International Trade Committee on Feb. 15th, 2011

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

Thank you, Mr. Chairman.

Mr. Doyle, you are no doubt aware of the motion of November 22, 2005. It was my colleague André Bellavance, from the Bloc Québécois, who sponsored it. So there's a little bit of him in that motion, which fortunately is still holding firm.

This supply management issue here in the House of Commons is still very current. However, I have to tip my hat to you and tell you that it is very much thanks to you, the agricultural producers under supply management, who are doing an excellent job convincing us of the importance of preserving supply management in all the bilateral negotiations we have increasingly had in the past few years.

To go a little further, Mr. Doyle, with regard to supply management, explain to us then, in your own words, how far we can go in preserving supply management so that we can maintain the balance and so that it is worth the trouble, and everything that's going on with regard to the potential TRQ expansion and the raising or lowering of customs tariffs. Where is the line in the sand?

[Richard Doyle]

I'm going to answer a little more broadly.

First, thank you for your comments, Mr. Guimond.

I'm going to continue a little with what Michael was talking about earlier. The current problem is that the countries have chosen two different approaches. Europe, which had regulated prices, decided to convert its prices, to deregulate them by converting subsidies.

The WTO ultimately reflects APAC. The definitions it contains, the decoupled subsidies, these are European inventions that have been recognized as green subsidies. So the Europeans have lowered their prices enormously, and other countries are doing the same. They are going to eliminate regulated prices.

However, the European community's agricultural expenditures have not declined. The colour of the programs has changed. We're no longer talking about export subsidies. They have eliminated the blue box, which was also a European invention, from subsidies. Now they are decoupled payments.

Here's the point I want to emphasize. International studies have been conducted comparing the production costs of more than 80 countries. Most of the European countries that export have production costs that are similar to or higher than ours, not at all competitive in the global market context. These are farm production costs.

Their prices are obviously much lower. So they can be more competitive and enter markets, but that's simply because we don't have equivalent compensation. We're not requesting it. We think that one of the serious mistakes currently being made in trade negotiations is not to compare production costs, but simply to compare prices in determining competitiveness.

The management system is a single model that costs taxpayers nothing. But it has unfortunately become very difficult—and I'm very aware of that—for governments to defend the model, but as the other models have not proven themselves and ours has proven itself over the years, I believe it's worth the trouble for us to continue supporting and defending it.

Thank you for your support.

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

That's absolutely normal. I must admit it's fortunate there is a consensus around the table on this point. Since I'm a dairy producer, I'm very pleased with that.

You obviously mentioned geographical indicators in your introduction. Once again, we know this really comes from Europe, but I would like you to tell me in concrete terms—you mentioned feta cheese, among other things—what the consequences would be for us if we opened those geographical indicators here. You mentioned small cheese makers, the industry. For us to get a clearer understanding, tell us what the actual consequences of all that are.

[Richard Doyle]

I don't have the market figures, but parmesan is a large market. You see Kraft. Whether it's finely grated or in another form, it's the North American cheese markets that are enormously important. By no longer using the name, we would automatically lose the trust of consumers who look for those names, those who choose their products based on the variety of cheeses. To rebuild all that consumer recognition of types of cheeses similar to those they used to buy will take years and require enormous investment. So there's a lot at stake.

In the circumstances, I believe that, if you open the door, even if it's for one or two cheeses, you're going to open it to an approach that's frankly very European but that does not really coincide with the actual situation in other countries.

We currently have more than 500 varieties of cheeses. They aren't all geographical indications; they aren't all European cheeses. There's a lot of innovation in cheeses. They're protected by trademark, which is the way to do it. They protect their trademarks in other countries and so on. We can't go back in the history of the development of an industry and say that what has always been used, what is recognized and what consumers are given, what forms the very basis of our sales, has to change overnight.

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

Mr. Clow, I would like to hear from you. The committee went to London and to the European Parliament in late November. We talked a lot about agriculture, but we also sensed that there were a lot of questions in Europe about GMOs and other issues. I would like you to bring us up to date on your production, GMOs and what agricultural products the Europeans want.

