Fisheries Committee on April 7th, 2014

[Marvin Hildebrand]

We know a couple of things for sure. One is that the size of the industry has been decimated by this measure that came into effect in 2009. In terms of the export capacity and actual export of seal products, that's a little bit difficult to nail down in great precision because some of the products, like oils for example, are combined with other marine mammals. But what I can tell you is that the export of seal products—seal meat, seal oils, and raw seal skins—peaked in 2006 at about $18 million, and by last year was down to under half-a-million dollars and the overall sum from 2004 to 2013 was just a little over $79 million. So it has tapered off very dramatically in recent years.

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

Was this file part of the CETA negotiations? I'm trying to get some sense of how seriously the Government of Canada takes this particular issue. We've heard great outrage publicly, but I'm wondering, when given the opportunity, how seriously the Government of Canada takes the issue when it comes down to actually trying to negotiate a positive result.

[Marvin Hildebrand]

The answer is that the government takes it very seriously. In giving you a more detailed answer to your question, I need to draw the distinction between, on the one hand, a legal challenge to a certain action on the part of a WTO member in this case, and on the other hand, a negotiation of a treaty. Those are entirely different things.

On the one hand, we have put major efforts into this challenge at every turn in the road since it was launched through the initial panel process and also now into the appeal. By far the best framework for Canada to challenge this action on the part of the EU is the WTO, because the rules we consider to have been violated are WTO rules.

In terms of our commercial relationship with the European Union, those are the rules. As we all know, a bilateral trade agreement has been negotiated and is in the final stages of technical work right now with the European Union. That treaty will result in another set of rules, another dispute settlement process that could be used, but it is not fully complete at this time. More importantly, it has not been implemented or ratified, and it's not in force.

The government absolutely takes this as being very important, and in terms of the levers and the mechanisms we have to challenge it—the best by far being the WTO—we have availed ourselves of those.

In addition, in practical terms, that avenue has allowed us to collaborate, in this case with Norway, and to work together with a co-complainant in the case, one that has very similar interests. It has also allowed us to benefit from what's known as third-party participation. There is a good handful of countries—six or more—that are third party to this case.

Specifically on this question of public morality, Canada has argued very clearly that the panel erred in citing this hunt as being offside with public morality. Not only have Canada and Norway argued that, but we have also benefited from third parties saying some of the same things and saying that it makes sense and that it does not pass the test. In Article XX there is a necessity test for invoking an exception, for instance, in the case of public morality. We have argued that they have not met that necessity test.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Mr. Chisholm.

Mr. Sopuck.

[Robert Sopuck, Conservative, Dauphin—Swan River—Marquette, MB]

Thank you.

At any time during this process, did the EU ever express any opinion or concern about the sustainability of the seal populations in Canada and the effect of the current harvest on the sustainability of the seal populations?

[Marvin Hildebrand]

No, they didn't.

[Robert Sopuck, Conservative, Dauphin—Swan River—Marquette, MB]

Okay, so they implicitly or explicitly acknowledged that Canada's seal populations are in good shape and that they are abundant. Okay.

Regarding the second exemption, for seal products resulting from hunts conducted for the sole purpose of sustainable management of marine resources, the key word in that statement in my view is “resources”.

This committee has heard many times from various experts and fishermen on the coast about high populations of seals affecting commercially valuable fish stock. So if Canada were to have a seal hunt or a seal reduction program for the purpose of conserving fish stocks that are threatened by an overabundance of seals, presumably seal products from that hunt would be allowed into the EU.

Is that true?

[Kevin Thompson]

A number of criteria has to be met in order to fall under the marine resource management exemption. One of the most significant ones for the east coast seal fishery is the fact that the seal hunt cannot be commercial. The fishermen cannot make a profit from the harvesting of seals.

Currently, there's only a very limited number of seals that are harvested in the EU under this exemption. I believe it was around 106. So there are some. At this point, in order to take advantage of that exemption, you have to meet these very stringent criteria. On the Canadian side, if we had a sustainable seal hunt but it was done on a commercial basis, that would not currently fit under the EU exemption.

