Evidence of meeting #9 for International Trade in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cusma.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Maryscott Greenwood  Chief Executive Officer, Canadian American Business Council
Charles Milliard  Chief Executive Officer, Fédération des chambres de commerce du Québec
Jennifer Mitchell  Director, Board of Directors, Music Publishers Canada
Andrea Kokonis  General Counsel, Society of Composers, Authors and Music Publishers of Canada
Gilles Daigle  Consultant, Society of Composers, Authors and Music Publishers of Canada
Kathy Megyery  Vice-President, Strategy and Economic Affairs, Fédération des chambres de commerce du Québec
Michel Leblanc  President and Chief Executive Officer, Chamber of Commerce of Metropolitan Montreal
Stuart Trew  Researcher and Editor, Canadian Centre for Policy Alternatives
Mathieu Frigon  President and Chief Executive Officer, Dairy Processors Association of Canada
David Wiens  Chair, Dairy Farmers of Manitoba
Joel Prins  Partner, Prima Dairy Farm
Matthew Flaman  Chair, Saskatchewan Milk Marketing Board
Darren Erickson  Pharmacist Owner, Tofield PharmaChoice, As an Individual
Gayleen Erickson  Business Owner, Guardian Pharmacy, Tofield Medical Clinic, As an Individual

11:35 a.m.

Liberal

Rachel Bendayan Liberal Outremont, QC

Thank you, Mr. Leblanc.

I will yield the floor to Mr. Manly.

11:35 a.m.

Liberal

The Chair Liberal Judy Sgro

Mr. Manly.

11:35 a.m.

Green

Paul Manly Green Nanaimo—Ladysmith, BC

Thank you very much for letting me share your time to ask some questions.

My first question is for Mr. Trew. It's just about mitigating and enhancing the agreement, and whether you have some other suggestions. I'm wondering what kinds of processes and reporting you'd like to see on how the agreement is working for Canadians so that we can determine what the socio-economic impacts of the agreement are as we work towards these six-year review processes.

11:35 a.m.

Researcher and Editor, Canadian Centre for Policy Alternatives

Stuart Trew

To be honest, we haven't really thought through a review of that kind. From our perspective there's not a lot in there that we might review in the positive sense of whether, for example, the agreement is bringing down emissions across the region. What I'm saying is that there aren't those kinds of review mechanisms that we would necessarily have thought through.

11:35 a.m.

Green

Paul Manly Green Nanaimo—Ladysmith, BC

Okay.

My second question is for Mr. Leblanc. I know that in Montreal you probably represent a lot of cultural industries. I know in my riding there are cultural workers who have to apply six months in advance to be able to do a tour in the United States, and they pay $600 to get their work permits. The American cultural workers who come to our border can bring their work permit to the border and pay a $10 fee and cross the border, and there isn't this kind of delay.

I'm just wondering if you have any comments on that and also on the processes for CBSA for implementing the agreement and the kinds of regulations for importers and exporters in implementing the agreement, and trying to make that a seamless process in terms of training.

11:35 a.m.

President and Chief Executive Officer, Chamber of Commerce of Metropolitan Montreal

Michel Leblanc

Actually, your question is very interesting and has to be taken in the current context. We now have a very tight labour market in Montreal, and I would say in all of Quebec. That is in all sectors, including the cultural sector. In this period the possibility of having, let's say, a workforce come in from the U.S. would not be that disruptive. In the past it would have been.

Clearly, the goal we should have when we look at that agreement would be to make sure that, as we move along, for any resources that reside in the U.S. that could be useful to develop our economic base—and we were talking about artificial intelligence a few minutes ago—we would want the process of coming here to be as seamless as possible. Of course, what you're stating is about service industries, people who go into the U.S. to service customers and to develop markets, and there are frustrations. The solution will have to be in the regulations as opposed to the agreement itself.

11:35 a.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much for that.

We will go to Mr. Savard-Tremblay for two and a half minutes.

11:35 a.m.

