Fisheries Committee on April 7th, 2014

[The Chair, Conservative, Rodney Weston]

I call this meeting to order.

I want to thank Mr. Hildebrand and Mr. Thompson for joining us again today. I apologize for the last couple of times we've been interrupted. I appreciate your patience and the committee members look forward to your presentation today. I know the other day we got started with Mr. Hildebrand.

Mr. Cleary.

[Ryan Cleary, NDP, St. John's South—Mount Pearl, NL]

Sorry to interrupt, Mr. Chair.

Can I give a verbal notice of motion before we start off with our witnesses for today?

[The Chair, Conservative, Rodney Weston]

Sure, go ahead.

[Ryan Cleary, NDP, St. John's South—Mount Pearl, NL]

I'll just read it into the record, Mr. Chair:

That the Committee immediately undertake a study on the impacts of the cuts to the inshore shrimp quota off the coast of Newfoundland & Labrador on fishermen and the local economy; and that the study include a review of the Department of Fisheries and Ocean’s science related to the shrimp fishery and the management policy known as last in first out; and that witnesses include but are not limited to: DFO officials, DFO scientists, local fishermen, and local processors.

The Minister of Fisheries and Oceans appeared before our committee a couple of weeks ago and I had an opportunity to ask her about impending cuts to the shrimp quota. Over the weekend, the shrimp quota was cut. It was cut by 10,000 tonnes for our inshore fishermen and by less than 1,000 tonnes for our offshore licence holders. The way the quota was cut is a result of last in, first out. A last in, first out policy is basically—

[The Chair, Conservative, Rodney Weston]

Sorry—

Mr. Kamp.

[Randy Kamp, Conservative, Pitt Meadows—Maple Ridge—Mission, BC]

Is this a notice of motion or are we debating this motion? I don't think we've seen this motion.

[The Chair, Conservative, Rodney Weston]

This is just a notice of motion. That's what I was just trying to ask.

Mr. Cleary, you probably had a notice of motion last week. This is a different notice of motion. Could I have a copy of the notice? Can you provide a text of it?

[Ryan Cleary, NDP, St. John's South—Mount Pearl, NL]

Absolutely. The reason why it's different is that the quota has been announced.

[The Chair, Conservative, Rodney Weston]

A notice has been provided by Mr. Cleary. I will give you a text of the motion that's been provided. The motion is:

That the [Standing Committee on Fisheries and Oceans] immediately undertake a study on the impacts of the cuts to the inshore shrimp quota off the coast of Newfoundland & Labrador on fishermen and the local economy; and that the study include a review of the Department of Fisheries and Ocean’s science related to the shrimp fishery and the management policy known as last in first out; and that witnesses include but are not limited to: DFO officials, DFO scientists, local fishermen, and local processors.

Thank you, Mr. Cleary. That notice has been provided.

Thank you to our witnesses, once again. I appreciate your patience, Mr. Hildebrand and Mr. Thompson.

Mr. Ström is here to provide legal advice to our witnesses. He's not here to be questioned with respect to the presentation that the officials will make. Just so you're aware of Mr. Ström's presence here at the table.

Mr. Hildebrand, if you want to proceed with your presentation, once again. Thank you very much.

[Marvin Hildebrand, Director General, Market Access, Department of Foreign Affairs and International Trade]

Thank you very much, Mr. Chairman.

It's our pleasure to be here this afternoon. I wish all the members of the committee a good afternoon.

My name is Marvin Hildebrand. I'm director general, market access bureau, at the Department of Foreign Affairs, Trade and Development. The market access bureau supports Canada's trade challenge before the World Trade Organization concerning the European Union's seal ban.

I'm here to provide an update on this trade challenge. The DFATD is leading the case in close collaboration with the Department of Fisheries and Oceans, and Aboriginal Affairs and Northern Development.

I'd like to begin my comments with some background information on the WTO challenge, the EU's seal regulation, and then move to the WTO dispute settlement process.

In 2009, after a concerted campaign by animal rights groups, the EU introduced regulations restricting the importation and marketing of seal products in the European market. These regulations ban the importation and sale of all seal products except under three narrowly defined circumstances: one, seal products resulting from hunts traditionally conducted by Inuit and other indigenous communities; two, seal products resulting from hunts conducted for the sole purpose of sustainable management of marine resources; and three, seal products imported for personal use by travellers.

To be placed on the market under the first two categories, seal products have to be accompanied by an attestation document from a recognized body confirming that they qualify for one of the exceptions.

Seal products from Canada's east coast commercial seal fishery do not qualify under either of the first two exemptions. Furthermore, the Inuit Tapiriit Kanatami, Nunavut Tunngavik Incorporated, and the Government of Nunavut have opposed seeking access to the EU market through the indigenous exemption. In their view, the Inuit exemption has little practical value, as it would be costly and administratively burdensome to apply without offering any clear commercial gain. They further indicated that they rely on southern commercial processing and marketing channels, as the remoteness of Inuit communities, and the small scale of the Inuit hunt mean that it is not economically feasible for them to develop their own processing and distribution channels.

The Atlantic and northern seal hunts in Canada are lawful, humane, and sustainable activities that provide an important source of food and income for thousands of sealers and their communities. Canada believes that the EU ban on Canadian seal products is inconsistent with its international trade obligations. We initially attempted to resolve this matter through consultations. When that failed, Canada and its co-complainant in this case, Norway, requested the establishment of a WTO dispute settlement panel. Canada argued before the WTO panel that the EU seal regulation was inconsistent with certain obligations under the GATT 1994, namely national treatment, most-favoured-nation treatment, and import restrictions.