[Robert Sopuck, Conservative, Dauphin—Swan River—Marquette, MB]

I'm astonished to hear that. That is clearly stupid and malicious behaviour by the EU, meddling in the management of our natural resources. I find it absolutely appalling that they are going down this particular path.

In terms of the use of this ridiculous public moral concern clause, what are the possible precedents that have been set for the trade in other commodities?

[Marvin Hildebrand]

That is an important point. Actually, we are quite concerned about the possible precedent of the panel's findings in this regard. It was one of the grounds of our appeal of the panel's conclusion concerning the interpretation. Application of GATT article XX(a) was a particular concern. Specifically, we argued that the panel failed to support its conclusion that the seal regulation could be justified. It was shared by Norway, and as I said, a number of other third parties in the appeal.

Basically, the concern is that the panel, through its ruling in its report of last November, has set a very low threshold for the invocation of a public morals defence, creating the possibility that a broad range of issues could potentially be recast as moral issues, and potentially be justified under the exemption.

Beyond that, I can't point to specific products that we think might be vulnerable. It's more the precedent of a low bar, and other parties potentially citing that and saying they could do the same thing with something else.

[Robert Sopuck, Conservative, Dauphin—Swan River—Marquette, MB]

This, clearly, has the potential to destabilize the entire world trade system if for domestic political reasons, like the EU is doing, certain countries utilize this low bar to ban all manner of different goods from their countries. Am I correct?

[Marvin Hildebrand]

We're very concerned with the precedent that has been set under GATT article XX(a). In crafting our arguments in this case and our arguments before the appellate body, we have cited various WTO challenges in other areas over the past 10 or 20 years. Jurisprudence is very important in terms of the functioning of the international trade system and with respect to the functioning of cases in dispute resolution. So yes, we're very concerned about the low bar that the panel found was acceptable in terms of the EU's actions.

[Robert Sopuck, Conservative, Dauphin—Swan River—Marquette, MB]

Who are those other third parties who are supporting Canada? Do we have a good case?

[Marvin Hildebrand]

The list of third parties goes a little bit beyond this, but the third parties that were particularly supportive of Canada's interests and of the arguments that we put forward were Colombia, Mexico, Iceland, Ecuador, and Japan.

With respect to whether we have a strong case, we obviously have great concerns with the panel ruling. We've argued in a number of ways, and in a submission of scores and scores of pages, the errors in analysis, and the errors in citing of jurisprudence that's not relevant or otherwise not applicable.

Through extensive arguments and analysis, we've put forward our case, which we believe to be the right one. We believe that the panel clearly erred, and that there are good and compelling reasons to rule in a different way, which is our expectation in terms of the appellate body.

[Robert Sopuck, Conservative, Dauphin—Swan River—Marquette, MB]

Has the public moral concern clause been invoked in other trade disputes by the EU?

[Kevin Thompson]

To my knowledge, it's been invoked in at least one other case involving gambling laws in the United States. I believe it was Antigua that challenged a number of restrictions on cross-border gambling. The U.S. sought to justify those restrictions under the public morals defence. There is a fair amount of WTO jurisprudence under GATT article XX, the general exceptions, generally and specifically in relation to this idea of necessity.

In looking at the general exceptions, there are various components to the test. The first one is that you have to establish that the measure is there to protect something. Is it protecting public safety, protecting public morals, protecting human health, protecting animal welfare, or protecting the environment? There's this notion of protection.

The second step is this idea of necessity. Is the measure necessary in order to achieve that objective of protecting, in this case, public morals?

Then you have this third step, which falls within something called the chapeau where, nonetheless, one has to determine whether the measure has been applied arbitrarily or in an unjustified manner.

There's a significant amount of jurisprudence around the general exception test itself.

[The Chair, Conservative, Rodney Weston]

Mr. MacAulay.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you very much, and thank you for your determination to be here.

Public morality, and I know you've been talking about it, how is it established? If I understood correctly, you're dealing with conservation and cruelty. It is truly a fact that our seal herds are much higher, I believe, than they probably need to be. In fact, they're probably the biggest consumer of fish in the world today. They consume all other types of fish.