Bloc

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

I will pick up the conversation where we left it just now.

Let me quickly repeat my question.

On the issue of milk proteins, I gather that the community has been divided for a long time in terms of importing American diafiltered milk. Basically, that is how we got the pesky class 7 in the agreement. Agropur was one of the first to ban the stuff.

What is your position on the matter today?

11:40 a.m.

Dominique Benoit

Class 7 has to be put in the context of the strategy for ingredients developed by the Canadian dairy industry to acquire the infrastructures and the means of producing in Canada the ingredients needed for processing.

By eliminating class 7, the agreement has moved backwards and, as an industry, we all find ourselves dealing with this issue. It was diafiltered milk, but it is now, more broadly, producing ingredients in Canada at a price competitive enough to let us manufacture our products.

So, the industry is working on it and it will clearly come at a cost. We will work with the solution when there is one. That is why we are currently looking for mitigation measures to allow us to absorb the effects, now that class 7 has been eliminated.

11:40 a.m.

Bloc

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

So, what's going on, as they say?

11:40 a.m.

Dominique Benoit

Each of the companies has its business plan. For Agropur, I can state that we are going to continue to use dairy ingredients that are entirely Canadian. We made that commitment and we are going to stand by it.

As for the industry, we have to work together to find solutions. What's going on? I can say that a lot of very hard work is going on between producers and processors. The dairy processors of Canada and the dairy producers of Canada are committed to finding a solution as a replacement for class 7.

We have a huge task before us, just three years after class 7 was put into place. So we are going backwards. We are rolling up our sleeves and getting to work.

11:40 a.m.

Bloc

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

So you are confirming the existence…

11:40 a.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, Mr. Savard-Tremblay. Your time is up.

Mr. Blaikie.

11:40 a.m.

NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

Monsieur Benoit, it's understood that given what's happening to Canada's dairy sector as a result of this deal, one of the best things the government could do would be to allocate 100% of the import permits to processors.

If the government can't be convinced of that, do you think it would be fair to attach conditions to permits that were given to retailers so they're not using those permits to bring in products that compete with what Canadian dairy producers are already offering? In other words, they have to bring in products to the Canadian market that are genuinely new, as opposed to using them to drive down prices from Canadian producers.

11:40 a.m.

Dominique Benoit

Our position is very clear. Import TRQs should be allocated to processors. I'll explain why. The why is that we can offer a product to consumers that is complementary to our Canadian offering, instead of offering consumers a product to replace a Canadian product.

This is why we've been so insistent to the government to allocate those TRQs to the processing communities, because we're the ones who have skin in the game. We're the ones who have the plants that will reduce their own domestic production because of imports. If we have the opportunity to import with the TRQs, we will minimize the impact on our plants, our labour and the economic impact on the Canadian dairy industry. This is what we are aiming for.

There's no rationale for the government to issue import TRQs to our customers. We continue and we are engaged in the consultation process that is in place right now, and we'll continue to push for that because this is just business common sense.

11:40 a.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much.

Thank you, Mr. Blaikie.

That will conclude this panel. Thank you all very much for your contribution today.

We will suspend until the next panel at noon.

Noon

Liberal

The Chair Liberal Judy Sgro

Let's resume our meeting. We are doing a study of Bill C-4, an act to implement the agreement between Canada, the United States of America and the United Mexican States.

We have a number of witnesses with us today: as individuals, Darren Erickson, pharmacist and owner of Tofield PharmaChoice, and Gayleen Erickson, business owner of Guardian Pharmacy, Tofield Medical Clinic; from the Dairy Farmers of Manitoba, David Wiens, chair; from Prima Dairy Farm, Joel Prins; and from the Saskatchewan Milk Marketing Board, Matthew Flaman.

Welcome to all.

Mr. Wiens for the Dairy Farmers of Manitoba, please go first.

February 25th, 2020 / noon

David Wiens Chair, Dairy Farmers of Manitoba

I'd like to thank you for this opportunity to speak here today.