[Ron Clow]

If I could ask, is the question specifically about GMOs?

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

Yes.

[Ron Clow]

There are no GMO potatoes used in North America. They started off several years ago, and my personal opinion would be positive, because you could reduce the amount of pesticides used and some other things to improve the product. But McDonald's has never accepted a GMO potato. So in North America, GMO potatoes for processing don't exist.

So there would be no GMO conflicts with Europe. Our products are GMO-free. I'm hoping long term that the industry and the world takes a different look at that because I think there are some benefits to GMOs, personally.

Did that answer your question?

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

Yes, thank you very much. I'm very pleased with the answer. I believe that Europe is a very promising market for potatoes and for you in the Maritimes. This is good news for everyone.

[Le président, Conservative, Lee Richardson]

Mr. Guimond, that's all the time you had.

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

It goes too quickly.

[The Chair, Conservative, Lee Richardson]

Mr. Julian.

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

Thank you very much, Mr. Chairman.

Thanks to our witnesses. Those were all very good presentations.

Mr. Geist, I have a feeling you could have gone on for longer in giving some of the details around intellectual property. So I'd like to start off by giving the floor back to you.

Could you talk about the consequences of some of the components that you see in CETA around intellectual property? Examples would be substantial statutory damages for non-commercial infringement, what that means for the average Canadian user; and the digital lock provisions, the fact that, as you and other observers have mentioned, it's not a sound process around intellectual property. As well, if you have any knowledge around the C-directive, UPOV-91, you could add that to the mix. Certainly in terms of the issues you've mentioned, why is this important to ordinary Canadians?

[Dr. Michael Geist]

Thank you for the question.

Let me deal with each of those, because you have in a sense highlighted two of the most important ones in terms of statutory damages and digital locks.

On statutory damages, I think there's increasing concern among many individual Canadians that cases of non-commercial infringement.... And I want to make clear: when you have someone who is infringing and seeking to profit from that infringement—the person who burns a copy of a DVD a thousand times and tries to sell it on a street corner. Everyone is in agreement that we need tough penalties to deal with cases in which people are profiting from that, and Canadian law already provides them.

What Bill C-32, the current Canadian copyright bill, seeks to do is say that we're going to have tough penalties, but we want to ensure at the same time that individuals, when there is non-commercial infringement—the proverbial teenager who is engaged in something they aren't profiting from and who is dealing with a 99¢ song—shouldn't face the prospect of $20,000 in liability just for that one song.

What Bill C-32 does, what the government has proposed, is to say that we're going to put a cap on non-commercial infringement. I think that's a good idea. I think it follows the approach in a lot of other countries that don't even have statutory damages. But what the Europeans are looking for is to increase the kinds of damages we have.

Canada has put on the table the notion that we should be able to continue having differences in the approaches we take for damages. I think that's the right approach. I think, actually, that the counter-proposal Canada has put on the table is the right one. I flag it because I think it's important to maintain the ability for Canada to make the choices it wants to make.

One area, though, in which the proposal from the Europeans would go beyond what the international treaties require, which has real implications for Bill C-32, is the area of digital locks. These locks are used to lock down such things as DVDs, electronic books, potentially CDs, and others. The concern many people have expressed is that there are legitimate consumer reasons why one might want to take a DVD and play it on one's iPad or iPod or video player, or take an electronic book and be able to exercise one's fair dealing rights; in a sense, that the same rights people have in the offline, non-digital world ought to be replicated in the digital world.

What the Europeans are proposing is rules that extend well beyond what is required at international law to provide legal protection for digital locks.

So my view about where Canada ought to go with respect to CETA is to say that we're going to provide protection for digital locks. We see it in Bill C-32; we saw it in Bill C-61; we saw it in Bill C-60. It's clear that Canada is moving forward to provide some legal protection for digital locks. But we're going to do it in a way that conforms with international law, and we're not necessarily going to go beyond those norms in a way that frustrates consumer expectations and that can have some real, harmful commercial effects as well for those who are purchasing things and ultimately find that their basic consumer rights are lost.

