International Trade Committee on Feb. 15th, 2011

[The Chair, Conservative, Lee Richardson]

Welcome to this the 45th meeting of this session of the Standing Committee on International Trade, where we are today continuing our study of free trade between Canada and the European Union.

We have as witnesses today: from Cavendish Farms, Mr. Ron Clow, the general manager; from the Dairy Farmers of Canada, not Jacques Laforge, who I understand is caught up in some snow in Quebec or New Brunswick, but Mr. Richard Doyle, the executive director of the Dairy Farmers of Canada, who is replacing him. In addition, we have, as an individual, Mr. Michael Geist, who is Canada research chair, Internet and e-commerce law, at the University of Ottawa.

I think you're all aware of our normal procedures, where we'll ask each of you to provide a brief opening statement, which will be followed by questions from the committee.

Perhaps we'll begin with Mr. Geist.

[Dr. Michael Geist, Canada Research Chair, Internet and E-commerce Law, University of Ottawa, As an Individual]

Thanks. Good morning.

My name is Michael Geist. I'm a law professor at the University of Ottawa, where I hold the Canada research chair on Internet and e-commerce law. I've been active on copyright and intellectual property issues for many years. Last year, I edited the largest academic study to date on Bill C-32, the current copyright bill, with peer-reviewed contributions from 20 leading Canadian experts.

I appear before this committee today in my personal capacity, representing only my own views.

The committee's recently released report on CETA's fact-finding mission focused primarily on two intellectual property issues--geographical indications and pharmaceutical patents--so the committee is aware of some of the concerns associated with the EU proposals, particularly some of the impact on agricultural products, and even more so on pharmaceutical pricing.

But I'd like to focus on another intellectual property issue within CETA: copyright. I believe that to fully understand the CETA copyright provisions, they should be viewed within the broader context of copyright trade pressures on Canada.

As committee members may be aware, Canada recently participated in the anti-counterfeiting trade agreement negotiations that led to a draft agreement in December of last year. The United States and the European Union were two of the leading protagonists behind the treaty. While few would oppose genuine efforts to deal with dangerous commercial counterfeiting, ACTA generated a global public outcry on at least two grounds.

First, the secrecy associated with the negotiations led to widespread concern about the negotiation of an intellectual property agreement--

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Pardon me. I believe our guest is speaking a little too quickly for the interpreter.

[The Chair, Conservative, Lee Richardson]

If you could just slow it down a touch, our able translators can keep up.

[Dr. Michael Geist]

Sure. That's no problem.

[The Chair, Conservative, Lee Richardson]

Thank you.

[Dr. Michael Geist]

So there were two global concerns with the anti-counterfeiting trade agreement. First, the secrecy associated with the negotiations led to widespread concern about negotiating an intellectual property agreement outside the conventional international forum of the World Intellectual Property Organization and with a level of secrecy normally accorded to military documents.

Second, the substance of the agreement extended far beyond addressing commercial counterfeiting issues. Instead, there was a concerted effort to renegotiate international intellectual property law by increasing the level of protection beyond required norms.

The final agreement raises some concerns—and I'm talking about ACTA here—though many of the most problematic provisions were ultimately amended under pressure from a coalition of countries that included Canada. I raise ACTA because many of the concerns associated with that treaty are being replicated within the CETA process, yet this time there is no coalition to argue for maintaining international flexibilities.

First, the same secrecy concerns that arose within the context of ACTA arise here. It's true that there have been leaks of various CETA chapters, including the intellectual property chapter, yet commenting on leaked chapters is not a full substitute for full and open consultations that permit expert analysis and opinion on proposed treaty rules. Waiting until we have a final or even near final text isn't good enough. We need public access for the purpose of informed commentary before the final trade-offs and the negotiations are concluded.

Second, and even more so, the substantive copyright provisions within CETA, from what we know, raise some significant concerns. In this regard, I'd like to make five brief points.

First, the inclusion of intellectual property policy marks a dramatic shift for Canadian trade negotiations, which have conventionally addressed market entry, investment, and tariff issues. As Dan Ciuriak, a former deputy chief economist at the Department of International Trade, has noted with respect to the CETA IP provisions, the process is not a sound one. In a hotly contested area, to have fundamental business regulation made in this fashion is not sound.

