr. Forsyth then said this:
Thank you, Madam Chair.
If you look at the act itself, it...is an organizational statute that sets out in general terms what the powers and duties and functions are for...ministers. It does not have any specific policies related to what the Minister of International Trade, the Minister of International Development or the Minister of Foreign Affairs ought to be doing. It doesn't elaborate on any government policies of the day. It's a general act that sets out the terms and conditions, if you will, for the department and for the ministers and the deputy ministers. It's not policy—
This is the danger with putting something like this within that act. You are actually putting policy into the act. What happens if others decide that we should be putting policy, not just trade, into the act, or perhaps putting foreign policy into the act or international development policy into the act? It sets a terrible, terrible precedent, something that we should absolutely have departmental officials back to talk about, especially considering the fact that their testimony seems so starkly different from one committee appearance to the other.
Mr. Lobb then had this question:
The first question I have is for Mr. Forsyth.
Again, thank you for appearing before our committee. I think you've been in the lead for most appearances since I've been on the committee—maybe you and the minister—so congratulations on being available.
When we say that we can't ever say we're not going to put certain items forward at the beginning of the trade negotiation, I understand the sentiment, but I'm curious that when we were doing the USMCA deal, softwood lumber never made its way on there and buy America really never got resolved either.
How does that happen?
Mr. Forsyth said:
I wasn't directly involved with the broader Canada-U.S.-Mexico negotiation at the time, but my understanding is that we certainly did start with the broadest possible negotiating objectives, including trying to deal with softwood lumber in some way, shape or form, as well as trying to deal with trying to negotiate a government procurement chapter in relation to the buy America provisions. It was clear, as we started to narrow down the issues, that the United States would not engage on either of those issues, so they were put aside...
Imagine if, in six years, as we heard from the committee, we looked at the CUSMA agreement and this piece of legislation was in place. What would the effect of that be with respect to that renegotiation? I think that's something that we have to get some expert advice on.
The other issue is this. It's interesting that there was an attempt to discuss softwood lumber in the renegotiation of CUSMA. Right now, the Minister of International Trade is trying to resolve the softwood lumber dispute. It would be interesting to see what effect Bill C-282 would have on her ability to negotiate softwood lumber. We know that the United States has complaints right now with respect to how the TRQs are allocated within CUSMA for dairy. Would this bill be an aggravating circumstance in trying to negotiate the resolution of the softwood lumber dispute, a dispute that now has collected over $8 billion in duties?
Based on the last softwood lumber settlement, Canada would be entitled to $6 billion of those duties being returned. I can only imagine what the Canadian softwood lumber industry could do with $6 billion in improvements, in machinery and equipment and perhaps the ability to export more to the United States.
Again, these are very serious questions with respect to the implications of this bill. Therefore, this is something that we absolutely need to have more meetings to discuss, because we quite frankly do not have the answers to any of that. We can go back to what we heard from department officials and what Mr. Arya asked Mr. Fowler:
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?
He said:
I am quite certain I am not the person to ask that question of, Madam Chair.
This is interesting, because under Bill C-216 they seemed to suggest that Bill C‑216 is not necessary at all, and Bill C‑216 is the exact same bill as Bill C-282.
We have to ask ourselves why, when they came to committee the first time, they suggested that the bill was not really necessary, but this time when they come back and they were asked a direct question—do you think the bill is necessary?—they decided not to answer. It's a bit of a head-scratcher, isn't it? The first time: We don't think this bill is necessary. This time: I don't think I'm the right person to answer this question.
That really gives me pause. That says to me that something has happened, and a witness who answered a question one time now won't answer a question another time. This is a very head-scratching situation.
Mr. Arya tried again:
Okay, I'll ask this one.
If this bill is passed...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?
He got this response:
I think it would be disingenuous of me to suggest that a piece of legislation that's before the Canadian Parliament would have no impact. I believe 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'll] be negotiating with in the future or what their interests would be in the context of those negotiations.
