Health Committee on June 11th, 2009

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

Thank you, Madam Chair, and thanks again to the department and to our other presenters who are here.

The comment has been made that maybe people weren't aware that this was going to happen, but this was a campaign promise that was made before the last election. It was also addressed in the Speech from the Throne. So it really shouldn't be any huge surprise to people that the government had said it was going to ban the sale of flavoured products to the youth market. That's been out front and centre for quite some time.

I have a question for Mr. Glover. I've had some correspondence today from constituents in my riding who are very concerned about this because of the U.S. trade questions that have been arising. I know that some of the American legislators have said that this would violate NAFTA and other trade agreements. I'm not referring to flavoured tobacco; I'm talking about the regular blended tobaccos from the States that are sold in duty-free stores. They are sold in carton sizes only; they are not sold singly. They are purchased mainly by American citizens returning to the States, for consumption in the States.

They feel that this would halt their ability to sell that product. Can you comment on that and on what the trade implications of this bill, if it went forward in its current state, would be?

[Paul Glover]

Thank you, Madam Chair, for the member's question.

Before responding directly to that question, I'd like to add to comments you made about consultation. While I acknowledged that there were some differences, I had also intended to indicate that we did reach out to industry and we did hold a number of conference calls and other things to make sure that we were able to explain the intent of the bill and hold consultative processes.

So while it might have somewhat deviated in a minor way from our normal processes, we were reaching out to industry to engage them in this process. We acknowledge the difference, but it was different, as we move forward.

With respect to trade in the bill, we're aware of some of the posturing that is occurring as this moves forward. I'll turn to my colleague, Diane Labelle from Justice, to explain how that process works as we move forward.

Before she does that, I would also like to add that our objective in answering this question would be to not hypothesize about potential trade disputes that have not yet arisen, nor what would potentially be federal responses to such a trade dispute, as that would be strategy at that particular point.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

That's right. But by the same token, we're not interested in presenting a bill that's going to create trade problems.

[Paul Glover]

We understand the question, so there will be some....

[Diane Labelle, General Counsel, Legal Services Unit, Department of Health]

Madam Chair, as committee members are fully aware, the Department of Justice does scrutinize all bills brought forward by the government on a number of issues, including Parliament's power to enact the legislation, the constitutionality of the legislation, and this also includes Canada's international obligations.

In its presentation before you today, the bill is not a protectionist measure nor a discriminatory measure. In answering your question, I would have to point out, too, some process issues. The allegations of trade or trade discrimination would need to be treated under the WTO Technical Barriers to Trade Agreement and NAFTA obligations.

Canada clearly has an obligation to ensure that technical regulations are not prepared, adopted, or applied with the view to or with the effect of creating unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade restrictive than necessary to fulfill a legitimate objective. And health measures are a legitimate objective.

What are some of the consequences here of violating Canada's obligation through WTO or TBT Agreement or NAFTA? It would engage one or both of the dispute settlement processes in the event of a challenge, the first one being state-to-state settlement procedures under which a party country challenges the measure it alleges is inconsistent with the applicable trade obligations.

Should the trade panel find that a violation has occurred, Canada would have to bring its laws and practices into conformity, or the other affected party, in other words an industry member, may ultimately suspend benefits provided to Canada by the applicable agreement. This, of course, may have serious and adverse consequences on the Canadian targeted industries. The second mechanism is the investor-state dispute settlement procedure under which an investor may claim damages resulting from the measure it alleges is inconsistent with the applicable trade obligations. Then a trade panel decision is binding, and it may award damages and applicable interest in restitution of property to an investor.

So given the importance of trade and trade agreements and Canada's obligations, the Department of Justice does scrutinize the bills for this reason.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

They scrutinize it, yes, but is there a trade issue here or not?

[Paul Glover]

We believe we have legitimate policy objectives and that we are not introducing barriers to trade. We believe we are advancing legitimate policy objectives in this country, not barriers to trade.

[The Chair, Conservative, Joy Smith]

Thank you.

Dr. Bennett.

[Carolyn Bennett, Liberal, St. Paul's, ON]

We have an amendment that we think is a bit of a compromise. I'd be happy if Small Guys and the officials would like to comment on it. In clause 2 we would replace line 8 on page 2 with the following:

scribed to be a little cigar, but excludes any tobacco product that has no filter and that has a wrapper composed of natural leaf tobacco as well as a binder and a filler both composed of natural or reconstituted leaf tobacco.

The view was that this would get around the weight problem that you had, but these are regular tobacco products.

[The Chair, Conservative, Joy Smith]

Would anyone like to comment on that particular aspect?