Second, the inclusion of copyright provisions within CETA is almost completely one-sided. With the exception of an anti-camcording provision that the EU has already rejected within ACTA and is therefore unlikely to accede to here, Canada has made virtually no demands on the copyright front. There is simply no evidence that there is much in this for us. Rather, the copyright provisions are a rather obvious attempt by the Europeans to export rules to Canada that they have been otherwise unable to do via ACTA or other international agreements.

Third, some rights holders have used the CETA process as an opportunity to circumvent domestic copyright reform by promoting reforms within CETA that may later tie our hands for a made-in-Canada approach on copyright. For example, the Canadian Publishers' Council has provided a submission to the government calling for an extension in the term of copyright and the creation of a sui generis approach to database protection, new kinds of protections for databases. Both of these reforms were soundly rejected during the 2009 copyright consultation that the government conducted and are not found in Bill C-32, yet this circumvention of the domestic policy process through international agreements carries significant dangers if we're not careful.

Fourth, the substantive proposals demanded by the EU are designed to rework Canadian copyright law in a manner that extends well beyond international law. Indeed there are instances where Europe's failed international efforts are being recycled within CETA despite the fact that Canada stood opposed in international fora. For example, the World Intellectual Property Organization has been negotiating a proposed broadcasting treaty for over a decade. The proposed treaty has never managed to obtain broad support, with many expressing understandable concern that extending new rights to broadcasters merely for the act of broadcasting represents a significant shift away from traditional notions of copyright that serve the interests of both creators and users. Canada has expressed similar doubts at WIPO, yet CETA seeks to import the failed provisions into Canadian law.

Another critically important example are the digital lock rules found within CETA. As you likely know, the digital lock rules in Bill C-32 have been among the most contentious in the bill. In fact those provisions have always been contentious, dating back to their initial inclusion in the WIPO Internet treaties in 1996. Those treaties established considerable flexibility and implementation in order to obtain consensus among the differing views on the issue.

The same concerns arose within the context of ACTA last year. CETA includes digital lock provisions that extend beyond the requirements in the WIPO Internet treaties, and therefore would remove some flexibility as Canada considers how best to comply with those treaties.

Fifth, there are potential concerns with CETA and the current draft of Bill C-32. For example, Bill C-32 codifies the notice and notice approach that has been used by Internet service providers across Canada for many years when they receive notifications of alleged infringement. The notice and notice approach in Bill C-32 strikes a good balance between the rights of copyright owners and the interests of Internet subscribers. Yet the Europeans have proposed language that would require ISPs to remove or disable access to content simply on being informed of alleged infringement—not proven, simply alleged. This appears to be an attempt to bring in a notice and take-down system that was rejected in Bill C-32; it was rejected in Bill C-61 before it; and it was rejected in Bill C-60, which the Liberals introduced even before that.

Another example involves statutory damages. Bill C-32 rightly distinguishes between commercial infringement, which carries full statutory damages of up to $20,000 per infringement--it gets tough with cases of commercial infringement--and non-commercial infringement, which carries a $5,000 cap on damages. The Europeans have proposed language that may contradict the Bill C-32 approach. Indeed, the Canadian counterproposal on this currently seeks to preserve the ability to make adjustments in special cases.

In sum, the copyright provisions were not part of the Canada-U.S. Free Trade Agreement or NAFTA. They were largely excluded or kept very minor in our more recent trade agreements. CETA represents a very significant change that's part of a broader effort to pressure Canada to change its copyright laws.

While most agree that there is need for some reforms, discarding a made-in-Canada approach for one drafted in Brussels raises significant concerns that implicate both future and current legislative proposals.

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Geist.

Mr. Doyle.

[Richard Doyle, Executive Director, Dairy Farmers of Canada]

Thank you, Mr. Chair.

Once again, I'd like to apologize on behalf of Mr. Laforge, our president, who is a farmer from New Brunswick. He tried valiantly to get to Quebec for his flight but didn't make it.

Mr. Chair, on behalf of the Canadian dairy producers operating 12,965 dairy farms, I am pleased to appear before this committee to present our views on the ongoing trade talks between Canada and the European Union. Before providing specific comments on the talks themselves, I would like to share with you the results from a recent study performed by EcoRessources, a firm specialized in economic research. The EcoRessources study estimated the economic impacts of the Canadian dairy industry, both at the farm and processing levels, using 2009 data.