We are on a farm near Grunthal, Manitoba. That's about 80 kilometres south of Winnipeg. I am a third-generation dairy farmer. My grandparents came to Canada in the 1920s to start a new life and a family. My parents took over from their farm in the fifties.

Since the sixties, when supply management came into effect, their income on the farm stabilized. With this increased stability, they were able to expand their farm and support the family. Supply management allowed dairy farms to contribute to a vibrant community.

My brother and I and our families took over the family dairy farm, which is where we continue to farm today. The family farm made it possible for my brother and me to raise our families, continue to grow the farm, and continue to contribute to our local community.

Today, as the chair of Dairy Farmers of Manitoba, I am representing 270 dairy farm families in the province. CUSMA will have a long-lasting negative impact on Manitoba's vibrant dairy industry. The concessions granted are ongoing perpetual losses. CUSMA is not a beneficial agreement for the Canadian and Manitoba dairy sectors. Dairy is one of the top two agricultural sectors in seven out of 10 provinces. Manitoba is not one of those provinces; however, this still has a significant impact in our province, considering that dairy processing is the fourth-largest component of food processing in our province.

CUSMA allows increased access to foreign milk, removal of class 7, loss of sovereignty because of U.S. demand for oversight on the development of our future Canadian dairy policies, and a surcharge on Canadian dairy protein exports. There are deep local economic ramifications because of these concessions. The projected annual market loss for Manitoba in terms of additional market access is $8.4 million in revenue. The overall Canadian loss here is pegged at $190 million. That does not account for any implications due to the elimination of class 7 or the export restrictions. The American oversight into the Canadian dairy system is nothing less than a complete loss of sovereignty by allowing the U.S. to interfere in the development of future Canadian dairy policies.

In Canada, of course, we're losing 3.9%, or 100,000 tonnes, of our dairy market to foreign milk and dairy products. This means that when you look at Canada as a whole, losing 3.9% amounts to pretty much wiping out Manitoba's dairy industry.

The concessions agreed to in the CUSMA deal deeply impact the pillars of supply management, which are import control, production management and predictable imports. Like a three-legged milking stool, without one leg the stool falls. The impacts of CUSMA will not only harm the dairy industry in Manitoba, from farms to processors, but the long-term effects will also reduce our contributions to the GDP. Nationally, that's $19.9 billion. In Manitoba, that amounts to $582 million and jobs in the province, as there will be less need for locally supplied milk, which will be replaced by a foreign product.

The loss of our farm production will have negative ripple effects across rural Manitoba. If our family-owned operations were terminated, there would be less demand for many service providers, such as veterinarians, mechanics and nutritionists, as well as less dependence on other agriculture commodities, such as Manitoba-grown feed barley or even canola meal used on dairy farms.

However, those impacts do not cease in rural Manitoba. If less Canadian milk is being produced in Canada and is rather being imported from the U.S., our 12 processors would also be negatively impacted. The dairy industry across Manitoba sustains 7,955 full-time equivalent jobs. Those numbers would decrease. Additionally, this agreement halted new processing investment into Manitoba, as processors stopped to consider the impact on their operations and assessed the type of processing they could focus on in the future. It certainly has put the ice on some proposed investments. Therefore, the future of having another processor, or current processor expansion, is uncertain. Having increased dairy processing would lead to more sustainable jobs, ensure that more locally produced milk is processed provincially and increase Manitoba's GDP.

Furthermore, increasing access to our Canadian market will have a negative impact on dairy farmers' share of the domestic milk market, a share that was the basis for investment decisions for our dairy farmers and for many young dairy farmers getting into the industry. Those dairy products will displace what would have otherwise been Canadian dairy and products made with Canadian milk, even if imports don't meet the same standards for safety and quality that Canadian dairy farmers provide to Canadians under the national on-farm program we call “proAction”. This is about giving up that portion of the domestic market and the government's commitment to provide compensation for those concessions.