Now, that is a very interesting way to say, “I can't speculate on what the impact would be.” It's interesting, because at the last committee hearing, Mr. Forsyth said this:
If we were to end up with this bill as it is written, I think very much that we would start with a much smaller scope of negotiations with various partners. It wouldn't be unusual for them to say, “That's fine. Canada has taken these issues right out of play. We will take issues that are of interest to Canada...out of play.” Then you're talking about negotiating from a smaller pie, as it were.
Here, on Bill C-282, it's “I can't speculate on...what [the] impact would be.” It would seem to me that when Bill C-216 was being studied at committee, our department officials had a very good idea of what the impact would be, but somehow, in some strange way, they suddenly didn't think they could anticipate what the impact would be.
This is another example of why we need additional meetings. This is another example of why department and government officials need to come back to this committee and explain exactly what has changed. Why have their views changed? Why are they saying different things?
I'm going to go on with this a little more, because Mr. Arya was quite persistent in his questions. I suspect he perhaps saw some of the previous evidence that was given by department officials and was trying to get some answers. Mr. Arya said:
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 would think Mr. Fowler would have said, based on what was said by the Government of Canada under Bill C-216, that this would be difficult; this would tie our hands; this would narrow the scope of our ability to negotiate. Unfortunately, that's not what he said.
He said:
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.
This is much less forthcoming an answer to a question than what we saw when Bill C-216 was here at this committee, and again, it is an identical bill.
Mr. Arya is a determined man. He wasn't prepared to let that go, so he asked another question:
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.
Finally Mr. Fowler admitted, “It would have an impact on these negotiations. I think it—”
Mr. Arya said, “Would it be a negative impact?”
Mr. Fowler said:
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.
Again, this answer is very hedgy, very hedgy, not the very clear declarations that Mr. Fowler was giving in the previous study of this bill. I find it, again, enormously challenging for us, as parliamentarians, to be at this committee and to say, let's rush to clause-by-clause; let's just get it done. We have completely inconsistent statements from our government officials as to what the effect would be.
We know, for example, that just for the canola sector, Mr. Sherman talked about $30 billion in economic activity, $12 billion in wages, and the largest share of farm cash receipts in the country. They are extraordinarily concerned about this bill. They believe it is going to have an extremely detrimental impact on future trade negotiations and a detrimental impact on their ability to export products. They are a major exporter, and they provide $12 billion in wages to Canadian families from coast to coast to coast.
We know how difficult it is to make ends meet right now. I suspect that if you don't have a job, it's going to be much, much more difficult than that.
Mr. Arya then said:
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[s] 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?
Again, this is where it gets interesting, because the answer we get here is very different from the answer we got before. I'll start with the answer to Mr. Arya's question:
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 [trade] 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...work. We will continue to do that.
The statement is talking about how it's a dangerous precedent. Mr. Arya is asking Mr. Fowler if he agrees with this, and Mr. Fowler is once again very, very careful with his answer. I mean, he's so careful that he almost doesn't say anything.
If we go back to Bill C-216, though, Mr. Forsyth was asked this question and gave this reply:
I'd be happy to elaborate on some of those risks and what would happen in a trade negotiation if one were to be negotiating with not the full basket of items on the table. I highlighted it in one of my earlier answers, but I'm happy to flag it again.
Mr. Forsyth was very clear and forthcoming under questioning as to the impact of Bill C-216—very clear. All the department officials who came were very clear on Bill C-216. Mr. Forsyth was very clear in the answers, and Mr. Fowler was also very clear in answers.
I'll go back to Mr. Forsyth:
If we were to start from the position that we would not be dealing with 100% of the items that we would negotiate on, it does risk having an agreement that's not necessarily completely beneficial to Canadian exporters and producers and it does risk being an agreement that does not necessarily provide the full economic benefits to Canada that one might have expected.
We have not faced that yet to date, but it is possible that if we were to go down the path provided in Bill C-216, that is in fact what we would do. It would be quite likely that our trading partners would take off the table something of interest to Canadian exporters and producers, and then we would be faced with the situation of negotiating an agreement that might not be as beneficial to Canada as it could be.
Then he turned it over to his colleague from Agriculture Canada, Mr. Fowler, who said this:
Thank you very much.
