Thank you, Mr. Chair.
The Association des microbrasseries du Québec is pleased to have been invited by your committee to help it to better understand the competitive and legal environment that limits the growth and competitiveness of Canadian microbrewers. Even though the Canadian microbrewery industry seems to be doing well, its development, competitiveness and even its survival are seriously compromised by the concerns and inconsistencies of the present patchwork affecting the legal structure in which it must operate. As you will see from the brief overview I will give, the current Canadian legal structure is not adapted to the global competitive context or to the reality of the new economy of microbreweries.
If our policies and regulations are to frame domestic practices to enable Canadian producers and processors to prosper and reinvest in the country's economy, you might say that this structure and this legal environment are rather dysfunctional. Most of the policies and legislation governing alcohol production and distribution in Canada were created in reaction to pre-prohibition social disorders. They were amended afterwards, but only in a piecemeal way, in response to isolated events and realities in each jurisdiction, without anyone taking the step back that was needed to reassess the overall competitive context and to harmonize the policies and regulations federally. Under these conditions, it is easy to understand why we are saying that our structures and legislation are somewhat ill-adapted.
I will give you a few examples. One thing in particular that comes to mind is the distribution cooperative that was created in Ontario under the name Brewers Retail and is now known as The Beer Store. This cooperative, which was created by regional Ontario brewers, defended the interests of those brewers for decades. It became the only legal system for distributing beer in Ontario. It passed into the hands of foreign breweries, which bought our Canadian breweries.
These foreign breweries are therefore benefiting from competitive and legal advantages that were put in place by Ontario breweries and the Ontario government to compete with Canadian microbreweries. Needless to say, this is completely absurd. Another thing that comes to mind is the federal measure that was put in place in the early 1990s to reduce the administrative burden of Canadian breweries and increase their competitiveness internationally. This was in reaction to the massive invasion of foreign beers on the Canadian market. It was a very good measure in itself, and the breweries and the Canadian economy benefited from this.
This interprovincial trade agreement on beer between Quebec and Ontario, which dates back to 1991, as well as the authorization of the free transfer of beer stocks between plants in Quebec and Ontario, is a very good thing. It allows us to exercise some competitiveness, but the problem is that, once again, the foreign multinationals are the ones benefiting from this advantage to the detriment of Canadian microbreweries.
Although Canadian microbreweries generate more positive economic and social benefits for Canada and its regions, they cannot take advantage of these benefits. So we are operating in an environment where there is a double standard. It is unfair.
I have another example I'd like to share. In Canada, unfortunately, we tolerate anti-competitive, if not illegal, practices. In fact, our current legislation and structure allow foreign multinationals to negotiate exclusivity agreements with large grocery chains and bar owners. Foreign companies can establish agreements of favouritism and even exclusivity with foreign multinationals to make it difficult to get access to regional products in Canada in large grocery stores. These practices have been deemed anti-competitive and illegal. However, our authorities to date have turned a blind eye, saying that this had not prevented our industry from progressing and that they did not want to intervene when it came to rules of the free market and competition.
When the market rules are unfair and unfavourable for their own economy, the authorities of the jurisdictions in question are required to intervene.
Lastly, I wanted to make you aware this afternoon of the fact that there is no dialogue among the provinces and the various jurisdictions to harmonize the policies and strategies, and to favour our domestic economy. In addition, the regulations are not consistent.
As you know, the Canadian Food Inspection Agency is reviewing the definition of beer, which is very important because it would have a decisive impact on the scope of the regulations for beer production, labelling, distribution and taxation. Too broad a definition would favour beverages sweetened with refined sugar, which are not really beer. However, too restrictive a definition would hinder the creativity of microbrewers.
You can understand why we believe that, even though the goal of reducing the administrative burden and obstacles to domestic trade is very noble, it will not be enough. This should not be the priority. We are even convinced that, in the current legal structure, it would risk further harming microbrewers and, as a result, Canada's economy. Yet that was what was done first. What we think the priority should be is developing a better understanding of the overall competitive context and the inequalities that our current regulations are producing.
If we aren't careful and if we continue in the same direction that we have accidentally taken or, rather, that has been perniciously produced in the last few decades by foreign competition, Canada will become a simple water bearer for foreign multinationals; Canada will provide the roads, trucks, consumers and even the regulations so that Canadians can subsidize the business of foreign multinationals. A better understanding of the global trends and competitive environment, combined with a political will and a vision for the domestic development of the sector, that is what we believe should be addressed first.
The short time and limited time for my appearance today does not allow me to give you all the recommendations that we would like to put to you, which is why we will limit ourselves to three wishes or recommendations, and even plead with you to take a leadership role with regard to the following.
First, we would like you to act as a centralizing agent for information — and I think that is what you are doing today — but also as an expert advisor with government authorities and all the departments and agencies to raise their awareness of the critical importance of considering the global context and competitive issues before defining new policies or before trying to amend existing regulations. In addition, it would be important to insist on greater dialogue between government stakeholders and better consistency between the policies and regulations in force. We're talking about consistency of regulations.
We also hope that your committee will be able to act as a guardian of the interests of Canadian producers, processors and consumers. In fact, we hope that you will ensure that the market conditions and regulations are fair for all Canadian producers and processors.
Microbreweries are not looking for competitive advantages, but simply to compete in a fair market.
As you know, microbrewery beers are distinguished by their taste and distinctiveness. We have sort of given beer back its nobility and enabled the industry to renew itself.
In Quebec alone, we have created over 120 companies and thousands of jobs, but our potential for development and contribution to Canada's wealth is unfortunately limited, if not compromised, by the constraints I have spoken about today.
We would ask you to become the leaders who will respect the specific character of microbreweries, which will enable them to reach their full growth potential and contribute to Canada's economy.
Thank you.