The oversight clause undermines Canadian sovereignty and Canada's ability to develop and manage Canadian policies without U.S. intervention. The U.S.A. will not need to provide similar levels of oversight into its system. This approach is yet another example of how CUSMA removes our competitive advantage and ties the Canadian dairy industry's hands to American decision-making. This should not be understated, and it will have a lasting effect on the domestic dairy sector. The sovereignty clause of CUSMA will undermine our ability to manage our own policies without American intervention. Having another country dictate our policies will tie our hands in our own industry by providing the Americans with the ability to intervene in our domestic policies.

The final aspect of CUSMA is the restrictions of Canadian exports. Canada has agreed to the U.S. demands to effectively cap Canadian exports of skim milk powder, milk protein concentrates and infant formula. Added together, these measures limit our ability to grow the Canadian domestic market. The export clause ensures that the Canadian dairy industry's hands are tied from both sides. Not only is our industry losing our market share, but it also cannot export due to aggressive restrictions and surcharges.

While the announced compensation package for the access granted for CETA and CPTPP was a first step in this regard, we are asking that the Canadian government provide dairy farmers, in the form of direct payments, the remaining seven years of full and fair compensation to mitigate the impacts of CETA and CPTPP, with that amount included within the 2020 budget's main estimates. We are also asking that the government deliver on its promise of full and fair compensation for the impacts of CUSMA.

Efforts to mitigate the impact of the export charges need to be made. This could be achieved through administrative measures with the United States, even after the ratification of CUSMA. These caps would set a dangerous precedent for any Canadian product that could be exported, as a means of limiting Canada's competitiveness in world markets. Therefore, we are asking that the Canadian government work toward an administrative agreement with the American government to ensure that the export charges contained in CUSMA apply only to exports to the U.S. and Mexico, and not worldwide.

lt is important to note that, should CUSMA enter into force before August 1—the beginning of the dairy year—the export thresholds for skim milk powder, milk protein concentrate and infant formula will see a dramatic decline of nearly 35% after only a few months. This would be another blow to the dairy market, which would not be able to benefit from a transition period. To enable a proper transitional period for the export thresholds, we ask that CUSMA not enter into force until after August 1 of this year.

ln closing, I want to highlight the increased risks and the need for more resources to monitor and enforce trade and standards at the border as the level of imports increases. The Canada Border Services Agency does not currently have the training, tools or resources to effectively monitor what is coming into Canada. For example, the artificial growth hormone rbST is allowed in the United States dairy sector, whereas it is currently illegal in Canada due to animal health concerns. We are asking that increased resources, tools and training be provided to CBSA to improve its effectiveness in dealing with border issues in a timely and transparent manner.

Thank you.

12:10 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, Mr. Wiens.

We'll go on to Mr. Prins from the Prima Dairy Farm.

12:10 p.m.

Joel Prins Partner, Prima Dairy Farm

Good afternoon.

My name is Joel Prins, and I've been involved in the dairy industry my whole life. I grew up and currently farm outside of the small village of Warburg, Alberta, an hour southwest of Edmonton.

My parents, like so many other dairy farmers in our area, both immigrated from the Netherlands to Canada in search of new opportunities. In the mid-1980s, they were able to put aside enough money to put a down payment on a small dairy farm that consisted of 37 cows and 160 acres of land. From that point on, they worked day and night to make sure they could raise me and my three younger brothers on the farm.

As my brothers and I were growing up, we were taught many valuable lessons, from the importance of caring for animals to the importance of commitment and dedication to finishing tasks. In elementary school, my brothers and I would get up before school started and make sure to feed all the calves before racing back to the house to get ready to catch the bus.

It was no different after school. We would often run off the bus to go help our parents in the field, raking or baling hay, or in the barn, milking cows. You could say that dairy farming was instilled into my brothers and me from a very young age, and I learned that it was a lifestyle, not just a job. With that mindset, as my brothers and I got older, we were able to continue to grow the farm to the current 400 cows that we milk today.

