International Trade Committee on Oct. 8th, 2009

[The Chair, Conservative, Lee Richardson]

We will come to order. This is the twenty-ninth meeting of the Standing Committee on International Trade.

We welcome today the Minister of International Trade, the Honourable Stockwell Day. Due to motions in the House, of course, we're beginning the meeting 35 minutes late. Unfortunately, that will restrict the minister's time before us. He had been scheduled from eleven to twelve, and he has a plane to catch shortly after twelve, so we're going to change our format in a small way to fit within the time available.

If I could ask the minister to maybe give some brief opening remarks, then we will go to questions from the committee, and I think we're going to have to keep it to one question each. We'll just do the first round, which is seven minutes for questions and answers. We'll go with the Liberals, then the Bloc, and then the NDP, so we'll have just the three question and answer sessions today, in each case within the seven-minute time limit.

With that, Mr. Minister, thank you for coming. I'm sorry for the change in the schedule, but we're grateful for your appearance, and I'd like to ask if you could open with brief comments.

[Stockwell Day, Conservative, Minister of International Trade]

Thank you, Mr. Chairman. I was prepared to be here for an hour, but, as you know, there was a vote. We live in a democracy and it's very important to be there for votes. I'm going to take your advice and shorten my comments to two or three minutes.

I want to point out that we are very concerned by the negotiations with the European Union. Of course, we are focusing on the most important work, that with the WTO. However, as you can understand, there are 154 countries and progress at times is not very quick.

That's why we're going to continue entering into agreements, where that's possible, or bilateral trade with other countries or regions of countries. We're going to continue doing all we can to promote the capitalization of business opportunities, particularly in view of the climate created by the global recession at a time when some countries are unfortunately adopting protectionist measures. We are opposed to that approach, and we're going to continue studying the possibility of extending free trade agreements. We've started discussions and negotiations with European Union officials. I hope they will continue.

I will point out to committee members that the Europeans said three months ago they hoped the negotiations would take less than two years. That's ambitious, but I appreciate their approach.

I am now ready to answer your questions. I assure you we are very committed to Canadian industries, and we have told the provinces that we want them to be with us during the negotiations. Representatives from certain provinces have told me they are now involved at an unprecedented level. We're going to continue that process.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Minister.

We're going to proceed immediately. I want to keep it tightly on track, so we're going to keep it to seven minutes for questions and answers.

We'll begin with Mr. Cannis.

[John Cannis, Liberal, Scarborough Centre, ON]

Thank you, Mr. Chairman.

I'll just make a brief comment and then I'll turn it over to my colleague Wayne Easter.

Minister, first of all, on behalf of the Liberals, I'd like to thank you again for coming before our committee.

I'll begin, sir, with the comments you closed on: “very committed to Canadian industries”. I thank you very much for that comment, only because as good as we are as a nation in producing quality goods and services, they're no good unless we are proactive out there on the international scene. So all I have to say to you, sir--and I know you are, but I just want to repeat it and put it on the record--is that we need you and we need this government to be very proactive on the international scene to make sure Canada gets its fair share of the pie.

With respect to the EU, which you talked about, I think it's a market, it's stable, it's solid, it's got the funds, it's got the need, and we should be in there as well as in other areas.

With that, I'll turn over to my colleague Wayne Easter, unless you want to comment on that in any way.

[Stockwell Day, Conservative, Okanagan—Coquihalla, BC]

I appreciate the comments, Chairman, because it helps us to maintain the momentum. When I'm able to say that the committee is in agreement with the approach we're taking, it just helps us keep the momentum up. Thank you for your advice on that.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Chair and Minister.

I have two questions, really, if there's time, Minister, one on country-of-origin labelling and the other relative to the trade action; and two, on the Canadian Wheat Board as a state trading enterprise at the WTO.

First, I think it goes without saying that the official opposition is extremely disappointed with the government's inaction on challenging the United States' country-of-origin labelling in a comprehensive way. The consequences are very severe. I don't know if Canadians really realize this, but our hog exports to the United States are now down 60%, our slaughter cattle exports are down 20%, and our feeder cattle are down 50%. We're losing the hog industry in this country. They're going broke.