National treatment means that an imported product cannot be treated less favourably than the like domestic product. MFN treatment means that an imported product from one WTO member cannot be treated less favourably that the same product from another WTO member. Canada also made claims under another WTO agreement, the technical barriers to trade agreement, relating to non-discrimination and unnecessary barriers to trade.

The panel hearings took place in early 2013, and the panel issued its final report on November 25, 2013. In that final report, the panel found that the EU seal regulation is inconsistent with the EU's national treatment and MFN treatment obligations under the GATT 1994, on the basis that it permits Greenlandic and EU domestic seal products to be sold in the EU, while prohibiting the sale of the same products from Canada. However, the panel also considered whether the EU's seal regulation could benefit from one of the general exceptions in the GATT that allow WTO members to justify otherwise discriminatory laws.

The EU sought to justify its seal regulation as necessary to protect public morality, given concerns in the EU public about the humaneness of the seal hunt. The panel accepted the EU's argument concerning public morality, but ultimately concluded that the EU had applied the exemptions, both the indigenous and the marine management exemptions, in a manner that arbitrarily discriminated against Canadian seal products.

Similarly, the panel found that the EU seal regulation was inconsistent with the TBT Agreement on the basis that it discriminated against Canadian seal products when compared to Greenlandic and EU domestic seal products. While the panel found that the EU seal regulation violated the EU's WTO obligations, the legal basis for this finding related to the manner in which the EU applies the exemptions to the ban, and not the ban itself.

As this narrow finding would not result in restored access for all seal products to the EU market, Canada and Norway appealed the panel's findings on January 24 of this year. The WTO appellate body hearing was held last month, from March 17 to 19. Canada's delegation was led by the Honourable Leona Aglukkaq, Minister of the Environment, Minister of the Canadian Northern Economic Development Agency, and Minister for the Arctic Council.

In the appeal, Canada argued that the panel erred in its findings with respect to the TBT agreement and with respect to article XX of the GATT. In Canada's view, the panel committed numerous errors of law, both in interpreting the appropriate legal standard and in applying that standard to the facts of this case. The appellate body is expected to issue its report no later than May 20, 2014.

We'd be happy to answer any questions that you have about Canada's WTO challenge.

[The Chair, Conservative, Rodney Weston]

Thank you, Mr. Hildebrand.

We'll start off with a 10-minute round, and Mr. Chisholm will lead off.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Thank you very much, gentlemen.

I have to tell you I find this a bit of a head scratcher. I'm glad you're here and perhaps you can help me better understand what's going on. There is a domestic seal hunt in the EU. Am I correct?

[Marvin Hildebrand]

There is some hunting and killing of seals that goes on in the EU, yes.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Right, and it's okay under the current rules for the EU to import seal products from Greenland?

[Marvin Hildebrand]

In this context, and for the purposes of international trade and international trade commitments, Greenland is considered to be outside of the EU. It's a third party, if you will, and the effect of the ruling by the panel was to allow the continued import of seal products from Greenland under the Inuit exemption, the first of those three exemptions that I talked about. So that's a yes.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

As I understand, in effect, because there's still a ban, because Greenland gets their seal processed in Canada, that's still affected by the ban. Is that correct?

[Marvin Hildebrand]

Are you talking about Greenlandic seals that would be shipped to Canada, processed in Canada, then returned to Greenland and shipped to the EU?

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

I'm asking you how it works.

[Marvin Hildebrand]

I'm not aware of any processing of Greenlandic seals in Canada, but....

[Kevin Thompson, Director, Government Procurement, Trade and Environment Division, Department of Foreign Affairs and International Trade]

The important issue is that the seals that have been harvested in Greenland need to qualify under the certification system that's been established. In order to gain access to the EU market, you have to fall under one of the exemptions. So products from Greenland that are harvested by indigenous communities would qualify now that this certification system has been established. They would qualify to be placed on the European market.

As far as I know, it doesn't matter where the additional processing or downstream processing takes place, what matters is, for the purposes of qualifying for the Inuit exemption, there are several criteria that relate to the hunter and whether or not the hunter meets this criteria for the Inuit exemption.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Could you explain for me a little bit more about this business of public morality. What does that mean as it relates to this business?

[Marvin Hildebrand]

Under the GATT 1994, article XX sets out a number of reasons why a WTO member could impose an import ban or some similar measure, why they could ban the import of certain products. It's a list of six or eight different circumstances or situations. It deals with things like prison labour goods that are.... The first one on the list, article XX(a), concerns products that are injurious or inconsistent with public morality.

So the EU has cited this provision, article XX(a), as a legitimate basis for it to ban the import of seal products. So it has said, on the one hand they have an outright ban of such products, and on the other hand, they have, as I mentioned, established three exemptions from that ban. So products that are harvested by Inuit people, products that are harvested for marine mammal conservation reasons, or goods that are carried in by travellers through airports or whatever.

So the flow of goods from Greenland to the EU, as was mentioned, is allowed by virtue of the first exemption, that related to harvesting of seals by Inuit people. The entire Greenlandic seal harvest, not surprisingly, is done by Inuit people.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

That exemption was defined because of the hunters, or the way the seals were harvested.

[Marvin Hildebrand]

By virtue of the nature of the people, the fact that they are Inuit people, their ancestry, and the history of their hunts. So it doesn't have to do with how the seals are killed, it's by virtue of the ancestry of the hunter.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

What is the size of the industry in Canada at this particular time from a dollar point of view? You must know.