The supply-managed system is the predominant reason we were able to thrive. Supply management allows farmers like my family to continue investing back into the industry, knowing that there will be stability into the future. It also ensures that we receive a fair price for the product we sell, and not rely on direct subsidies from the government for production, which dairy farmers in other countries rely on so heavily.

For example, European farmers receive €55 billion in subsidies per year, and Americans paid $4 billion in subsidies in 2009. Canadian dairy farmers earn their income from the market, not from the government. We appreciate the government's compensation programs to alleviate some of the impact of our reduced market, but if we had our choice, we would much rather have a domestic market that's not influenced by trade deals, with no dairy compensation programs.

Dairy farmers are also a big driver of the Canadian economy. The dairy industry continues to generate $20 billion towards Canada's GDP every year. Dairy farmers also greatly support our local rural economies. On our farm alone, we employ five local employees and create a lot of spin-off by purchases we make in the surrounding communities to help keep our rural economy strong.

Overall, the dairy industry employs over 220,000 Canadians, from the farm to processing to the retailer, and all the steps in between. Not only does supply management employ locals, but it allows consumers to have the knowledge that their milk is local and that they are supporting the farms in their backyard. In poll after poll, it's clear that Canadians support local dairy farms and locally produced milk. This is reassuring to many, as Canadian milk has some of the highest standards in the world. What's worrisome is that foreign milk coming into Canada through these trade deals does not need to adhere to the same standards for production.

On our farm, over the last two years, my family has been going through the steps of succession planning. My brothers and I are all starting young families of our own and want nothing more than to raise our kids on a dairy farm where we can teach them the values that they can only get from being on a farm. This succession planning required a great deal of trust in our supply-managed system and in the government, that they would continue to support our industry by standing up for it and protecting it.

We all took on millions of dollars of debt, which will take many years to pay off. However, lately we question our decision of taking on that kind of risk. It seems that our industry is continually being put up as a sacrificial lamb in order to make a trade deal complete. Starting with CETA, followed by CPTPP and now the CUSMA deal, supply management in Canada has been eroding away.

The current CUSMA deal alone is asking for 3.9% of our domestic market. When you add up the three deals, it equates to 18% of our domestic market by the year 2024, when everything is implemented. This market access dramatically impacts our farms and likely has a very minimal impact on the countries that have that increased access.

For example, 3.9% access for an American dairy farmer is hardly a solution to their overproduction problem. The state of Wisconsin produces more milk than all of Canada, so this small access for them doesn't help their situation and dramatically hurts our local farms. Not only does the trade deal increase access to our domestic markets, but it also requires us to limit our class 7 milk.

Other concessions included a worldwide export cap that limits Canadian dairy products from being exported globally. This is very worrisome, as the implications of this cap go beyond the three countries that the trade deal is negotiated around. Canada should be allowed to stand up for its own rights and trade implications in those countries instead of having our neighbouring countries dictate them for us.

Beyond the increased market access, the elimination one of our classes of milk and a global cap on exports, most concerning is the fact that the Canadian dairy industry will also need to consult the United States for any domestic milk class policy changes. This is a severe breach of our Canadian sovereignty. The Canadian dairy industry should not need the approval of an outside country to make changes to a domestic policy.

We feel this will impede our ability to adjust and react to market demands and to innovate. We will no longer have the ability to make decisions that serve the best interests of Canadians, since we will be required to consult with the U.S. before making policy changes. This policy does not serve the best interests of Albertans or Canadians. The economic effect of this clause is difficult to determine; however, one could assume that the U.S. will not support a policy that will see Canadians benefit in the face of the American dairy industry. Ask yourselves: Would the U.S. or Mexico have agreed to this if the roles had been reversed?

The CUSMA trade deal has many negative impacts on us as a supply-managed dairy industry. Even with the deal still waiting to be signed, there have been many ramifications. Processors have been reluctant to re-invest in Canada, with some even pulling the plug on new projects that were steps away from being finalized. These are missed opportunities for growth in the Canadian economy.