No, I fully agree....
Let's go back to Mr. Arya's question:
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[s] 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?
A very similar question was asked under Bill C-216. I just gave you part of that answer, where Mr. Fowler was saying he agreed that this would have a serious...that it would diminish Canada as a free trade partner, but somehow, under Bill C-282, this is the answer we get:
I'm familiar with this statement.
Okay. That's great.
I have discussed these issues with the alliance....
I think it is the job of Canadian negotiators to ensure that we operate to the maximum advantage of...industry stakeholders, irrespective of the mandate and operating environment in which we...work. We will continue to do that.
It's a completely different answer. It's almost a complete evasion of the question, and we, as a committee, are just supposed to say, “Well, there's nothing to see here, because what they said under Bill C-282 is all that we should be concerned about.” They said something almost diametrically opposed last time. As parliamentarians, we should just move on. We're busy. Let's not have an extra meeting or two to try to get to the bottom of it. It's only $12 billion of salaries for Canadian workers that are at risk, so let's move on. There's nothing to see here.
To me, these are incredibly concerning issues. The government officials say that they understand the concerns, and, sort of, that's it, but they're not going to acknowledge them. That's where we are under Bill C-282. Under Bill C-216 is it very, very different, and I find that, Madam Chair, to be deeply and extraordinarily challenging, something that I am very unhappy with, and something, quite frankly, it really wouldn't be too hard for this committee to get to the bottom of. We need a few extra meetings.
My motion talks about one additional meeting to invite departmental officials back prior to clause-by-clause, not only because we heard such fearful testimony on other aspects of the Canadian economy but also, I think, because perhaps departmental officials would like to clear up how their statements seem to be wildly inconsistent. That's my perspective.
I was a litigation lawyer for over a decade. When you see statements that are wildly inconsistent, you think you have to get to the bottom of them. If you don't, you don't actually know where the truth lies.
I think that's reason number one that we should be looking at this. We need the department officials to come back. We need to ask them questions similar to the questions I've asked today. Everyone on this committee should want that and should want to demand the answers.
That's what I have to say with respect to that, but the other issue is this.
Madam Chair, you had a question on where I was.
That was the first point I wanted to make with respect to this motion. I have four points in total, and I'm going to move to my second point now, which is the fact that we need additional stakeholders to come to speak to this.
We have had so many people come to talk about this and raise concerns. One of the ones I thought were quite powerful and we really didn't get much information on, because of, again, the limited amount of time we had at committee to study this, was Mr. Joe Dal Ferro, the chair of the International Cheese Council of Canada.
He was talking about his association:
The ICCC was founded in 1976. We are an association of small and medium-sized cheese importers and their suppliers. Our members are Canadian-based importers of cheese. Our associate members include cheese producers and processors from various countries that have international trade agreements with Canada.
It was actually Mr. Cannings who had some very interesting questions for them to try to understand what they were talking about. It is a complex issue, and I don't think in a five-minute intervention we're able to get to the bottom of it.
He stated:
The ICCC has coexisted with Canada's supply-managed dairy sector for over four decades and accepts the rationale underlying Canada's supply management system.
They are also supporters of supply management. They are not advocating for its dismantling.
He continued:
Rather, we are continuing to work with the government to ensure that its TRQ allocation and administration system respects our trade commitments in the dairy sector. Moreover, many of our members, including my company, are proud to be distributors of domestic cheeses [all] across...Canada.
I am here today to offer the committee several compelling reasons why Bill C-282 should not be supported by parliamentarians.
First, parliamentarians must...consider the significant negative financial impacts...this bill will have on the many Canadian small to [mid]-sized businesses that import cheese. The future for Canadian importers of cheese is already uncertain. This bill is only adding to the unpredictability. The unknown outcome of Global Affairs' TRQ phase II review—which initially started in 2019—is creating ambiguity and inhibiting business planning. Moreover, it may require importers to significantly change their business methods and model if the new quota policy is unfavourable to our industry.