Mr. Choinière.

[Denis Choinière]

Thank you, Madam Chair, for the question. It's not clear to me from what was read whether or not the little cigars shown in figure 2 would be captured. If you rely only on the presence of a filter, my understanding is that all these products would no longer be captured by the bill. The restriction on minimum packaging and on flavours will no longer apply to the little cigars shown in figure 2 if you go only with the criterion of the presence of a filter.

[Carolyn Bennett, Liberal, St. Paul's, ON]

I think what we're saying is that it excludes any tobacco product that has no filter.

[Denis Choinière]

Those are the ones that are shown in figure 2.

[Carolyn Bennett, Liberal, St. Paul's, ON]

It's the following:

scribed to be a little cigar, but excludes any tobacco product that has no filter and that has a wrapper composed of natural leaf tobacco as well as a binder and a filler both composed of natural or reconstituted leaf tobacco.

Maybe the best thing to do would be for the Small Guys and the officials to have a conversation, and I'll shut up.

[The Chair, Conservative, Joy Smith]

I'm not going to say that this is a rare opportunity. I'm going to resist. No, I love Dr. Bennett. She knows I'm just joking.

Who would like to answer that?

[Paul Glover]

I'm happy to start with that, Madam Chair.

I think what my colleague was attempting to communicate, and I will reiterate, is that what is in figure 2 are those things that--as we interpret that amendment--are without the filter and would comply with the definition that has been proposed and would therefore continue to be allowed for sale in the Canadian marketplace. It would mean that those products on that page would continue to be allowed. That is why we have some concern with the amendment as it has been proposed.

[Carolyn Bennett, Liberal, St. Paul's, ON]

Colm, do you want to explain the weight problem, or the reason we...?

[Colm O'Shea]

The reason we looked at the weight...and we thought it was rather arbitrary. I appreciate the fact that the group is trying to target all the products. The trouble is that sometimes it catches products that weren't intended.

The weight is 1.4 grams. In Europe now I believe it's 2.5 grams. That's the weight they're using in ECMA, or in the European Union. We suggested that the weight wasn't the target. From the discussion that I'm hearing around the table, it was the presence of an acetate filter that distinguished our traditional cigar products from the product you're targeting.

We thought that by describing the product so specifically, by saying that this product has a natural leaf wrapper, it has a natural reconstituted binder, it has a natural reconstituted filler.... It's not the product that I've been seeing held up here. If you were to ask if we're missing one, then what I think is very important is.... If the people from Health Canada read what they wrote.... They put in two extra bullets in clause 2, the last sentence. And it's just kind of a dangling sentence, to the industry. We asked ourselves what it means.

It says:

It includes any tobacco product that is prescribed to be a little cigar.

If that's a product they don't like, Health Canada can just say they're going to call it a little cigar, even though it falls into the definition we've just proposed.

And if that wasn't good enough, Health Canada went further and said, under proposed subsection 2.1(1):

The Governor in Council may make regulations prescribing any tobacco product to be a little cigar.

That means “any” product--one that weighs more, one that weighs less, one that's yellow--

[The Chair, Conservative, Joy Smith]

Thank you, Mr. O'Shea.

We'll now go to Ms. Cadman. We're running out of time. We only have about four minutes.

Ms. Cadman, do you want to pick up on that, or do you have another question?

[Dona Cadman, Conservative, Surrey North, BC]

I have a question. I'm an ex-smoker, and it was hard to get off. Flavouring these cigarettes in wildberry and peach and strawberry is disgusting. It tastes like shit, for one thing.

[The Chair, Conservative, Joy Smith]

Excuse me....

[Dona Cadman, Conservative, Surrey North, BC]

Sorry. It's not a good thing.

Is this the only thing that you're after, or is it still okay to have cognac-flavoured cigars or wine-flavoured cigars or Old Port? Is it just these funny new flavours that you're targeting?

[Paul Glover]

The general objective of this is prevention with respect to youth. This is a bill designed for the protection of youth, and therefore the flavours we are targeting, in cigarettes, tend to be all flavours. We acknowledge that there are a number of large cigars that have some of these flavours in them. We're not capturing those.

[Dona Cadman, Conservative, Surrey North, BC]

So you're after the blunts in the strange flavours?

[Paul Glover]

We're after the blunts flavoured with chocolate, banana, strawberry, and peach. As you've heard from the industry, these sweeteners are sometimes added, particularly to cigarettes, to make them less harsh. When you're experimenting, as youth often are, if there is less harshness to the cigarette, it is easier to start smoking.