I was just looking at the sustainable management of the marine resources. How can they use public morality when we have the most humane seal hunt? I'd like you to elaborate on how the seal hunt is done in the EU and other places where they import the product into the EU.

What happens if they decide, under public morality, to put a camera in a butcher shop or where they cook the shellfish. Where are we going in the world with trade? Is this not a trade barrier?

[Marvin Hildebrand]

We certainly argue it is a trade barrier, and that it's an illegitimate trade barrier.

[Lawrence MacAulay, Liberal, Cardigan, PE]

I mean illegitimate trade barrier.

[Marvin Hildebrand]

We made a number of arguments with respect to the question of public morality and animal welfare. We emphasized the relevance of comparing the standard applicable to the commercial seal hunt with other animal welfare standards, such as wildlife hunts in the EU, for example.

Certainly we recognize the WTO members have a right to establish their own standards for animal welfare, but they have to be based on factual information. They need to not be applied arbitrarily. It's important to look at other standards in similar situations, if a country wants to go down that road and try to justify a ban on the basis of animal welfare concerns.

We pointed out also there is a much less trade-restrictive way of going about this. We pointed out that other wildlife hunts in the EU as I said are, if anything, more of an offender in this area than the seal hunt. In particular we argued an alternative mechanism and a regime that would be less trade restrictive. The EU could have accepted a certification and labelling scheme, based on an accepted animal welfare standard.

We believe, and we argued before the panel and the appellate body, that the existing requirements to ensure a humane seal hunt in Canada are adequate and even more stringent, as I said, than the standards in other EU wildlife hunts such as the deer hunt. We also pointed out the EU applies a different standard to seals, an animal that's largely hunted outside its territory, that exceeds the standard they apply to hunts within their territory.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Thank you.

But you lost your first appeal with the WTO, and you're appealing again. What changes are you bringing forward?

My understanding is that we have the most humane seal hunt in the world. We use the most humane practices. It's wide open to the public, perhaps too much so.

Is it because of the do-gooders trying to say this is inhumane and using millions of dollars to damage our seal fishery? Is this what the problem is in Europe? With public morality, is that because people are offended because of the way we do it, and they fish the seal the same way?

How can you have trade in the world if the EU can do that to us with the most humane seal hunt in the world? It's hard to understand.

[Marvin Hildebrand]

Right. We know there has been an extensive campaign in the European Union over a sustained period of time. We know the EU ban was preceded by a couple of country-specific bans in the Netherlands and one or two other countries before it was adopted by the EU generally, and that it has been a subject of great controversy and publicity in the EU by those who oppose the seal hunt.

With respect to the panel report and the appeal, the first panel report that came out in November of last year is the only panel report. There has been one panel to date. They took the information at hand, the submissions of the parties, the third-party information, and they wrote a lengthy report on their conclusions and their findings. That report was adopted. We agree with parts of that report, and there are parts of it we don't agree with.

The purpose of the appeal process we are into now—and there isn't a further appeal process—gives us an opportunity to look at the analysis and the thinking and the jurisprudence the panel members and the panel collectively engaged in. It also allows us to develop arguments as to where we think they went wrong in their thinking, and where they drew wrong conclusions.

[Lawrence MacAulay, Liberal, Cardigan, PE]

Where do you think they drew the wrong conclusions?

[Marvin Hildebrand]

One of the main concerns is with respect to their interpretation of Article XX(a), the public morality, the bar that they set in terms of GATT article XX(a), and the invocation of a ban on the basis of preserving public morality.

Specifically, as Kevin said, there's the word “necessary” in that very short line of article XX(a). It says it's necessary to protect public morals—or whatever the words are—and so there's a necessity test. What we have argued, and what we are very concerned about, is that the EU has not passed that test and that the panel erred in concluding that they had met that necessity test.

Those exemptions are only available in situations and to members who can demonstrate the necessity of them in order to accomplish a legitimate end.