Even on the farm level, when speaking with fellow farmers, there's an uneasiness and reluctance about what to do next. I even had a few neighbours who decided to get out of the industry due to the increased stress that the trade deals brought upon them. They continue to point out that there are more trade deals to come and worry that we will be the final sacrificial piece once again. Even for my brothers and me, this trade deal has been weighing on our minds greatly. We just took over from our parents, and seeing our growth in our domestic market being given away every few years makes us discouraged and frustrated.

How does an industry survive if you ask it to stagnate or decrease in size in order for foreign countries to bring in their products? This will not continue to work over the long run.

In closing, I would like to say that dairy farmers just want to be able to make a living from their market, doing what they love to do without a constant threat that the government will continually sell them out in the next trade agreement. I personally want to be able to wake up 30 years from now and pass on a successful dairy to my son, and know that he would also be able to do that for his kids one day. I want to share the story of how our government stood behind our dairy farms and valued our contributions to this great country, but right now, I don't know if I'll be able to have that conversation, if we are continually faced with the roadblocks the government is putting up against our industry.

Thank you very much for the opportunity to speak here today to highlight some of the implications of CUSMA for my dairy farm, dairy farms across Canada and what the future looks like for our industry.

Thanks.

12:20 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, sir. We very much appreciate it.

Mr. Flaman.

12:20 p.m.

Matthew Flaman Chair, Saskatchewan Milk Marketing Board

Thank you, Madam Chair.

My name is Matthew Flaman. My wife, sons and I are fourth- and fifth-generation dairy farmers from Vibank, Saskatchewan, near Regina.

Today I represent myself and 165 other dairy farmers in Saskatchewan. Thank you for the opportunity to offer my thoughts on the impact of the CUSMA deal on me.

Supply management has allowed our farm and my family to contribute to the local economy through using local employees, vets, ag dealerships and other services that are close to me. The stability offered by supply management has allowed me to have the confidence to invest in our farm, our community and our area. The concessions granted in the trade agreements now have created some uncertainty of the climate going forward.

Dairy farmers did not want to see concessions given, but they have been—3.9% on the CUSMA deal, and nearly 18% currently on the books. It is important for me that it's heard, in the words of our government, that “full and fair” compensation will be paid for the direct impact of these concessions. We've asked for direct payments, because we have had a portion of our market taken away. Programs that stimulate innovations are great, but they can be put in place at any time. They're not compensation for market loss.

We have received a payment so far from a previous European trade deal, and we've used it to improve efficiencies through cow comfort and ventilation in our youngest calf barn. We've also used it for funding the next generation, through succession planning.

I also want to speak about the export caps that have come into place through the CUSMA deal, which strike a nerve with me, not only as a dairy farmer, but as a Canadian citizen. As you've heard my fellow panellists say, these caps are unprecedented. To answer Mr. Prins' question, in my opinion, there's no chance that the U.S. or Mexico would ever let caps that were intended to be among three countries be spread out over the world. As a Canadian, this is very troubling for me, not just as a dairy farmer. The impacts go well beyond the dairy sector and can be used in any other industry in future trade negotiations. That scares me.

In conclusion, I want to say that dairy farming has given me a good life. It's given me a good opportunity to raise my family. It's given me an opportunity to put some local employees to work and put some young people through school. It's been a proud spot in my life. I want nothing more than for my business to thrive and for my sons to take over one day and also thrive.

I'm worried the industry is suffering a death by a thousand cuts. Not only are we giving up market access, but the export caps that don't allow us to move our protein concentrates around the world are an area of great concern to me, because they limit our ability to expand. If this continues to be the case, I'm not sure what advice I'll give my son in his endeavours to be a dairy farmer.

I appreciate the time you've given me. Thank you for this opportunity.

12:25 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, Mr. Flaman.

We'll move on to the Ericksons, whoever would like to go first.

12:25 p.m.

Darren Erickson Pharmacist Owner, Tofield PharmaChoice, As an Individual

I'll go first.

12:25 p.m.

Liberal

The Chair Liberal Judy Sgro

Okay, go ahead.