It's a blatant trade restriction on the part of the Americans, and yesterday the minister asked for a panel. While we're the boy scouts in terms of international trade, abiding by the rules, the Americans are increasing their exports into our marketplace. So every day that goes by means that we have producers in more financial difficulty.

My question to you is, on this dispute panel, which we respect, what is the timeframe within which the process will move forward? My concern is that if it's a long timeframe, then the Americans have really been rewarded for violating the trade action. We all know around this table that even when a trade panel does rule, the Americans seldom abide by the international rules.

[Stockwell Day, Conservative, Okanagan—Coquihalla, BC]

First of all, it's at the behest of industry itself, and the pork industry specifically, that we have done this. You've probably seen remarks from their representatives over the last 24 hours; they're very pleased with the approach we're taking. The Minister of Agriculture is in constant and close discussion and communication with them at all times.

We had hoped to see this resolved. As you know, we pushed hard to get some clarification on the country-of-origin labelling rules, and when that came out, it looked like the clarification we had asked for was going to be there. Then, as you know, there was a subsequent letter attached to that suggesting some areas of voluntary compliance. That threw the whole matter into confusion, especially on the U.S. side, even at the production level and the processing level. We actually had processors starting to even decline Canadian product because of the uncertainty.

This was all taking place at the time of a new administration in the United States. They were finding their way on a number of issues. They were starting to appoint their key people. The timing was most unfortunate. We had to give them a bit of time to get settled and get on the issue. It's something that I had raised with the new U.S. trade representative as soon as he came into play, and the Minister of Agriculture did the same with his counterpart, and the Prime Minister has raised it with the President. We were hitting it at every level.

When it appeared that there was not going to be clarification, especially with the questions raised by that letter, we gave it as much time as we thought we possibly could, because as you know, Wayne, if we'd been able to resolve it at the informal discussion level, that would have been best. Once you start into a formal process, as your question about timing is indicative, once you start going down that road—which is an important road if you have go down it—everything has the potential of really slowing down.

It's not like it's the last resort, but it's getting pretty close to it, and that's why we made the decision and we finally said we couldn't wait any longer. The consultation phase is a 90-day phase; we'll get the people in place right away.

Chairman, we'll know more by the end of the week in terms of the placement of the panel itself. If it's going to be a substantial addition to the 90-day consultation process, we'll let this committee know about that right away. We should know by the end of the week.

[Wayne Easter, Liberal, Malpeque, PE]

I know the leadership has come out. I talked to four producers on the ground this morning, and I'll quote what one of those producers told me about the leadership, which seems to be in agreement with your position. He said, “I'm going broke on my farm. The leadership is wimping out” in terms of agreeing with this, “and we need a plan that puts money in producer's pockets, not more loans.” That's what the farmers on the ground are saying, I'll tell you that specifically.

On the Canadian Wheat Board, what is the position of the government on the modalities document now at WTO that would undermine the Canadian Wheat Board as a state trading enterprise? Are you asking that this modality be removed from the text?

[Stockwell Day, Conservative, Okanagan—Coquihalla, BC]

First, to finish up your conversation on the hog producers, we hear from individual producers. We have to deal with the leadership. We have not heard, in any kind of significant way, that there is large concern by the members about their own leadership. If there is on the part of individual members, I suggest they take that up with them, because we have to go on their guidance.

As you're aware also, the Minister of Agriculture is aggressively moving on plans, has moved, and continues to, for hog producers. At the risk of sounding partisan, we think the plans are going to be more effective than ones formerly in place. Now, we can debate that one all day, but the Minister of Agriculture has been very aggressive in terms of programs, and programs to assist producers who, just by virtue of where the market cycle is and where it looks like it's going to be for the next few years, can get out of production if they want to. So there's been a large part of programming there in play, and that's going to be helping producers.

In the area of any issues or discussions related to the Wheat Board, we've made it very plain that we will decide in Canada what's going to happen and how we handle the Wheat Board. We are not going to be forced, pressured, or pushed by exterior forces on that. We've made that very clear. That's our position; we're sticking with it.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Minister and Mr. Easter.

