International Trade Committee on May 10th, 2016

[Dominique Benoit]

In Australia, the government did not intervene, which resulted in a failure. Dairy production is in a sharp decline. Exports are also falling. So it's a failure across the board. Right now, the Australian government is assessing how it can help producers, in a context of an international dairy crisis during which the prices of milk have never been as low.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Could you compare the situation of Australian dairy producers to that of Canadian and Quebec dairy producers?

[Dominique Benoit]

It is comparable. Here we have family farms where the production of milk is the primary source of income. In Australia, producers are not able to make a living from their activity. They are having a great deal of trouble.

In the case of New Zealand, the government intervened, allowing the creation of a virtual monopoly for the Fonterra cooperative, owned by the dairy farmers. Not only do the producers in that country benefit from specific weather conditions, but they also benefit from government support through the creation of a processing and export monopoly whose benefits they share.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you very much.

Mr. Vaillancourt, I believe your organization was not consulted during the first rounds of negotiations about the TPP.

[Claude Vaillancourt]

No, we were not consulted. In fact, no organization in civil society was properly consulted. I have followed the negotiations from the outset. There has been no proper consultation.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

You mentioned the environmental aspect in terms of the local market. You are talking about further promoting food sovereignty or small-scale production, which would require less transportation?

What are you suggesting exactly?

[Claude Vaillancourt]

I think the free trade agreements provide strong support for exports on a large scale. In a way, those exports might become irrational. If a product that exists in Quebec is also available at a lower cost in another country far away, that product will be transported all the way here. The supposed savings may not be as significant, after all, because of all the external factors.

I think the issue of external factors must be taken into account in relation to exports and free trade agreements. We must ask ourselves what the impact is on the environment, on work, on working conditions. If we are constantly going after the lowest price, those factors are overlooked, but they may be extremely harmful to our local economy.

Choosing to favour short routes and the local economy is much healthier for the economy; it creates a lot more work and also makes it possible to fight climate change in a much more effective manner.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

It is very important that people are aware—

[The Chair, Liberal, Mark Eyking]

Thank you, Madame Lapointe. That's good.

We're going to move over to the NDP.

Go ahead, Ms. Ramsey, for five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you very much for your presentations this morning.

You know we entered into the TPP late, and the U.S. didn't really want us in even at that point. We entered in a position of weakness and we continue to bargain from that position. In that position we cracked open our dairy supply-managed market, which is unacceptable to most Canadians when they become aware that is part of the deal.

You talk about the diafiltered milk issue, and I know that you know the NDP put forward a motion that was unfortunately shut down. We need protection in our domestic markets, and I think you've made it clear there's much more to trade than deals like the TPP.

Let's focus on the TPP and the proposed compensation package. The compensation package sits in limbo. We don't know where it's at right now. The government has said that they will consult again with dairy and other industries in supply management.

Can you tell us the proposed amounts under the previous government? Were they sufficient to sustain the industry, or would they have a negative impact on the industry in the long term?

[Dominique Benoit]

Thank you for the question. I'll answer in French, if you don't mind.

Compensation is important. That said, the dairy industry will be negatively impacted by the TPP agreement. In fact, between 3% and 4% of our market will be supplied through imports from now on. We need support. The programs announced were good news, to the extent that they allowed processing companies to benefit from support for modernization so that they could continue their development. Agropur did it by using its own resources, but government support is needed.

For us, the issue of diafiltered milk is a priority. We have defended supply management on international markets and we now have to defend it here. That entails the control of our borders, the strengthening of our manufacturing standards to ensure that we are using our milk in Canada to make our products, rather than the foreign products we allow into the country.

[Tracey Ramsey, NDP, Essex, ON]

I'm aware that diafiltered milk has brought about a loss of $220 million, which is approximately $15,000 per year per producer. On top of that, now we're going to see even greater losses through the opening of the market through the TPP.

How will Canadian farmers be affected by the additional access to the domestic dairy market that would be given to producers in other TPP countries, such as the U.S.?

[Dominique Benoit]

This is an important situation. It needs to be resolved. Over and above Canada's commitment to open its markets, now we have to control our border.

Mr. Lebel referred to the pizza kit. That was an example of what happened a number of years ago. The government took action on the pizza kit and solved the problem. It is exactly the same thing today with diafiltered milk. Government has to take action and has to take action now, because every day more and more of that product is coming in, to the detriment to the industry in Canada.

[Tracey Ramsey, NDP, Essex, ON]

If we're able to get our product into other markets, what opportunities exist for us?