Milk producers produced 83.8 million hectolitres of milk valued at over $5.4 billion. The 452 processing plants generated $13.7 billion in direct sales. Together the sector sustains more than 215,000 jobs in Canada, adding $15.2 billion to Canada's GDP, and it contributed over $3 billion in tax revenues: $1.8 billion at the federal level, $1 billion at the provincial level, and $300 million at the municipal level. I am very proud to say that the Canadian dairy sector contributes more than positively to the Canadian economy.

As you are aware, the Canadian dairy sector operates within a supply management environment, according to which producers manage their production to meet the demand on the Canadian market. Despite concentrating our effort on the domestic market, international trade talks are an important aspect when it comes to maintaining the integrity of the Canadian system in the future. In fact, the Canadian dairy supply management depends on import controls or the ability to manage imports at negotiated levels. Therefore, trade talks, whether at the WTO or at a bilateral level such as CETA, have the potential of affecting our import control measures.

Canada has negotiated a number of bilateral trade agreements with a number of trading partners these past 20 years and has always exempted dairy from the main provisions of these agreements. In other words, no concessions have been made with respect to TRQ—tariff rate quotas—expansion and over-quota tariff reduction. This is fully in line with the position defended by the Canadian government, which was clearly spelled out in the unanimously endorsed House of Commons motion of November 22, 2005, and supported by all parties. The motion clearly states that Canada will accept no over-quota tariff reduction and no TRQ expansion for its supply managed sectors.

I must point out here, outside of my text, that the motion also stresses that Canada will pursue, for the non-supply commodity, their export interests as well. I'm just pointing out that there's no conflict there. Canada's chief negotiator for agriculture has also confirmed that his mandate, not only in the context of the WTO, but also in the context of CETA, is consistent with the motion. Now DFC supports the Canadian government's position on this.

As the Canada-European Union trade talks are entering into what we consider the most difficult phase of the negotiations, we want to thank the Canadian government for the strong position it has defended in these negotiations, opposing the European Union demands for increased access to our milk and dairy product markets, notably cheese. DFC is also pleased with the comments by both Minister Ritz and Minister Van Loan, who have reiterated on a number of occasions that they will not trade away supply management and will continue to defend our interest at the international level. This being said, the Europeans continue to seek access to our dairy market, and we urge the Canadian government to continue to remain firm, opposing any concessions in this area.

In support of the Canadian government's position, we would like to highlight that Canada imports almost ten times more dairy products from the EU than the EU imports their products from Canada. For a market that is fifteen times smaller, it hard to say that Canada is a closed shop. More precisely, Canada's exports of dairy products totalled $26 million, out of which cheese export totalled $23 million—so it's mostly cheese—and we have imported dairy products worth $217 million from the EU 27, out of which cheese accounted for $156 million.

In the end, it is Canada's credibility that is at play in these negotiations. How could the Canadian government be taken seriously at the WTO if it makes any concession in the CETA negotiations? But until the negotiations are over, the debate over market access will continue to preoccupy their farmers.

I will conclude in French, Mr. Chairman.

Another area of the negotiation that is of concern is the issue of geographical indications. As you may be aware, the Canadian government has opened the door to a negotiated outcome regarding the EU demands for a broad recognition of geographical indications. In considering this particular question, we must not lose sight of the fact that the Canadian cheese industry produces hundreds of varieties of cheeses, and many of them are based on recipes that were brought to Canada by the migrants who have helped create the multicultural society that is Canada today.

The GI debate has the potential of severely affecting some of the cheeses we produce in Canada, notably parmesan and feta. The final outcome on GI should allow us to continue to produce those cheeses that are considered to be generic here in Canada and to market the great Canadian cheeses under the names they are currently being marketed.

The industry, both producers and processors, strongly opposes the expansion of the protection conferred through GIs. Quite a few cheeses produced in Canada could be negatively affected by a broad recognition of the GI principle and many of these are produced in small quantities. But in the end, the small cheese producers are equally important, create jobs in rural areas, and have helped the Canadian cheese industry acquire its "lettres de noblesse".

Thank you very much.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Doyle.

Finally, we have Mr. Clow.

[Ron Clow, General Manager, Cavendish Farms]

Good morning, Chair and members of the committee. I'd like to thank you for inviting me to speak here today on behalf of Cavendish Farms.

