Agriculture Committee on May 17th, 2007

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Right, and so the processors in Canada, by getting these supplemental import licences--and I'm not sure what the right term is--does that create a second profit centre for them, that they can then buy the chicken cheaper outside Canada? The incentive is not that there's no chicken available in Canada; the incentive is that they can skim that margin.

[Urs Kressibucher]

Once you're issued an import permit, you have the ability to sell that permit to someone else, and they can also import the product. Whether that's the motivation, something just for convenience's sake, also for the manufacturer.... It's much easier, if he's going to manufacture product over the course of the year, to sell his import permit and purchase product for the Canadian market.

The subsidy occurs in the selling of the import permit versus the product selling.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Hang on. So you're saying the processor can actually get an import subsidy licence and then not even use it, sell it, and then just buy Canadian product.

[Urs Kressibucher]

That's correct.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Clear.

Okay, my last question, 13% to 80%, it sounds like a big jump to go from 13% to 80%.

[Urs Kressibucher]

Let's rephrase that. This is why you don't talk about the 13% rule; it's very confusing. You have to think of it in the reverse. Products that can come into this country duty-free can have a chicken content up to 87%. You want to lower that 87% to 20%.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Right, and you won an article XII challenge to accomplish that.

[Urs Kressibucher]

Yes.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

I know where 87% came from. Where does 20% come from? Why not 30% or 40% or 50%? It just superficially strikes me as a very large jump to go from 87% all the way down to 20%. How do you justify 20% as the number?

[Urs Kressibucher]

Go ahead.

[Mike Dungate, General Manager, Chicken Farmers of Canada]

In chapter 16 of the harmonized tariff system, you have to have 20% meat content to be in that chapter. All these 13% rules are an exception for chapter 16 products.

So if you have less than 20% meat, you just become a food preparation in another area. We're not talking about controlling soups that might have some chicken in them or something like that. We're not trying to capture anything that has a little bit of chicken. If it is deemed by the harmonized tariff system to be a chicken product--if it has more than 20%, it is--then we're just saying don't provide an exception from the regular rule. That's what the 13% is; once you're 20%, you're declared a meat product.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

What you're saying then is that going to 20% brings us back in line with what the standards would be.

[Mike Dungate]

Around the world, that's the standard.

[Barry Devolin, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Okay.

[The Chair, Conservative, James Bezan]

Thank you. Your time has expired.

Monsieur Gaudet.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you, Mr. Chairman.

Good afternoon, gentlemen.

Mr. Lefebvre, you mentioned earlier that approximately 30 countries have used the special safeguard measure. Could you give us an example of countries where the situation was rectified by using that measure?

[Serge Lefebvre]

The United States, the European Union and Japan, that is countries that Canada mainly trades with currently, all took measures. It wasn't long after the implementation of the Uruguay round, approximately 12 months. It is feasible. Our own partners have access to these measures. That doesn't mean they use them all the time, but as Mr. Souligny mentioned earlier, they allow for a faster response to certain situations.

[Roger Gaudet, Bloc, Montcalm, QC]

They could be temporary or permanent measures.

[Serge Lefebvre]

It all depends on the situation.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you.

Did you say that 200 million dozen eggs are imported every year?

[Serge Lefebvre]

Under our WTO agreements, 20 million dozen eggs are imported into Canada.

[Roger Gaudet, Bloc, Montcalm, QC]

I was told 200 million. I'll take away a few zeroes.

[Serge Lefebvre]

The figure of 20 million dozen represents 5% of our overall consumption.

[Roger Gaudet, Bloc, Montcalm, QC]

You did well to mention this figure because otherwise I would have spread false information.

[Serge Lefebvre]

Therefore, when three million dozen additional eggs come into the country under the tariffs, that figure represents 15% of the volume that normally comes into Canada. That is therefore very significant.