Monsieur Cardin, seven minutes; we have to hold it very tight to seven minutes.

[Serge Cardin, Bloc, Sherbrooke, QC]

Yes, Mr. Chairman. I'm going to share my time with my colleague André Bellavance, who is the Bloc Québécois agriculture and agri-food critic.

This past Tuesday, we heard from Mr. Gauthier and Mr. Stephenson. In talking about supply management, Mr. Gauthier told us the following:

In this regard, Canada has taken a very strong position in the negotiations, by opposing any tariff reductions or tariff quota expansion for our supply-managed products. This position is stronger than any other WTO members.

However, people know we didn't want to make any concessions. Moreover, in Canada's International Market Access Report of 2009, the Minister of Foreign Affairs and the Minister of International Trade stated that Canada would press to achieve its objectives:

...while seeking to ensure that Canada's supply management system for certain agricultural products is not compromised.

Canada undertook at that time not to reduce over-quota tariffs or the size of quotas. However, in recent bilateral negotiations, Canada has made concessions on in-quota tariffs on products subject to supply management. We're told that Canada has offered preferential access to its market in the context of its commitments on in-quota tariffs, but that has nevertheless left the very essence of the supply management system intact. There was nevertheless an opening at that time.

In his conclusion, our colleague Mr. Keddy told us that Canada had adopted a firm position on sensitive products and supply management and that it had defended it at the WTO and in the other bilateral negotiations around the world. However, he noted that no one could say what the future holds for us. In a Cabinet document prepared by the ministers of Finance, International Trade and Industry in 2002, it was noted that the decision to protect supply management at whatever cost was not an obvious one. That suggested that, at some point, it would be an item for negotiation.

I would like you to tell me today whether you are going to protect supply management and make no concessions on that point.

[Stockwell Day, Conservative, Okanagan—Coquihalla, BC]

I can't answer you with regard to the 2002 document because that was a Liberal government document.

As Mr. Keddy said, our position is very clear. We agree on the very clear, very firm direction the Parliament of Canada took in 2005: we have to protect our supply management system. That's our position, and we're going to continue to maintain it.

One of the difficulties now lies in the fact that the process is ongoing. As you know, negotiations are now underway and may perhaps last another year or two, but I hope it won't be that long. That's why it's hard to make a comment every time, on every position, because it's the final position that's very important. And that's why I agree with you, sir.

Our position on our supply management system is very clear, and we're going to maintain it. We've received comments, to the effect that there might be a 23% reduction, which is unacceptable. There was another suggestion: the percentage of tariff lines that we can protect should be neither more nor less than 4%, but that's not our position. In our view, it should stay at 6%. And there's no reduction with regard to the 23%.

Sometimes we have suggestions, positions and possibilities, and you're right to ask questions. However, I can assure you that we are in a process, but we are going to maintain our position very firmly.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Thank you for being here, minister.

In your comment, you talked about the agreement currently being discussed with the European Union, and I would like to ask you some questions on that subject.

I have a very specific question. I had some research done by the Library of Parliament, which I asked whether, historically, when Canada begins this kind of discussion with a view to free trade agreements, it specifically states in a preliminary text that certain things are excluded. For example, I'm told that, historically, we exclude the supply management system from certain types of agreements.

Unfortunately, we see from the second paragraph in section 3.1 of what's called the Joint Report on the EU-Canada Scoping Exercise that everything is on the table, including supply management. In fact, supply management was not excluded. Was that an oversight? Was that deliberate?

I'd like to hear you say—and no doubt agricultural producers under supply management in both Quebec and Canada would also like to hear you say—whether, as Minister of International Trade, you indeed intend to ensure that supply management is not part of those discussions for the agreement currently being negotiated with the European Union.

[Stockwell Day, Conservative, Okanagan—Coquihalla, BC]

With all due respect, my answer to your colleague's question was very clear: we'll continue to defend our supply management system. We haven't accepted the recommendations on changing the percentages.

