International Trade Committee on June 12th, 2006

[Rick White]

Thank you.

That's a good question. Thank you for that.

The way I look at this is that I'm not here to express who should win or who should lose, or who should give or who should take. Those are all political decisions. I'm here today to express exactly how much is on the table here, according to the association I represent—and Liam has done the same. It's millions and millions and millions of dollars that we are losing in opportunity every year—not just opportunity, but real costs in terms of subsidized product depressing our prices. So there is a very real impact that's hitting us every day.

The question you're asking is a political one, but all I can do is express to you the importance of this to 91% of the agriculture that doesn't rely on a domestic system. So all we can do is provide you with all the information we have, so that you can make the right political decisions for us in the negotiations.

[The Chair, Conservative, Leon Benoit]

Very briefly, Mr. Friesen.

[Bob Friesen]

Thank you.

I don't think we should talk about what we're willing to give up; that undermines our negotiators. I think they have to continue to fight to the wall, and the decision, again, will have to be made on the last day.

I can tell you what I'm afraid we might not achieve. I'm afraid we might not achieve the right rules for domestic support. I'm afraid we're going to lose de minimus, which was an exemption for countries that discipline their domestic support. I'm afraid there may not be enough equity when it comes to commodity-specific caps. I'm afraid that we might not get enough tariff reduction in the tariff reduction category to give us real, good profitable market access, and I'm also afraid that we're not going to get other countries to move their TRQs in the direction they should already have moved them in the Uruguay Round.

So we have many concerns about not being able to achieve what we want, but again, we have to continue to negotiate as smartly as we possibly can.

[The Chair, Conservative, Leon Benoit]

Thank you.

To Mr. Menzies, for five minutes.

[Ted Menzies, Conservative, Macleod, AB]

Thank you, Mr. Chairman.

I guess I will open by citing a statement by Pascal Lamy the other day that Canada has lost its ability to bridge. I find that very troubling. Canada used to play a very active role in WTO negotiations, and prior to them as well. I'm concerned about this. As I've stated in the last committee meetings here, the WTO has a voluntary membership, with 149 members—and getting larger. This is why we are studying this process, because if it fails—if all of a sudden we're down to 148, 147, and these numbers start dropping off—we lose the benefits of protecting any sector in this country, more so than even agriculture. So I'm very concerned about our future.

So the question I'm going to throw out.... It's very important because it impacts agriculture. But not only that, I've talked to the CCC, the Canadian Manufacturers & Exporters, who are all very concerned about this potential failure. And it's all pivoting on agriculture, so it's so important that we get a deal. If Canada isolates itself from this modality phase, how do we reinsert ourselves into the next process, or are we totally isolated and have we lost that opportunity? We've lost the opportunity to gain market access. We've lost the opportunity in this multilateral agreement to defend any industry in this country.

I'd like some comments on that, please.

[The Chair, Conservative, Leon Benoit]

Is your question directed to anyone first?

[Ted Menzies, Conservative, Macleod, AB]

Whoever wants to jump in.

[The Chair, Conservative, Leon Benoit]

Mr. McCreery.

[Liam McCreery]

Thank you, Mr. Chair, and thank you, Mr. Menzies, for that question.

Again, if we do not get a deal, there is no status quo. Last year, the Americans spent $15 billion in trade-distorting support for the grains and oilseeds sector. We saw what that did to the feed industry in Canada; it was absolutely devastated. They can increase that spending by $4 billion next year and be within the rules of the WTO.

Our friends in Japan, which is an excellent premium market for our beef, can increase their tariffs from I think it's 37.5% to 50% overnight, without any notification. They can just say the tariffs are going to go up.

That reasoning echoes across all members of the WTO. They can increase tariffs and increase subsidies under the current regime that we've agreed to as a country under the Uruguay Round. If we do not get an agreement, things will get worse for Canadian agriculture--full stop.

I'm going to cheat, Mr. Chair, and try to answer the previous question.

My fear is that we will not get an agreement, that we will not tackle what the Americans, the Europeans, and the Asians are doing with subsidies and tariffs. The richest of the rich will continue to distort markets and continue to hurt producers in Canada.

And you're right. It will affect not only agriculture but every industry in Canada.

People will maybe put forth that bilaterals and regionals are the way to go, and we should always pursue those, but there is no other mechanism then to go after the trade-distorting support, other than the WTO. Bilaterals are notorious for leaving out agriculture, and that hurts us.

I had an opportunity to meet with the head of FTAs for Japan last week. We had a little side conversation. He said, “Well, Liam, you have to understand that agriculture is sensitive.” I said, “Well, if I were the Canadian negotiator, I'd just say cars are sensitive and you can't come into our market.” It's a two-way street.

You're right. It affects all industry.

Thanks, Mr. Chair.

[The Chair, Conservative, Leon Benoit]

Mr. Laforge, we have about a minute left.

[Jacques Laforge]

I think Mr. Menzies' question is more one of perception of where we are than how people are actually viewing us.

If we go to Geneva, I think the negotiators who are there are still viewed as very credible people and have influenced this negotiation a lot. I don't think that's going to go away overnight. I think every country right now is almost in the same position as Canada.

We're down to the last stretch and we have key areas of concern. Those are all around market access and sensitive products, and I think everybody is going to play tougher. We just have to realize that we need to be smart and handle it in the best manner possible. I think that's a responsibility of the government, to assure that takes place.

