Agriculture Committee on Feb. 7th, 2008

[Ève-Mary Thaï Thi Lac, Bloc, Saint-Hyacinthe—Bagot, QC]

Good morning. As you know, I represent a riding which is mostly rural. I was recently elected in the last by-election on September 2007. I had the opportunity to meet with farmers. Several agricultural sectors are in crisis, but those which are supply-managed have a certain degree of stability. It is vital for producers operating in a supply management system that the system remain in place. They want us to continue to fight for them.

Mr. Lamy, who is the Director General of the WTO, believes that the political conditions in 2008 are conducive to reaching an agreement. Is this your impression when you sit at the negotiating table?

[Steve Verheul]

It's a fairly complicated dynamic around the negotiating table, what with 152 members all negotiating. Over the last several months, we've seen a significant shift on the part of the European Union and on the part of the U.S. They've made important concessions, and I doubt whether they would make such moves if they didn't think that the end game was coming up soon. The U.S. and Europe are clearly prepared to do a deal, and I think that Brazil and a number of other developing countries are in the same position. We have some questions about India and China and their readiness to make the kinds of concessions that would be needed to achieve a deal.

Generally, there's a sense that it's going to be a little easier to get a deal under the current U.S. administration than under the next one. So many are thinking that this is the time to take a shot. We made a lot of progress. Not that many issues are left, other than the issues of ambition that ministers are going to have to decide in the end. I think the conditions are starting to become favourable for us to take a serious run at this.

[Ève-Mary Thaï Thi Lac, Bloc, Saint-Hyacinthe—Bagot, QC]

In other words, if there is no agreement in 2008, you do not think there will be one for a while, that is, in the next few years. Is that correct?

[Steve Verheul]

Yes, I would agree with that.

I think we will at least take a pause while the new U.S. administration gets up to speed. It usually takes a good six months or so before they get their staff in place and start to formulate their positions.

Even if we don't achieve an agreement in the April-Easter timeframe, we're going to have a platform that will show how far we got—something we could pick up again in a year or two.

Whichever administration comes in, it will not be eager to turn its back on 140 or 150 other members, many of them developing countries, that will want this deal. Even a new U.S. administration will be under pressure to try to conclude the deal.

[Ève-Mary Thaï Thi Lac, Bloc, Saint-Hyacinthe—Bagot, QC]

The Minister of Agriculture and Agri-Food said in a press release last January that the Government of Canada would continue to defend with vigour the important interests of our supply-managed sectors during the upcoming WTO negotiations. In August 2007, he also said in a letter addressed to the chair of the WTO negotiations on agriculture, Mr. Falconer, that his approach to sensitive products in the draft agreement was not acceptable for Canada.

Do you believe that the document containing the revised modalities, which will be tabled shortly by Mr. Falconer, will contain provisions in support of supply management?

[Steve Verheul]

I fully expect that the text we'll probably see tomorrow will continue to call for tariff reductions on supply-managed products. It will continue to call for tariff quote expansion on supply-managed products. I would be very surprised if it said that there was an exemption for Canada from those tariff cuts and tariff quote expansions.

With respect to supply management issues, when the text comes out tomorrow I don't think we'll be much further ahead than we are today. Obviously, the fight will continue. As we get closer to the end game, the fight will be much more intense.

[Ève-Mary Thaï Thi Lac, Bloc, Saint-Hyacinthe—Bagot, QC]

If the document does not contain any provisions to that effect, what measures do you think the Canadian government should take to make that happen?

[The Chair, Conservative, James Bezan]

Ms. Thaï Thi Lac's time has expired, so could you give just a quick response, please?

[Steve Verheul]

Okay, sure.

[Ève-Mary Thaï Thi Lac, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you.

[Steve Verheul]

It's not the kind of the question that leads to a quick response, but, basically, we will be continuing to take a very hard line in the small-room negotiations next week. It will require a continued political commitment that this is of a high importance, and we're going to push hard.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Lauzon.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

Thank you very much, Mr. Chairman.

Thank you very much for being here this morning.

Earlier this week I received a briefing on what was happening at the WTO. It was a very insightful briefing, and I was very pleased to hear some of the things that were mentioned.

One of the things, as you know--and hopefully everyone knows--is that our government, the Conservative government, our Minister of Agriculture, our Prime Minister.... I suppose before I say anything, I should let you know where I'm coming from.

I represent an area that has a significant population of dairy farmers, and they have some great concerns. They have a lot of money invested in quotas and what have you, so they're very concerned about the WTO negotiations. They are pleased that this government, the Minister of Agriculture, and particularly the Prime Minister, are very supportive of our supply management, to the point where it's been brought up in the throne speech.

One of the things they take great comfort in--or at least when I got my briefing, I took great comfort in it , and I want you to reinforce this or reaffirm this--is that supply management is being protected and being fought for at WTO very strongly and vigorously. Can you just expand on that and tell this committee how we're treating supply management at the WTO?

[Steve Verheul]

Sure.

The government has made it very clear that supply management and protecting supply management's interests are essential at the WTO negotiations, and a key part of the instructions to me, as quota negotiator, is to carry that forward in Geneva. So we have been taking a very hard and consistent line, making it very clear at every opportunity what our position is and why we want to defend supply management the way we are. And we're doing that in negotiating sessions with 152 members. We're doing it in negotiating sessions with 10 or 15, which often happens, and we're doing it in negotiating sessions one-on-one with other countries, which we also frequently do.

