International Trade Committee on Feb. 24th, 2020

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

When you say identify them at the counter, do you mean the meat counter where consumers buy the product?

[Michel Daigle]

Yes. When the retailer requires country of origin labelling and demands only U.S. beef, it's discrimination against all Canadian beef products.

The economy is so entwined that live cattle are also imported and exported. Currently, the level of U.S. cattle imported for feeding in Canada is higher than the level of Canadian cattle exported to the U.S. for feeding.

As such, it's important that products not be discriminated against at the meat counter.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

I'm already out of time.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Ms. MacLellan, I wanted to start by saying—and I've said it earlier, but I'll say it again—that to the extent the parliamentary process does wrap up prior to May 1, we're completely in support of the government exercising its prerogative to delay ratification until May 1, which it can certainly do. That's a prerogative of the Crown, the terms of when it gets implemented.

In the event that the government chooses not to take that road, we're asking folks from the dairy sector if they would like to see extra compensation negotiated for that other year and the accelerated implementation of the caps.

[Rosemary MacLellan]

The dilemma is simply where the dairy year falls into the calendar year. What I would put it as is that it comes back to signals from government that it sees a future for dairy in Canada, a future that is expansion, innovation and sustainability through growth and new products as well as a very strong processing sector.

I think it will be more important for the government right now to show us that this is a sector it sees as a winning sector in Canada. We certainly think it is. We need to know that government is there with us on that commitment. I would leave it to government, be it under the administrative measures that are available in the agreement or through other means, to make that decision.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

What would some of those signals look like? What would you take as a positive signal by government that it has your back?

[Rosemary MacLellan]

Certainly moving ahead, finally. We're now two years past. In terms of when CPTPP also came into effect, we basically had year one and year two within a day of each other because they happened December 30 and basically January 1. We're still waiting on that compensation for that commitment, and so moving ahead immediately on the processor investment compensation for CPTPP, as we start to figure it out through CUSMA, is one first step.

I think the second part of it is looking at some of these other means and measures and clarifying them right now. They're going through the second round of consultations on review of how they've been administrating the TRQs. I think the industry would say that there is room for improvement there.

I would differentiate again. CETA is different from CPTPP and CUSMA, where we are not obligated to be bringing in those imports. It should only be getting filled if we have a domestic market need for it.

I would also add to this that the department is going from 20 in CPTPP that was added to 16 in WTO. That's a significant increase in resources. They need to really be good and timely on the administration.

I have two industry colleagues here who would not want funds taken away from trade facilitation and removing some of the barriers they're encountering to support us with domestic administration.

I think, in terms of some of those processes, we need to make sure now, to the point of the impact statement, that the government also has the resources to live up to some of the obligations Canada has taken on.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

When we talk about the allocation of those TRQs and not having to fill it unless there is domestic demand, who is in the best position to assess domestic demand and whether there's a need to bring product in from the United States?

[Rosemary MacLellan]

Processors work very closely with dairy farmers and that's a part of our milk supply management system. With that we have the appropriate signals and recognize what is coming in and where and how it needs to go but, with that, then working with producers to ensure that does not displace domestic milk when we actually can be filling some of those markets domestically.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Right on.

There has been talk at this table with a few different witnesses about the impact on people who work in dairy processing as well and whether they should be included in the compensation package in terms of pension bridging or retraining for younger workers who may end up shifted out of the industry as a result or the agreement.

Are you supportive of including some kind of meaningful package for people working in the industry, in addition to what would be there for producers and processors?

[Rosemary MacLellan]

I'm hopeful that we won't see job losses in Canada. I'm hopeful that we can figure out a plan, as industry and government, that we actually expand this industry and we don't see contraction. If closures and other things that do need to be part of business decisions occur, then absolutely, employees should be considered.

I would put on my other hat, though, in that we are projecting a shortfall of 65,000 full-time employees by 2025 in the food and beverage manufacturing sector in Canada. I would hope that, if we were to see job losses within the dairy sector, certainly government would be working with other parts of industry to actually be filling some of those vacancies that we know are occurring across all sectors today.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

In the event that government—

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Blaikie.

We'll go to Mr. Kram.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you very much to all the witnesses for joining us today.

Ms. MacLellan, when were you first made aware of these new dairy export tariffs that apply not just to Canadian exports to the U.S. and Mexico but indeed to the rest of the world as well?

[Rosemary MacLellan]

Government, as it started to look toward the landing zone, probably a month out, started to float some of the options it was considering, and certainly those were privileged conversations, without prejudice. It was not definitive to what they were going ahead with, but certainly we were trying to make sure they fully understood just where skim milk powder, from a production standpoint, fit with the class 6 and class 7 and the components of us also addressing the domestic butterfat section.

We were aware of it, but it was on the morning after the trade agreement was finalized that, in fact, it was confirmed that it was in the agreement.

[Michael Kram, Conservative, Regina—Wascana, SK]

When you say a month out, does that mean a month from the beginning of negotiations or a month from the end?

[Rosemary MacLellan]

Throughout the month of September, we started to understand that there were some variations and some options that government was considering in its discussions with the U.S.

[Michael Kram, Conservative, Regina—Wascana, SK]

Okay, and that was September of last year.

[Rosemary MacLellan]

It was in 2018.

[Michael Kram, Conservative, Regina—Wascana, SK]

It was 2018. Thank you.

How much do you expect Gay Lea Foods to be paying in the new export tariff?

[Rosemary MacLellan]

In 2003 the dryer that Gay Lea put in place in Guelph was predominantly to make skim milk powder, so that entire facility in the city of Guelph is entirely making skim milk powder right now. We'll be making some decisions as to what we do and how we go forward with some of that, recognizing that we, frankly, make some of the best skim milk powder on the globe.

There will be some impact to that, but not all of that is exported. Much of that is also for domestic use.

A lot of this will be a recalibration within the industry as to what we make, how we make it and how we use some of this domestically, and it's still too early for us to fully assess how all those pieces will fit together.

[Michael Kram, Conservative, Regina—Wascana, SK]

Okay, so you may be paying zero dollars in export tariff because you'll just stop exporting that product that qualifies for the tariff. Is that a possibility?

[Rosemary MacLellan]

That tariff is prohibitive at its cost right now for us to look at some of this to be competitive.

[Michael Kram, Conservative, Regina—Wascana, SK]

All right.

Has the government had any talks with you about what the money collected from that tariff will be used for?