If Bill C-282 becomes law, it risks obstructing even the possibility of addressing the market access requested by the U.K. as part of the ongoing bilateral negotiations. If the U.K. is forced to settle for a portion of the WTO non-EU quota, Canadian importers will be limited to exclusively using this method...to import British cheeses.
Now, this is the important part. He went on to say, “This pool is already fully utilized....”
What is effectively being said by this gentleman is that if Bill C-282 becomes law.... The U.K. left its quota in the EU when Brexit happened. Its quota was left with the EU. It has some quota now through the transitional provisions as we're negotiating the FTA, but if Bill C-282 passes, then there can be no additional dairy access granted to the U.K.
This bill is happening right in the middle of trade negotiations. Our negotiators are there, trying to negotiate a deal, and hanging over their head is the fact that this bill could pass and completely upheave the negotiations, because maybe there's going to be some dairy access for the U.K. We know they want it, but if this bill passes, there's none.
Imagine you're the trade negotiator there, and you think you have a deal—you're very close. Boom, Bill C-282 comes in, and all of a sudden that part of the deal you've made is no longer valid, because you're in contravention of a piece of legislation. That is the risk of doing this.
I was a lawyer, but I am not an international trade lawyer. We do have someone or some people who could come to this committee and give us some guidance on this. Mr. Verheul would be fantastic for that. Mr. Verheul could be asked, “If you're in the middle of a negotiation and someone passes a piece of legislation that takes a segment of that negotiation off the table, how would that affect your negotiation or your ability to negotiate?”
As a lawyer, I know. I had to negotiate things all the time, and as part of the negotiating process, you're building good faith with your counterpart. You're building good faith and trust as you move forward in trying to negotiate something. If you have come to a decision whereby you're saying that maybe you're going to have to find a way to give the U.K. 0.05% or something like that—I'm just making up a number—and you know that then you're going to have agreement on all these other things, but a piece of legislation comes in and says, no, that's off the table, how are you going to continue to work forward in good faith? It's going to absolutely affect the good faith of the negotiation.
The other thing is this, Madam Chair: Is the threat of Bill C-282 hanging over our negotiators' heads right now as they try to negotiate the FTA with the U.K., because they feel they have to rush the FTA to get it done before this bill passes?
Let's think about the consequence of that. If you're rushing to conclude an FTA because of fear of this piece of legislation, you might actually give away more than you'd planned to because you had to get it done quickly, which is a really interesting thing as we're talking about Canada-U.K. and what's going on.
In a March 9 article in a U.K. newspaper, there was bragging: “I am hearing that the volumes on beef are low, and that in return they have also got some dairy access which makes it a more reciprocal and balanced agreement.” That is someone who is involved or who has knowledge of the Canada-U.K. FTA negotiation.
So there's a possibility that this bill in and of itself is causing our negotiators to rush to get a deal, and in so doing may in fact do more harm to the supply management sector in this country than would have happened, because our negotiators are under pressure to get this done before they can.
The international cheese association said:
This pool is already fully utilized with cheeses from the U.S.—
That's the WTO quota.
—New Zealand, Switzerland and Norway, among others. Otherwise, they will find themselves faced with three options, all of which will result in financial harm to Canadian businesses.
These are the three unappealing options. The first is ceasing to import U.K. cheese products altogether in Canada, meaning that many Canadians’ beloved British cheeses could be gone forever. The second is substituting some of their imports from other non-EU countries with imports from the U.K., ensuring a shortage of available cheeses.... Third...importing U.K. cheese with the prohibitive 245% tariff.
Imagine that—a 245% tariff. This is a government that talks about how it's there for small business. It talks about it all the time, about how important small business is. Here we have the International Cheese Council of Canada saying that this could have a devastating impact on small businesses because of their inability to import cheese. They came; they gave their evidence, and they gave their significant concerns.
Madam Chair, they were so concerned that they actually submitted a brief after they appeared. That is not always how it goes. They often submit briefs before they appear. They were so concerned that they decided to actually put a submission in. This is something, again, that I think we should be studying, and studying closely. It talks about this:
C-282: Potential Impacts on Canada-UK Trade
If C-282 passes, the many small to mid-sized businesses that import cheese from the UK will be at a distinct disadvantage.