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

Thank you for that.

Coming back again to the digital lock, then, you're combining the two components—the statutory damages for non-commercial infringement and the digital lock—which means for the average Canadian user that again there are major concerns about what the implications are.

[Dr. Michael Geist]

Potentially there could be, yes. If you were to see statutory damages in the context of digital locks, then yes, the mere act of trying to circumvent, if we were to have those kinds of provisions, could lead to very significant penalties.

In the CETA context, though, I guess my view is that we're moving in a direction to provide some legal protection for digital locks. The Europeans want us to do the same, and what I think Canada ought to ensure is that we retain the same sort of flexibility that exists in international law for these legal protections for digital locks—to do so domestically. The Europeans are effectively saying “We want our approach to be the Canadian approach”; I'm saying we negotiated in the 1990s a consensus-driven model that provided flexibility in how you do that, and I think this agreement ought to retain that flexibility.

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

Thank you very much.

I have two more questions, including one for Mr. Doyle.

We know very well that supply management is on the table. The government has said so; a number of witnesses have said so as well. So even though this is our most stable and profitable agricultural sector for small communities, supply management is definitely on the table in current negotiations.

Your concern isn't just about the agreement, but also about the fact that it can have a kind of domino effect for other agreements that Canada will be negotiating, isn't it?

My final question I'll flip over to Mr. Clow, of Cavendish Farms.

Thank you for your presentation. We had this week a study come out by Paul Grootendorst and Aden Hollis, professors respectively in the Faculty of Pharmacy in the University of Toronto and the Department of Economics of the University of Calgary.

They say that the cost to the Canadian health care system of the CETA provisions on intellectual property will increase health costs by about $3 billion a year in Canada. Now, that will impact on the public health care system, but also on individuals and on private health care plans.

So I'm wondering whether, for Cavendish Farms, you have done any study of what your cost of doing business in your private health care plan will be for these provisions and for the direction the government is currently taking on negotiations.

[Ron Clow]

We have not done that study, so I don't know the impact on medicare costs at this point.

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

You don't know at this point.

Monsieur Doyle.

[Richard Doyle]

In most bilateral agreements, at the start of the negotiations, the countries used to cite the sensitive products that they didn't want to put on the table. In the context of Europe, the objective was to aim for a 90% opening to the tariff lines, but without excluding any sensitive production or industry from the negotiations.

We're concerned because that's different from the bilateral negotiation mechanisms that have been used in the past. However, I believe that the proof of that will be in the negotiation itself. Currently, both the negotiators and the government are clearly telling us that they can defend management systems and ensure they stay protected within the negotiation mechanisms. However, as you say, no sectors were excluded from these negotiations at the outset. So we know they're all on the table. We also know that Europe has sensitive products and sensitive sectors. So there will be a balance at the end of the negotiations.

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

But if you see it's excluded from the negotiations, will you be glad?

[The Chair, Conservative, Lee Richardson]

Mr. Julian, I'm sorry, that's eight minutes.

[Richard Doyle]

Absolutely.

[The Chair, Conservative, Lee Richardson]

Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Welcome to our witnesses. It's been a good discussion here this morning. However, there were a couple of comments made that I would like to drill into a bit deeper.

Mr. Geist, I don't think any of us, outside of you perhaps, are experts on intellectual property rights, and we're not trying to pretend to be. But certainly the world is changing and technology is changing, and I think we've got a bit of a double-edged sword with technology.

You made a comment, your last comment, actually, that the agreements and negotiations that took place in the 1990s should be maintained. That's better than a decade ago. Technology changes so rapidly that I don't know how we can maintain those agreements.

I'm not saying the European copyright laws don't go too far, so don't get me wrong. I do think we need a made-in-Canada solution, and I think that's what we're trying to do with Bill C-32.

But the difficulty of that—and I do have some faith in our trade negotiators who liaise with industry, and our WTO partners around the world who try to figure out exactly where we're headed in the future—is that with this one, I think the moment you think you have a grasp on it, it's gone.

I want you to comment on the whole concept of changing technology and how we could ever possibly keep up to it.