So we've been using every opportunity to make it very clear, and every WTO member understands very clearly exactly what our position is on these issues.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

The feedback I was getting following my briefing is that Canada is gaining a lot of respect at these WTO negotiations and that our negotiators, you included, are very well respected and have a lot of credibility there. Canada has been playing a significant role in the negotiations, of course, probably more than ever before, and particularly beyond the sensitive products area.

Now, are we using some political capital here to push our agenda in the sensitive product area? How are we doing in that area?

[Steve Verheul]

We are very active across the board on all issues, as you say. In fact, we are the most active country in the negotiations, I would say, above all others. We do more analysis; we get more involved in developing creative ideas to try to bridge gaps, to try to achieve our objectives than any other country does. That has meant that we are included in all of the rooms, whether it's rooms of two or three, as in many cases. We are included in those rooms because of what we bring to the table.

Having that kind of broad approach, including working on some issues that may not be of direct importance to us, gives us increased leverage, because countries know that we need to be in the room. And if we're in the room, we can help resolve a lot of issues. It also means that some countries owe us favours, owe us a bit of flexibility, because we've worked in a way that has given them flexibility on some of their issues.

So I think we've established ourselves pretty well for the next stages of the negotiations by building those kinds of bridges and making sure that countries know they should be favourably disposed to us on some issues.

[Guy Lauzon, Conservative, Stormont—Dundas—South Glengarry, ON]

I'm very optimistic about the work you're doing. I just want to close by saying that I certainly respect the hard work you're doing. I understand that this is one of the most successful rounds of negotiations that have ever taken place, from the Canadian perspective, and I commend you and your colleagues for the good job you're doing. We're looking for optimistic and positive results.

Thank you very much, Mr. Chair.

[The Chair, Conservative, James Bezan]

Thank you.

Mr. Atamanenko.

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

Thank you very much for being here.

Like my colleague, I do thank you for your hard work. I know what you're doing is not easy. I just want to zero in a bit more on supply management. I also have a question.

Obviously, negotiations involve give and take. If we said we're not moving on supply management, where do we give, and what effect will this have on other sectors of agriculture? That's my first question.

There was some mention of the Canadian Wheat Board, and your answer was that this is our domestic issue and it's nobody's business if we decide that here. Nevertheless, is there still pressure? Do you find subtle pressure or unofficial pressure at the WTO for us to disband, to change the way we do things?

You also mentioned we're arriving at a difficult situation, coming into discussions on supply management. Once again, given the fact that all of us have just recently met with the dairy farmers and others and the message is that we must keep things as they are, I have a question. Are we prepared to give at all? Are we prepared to move from that 5% or 7.5% over quota and the tariff quotas that we have for produce coming in?

Ultimately then, if we're not prepared to give at all, if everything stays the same so there's no change for our farmers, and if we get the ultimatum from other countries saying, well, look, if you don't give at all here, there's no deal, do you have the instructions then to walk away from this?

I'm just wondering. Negotiations involve give and take. Where is the give and where is the take? Where have we drawn the line? Are we prepared to leave the negotiations if there's pressure to move here?

[Steve Verheul]

Yes, clearly, when it comes to the issues of greatest importance to supply management, tariff reductions, tariff quota expansion, and getting enough of our supply-managed products into the sensitive products category, we have shown no flexibility. The chair will in this draft as he has in previous drafts offer some flexibility to some other countries on the condition that they are prepared to pay more through providing greater access. In other words, countries like Norway and Switzerland will be able to have a larger number of sensitive products through paying an additional 0.5% of domestic consumption as compensation.

Those kinds of deals are out there. We have not pursued those deals because what we've been looking for is no tariff reduction and no tariff quota expansion. So our line has been a hard one, and we've been maintaining that line without offering any trade-offs either within supply management or outside of supply management. We are prepared to eliminate the tariffs that are within quota and we have been pressing hard on that, but that is of lesser value to other countries than tariff reductions and tariff quota expansion.

With respect to the Canadian Wheat Board, I wouldn't want to leave the impression that we're not under significant pressure. We are under very significant pressure on the Wheat Board and monopoly powers. It is a priority for the U.S. government. It is a priority for the European Union. And those are two pretty big players.

At the end of the day, that decision will come down to either an up or down decision. Either we keep those powers and decide what we want to do domestically about that, or we lose those powers at the end of the negotiations.

So on supply management, your last question, clearly my instruction and the government's direction is still to push very hard on this issue, to not show flexibility in any way on the issues of tariff reductions, tariff quota expansion. So we will not be doing that. As to the question of whether we would walk away from that negotiation at the end of the day if we don't achieve that, fortunately for me that won't be my decision. That will be at a stage where the discussions will be almost entirely political. So we could maintain this hard line right up until the final day, and then there would have to be some very serious discussions about what would happen next.

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

Do I still have a few minutes?

[The Chair, Conservative, James Bezan]

You have about 20 seconds.

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

On the 0.5% quota for pork in Europe, are there negotiations to bring that quota up so we can get better access for the pork into the EU?

[Steve Verheul]

Yes, indeed. In fact that's been one of our key priorities. I've spent a lot of time with my European counterpart discussing that very issue, and we've been talking about what specific result we could achieve on pork going into the European Union. We will get a much better result than we got on the last round.

I'm also working to try to achieve a result that would mean we would more easily access the existing access that they have provided. So we're also working somewhat in partnership with the U.S., because we both have interests in the European Union. I think, clearly, this is going to be one of our key objectives in that market.

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

Thank you very much.