As a result of Brexit, the UK has ceased to be entitled to the market access achieved by the European Union (EU) as part of CETA.
That's what I was saying. The U.K. left its market access in the EU through Brexit. It was an unintended consequence, I'm sure.
In December 2020, the UK and Canada agreed to a 3-year transition period during which the UK will continue to have access to the WTO cheese TRQ EU pool, despite the UK having become a non-EU country.
I think that's what they were trying to explain when Mr. Cannings was asking questions. The UK is getting some WTO access through the EU pool, but this is a transitional provision, and the ICCC goes on to say this:
Unfortunately, the post-2023 future for Canada's importers of UK cheese has never been more uncertain—and the prospect of Bill C-282 passing would make the resolution of this problem even more challenging.
The reason for this is that, at it stands, after 2023, UK cheese products will need to be brought into the Canadian market through the WTO TRQ non-EU pool—
The U.K. had some access under the WTO TRQ pool. Afterwards, they will not—after 2023—because the agreement extends only until 2023, so then they go to the WTO TRQ non-EU pool, and this is where the problem is. It's:
—a pool which already has a utilisation rate of above 97%.
That pool is full. British cheese will not really get into Canada unless it's under those scenarios that I was talking about, which would include a 245% tariff. That would drive that cheese out of the marketplace.
Moreover, if Bill C-282 becomes law, it will obstruct even the possibility of addressing the access requested by the UK. The UK would be forced to settle for a portion of the WTO TRQ non-EU pool...with no modification in overall quota amount despite the addition of the UK, a significant cheese-producing member. The result is that our Members—i.e., Canadian importers—will also be limited to exclusively using the WTO TRQ non-EU pool to import UK cheese products. Otherwise, they will find themselves faced with the following three unappealing options.
Those are the options they mentioned in their statement to this committee, all of which are very unappealing, and all of which, they say, will result in financial harm to Canadian businesses.
These are small businesses, Madam Chair. They are small businesses. They are, most often, mom-and-pop shops. They're the ones we should be trying to find a way to help, to protect. The government should be very concerned about this. The government should be listening to witnesses to hear what the impact of this is going to be.
Instead, this government, this committee, seems to want to just say, “We've heard enough. We don't care. We're sorry, you cheese importers, but we just don't care because we're passing this bill regardless of your concerns,” without actually even fleshing out their concerns, because when someone comes and gives a five-minute opening statement and gets one five-minute Q and A, it's incredibly difficult to actually explain the severity of the problem and how serious the problem is.
I've had a bit of time today to go into some of the problems, and I'm not even going into depth on many of these things. I'm just scratching the surface to try to raise these issues, to try to convince my colleagues that more meetings will help this committee make a good decision and help this committee find a way for this bill to be a winner for everyone. That's really what we want. All of us want that. Despite what the parliamentary secretary will say about not supporting supply management, I am a strong supporter of supply management.
A gentleman who owns a dairy farm came up, when the dairy farmers were here on their lobby day on the Hill, and thanked me for all the hard work I do. He thanked me for coming to visit his farm to talk to him, to talk to his family and understand the challenges they have. I understand those challenges. I support supply management. I also support the Canadian economy. I support other industries and sectors across the country, and those sectors have voiced their concerns with this bill.
When we asked the sponsor of the bill if he had taken the time to consult other industries and other sectors of the Canadian economy, he basically said that he had not, because he didn't think it was necessary.
I think what we're finding at committee is that consultation would have perhaps served this committee well, because we're hearing more and more from other industries in this country about how concerned they are.
I had an opportunity to talk about this bill with some members of the automotive sector when President Biden was here to visit. They were unaware of the bill. As many of us know, auto is a huge part of the Canadian economy. When I talked to them about how this bill would mean supply management is off the table when negotiating trade deals, they were quite concerned. They were surprised they had not been consulted. They were surprised at the potential impact to them, and this is part of the problem. This is why I am saying we need more meetings.