We heard from the Dairy Farmers of Canada when they came to committee previously. They said the cheese market is such a niche market that trying to get into other markets is difficult. Do you see any opportunities for our milk, or cheese, or other dairy products to be sent to TPP countries?

[Dominique Benoit]

That's an interesting question.

Our industry has been developed or designed to meet Canadian needs. That doesn't exclude the opportunity to have some niche product exported, probably to the United States or other countries, but our reality is that the U.S. industry has developed with multiple mega-farms. Other markets, such as those in Asia, are quite far away.

Our focus in the industry right now and in supply management is about making sure that food security in Canada is met. We are meeting the needs of our Canadian consumers, and that's where we're aiming for now.

[The Chair, Liberal, Mark Eyking]

That pretty well wraps your time up, Ms. Ramsey.

We've going to move over to the Liberals and Mr. Peterson.

Go ahead, sir.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

Welcome to Montreal.

Thank you for being here this morning and for your informative presentations.

My first question is for Mr. Benoit and Mr. Riendeau.

I don't know how to say “supply manage” in French, so I'd better stick to English for this question.

I'm a little confused about your opinion of the impact the TPP has on the supply management regime. I'm not clear whether you think it's detrimental or whether it's preserved in this agreement. In one sense I get the feeling that you think this agreement only has a marginal impact on supply management, but on the other side we're talking about what sort of compensation might be paid because of the TPP.

Can you clarify that for me a little bit?

[Dominique Benoit]

I think it has been said that, yes, supply management has been protected in the deal. There's no reduction in the over-quota tariff. There is a limited access of imports, although 3% or 4% of our market is still an important share of our market, which we're going to give to the other countries.

For us as an organization, as an industry, it's not good news. Compensation is required, and what the previous government announced was good news. We still need to see the colour of those programs, how they're going to be designed, what they're going to look like. We're hoping they will compensate for that.

What we've said is that while there's something in the context of the TPP, at the same time the TPP is happening there's another issue, and it's about border control. Border control for supply management is critical. The previous government told us they would act on diafiltered milk, and that's what we're asking for today.

It is important that at the same time that we finalize an agreement on the TPP, there be a solution to diafiltered milk. We've said that probably the most efficient solution right now is to enforce the cheese standards. Those standards were implemented back in 2008. The aim of those standards at the time was to restrict the ingredients we can use in making cheese. Today it's the exact same thing. Diafiltered milk is used to replace milk in making cheese, and that's not acceptable from an industry perspective.

If we believe in supply management today, the government has to take action to solve that issue.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you.

This is to the Fédération des chambres de commerce du Québec.

You mentioned that you would like to play a liaison role between our government's innovation policy and attracting new markets for your members' innovative products. How do you picture that role playing out? Can it be played out in the absence of the TPP, or do you think the TPP is a necessary mechanism for that to take place?

[Stéphane Forget]

The strength of the federation and its network lies in its presence across Quebec and in representing a lot of businesses, in all major sectors of the economy. Our contribution is making the network of chambers available to the federal government so that it can reach out to businesses. Routinely, small and medium-sized businesses are unfortunately spending more time on their operations than on focusing on what will happen to them later.

Our proposal is to make the network available to the federal government in order to contact the businesses and educate them on the various business opportunities created by free trade agreements and to help them figure out how to withstand the potential competition. So the idea is to prepare Quebec's businesses to react and be proactive in this sector.

[The Chair, Liberal, Mark Eyking]

That ends our first round. We're going to go to our second round now, and we'll start off with Madam Ludwig.

Go ahead.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Good morning, and thank you for your excellent presentations.

I have a number of questions for all of you. I'm going to start with Mr. Benoit.

My question for you is regarding infrastructure. Looking at not only the TPP but also at the potential of ratifying CETA, how prepared is Quebec in particular in terms of infrastructure such as rail, ports, roads, trucking, and cold storage to accept importing and exporting opportunities?

[Dominique Benoit]

Honestly, we don't have an issue with infrastructure from our perspective. We produce dairy products that we ship across the country. Today it's by truck mostly. In some regions we go by plane. We're probably not the best ones to speak about infrastructure in that context.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Is there anyone else?

[Yvon Boudreau, Consultant, Fédération des chambres de commerce du Québec]

Clearly, as international trade is expanding, infrastructure is a major aspect. This includes both traditional infrastructure, such as roads, railways, airports, including regional airports, which have been much neglected in the past, and research and telecommunications infrastructure, for example.

That is why the federation has always welcomed investments from both levels of government and municipalities in improving, upgrading and modernizing infrastructure. This goes hand in hand with the expansion of trade, and innovation, which Mr. Forget mentioned earlier.