International Trade Committee on Feb. 16th, 2023

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

It all depends on the government.

[Luc Thériault, Bloc, Montcalm, QC]

No matter which government is in power, the bill would come into play before an agreement was signed. If my bill passes, no matter which party is in power, no matter what its agenda is, the government could never again go back on its promise and throw supply management to the wolves.

Some think that this can all be corrected in the implementation phase, but that's wrong. This bill would serve its purpose at the negotiating table, before an agreement is signed.

Earlier, I referred to the commitment under the Vienna Convention on the Law of Treaties.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Thériault.

[Luc Thériault, Bloc, Montcalm, QC]

That's what I mean when I say that we need to hold governments to the promises that have been made, unless, one day, your government doesn't want to be bound by legislation like this.

[The Chair, Liberal, Judy Sgro]

Thank you very much. I'm sorry for the interruption.

We have Mr. Miao for five minutes, please.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair.

First I'd like to say, coming from the west coast of British Columbia, that we as parliamentarians hear so much about the success of Canada's supply chain management system. I'm wondering about someone from Quebec. What does supply management actually mean to producers in Quebec?

[Luc Thériault, Bloc, Montcalm, QC]

Supply management is synonymous with products of unquestionable quality and human-scale farming.

It also ensures that farmers are able to pass down their farms. When the effect of a trade agreement is to pull the rug out from under farmers, they can't pass on their farms to the next generation. Do you think their children would want to take over the ailing family farm?

Supply management provides social and economic stability as well as stability vis-à-vis food security. That's what it does in Quebec and everywhere else in Canada, in my view.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you for that. According to Farm Critic Canada, farm receipts in 2022 reached a record high of $95.5 billion, which is an increase of nearly 15% from 2021. In your opinion, what are the best strategies for continued growth in the agriculture sector?

[Luc Thériault, Bloc, Montcalm, QC]

I'll let Mr. Roche answer that.

[Marc-André Roche]

Farm receipts have risen considerably because of inflation, which doesn't mean that farmers are any richer because of that increase. A large portion of what their inputs cost has also gone up a lot.

The effects of the breaches created under the various trade agreements aren't felt immediately. It's a seven-year process, so the negative effects of recently signed trade agreements that undermined supply management haven't yet been fully felt. We will probably be in a position to assess the repercussions in the years ahead. As the industry increasingly churns out high-quality products and higher value-added delicacies, farm income will not grow as it should because subsidized competitors are going to scoop up market share.

I can't answer your question when it comes to products that are not supply-managed, which aren't covered by the bill.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you very much for that. Do you have any other suggestions as to how we can strengthen our farming sector in Quebec, given the importance of the sector, and also in Canada as a whole?

[Luc Thériault, Bloc, Montcalm, QC]

Earlier, in response to a question from Mr. Cannings, I talked about the importance of predictability in farmers' ability to make investments. I also mentioned that in my opening statement.

If there is a guarantee that the production balance will no longer be tampered with, I think we will definitely see more growth there. We could see farmers making investments to improve their production and innovation capacity. They, too, want to do things with as much respect for the environment as possible, and it's very expensive to make those changes.

This is something that would pave the way for that transition. Ultimately, what it will do is help to harmonize human-scale farming.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Miao.

Thank you, Mr. Thériault and Mr. Roche for your information. Thank you for the bill. It looks like it will be a very interesting study.

I will suspend for a moment while the next panel comes to the table, please.

[The Chair, Liberal, Judy Sgro]

I call this meeting back to order.

On our second panel, from the Department of Foreign Affairs, Trade and Development, we have Aaron Fowler, associate assistant deputy minister; Doug Forsyth, director general of market access; and Carolyn Knobel, director general and deputy legal adviser.

From the Department of Agriculture and Agri-Food, Tom Rosser, assistant deputy minister, market and industry services branch.

Thank you all for coming back to see us.

Mr. Fowler, I'll give the floor over to you for an opening statement of up to five minutes, please.

[Aaron Fowler, Associate Assistant Deputy Minister, Department of Foreign Affairs, Trade and Development]

Madam Chair and honourable members, thank you for the invitation to appear before the Standing Committee on International Trade on its review of Bill C-282.

The bill proposes to amend the Department of Foreign Affairs, Trade and Development Act, such that the Government of Canada cannot make any commitment in an international trade treaty that would have the effect of increasing tariff rate quota volumes or reducing over-quota tariff rates for dairy products, poultry or eggs.

The intent of the bill is consistent with the long-standing Government of Canada policy to defend the integrity of Canada’s supply management system. In practice, this policy has allowed Canada to successfully conclude 15 ambitious free trade agreements covering 51 countries while preserving Canada’s supply management system, including its three pillars of production control, pricing mechanisms and import controls.

New market access for supply-managed products has been provided only at the WTO and in three free trade agreements, which are the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA; the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP; and the Canada-United States-Mexico Agreement, or CUSMA.

The decision to provide increased market access for supply-managed goods in the context of these negotiations was not taken lightly. Such commitments were accepted only where it was deemed necessary to conclude free trade agreements that were in Canada’s overall economic interests. For instance, these agreements allowed Canada to maintain its preferential access to the United States market and to secure significant new access to the EU, Japan and other important foreign markets. It is important to highlight that while new access for supply-managed products was provided through these agreements, the integrity of the supply management system itself, including its three pillars, was fully maintained.