I want to get back to the concerns of the International Cheese Council of Canada, because they are small businesses. They are not able to hire expensive lobbyists to come and try to convince the government of the damage this bill would do to them, so they're relying on us. They're relying on members of Parliament to take the time to listen to their concerns, hear their concerns and deliberate on those concerns.
Again, we have not deliberated on those concerns. The meetings were fast. We crammed in a lot of witnesses on every single panel, so we weren't able to get deep, in-depth answers. We still have not had anyone who is an expert in trade come and testify, other than department officials, and I outlined some of the concerns I have with the evidence they gave this time, as opposed to before.
Again, I'll go back to the International Cheese Council of Canada. They say:
As a result of this unfortunate situation—
I agree. They're just a small player in this, but they're going to be deeply affected.
—Canadian businesses will be unfairly penalized. Not only will they be prevented from generating market growth, but their ability to import cheese products from the UK at an affordable price will be severely constrained: they will lose business. Ultimately, Canadian customers [will] also suffer, as they will face either reduced availability for British cheeses, or the UK cheeses on the grocery [store] shelves will be priced significantly higher.
When they say “significantly higher”—I want to go back to that—they will end up with a 245.5% tariff. I was saying 245%, but it's actually 245.5%.
None of these scenarios deliver an improved outcome for Canadians.
Meanwhile, it should be noted that European exporters will be provided “a Brexit windfall” after 2023 when they will presumably be able to access higher quantities since there will be one less European Union state drawing from quota accessible by EU states (i.e., the WTO TRQ EU pool and the CETA [non-pool]).
It is worth keeping in mind that senior members of the U.K. government have expressed strong interest in including cheese in the future Canada-UK FTA. The passage of C-282, which would prevent addressing such issues in the Canada-UK agreement, would certainly irritate our valued trading partner and most likely constrain Canada's ability to reach a broad deal that leaves both parties satisfied.
This exactly dovetails with the concern I just raised. We are actually in the middle of negotiating a Canada-U.K. FTA, and we know they want some cheese access. We also know that, sometimes, very difficult decisions have to be made for the benefit of the country. Canada has absolutely successfully defended supply management through many FTAs.
When I was asking my questions of department officials, I wanted to talk about this. I asked about how everyone says they are prepared to defend supply management. I asked Mr. Fowler this:
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?
Mr. Fowler said:
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—
So I said, “In your experience”, and he continued:
—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.
Okay, so we get back to the Canada-U.K. FTA. They're our third-largest trading partner, and we're right now operating under transitional provisions from the Canada-EU.... They very clearly want access with British cheese. This bill would prevent that. We just heard that “there was no deal that did not include market access commitments for dairy” in CUSMA. Are we sitting here today with the knowledge and wisdom amongst us that we can still get a deal done with the U.K. if there's no access for British cheese?
There are two problems here.
Number one, there's the problem with what we heard from the International Cheese Council of Canada and how damaging this would be to the economic interests of all those small businesses—small businesses that we, as parliamentarians, should be looking out for and looking to support.
The second problem, of course, is that this may prevent an FTA from actually happening, and that would be enormously challenging. Sometimes negotiators.... They all say they defend supply management. Conservative governments have done that at the negotiating table. Liberal governments have done that at the negotiating table, and I suspect a hypothetical NDP government would do the same thing. However, if you're going to get a deal, you sometimes have to make really difficult choices, and I know this as a lawyer from when I was in mediations and negotiations. Settlements are tough. I used to always say to my clients, “If you walk out of a mediation or a settlement discussion a little bit unhappy, you know you've probably gotten the right deal; everyone should be a little unhappy in a mediation.”
I think the same thing happens when you're negotiating a free trade agreement. There are things that I'm sure we're unhappy about in CUSMA. I'm sure there are things the Americans are unhappy about in CUSMA. However, when you balance it all out, both sides got what they think is a deal that is in their country's best economic interests, and that is sometimes where the tough things happen.
