Agriculture Committee on Nov. 28th, 2022

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I think this information is important for supply-managed sector. Obviously, it needs predictability, for its production. I think that is the main concern. I don't think that sector is questioning our government's support for Ukraine. Canadians support Ukraine. It is simply that we have to make sure that there is some predictability in the market. Their chicken producers, for example, have to know how many chickens to raise in order to increase production in the months to come.

Thank you for your testimony.

[The Vice-Chair, Conservative, John Barlow]

Thank you, Mr. Drouin.

Mr. Perron will now have the floor for five minutes.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

I would like to thank the witnesses for being with us today. I am very grateful to them.

To begin, I would like to say, as Mr. Drouin did, that everyone agrees we must help Ukraine. That is not the question; the question is how to do it, since we must not damage ourselves at the same time. There might be other ways of doing things, and that is what my questions will be about. If they happen to be meant more for the other witnesses who will be coming shortly, tell me and we will move on to something else.

Ms. Govier, I will start with you. There have not really been any imports. However, you said in your presentation, and you then reiterated it, that if there was a large quantity of imports, you would assess the situation.

First, I would like to know what you are going to consider to be the threshold for a large quantity. Mr. Drouin was just saying that supply-managed producers need predictability in order to plan their business. Otherwise, the system doesn't work. That is a fundamental issue.

[Michèle Govier]

I understand.

We will have to work closely with the other departments, whose representatives will be appearing here a little later today, and in particular the Department of Agriculture and Agri-food, to determine whether the volume of imports expected will be problematic. We will have to discuss it to get a better understanding of the supply and know whether it is going to cause problems.

As I said, there has to be a balance. The intent of the measure is to help Ukraine and support its exports, but it is also very important to consider its impact in Canada, so we are trying to find that balance.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you for your answer, but it seems a bit vague to me.

Do you not think this could be discussed with the industry now, to establish the volume of imports that would be problematic, so you could then be prepared to respond?

[Yannick Mondy]

When we adopted this measure in June, we worked with the departments that have expertise, particularly Agriculture and Agri-Food Canada, to immediately establish the tariff lines we should be closely monitoring. So with the data that is collected by the Canada Border Services Agency, we are monitoring the supply-managed goods more closely.

The question of the threshold that would have to be reached in order for it to become problematic can also be put to our colleagues who will be testifying in the second hour of this meeting.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

You are monitoring it closely, but, unless I have misinterpreted what you said, there is not a lot of contact with the supply-managed producers. It is important to work with them.

[Michèle Govier]

Yes, we could do that.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you.

What kind of measures are you going to use, if you and the industry people agree that the volume of imports is getting too big and there is a risk it could destabilize the system? What might the reaction time look like?

[Michèle Govier]

It's hard to say exactly what we will do. It will depend on what we see.

The measure is in the form of a remission order, which requires the approval of the Governor in Council. We were able to make the order relatively quickly the first time. If changes had to be made to the order, we could also do that relatively quickly, provided that we have all the information we need for making a recommendation. However, that decision is up to the government, not the public service.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you.

You said that for ice cream alone, we had collected $2.6 million less in customs duties, and nothing else had been imported to date. Have I understood correctly?

[Michèle Govier]

No.

In the case of ice cream, I think $17,000 has not been collected because of the order. The $2.6 million was an estimate of all duties not collected on all goods for the entire year, not just for supply-managed goods.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Right.

So it is $2.6 million for the entire year, but to date, $6,000 in products have entered.

[Michèle Govier]

That figure related only to supply-managed goods. Overall, I think it was $732,000.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Right.

I imagine your estimate of $2.6 million corresponds to a certain quantity of goods and that this information could be provided to the industry for discussion.

Are you getting a lot of requests from Canadian importers who want to import goods from Ukraine that are included in the category of supply-managed goods?

[Michèle Govier]

We have not had any contact with importers on that subject.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Right.

I don't know whether you are going to be able to answer my next question.

Following inspections done in 2019, the importation of supply-managed goods was not authorized. Today, in 2022, since the remission order came into force on June 9, we seem to be rushing to authorize the importation of these goods. It usually takes three years for it to be authorized?

Is there a direct link between the two, or is that a coincidence?

[Michèle Govier]

I think that subject will be addressed in the next hour.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Right. I did say earlier that you had to watch out for me.

Mr. Lehoux mentioned the foreign ownership of one of the biggest companies, which owns over 75% of the poultry production, among other things. To what extent are we able to verify that these goods are not coming from neighbouring countries or regions occupied by the Russian Federation?

[Yannick Mondy]

In the order, the definition of eligibility is based on the last segment of production, which must take place in Ukraine. That is what is called the origin rule. Processing that is referred to as minimal, such as repackaging or dilution with water, is excluded by definition. The order sets out the goods that are eligible for remission, to ensure that the last segment of the production process in fact takes place in Ukraine.

[The Vice-Chair, Conservative, John Barlow]

Thank you.

Just to my colleagues, if you're asking a question and the witnesses are taking over your time to answer, I'm just going to let them answer. I think we're all here to try to get as much clarification and information as we can. I'm not going to cut off our witnesses in answering your questions. So if you're keeping an eye on the clock and it goes a little long, I want to allow our witnesses to finish their responses as best we can. Time shouldn't be a big issue today.

It's now over to Mr. Cannings for six minutes, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you for being here today. This is all quite interesting.

I just want to make sure I understand the whole process that's involved here. I assume this remission order was made to help Ukraine in its situation.

Was it just a general removal of most or all tariffs we would normally charge? There wasn't an analysis, sector by sector, of what would help Ukraine the most?

[Michèle Govier]

It was a blanket removal. Many of our tariffs are already at zero as a result of our free trade agreement with Ukraine, but there were some categories, including among the supply-managed goods, that still had tariffs.

Yes, those were all brought to zero. I would say, therefore, that we did not target any particular sectors or do analysis to be able to target them, though we were trying to be aware of what sensitivities there might be in moving it forward.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

So, in particular with the supply-managed sectors, do we know where Ukraine was exporting those products? I assume very little or none were coming to Canada before. Are those markets compromised because of the war?

I'm trying to get at whether there's some pressure on Ukraine to develop new markets in perhaps Canada. I'm trying to find out whether Ukraine has a real reason to send these products to Canada now.

[Michèle Govier]

You are correct that there were no imports coming in before that, just because of the tariffs that were in place. We were aware of interests, from our negotiations with Ukraine, in certain products.

I can't speak to the whole of their trade interests. Obviously, they're very close to the European Union, so I think that is an important market for them. As I noted in my remarks, the European Union also took measures to remove tariffs from Ukraine. So I don't know that they have pressure from that side.

I can't say, for all of their trading partners, whether there are other pressures that are arising that might be driving them towards Canada as a partner.