Agriculture Committee on Nov. 28th, 2022

[Michèle Govier]

No. This is a fairly unique instance, not just with respect to the supply management aspect, but to having something where all imports from a particular country are affected. I think that reflects the really unique circumstances we're in with respect to Ukraine.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

We're having conversations with other countries. Are we working in step with other countries? You mentioned the EU and the U.S. Are we having those conversations to learn from each other's remission orders?

[Michèle Govier]

We're in contact with those various countries through different mechanisms on a regular basis on the overall responses to Ukraine, so those conversations do continue.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Finally, just in general, on the free trade agreement we have with Ukraine, what are the major sectors that our trade shares?

[Doug Forsyth]

The current free trade agreement we have with Ukraine that was brought into force in August 2017 covered basically goods, excluding supply management goods, of course. There have been efforts at modernizing that agreement, and we had been having ongoing discussions with Ukraine officials even before the war started to try to modernize that and to look at services, investment and digital chapters and make it more of a comprehensive FTA.

Those discussions are ongoing. That excludes goods. The goods portion of the free trade agreement is finished, and we are looking now at services, investment and digital.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you.

I believe I have about a minute left, Mr. Chair, but I just want to thank the witnesses. I appreciated this discussion.

I'll cede my time. Thank you.

[The Vice-Chair, Conservative, John Barlow]

Thanks, Mr. Louis.

Since you're ceding your time, I had one question.

On the fact that we talked a lot about the threshold, why was a threshold not set beforehand—before you included supply management in this remission order—to provide some assurance to our producers, who are obviously a bit concerned about this?

Would Finance and Ag Canada not get together and say that this is a line we will not cross and have that consultation with producers and say, “Do you feel comfortable to import this amount of product at this amount of time?” Why was that threshold not set beforehand? Maybe there's a reason.

[Michèle Govier]

I think there are a couple of things.

First, it is difficult to establish exactly what that threshold is. Perhaps my colleagues who will be appearing later from that department will have more to say on that.

Also, it was done in a relatively expeditious way, so there was not perhaps as much opportunity to do some of the things we've been asked about today in terms of analysis ahead of time, but it's certainly something that we're taking back and we'll be considering further as we go forward.

[The Vice-Chair, Conservative, John Barlow]

Maybe Foreign Affairs and Trade could answer this.

For my knowledge, and with some good questions from my colleagues, on the ice cream, for example, it's my understanding that in the initial remission order, supply-managed goods like poultry weren't included, but there's going to be or will potentially be an export certificate signed that will include that.

We haven't had supply-managed imports from June 9 until now because they weren't included, but now there's a potential decision to include supply-managed goods with that export certificate, if signed. Is that correct? Or am I incorrect on that?

[Doug Forsyth]

I'd probably clarify that a bit. That's mostly correct.

There are some processed dairy products that are allowed to come into the country, and they have a certification process in place for those. There is not yet a certificate for poultry or eggs to come in. Our CFIA colleagues will have some more information on that, but there is no export certificate in place yet for those products. That's why there are no imports.

[The Vice-Chair, Conservative, John Barlow]

Thank you for the clarification on that.

I appreciate everyone's time.

That was a great job, colleagues.

We will now take a break for a couple of minutes. Please don't wander off too far.

Our officials can be excused. Thank you again for your time.

We'll take five minutes. Grab some food and head back as quickly as you can. We'll get our next panel set up on Zoom.

[The Vice-Chair, Conservative, John Barlow]

Okay, colleagues, we will bring the meeting back into session.

I will try to condense the preamble here just so that we can get going as quickly as possible. We only have about 45 minutes or so left. I want to make sure the colleagues get as many questions in as possible.

There are just a few reminders for our witnesses. We have all of them on hybrid, on Zoom today. No screenshots are permitted—not that I expect you would take any. Please speak in the official language of your choice. We do have translation. If there is an issue with translation, I will just put my hand up and ask you to stop. We will recommence once the translation is resolved.

We do have one witness, Mr. Band, who does not have an official headset. If we have some issues, we may have to address that. Ms. Donohue has changed her headset. She has passed her test. We're good to go.

With us today as our witnesses, we have from the Department of Agriculture and Agri-Food, Tom Rosser, assistant deputy minister, market and industry services branch; and Marie-Noëlle Desrochers, acting chief agriculture negotiator and director general, market and industry services branch.

From the Canada Border Services Agency we have Mr. Band, director general, trade and anti-dumping programs directorate.

I believe we also have from the Canada Food Inspection Agency, Kathleen Donohue, the assistant deputy minister and vice-president, international affairs; and Kanwal Kochhar, senior director, food import and export division.

Each department will have five minutes for their presentation. Then we will commence with questions from my colleagues.

Maybe we will start with the Department of Agriculture and Agri-Food. Mr. Rosser, I'll pass that over to you for five minutes, please.