That certainly.... I'm not trying to minimize the impact to supply-managed sectors in this economy when these things happen. There's absolutely an economic impact; we've heard that. We heard very passionate speeches from people in poultry, dairy and eggs about how challenging they have found some of the access that was negotiated away as a result of an FTA. They get compensation for that. That's absolutely true. That is to compensate them for their lost market access. Whether or not that compensation is sufficient is something that parliamentarians, in their infinite wisdom, can ponder.
The other question you have to ask is this: If we weren't able to make those concessions in a trade agreement on supply management, would we have any of these deals? Would we have a CUSMA? Would we have a CPTPP? Would we have a free trade deal with the EU? I think the answer we heard from our department officials, some of whom were the negotiators.... The answer to that, I think, was pretty much no.
I know there were some questions that were asked. Mr. Cannings asked about canola and asked Mr....I'm going to forget his name. I apologize. He asked how he would feel if he was always the first on the chopping block.
I don't think that's accurate in what happens. I think negotiations on supply management are at the very end. They are of the absolute last resort. Our negotiators go into every single free trade agreement negotiation saying, “We will not grant access to our supply-managed sectors.” If they do it, it's not the first thing. It is the absolute last thing, because they know how important protecting supply management is. Whether it's a Conservative or a Liberal government, that is the most important thing in those negotiations. You have to look at the country as a whole. You have to look at the economic interest of the entire country when you're negotiating a free trade agreement.
The International Cheese Council of Canada talks about the cheese letters. This is something I don't understand and it's also something we didn't really find the time to get into. They go on to say:
As mentioned above, as part of the Canada-UK Trade Continuity Agreement...negotiations, both Canada and the UK agreed to a 3-year transition period during which the UK continues to have access to the WTO cheese TRQ EU pool, despite having become a non-EU country. These “cheese letters” are only valid until the end...of this year.
That's 2023.
Both parties have stated that they will endeavour to seek an outcome for the cheese sector by June 30th, 2023—which is barely three months away. This scenario, if left unchanged, will create significant business disruptions to our industry given the planning horizons for the cheese sector. Indeed, while 2023 may have only just begun, the cheese planning has already been concluded for [this] year. Indeed, planning for 2024 has begun—with the assumption of at least a similar level of access after the cheese letters will have expired.
As such, the ICCC urges Canada to come to an agreement with the UK before the conclusion of the sixth round of negotiations (in June 2023) to extend the validity of the cheese letters until the end of 2024. Ideally, the agreement would be aligned with the announcement of the outcome of the TRQ Review, therefore reducing the number...of transitions faced by the industry in the next 12-24 months.
Note that such an outcome would not provide more access to importers, but would provide an increased amount of certainty at a time [when] our industry is facing significant headwinds.
Increasing access to Canada's protected supply-managed goods is not the only option available to Canada's trade negotiators provided they have the ability to best advocate on behalf of Canada. Options available include the reallocation of existing quota between pools (which Canada has done in the past), or changing the allocation method of existing TRQs, such as [in] the CPTPP.
The ICCC strongly encourages Members to consider the impact of this Bill on our trade relationships. Our trade allies are increasingly dissatisfied with Canada's administration of...dairy TRQs—so much so that the United States has launched a trade dispute, alleging that Canada is failing to respect its existing trade treaty commitments.
Now you have to think that we now have these dairy challenges within USMCA or CUSMA—however you want to describe it. Will this further irritate or agitate that trading relationship with the United States, our absolute number one trading partner? Seventy-plus per cent of our exports go to the United States.
The International Cheese Council of Canada—
5:35 p.m.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
On a point of order, Madam Chair, with all due respect to my colleague, I notice we're over time. I don't know the protocol here, but do we normally end on time?
5:35 p.m.
Liberal
The Chair Liberal Judy Sgro
We normally do, but I thought Mr. Seeback wanted to get his other two points over before I adjourned the meeting. We have to be here until 8:30 tonight, so, as the chair, I thought he could just continue on.
What's the will of the committee?
5:35 p.m.
Liberal
The Chair Liberal Judy Sgro
That's too bad, Mr. Seeback. I was trying to give you until eight o'clock. I figured you could finish it all off tonight.
We are adjourned.