My name is Ron Clow. I'm the general manager of Cavendish Farms.

Cavendish Farms is a food company that's part of the Irving group of companies. We're a proud Canadian company and a leading processor of frozen potato products. We're the fourth-largest frozen potato producer in North America.

We also have a fresh potato business. And we have a frozen appetizer business that is located in southern Ontario. We have two french fry plants and a fresh potato plant on Prince Edward Island, a province that's well known for potato growing. Our appetizer plant is located in Wheatley, in southern Ontario.

Cavendish has 700 employees in P.E.I. We have our head office in Dieppe, New Brunswick, with about 100 people. We have 140 in our facility in Ontario.

We would like to thank the federal government for the increased focus on free trade, and we support the timely conclusion of the Canada-Panama Free Trade Agreement, as well as the continuation of negotiations with the Caribbean countries. These markets have huge potential for our exports of frozen potato products.

We're here today to discuss the Canada-EU comprehensive free trade agreement, the potential benefits for Canadian agriculture, and the opportunities for Atlantic Canada specifically.

As you know, Canada and the EU have entered a critical stage in the negotiations. We'd like to bring to your attention how important it is for our regional economy that Canada gain the immediate and complete elimination of duties on Canadian fried potato products. Currently, the tariff stands at 14.4%. We're hopeful that this tariff will be immediately eliminated through these negotiations. Sweet potatoes and fried vegetable tariffs are even higher, at 17.3%, and we hope that this tariff, too, is repealed in a timely manner.

Of Cavendish's current production, only 12% is consumed in Canada. The rest is largely exported to the United States, the Caribbean, and Central America. Some is exported to Asia. To date, our product is not exported to Europe, with the exception of Iceland, where we've seen a 40% increase since the conclusion of the EFTA agreement.

This gives the committee an idea of the potential we have seen in the EU market. Atlantic Canada, in particular, stands to gain from the successful conclusion of this negotiation due to the inexpensive cost of shipping by sea. It is as cheap for us to ship product to Europe out of Halifax as it is to truck it to a market like Chicago.

As a family owned Canadian company, we'll ensure that Canadian manufacturing and processing facilities continue running and that 940 jobs are protected, while we focus on more production through our facilities and more employment.

The elimination of the EU duties on french fries from Canada through this comprehensive trade agreement will level the playing field with the EU. Currently we impose a 4% tariff on imports versus a 14.4% tariff on our exports. It will allow Canada to enter into free trade with Europe ahead of the United States. It will contribute to the success of the economy in Atlantic Canada and will reinforce the comparative advantage enjoyed by the P.E.I. potato industry from being situated next to two excellent ports, Halifax and Saint John.

We ask that the committee recommend that the negotiators continue the good work, that they pursue the complete elimination of the EU duties on frozen potato and vegetable products, and that it comes into effect immediately upon implementation of this historic agreement.

Thank you for the opportunity to appear before this committee today. I'm pleased to answer any questions the members may have.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Clow and all of our witnesses.

We'll begin this first round. Maybe we can get a couple of rounds in today. We'll start the first round at seven minutes. That's seven minutes for the question and the answer, so I would ask our committee to keep that in mind, as well as the witnesses when responding.

The first questioner is the vice-chair, Mr. Cannis.

[John Cannis, Liberal, Scarborough Centre, ON]

Thank you, Mr. Chairman, and welcome to our guests.

Certainly our visit to Europe, gentlemen, was quite enlightening for us, and to speak to some of these people, especially when it came to the GIs.

I know when we were in Rome, Mr. Chairman, you'll recall...boy, they're pretty tough on some of their products.

I'm getting different messages here from all of you. I'm disappointed in some way, because I heard, regarding the agreement, if I may quote, “...discarding a 'Made in Canada' approach for one drafted in Brussels....” I'd like to believe that's not the case. If it is, I'd like some suggestions as to what our people could be doing that they're not doing. That's one question.

Mr. Clow, I've been to your part of the world, P.E.I. My son was performing at the theatre there, and I tasted your wonderful potatoes. I stayed with a farmer who supplies your chain.

You're telling me you're not exporting to Europe right now?

[Ron Clow]

No.

[John Cannis, Liberal, Scarborough Centre, ON]

You're not. I'm really upset when I hear we're being charged a 14% tariff and we're charging 4% coming in. That's unacceptable. These are tools or arguments we could use.