[Tom Rosser, Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food]

Thank you very much, Mr. Chair.

There had been an issue with my headset earlier. I've changed it. I trust that you can hear me okay.

I welcome the opportunity to appear before this committee.

My remarks will focus on the impact of the Remission Order on Ukrainian goods, specifically with respect to the duty-free and quota-free importation of supply-managed goods into Canada.

But before I start, let me share a few quick facts on Canada’s supply-managed sectors.

Supply management is the production and marketing system under which dairy, eggs, hatching eggs, chicken, and turkey are produced in Canada.

Through the three pillars of the supply management system—planned domestic production, administered pricing, and import control—Canadian producers are ensured a reasonable return for their labour and investments, while consumers receive a continuous and reliable supply of products.

The supply-managed sectors are important within Canada’s agricultural sector. They generated $13 billion in farm-gate sales in 2021 and created over 100,000 direct jobs in Canada in production and processing activities.

In addition, dairy and poultry processing activities contributed $24.8 billion to Canada's manufacturing shipments, equivalent to 19.5% of Canada’s total manufactured shipments of food and beverage products in 2021.

The actions taken by Russia have had a significant effect on Ukraine's economy, including its ability to export goods to other countries. That's why the government decided to temporarily waive tariffs and trade remedy duties on imports originating from Ukraine, including for supply-managed products. The measure came into effect on June 9 and will expire after one year. This means that supply-managed products from Ukraine are eligible to enter Canada duty free and quota free until June of next year.

As I highlighted before, supply management is based on planned domestic production, administered pricing and controlled imports. Domestic requirements are established taking into account anticipated imports. Unpredicted imports may impact production planning, which is a pillar of the Canadian supply management system. We understand the consequences of this measure may be a source of concern for supply-managed sectors.

Due to a lack of a finalized official meat inspection certificate, Ukraine has not exported any poultry products to Canada in the past. Since the implementation of the remission order, imports of supply-managed goods have been limited to one shipment of ice cream. There were no Canadian imports of dairy products from Ukraine in the past five years. Given the low volume of supply-managed products that have been imported from Ukraine into Canada to date, and considering the various logistical challenges facing Ukraine, it's difficult to estimate the potential volume of imports during the term of the remission order. However, the Government of Canada monitors the situation closely and will continue to engage with industry on potential or observed impacts throughout the duration of the remission order.

In conclusion, it will be important for the government to continue to work collaboratively with the industry to ensure that the potential impact and challenges associated with the remission order are identified in a timely manner and understood. In that regard, AAFC will continue to engage directly with dairy, poultry and egg sector representatives to help address their concerns.

Thank you.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Rosser. As always you were succinct and well detailed. It's good to see you again as well.

Now we'll go to Mr. Band, from the CBSA for five minutes.

Go ahead, please.

[Doug Band, Director General, Trade and Anti-dumping Programs Directorate, Canada Border Services Agency]

Thank you, Mr. Chairman. I'll be brief.

As was mentioned already, my name is Doug Band. I am the Director General of the Trade and Anti-dumping Programs Directorate at the CBSA.

Thank you for giving me the opportunity to appear before the committee to discuss the Ukrainian Goods Remission Order.

If I may, I would like to give you an overview of the role the CBSA plays in administering the remission order.

As has been mentioned, while most goods from Ukraine already enter Canada duty-free as a result of the free trade agreement, tariffs still apply on certain goods that are being phased out under the agreement or that are excluded from it.

CBSA is responsible for administering this remission order in accordance with the parameters and eligibility requirements outlined in the order. To assist importers with claiming relief under the order, CBSA in June published Customs Notice 22-12 on its website. That notice lays out what goods imported into Canada are eligible for remission, what types of duties can be remitted and the time period within which remission is granted—one year. It also reiterates the requirement that goods originate from Ukraine.

For all goods originating in Ukraine and imported into Canada, the order remits customs duties paid or payable under the customs tariff as well as duties paid or payable under the Special Import Measures Act. The Special Import Measures Act, as members know, is the anti-dumping regime that governs CBSA's anti-dumping investigations to protect Canadian companies. Importers can claim remission of duties under these two acts for a period of one year, from June 9, 2022 to June 9, 2023.

As with the tax regime, Canada's customs duty regime is a voluntary, self-assessment regime, backstopped by CBSA monitoring and risk-based compliance verification after the goods have been imported. Importers of commercial goods may apply for relief of customs duties at the time of import simply by entering a special authorization code on their Canada customs code form B3. In the case of importers having overpaid or not having claimed remission when they were eligible, they can also seek a refund for remission under the order by filling out a form B2.

Thank you. I look forward to answering the committee's questions.

Merci beaucoup.

[The Vice-Chair, Conservative, John Barlow]

Thank you very much.

For our final witnesses, Ms. Donohue, I will pass it over to you if you're doing the presentation.