[Bob Friesen]

I'll get Mr. Shauf to answer that.

[The Chair, Conservative, Leon Benoit]

Okay, a very short response, Mr. Shauf.

[Marvin Shauf]

Thank you.

Just to follow up, I think Canada is still very clearly involved, and Canada is working for a good deal for Canada. That's important, because if you accept a bad deal, you've accepted that other countries can do this to you for a period of time. There's some risk in not getting a deal, but there's a lot of risk in accepting a bad deal.

Canada does need to work for that good deal, does need to stay there, does need to be very influential. At the end of it all, we need to have the deal that has the ability to bring some money home. That means all of the pillars, all of the trade issues, need to be kept in context with each other.

[The Chair, Conservative, Leon Benoit]

Mr. White, I see that you want to give a short answer as well.

[Rick White]

Yes, I'll keep it short.

Thank you, Mr. Menzies, for the question.

I think we learned a lot in the Uruguay Round about what happens when Canada is not there when it should be. We particularly experienced that with canola, for example. Soybeans and products have substantial tariff advantages in many of our export markets that we compete head to head with them against, and it's simply because we weren't there in a big way to influence the process.

India has a 45% tariff on soybean oil and a 75% tariff on canola oil...just because.

As another example, Korea's tariff on soybean oil is 5%; however, their canola oil tariff is at 36%.

The issue is non-tariff parity. Soybeans were there, particularly from the U.S., and it's because they were there and pushed it all the way through.

If we exclude ourselves from the process now, we are in really big trouble when it comes to doing the detailed schedule exchange, because we will get beat up again, just like we did in the last round, if we're not there now. We have to set the stage for the next detailed negotiations on an exchange of schedules. We have to be there now.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Menzies and everyone, for your answers.

Ms. Chow, for five minutes.

[Olivia Chow, NDP, Trinity—Spadina, ON]

I don't need it.

[The Chair, Conservative, Leon Benoit]

Okay.

Then we'll go to the next round, to Monsieur LeBlanc, from the Liberals.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thank you, Mr. Chairman.

I would like to welcome the witnesses. The last hour was interesting. It's obvious that not everyone shares the same opinion, which is what makes this discussion interesting. I greatly appreciated hearing what was said.

I have a fairly simple question, and perhaps Mr. Laforge can answer, and Mr. Friesen might want to add a few words as well.

In my riding in New Brunswick, there are dairy producers. On several occasions, I have met with members of your association and I believe we must protect and promote our supply management system. However, I have many concerns and I believe that many of you do so as well for very good reasons.

However, there is a bit of confusion, Mr. Laforge. Industry and consumers might not be that familiar with the system of supply management. Can you explain to us in simple terms what the advantages of supply management are and how the system benefits producers and consumers? We could use your explanations when we communicate with our voters.

[Jacques Laforge]

I will give you a very simple answer, Mr. LeBlanc.

There has to be stability throughout the entire chain, so that a producer can produce his production and generate enough income, so that the processor has a guaranteed supply of milk, and so that retail stores and consumers pay a reasonable price in comparison with American dairy products, for instance. That way, everyone comes out ahead, from the producer to the consumer.

That would be my very simple answer to you. If there is not enough stability, someone somewhere within that chain will pay.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thank you very much, Mr. Laforge. I share your opinion.

Mr. Chairman, my colleague, Mr. Easter, might have a few questions in the remaining time.

[The Chair, Conservative, Leon Benoit]

Mr. Easter, you have about two and a half minutes.

[Wayne Easter, Liberal, Malpeque, PE]

That's a lot of time, thanks.

I did have the opportunity to read the CFA presentation, Mr. Chair, so my questions will mainly be directed to them. If they answered as I was debating in the House, then just say so.

On the question of market access, there is certainly an opinion out there, which is being portrayed by those who oppose the supply management system, that our supply management system is very protectionist. Dairy is a prime example. We allow imports of 6%, yet the U.S. only allows for 2.75%. Can you give us an overview? I think you will find that even with supply management we are more open traders than most around the world. I wonder if either Jacques or Bob could speak to that.

[Bob Friesen]

Thank you, Mr. Easter.

Some of it may have been touched on, but when it comes to market access improvement there are many different ways to improve market access, and eliminating tariff escalation is one. But you're right, there are times when TRQs are better than a gratuitous reduction in tariffs.

I can recall meeting with the high commissioner from India and him telling us he didn't want to reduce his tariffs very much. Then we said, how about you give us a TRQ with no in-quota tariffs? Can you imagine the market access we would get to India on some of the export products where we now have to pay a very high tariff? So, yes, we believe TRQs should be negotiated to come to a common end.

We believe those countries that did not live up to the spirit of the Uruguay Round should be committed to moving there. Supply management was an example coming out of the Uruguay Round when it came to offering transparent market access. In fact, our government's position to date has been that they are also prepared to go to zero in-quota tariffs. In-quota tariffs have really served to erect some very serious access issues as well.

To some extent, supply management has been more of a free trader than many of the other countries have been with their TRQs. I believe we need to be fairly specific on what gives us market access--is it a tariff reduction, a TRQ, etc.?--and make sure we negotiate the best deal we can for exporters and supply management.