In recent years, the government has made clear its commitment to make no further market access concessions for supply-managed products in future trade negotiations. In line with this publicly stated commitment, Canada’s most recently concluded trade agreement, the Canada-United Kingdom Trade Continuity Agreement, did not provide new market access for cheese or any other supply-managed product, even though this was an important issue for the United Kingdom in the negotiations.

In conclusion, Bill C-282 proposes to make the government’s commitment to make no further market access commitments for supply-managed products into a legal requirement by amending the Department of Foreign Affairs, Trade and Development Act. This would strengthen the policy of defending the integrity of Canada’s supply management system by enshrining it into law.

Along with my colleagues here today, I welcome the committee's questions. Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Fowler.

We will go to Mr. Rosser, please, for up to five minutes.

[Tom Rosser, Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food]

Thank you, Madam Chair.

Honourable members, I appreciate the opportunity to appear before the Standing Committee on International Trade on its review of Bill C‑282.

Agriculture and Agri-Food Canada, AAFC for short, works closely with and supports Global Affairs Canada in advancing Canada’s free trade agenda, playing an important role in trade negotiations, particularly in areas related to market access for agricultural goods.

As said by my counterpart Mr. Fowler, the Government of Canada has had a long-standing policy to defend the integrity of Canada’s supply management system for dairy products, poultry and eggs. This includes clear commitments made by the Prime Minister and the Minister of Agriculture and Agri-Food to not provide any new market access for supply-managed products in future trade agreements. The bill is consistent with this policy.

Canada’s supply-managed dairy, poultry and egg farmers are part of the backbone of rural communities across the country, generating almost $13 billion in farm-gate sales in 2021, and creating over 100,000 direct jobs in production and processing activities across Canada.

With respect to the market access provided to Canada’s trade partners, it has only been provided in exceptional cases in regard to landmark trade agreements, such as the Agreement Establishing the World Trade Organization, or WTO, CETA, the CPTPP and CUSMA. While not taken lightly, these trade agreements are overwhelmingly in the interest of Canada and to the overall benefit of Canada’s agricultural sector.

Furthermore, in the case of CUSMA it's important to remember that the original negotiating position in the United States was the full elimination of the supply management system. The outcome in CUSMA, while difficult and challenging, allows the supply management system to continue functioning with respect to its three pillars.

The Government of Canada is also fully and fairly compensating producers and processors with supply-managed commodities who have lost market share under the three agreements. As announced this past November, dairy, poultry and egg producers and processors are expected to share more than $1.7 billion in direct payments and investment programs in response to the impacts related to CUSMA. This is in addition to the over $3 billion in direct payments in investment programs for CETA and CPTPP. These programs will help drive innovation and growth in the supply-managed sectors.

In conclusion, the integrity of the supply management system has been successfully defended during multiple trade negotiations. The Government of Canada is working hard to ensure that the supply management system remains strong and that producers and processors operating in the system remain productive and sustainable.

Bill C-282 would protect these sectors from additional market access concessions in the context of future trade negotiations, and as such is fully consistent with existing policy.

Thank you again, Madam Chair. Along with my colleagues, of course, I'd be happy to answer any questions that committee members may have.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Carrie, you have six minutes, please.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Madam Chair, and thank you to the witnesses for being here.

First of all, I think everybody is in agreement that we have to support our farmers. They work really hard, and without them there's no food on the table.

I'm getting a lot of emails, though, from constituents, on the price of things these days. A pound of butter, I think, is $7.99. They see this dumping of large quantities of milk on TV, and they're saying there's something not right here.

When you think of supporting the farmers, I think a lot of them are skeptical. I've listened to the farmers in my caucus. They have to compete. They have these carbon taxes to pay. They're being told they can use only a certain amount of fertilizer. Costs are going up.

When we make these trade agreements, we make agreements with the sector. One thing we agreed on when we conceded market share was that farmers would get compensation.

You mentioned the compensation, Mr. Rosser. I want to ask you about the status of the compensation for CETA, CPTPP and CUSMA. How much has been paid out to the farmers so far?

[Tom Rosser]

In terms of compensation for the three agreements and the five sectors under supply management, the total announced compensation to date is $4.7 billion. Because this was done in multiple programs targeting multiple sectors of both producers and processors, in terms of the actual quantum that has been fully paid, it would be into the billions of dollars.

I would be delighted to provide the committee with a detailed written response in terms of the quantum of funds committed to date under the various programs that were established.

[Colin Carrie, Conservative, Oshawa, ON]

That would be great. Thank you.

Could you do it for each agreement with regard to how much has been paid out and how much is outstanding? Right now, farmers are saying there are a lot of costs. They have to be competitive, and we want to be supportive.

Regarding another thing they were promised, the minister promised the dairy sector that she would not include caps on the export of milk protein concentrates in CUSMA.

I am wondering, were these caps included in CUSMA and, if so, what impact will those caps have on future value-added milk and protein concentrates?

[Aaron Fowler]

There were export-related provisions included in the CUSMA that applied to three specific dairy products set out in that agreement. Those are not caps as such, but rather they establish an export threshold for the products in question. Exports below that threshold are free to leave the country. Exports above that threshold attract a specific export charge, which depends on the product in question.

[Colin Carrie, Conservative, Oshawa, ON]

All right. Are we looking at semantics? There's a threshold and a cap, and I am wondering whether there's a difference.

[Aaron Fowler]

Yes. A cap is a hard ceiling on the amount of a product that can leave the country. A charge above the threshold changes the economic calculus associated with the export, but it does not prevent that export.

[Colin Carrie, Conservative, Oshawa, ON]

Okay.