Go ahead for five minutes, please.

[Kathleen Donohue, Vice-President, International Affairs, Canadian Food Inspection Agency]

Thank you.

Good afternoon and thank you everyone.

Mr. Chair and members of the committee, thank you for inviting me to appear before this committee.

I am here on behalf of the Canadian Food Inspection Agency, the CFIA. I am the Vice-President of the International Affairs Branch. With me is my colleague Kanwal Kochhar, who is the Senior Director of the Food Import and Export Division.

My remarks will relate to granting access to the Canadian market for the import of dairy, eggs and raw and cooked poultry products from Ukraine and the process that was undertaken by the CFIA.

I would like to start by saying that all food sold in Canada, whether it is manufactured in Canada or imported under a tariff or tariff-rate quota or duty free, must comply with Canada’s federal regulations. When a non-compliance is identified, the CFIA takes immediate action regardless of country of origin.

Licensed importers are responsible for ensuring that the food they import is safe and that it meets Canadian requirements. Under the safe good for Canadians regulations—SFCR—importers are required to source from foreign suppliers who manufacture, prepare, store, package and label the food under conditions that provide at least the same level of protection as those in Canada.

Meat, or poultry in this case, and animal by-products, such as eggs and dairy products, are regulated by the safe food for Canadians regulations and the health of animal regulations. To import these products, food safety requirements, as well as the animal health requirements outlined in the regulations must be met.

CFIA has followed its rigorous process to approve imports of poultry from Ukraine. This included CFIA's successful on-site audit of three Ukrainian poultry facilities, CFIA's approval of the Ukrainian poultry inspection system and successful negotiations of the import requirements.

In 2017, the Canada-Ukraine Free Trade Agreement came into force, and in 2019, the CFIA audited Ukraine’s meat inspection system and animal health controls.

Audits are conducted to verify that the food safety controls in another country, in this case Ukraine, are effectively applied to the production and export of implicated products and to confirm that these controls meet Canadian import requirements.

Since 2019 CFIA has been working with Ukrainian officials to allow for the export of raw and cooked poultry products from Ukraine to Canada. However, the completion of this work was delayed due to the COVID-19 pandemic and other competing priorities.

Given the current situation in Ukraine, the CFIA has sought additional assurances regarding the food safety as well as the animal health controls in Ukraine. Ukrainian officials have assured us that food safety and animal health standards and controls are still at the same level as they were at the time of the audit, and that Ukraine can inspect and certify exports as per the certificate conditions. Ukrainian exports continue into such third countries as the European Union, which maintains strict food import requirements that are similar to Canada's.

New imports of any meat products from a newly approved establishment undergo full inspection by the CFIA for the first 10 shipments. Imports from Ukraine would also follow this process. Only compliant shipments will be released to the importer. Subsequent to that, the CFIA will continue ongoing monitoring of imports of poultry from Ukraine on a risk-based inspection approach, including sampling as well as testing.

The CFIA has met with the Chicken Farmers of Canada and the Canadian Poultry and Egg Processors Council to discuss the impacts of the imports of poultry products from Ukraine under the remission order.

There have been no previous imports of poultry from Ukraine. As such, Canada has requested pre-export certification data for type and volume of product on export shipments of poultry from Ukraine in an effort to help the Canadian industry better plan their domestic production.

Ukraine officials have confirmed to the CFIA that they will share, twice a week, requested pre-export information with the CFIA, and that it will be provided for every export certificate that is issued.

[The Vice-Chair, Conservative, John Barlow]

I'm sorry, Ms. Donohue. You're past your five minutes. Can you wrap it up as quickly as you can?

Thank you.

[Kathleen Donohue]

Okay. I will do so.

In August 2021, CFIA also received a request from Ukraine for the export permit to allow for milk and dairy products. This certificate was finalized and approved back in July 2022. This negotiated certificate means that Ukraine is able to export milk and dairy products to Canada.

I would note, just quickly, that certain products, such as cheese, ice cream and yogourt, are not recognized as milk products under the health of animals regulations. They have always been permitted from Ukraine without a certificate.

Under the SFCR, the import of shell eggs and processed eggs into Canada also requires certificates. In May 2022 the CFIA received a request from Ukraine to negotiate a certificate for the export of these products. That is something that we are looking into.

[The Vice-Chair, Conservative, John Barlow]

I'm sorry, Ms. Donohue—

[Kathleen Donohue]

That concludes my remarks.

[The Vice-Chair, Conservative, John Barlow]

Thank you. If not, I'm sure you'll have a chance to finish it up during the questions. I apologize for that, but we have a limited amount of time.

[Kathleen Donohue]

No worries.

[The Vice-Chair, Conservative, John Barlow]

We'll now go to questions from our colleagues.

Ms. Rood, you have six minutes, please.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for appearing today on this important topic.

Has there been an increase in imports of supply-managed goods since the order was made?