With respect to the intellectual property rights, of course, that's a big concern worldwide today. I got from you, Mr. Geist, the message that we're failing miserably somewhere. I'd like you to give us some suggestions as to what can we do, how forceful can we be. When we look at the European Community, these 27 countries, they're looking at us as the golden fleece, I'll tell you. That was my sense. They know they've got a beautiful, growing market here in Canada. That's really where our strength lies, and sometimes we fail to understand our strength--32 million going to 33 million population.

We're moving forward on this trade deal, this agreement with the European Community and Canada. Would it be wiser if we acted as a bloc? They're acting as a bloc. If we were to deal on a unilateral basis with some of these countries, they've got less population than we have, they have more of a need for our products than we have of theirs, and then they're looking at us as a very lucrative market, whether it's toll highways...and the list goes on and on.

But I am concerned, and I'd like to get back to the profits of GIs. You talked about the cheeses, and we should be able to.... I know these guys are driving a very hard bargain when it comes to some of their products. I think the people who were with me in Rome confirmed that. So how do we work on that? Can you give us some suggestions? It didn't seem to us that they were prepared to take back one inch. That was the impression I think we all got. The parliamentary secretary was with me, and we took a very strong position on behalf of Canada, whether it be our oil sands or everything else, and they're just going to take every opportunity, no matter how much we are trying to address our responsibilities internationally.

I'm going to stop there to give you some time, but you can see where my concerns are.

And I want to get some more products into Europe as soon as possible, Mr. Clow.

[Ron Clow]

I appreciate your help.

[Richard Doyle]

Maybe I'll start on the GI.

I think we're unanimous within our industry that you should not allow the GI to be opened up. This is a negotiation that is also being done at the WTO, where the Europeans have been pushing very hard. Most of what we call the new world, whether it's Australia, New Zealand, the U.S., or Canada, have all had their cheese industry developed in the same way: by immigrants who brought their recipes and sold their cheese to their compatriots. We developed a whole industry based on this. To write that many years later and say we cannot use these names anymore is totally unacceptable and will create a great deal of confusion.

There are about 11 cheeses, like brie de meaux or parmigiano reggiano, which tend not to be used in this country, where there's some protection for those. But parmesan, feta--they want to protect all these things. We produce an awful amount of these cheeses in North America and in other countries. I think what the Europeans are trying to do is open up the CETA so they position themselves better within the WTO, where there's more of the old countries versus the new countries, if you want, that are opposing this whole discussion. I think Canada could place itself in a difficult position within this negotiation by conceding certain things and breaking some of the allies they have created within the WTO. So that's also a consideration that I would suggest needs to be taken into account.

[John Cannis, Liberal, Scarborough Centre, ON]

Mr. Clow, do you have any comments?

[Ron Clow]

I guess my only comment is that the European market is, for potato products, as big as it is in North America. It's a market we're not playing in today. And it's a market we'd love to see opened as a fair playing field so that we have the opportunity to compete. We can use our lovely ports in Atlantic Canada to ship products to Europe.

[John Cannis, Liberal, Scarborough Centre, ON]

Good.

Mr. Geist, do you have any comments?

[Dr. Michael Geist]

Yes, I'll jump right in.

Where we're debating issues about market access and tariffs, I think that sounds a lot like a trade agreement, and that's where some of these trade offsets we're hearing about from the other couple of witnesses come into play.

What I think is important to recognize within the copyright-related provisions is that we're not talking about market access. We're talking about basic regulation and an attempt, in some ways, similar to what we just heard, to take European-style rules—sometimes similar to U.S.-style rules—and export them into the Canadian market.

We're having a robust debate in Canada right now about what our copyright laws ought to look like. I think that made-in-Canada debate is exactly the right approach. If we ask what we should be doing, what we should be doing is saying that it's clear that within this agreement, Canada and both parties will meet all international standards. But in the same way we have worked very hard in other fora to ensure that there are international standards and that there is international flexibility within those agreements, we ought not discard all of that within the context of this agreement.

[John Cannis, Liberal, Scarborough Centre, ON]

I assume that I'm out of time, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

You are, just.

[John Cannis, Liberal, Scarborough Centre, ON]

Thank you, sir.

[The Chair, Conservative, Lee Richardson]

We'll move to Mr. Guimond.