As to whether everything was on the table, the answer is yes, absolutely. As for maintaining our position, we want to have the opportunity to explain to the 27 countries why the supply management system is so important to us. If it weren't discussed right now, it would be as though there was an elephant in the room and no one wanted to talk about it.

We want to discuss it and to clearly explain our position. We're negotiating with the European Union at the same time as with other countries that do not belong to the European Union with a view to entering into bilateral agreements. They can also know our position. The Canadian position is very clear for everyone, and we will uphold it. We're proud of it and we want to discuss it.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Minister.

Mr. Julian.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair.

Thank you for coming, Minister Day. I like a minister who comes forward without an entourage; it shows more confidence. But there may be some questions we ask you that you may not be able to answer, and we hope we can follow up with your ministry.

I have three questions to start with on supply management--four, actually--following up on the questions by Monsieur Cardin and Monsieur Bellavance, because it has not been clear to us that Canada is saying no to any deal that does not fully protect supply management. In fact, a negotiator from your ministry, Mr. Stephenson, likened the negotiations at the WTO to sumo wrestling. Our concern, of course, is that at the end of the game, at the end of the negotiations, it's quite possible that supply management and single-desk marketing could be squashed unless Canada takes a very firm stand.

So my question to you is this: are you saying to us that Canada will not sign on to agricultural provisions that do not fully protect supply management? And are you saying to us that Canada will not sign on to agricultural provisions that do not fully protect single-desk marketing?

My third question is, with the negotiations—

[Stockwell Day, Conservative, Okanagan—Coquihalla, BC]

I'm sorry, but I thought those two questions were one. The first one is, will we not sign on to.... And the second one was...?

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I was referring to the Canadian Wheat Board, that an agreement might not fully protect the Canadian Wheat Board.

And then, third, in the negotiations with the European Union, is the position of the Canadian government that we will not sign an agreement with the European Union that does not fully protect these agricultural sectors?

[Stockwell Day, Conservative, Okanagan—Coquihalla, BC]

And you said there were four questions?

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Those are the first three—and I'll come back to sock you in a moment.

[Stockwell Day, Conservative, Okanagan—Coquihalla, BC]

I'll take a bit of issue with you on Mr. Stephenson's remarks, because I did review them, and in my view, he could not have been clearer. When he was asked the question, will there be a diminution, a dilution, or some kind of moving away from protection of the supply-managed area, it was a one word answer: no. I think he has learned what we in politics could probably also learn: just make your answer very straightforward and then you won't get into other stuff. He was very clear about saying no. His history is very clear in defending that point.

I appreciate your suspicion about strong commitments, because maybe you had to deal with the former government. I don't know where you're getting your paranoia. But all I can say is that we are very clear on this.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

The government will not sign agricultural provisions that do not fully protect supply management?

[Stockwell Day, Conservative, Okanagan—Coquihalla, BC]

Absolutely. We've been clear on that.

You compared it to sumo wrestling. I've had the opportunity to be at a live sumo training session--not for me, of course--and one thing that was explained to me was that at any time the sumo wrestler can step out of the ring, and the match is over. If it came to that.... I hate to think we would get to a place where we would not be able to negotiate around this, but I've been involved in a number of discussions related to supply management in other countries and in other multilateral situations, and when the topic comes up everybody kind of shrugs, sometimes reluctantly, and they say, “Well, we know Canada's position on that one.” So the discussion is usually two to three seconds. We've been very clear on this.

We've been equally clear in relation to the Wheat Board. We've said we respect what might be tabled or might be suggested in Geneva, but we make decisions on the Canadian Wheat Board. We'll make decisions around this table. We'll make decisions in Parliament. And we've been very clear on that.

That's two, but on your third one, I'm still not clear. It was supply management, Wheat Board, and--

[Peter Julian, NDP, Burnaby—New Westminster, BC]

The Canada-EU negotiations. We were talking about the WTO, but with Canada and the EU, it's not clear--

[Stockwell Day, Conservative, Okanagan—Coquihalla, BC]

It was Canada-EU I was referring to. That would carry over, of course, to the WTO.