International Trade Committee on Feb. 16th, 2023

[Aaron Fowler]

In practice, there have been no exports above the cap since CUSMA, so there have been no export charges collected on those products since the agreement entered into force.

[Colin Carrie, Conservative, Oshawa, ON]

Okay, so there is a limitation on the exports.

Out of curiosity, do the Americans have any input or control over caps in Canada under that agreement?

[Aaron Fowler]

The provisions of the agreement are as negotiated between the parties to the treaty and therefore represent an agreement between Canada, the United States and Mexico regarding this particular outcome.

[Colin Carrie, Conservative, Oshawa, ON]

Right, so would the Americans have any say if we wanted to increase those thresholds?

[Aaron Fowler]

Well, the provisions that are contained in the agreement are legally binding and enforceable provisions, so they are not subject to change by one country. Similarly, the United States cannot unilaterally change aspects of the agreement that are of interest to Canada.

[Colin Carrie, Conservative, Oshawa, ON]

Okay. Right now, I think everybody is aware that we have a bit of a dispute with the United States. I think it was on December 20, 2021, that a dispute settlement panel determined that Canada contravened CUSMA's obligations but we could retain the supply management system.

On January 31, 2023, a week ago, the United States again requested establishment of a dispute settlement panel relating to Canada's dairy policies. I was wondering, if we enacted this bill, Bill C-282, would it affect the Canada-U.S. trade relationship concerning dairy products? If so, how? What is the probability that, following enactment, the United States would seek to renegotiate certain CUSMA provisions? What are your thoughts on that?

[Aaron Fowler]

I would have to speculate as to what the reaction of the United States would be to this particular bill. If it becomes law, it does not affect the legal commitments that are contained within the CUSMA. Those would continue to be binding legal commitments on Canada.

I don't see that this bill would have any particular impact on the issues that are being discussed in the context of either the initial dairy panel or the ongoing dispute settlement process, because they don't relate to the questions that are addressed in this piece of legislation.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I'm sorry, Mr. Carrie. Your time is up.

We have Mr. Virani, please, for six minutes.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you very much to all four of you for your appearance today.

Can you tell me when supply management first entered the Canadian lexicon? When was it first implemented?

[Tom Rosser]

Madam Chair, thank you. It's a very good question.

I'm not sure that I have a precise answer, but the Farm Products Council of Canada, for example, which runs the supply management system for many of the products under supply management, celebrated its 50th anniversary last year, so it dates back to the early 1970s. It was in the 1960s and 1970s—in that era—that the system came in as the forerunner of its current form, but I'm afraid I can't offer a more precise date.

[Arif Virani, Liberal, Parkdale—High Park, ON]

That's okay, so we're talking about either the Pearson government or the government of the elder Trudeau.

All four of you were working on either the after-effects of or the ongoing trade agreements, and I appreciate some of your opening comments about what has happened in the past but also what is going on as we go forward. When you see the mandate to enter into these trade negotiations, that mandate is to defend and protect the supply management system, as you've listed in some of your opening statements. Is that fair?

I'll direct that to Mr. Fowler.

[Aaron Fowler]

It is a long-standing policy of the Government of Canada to defend the integrity of the system. I won't speak to specific mandates that are given to negotiators.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Okay.

You can tell me how much detail you can go into, but we are actively negotiating a new free trade agreement. In the interim, we have a U.K.-Canada continuity agreement and, as you mentioned at the outset, there has been no increased access for U.K. cheese into the Canadian market pursuant to that continuity agreement. Is that correct?

[Doug Forsyth, Director General, Market Access, Department of Foreign Affairs, Trade and Development]

Yes, that is correct.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Okay.

We're also pursuing a few other areas, particularly given our Indo-Pacific strategy. There is an early progress agreement with India. Do you have any sense of whether access to supply-managed sectors is being granted or even contemplated with respect to an early progress agreement with India?

[Aaron Fowler]

Negotiations with India are ongoing, and we don't speak to specific positions that are put forward by either party in the context of ongoing negotiations, but of course the government continues to advance the policy that it has traditionally advanced with respect to these sectors.

[Arif Virani, Liberal, Parkdale—High Park, ON]

I'll ask you the same question with respect to ASEAN. We are elevated to the level of a strategic partner within ASEAN. That's good news. Thank you for your hard work in terms of that.

We're hoping to conclude a deal there. Is there any sense or determination that supply management would be jeopardized with respect to what we're doing with ASEAN?

[Aaron Fowler]

We have consistently been able to conclude high-quality trade agreements and support the supply management system. I don't think there's any reason to think we could not continue to do so with or without this piece of legislation.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Just to close out the natural hat trick that is in the Asian area right now, we're pursuing something specifically with Indonesia on a bilateral basis, between Canada and Indonesia.

Is there any reason to believe that supply management wouldn't be defended in the context of a deal with Indonesia?

[Aaron Fowler]

There is no reason to think that the supply management system would not be defended in that and every other negotiation.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Okay. Thank you.

I'll just echo the comments of Mr. Carrie that clarity on the compensation piece is important.

We just heard from the mover of the bill, actually, that compensation is slow in coming. I think he said three or four years in coming, if I understood, but also, according to some of the other testimony we just heard in the previous hour, the full impacts of the limited market access that was granted under, for example, CUSMA, take place on a staggered basis over the course of seven years, so is it logical to think that the compensation would also be staggered, Mr. Rosser?

[Tom Rosser]

There was a very elaborate process of discussion with the affected sectors about what the nature of the impacts would be and what the magnitude was, which formed the basis of the quantum for the compensation.

It is true that for those who received direct payments, those payments have flowed over a period of years, but the structure of those has been announced.

Some of those programs that took the form of support for investments in projects for transformation facilities or other types of production facilities, just by their very nature, will extend over years. In many cases, sector stakeholders asked that the funding be put over many years so that, for example, it would align with the cycles for replacing barns or other pieces of equipment—the natural capital lives of the pieces of equipment being replaced. Their preference was for the programs to have a longer life.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Can I take you back to the CUSMA negotiations? I think you provided some useful reminders about CUSMA. I remember times during that first Parliament that I sat in, when people, including parliamentarians in certain parties in the House of Commons, were urging Canada to just take any deal, and that any deal was better than no deal.

That being said, the starting position of the United States was actually to eliminate supply management altogether, and what you indicated is that supply management was retained. A bit of market access was granted in compensation that has flowed or is flowing, based on that.

To the extent you're able to, can you walk us through a bit how that supply management negotiation worked and how Canada stuck to its guns in terms of protecting the bulk of our supply management system?

[Aaron Fowler]

I think it was a fairly public position that the United States took with respect to the goals it was advancing. Under CUSMA, with respect to the Canadian supply management system or, more specifically, to the supply management system as it applies to the dairy sector, their goal, as stated by the administration, was to see that system dismantled.

Although that position was moderated over the course of the negotiations, as a negotiator who was at the table, I can tell you that well into the fall of 2018, the United States' negotiating team continued to advance proposals and positions that would have had the effect of undermining the integrity of the system. It was for the Canadian negotiating team to put forward counter-proposals that addressed the underlying U.S. concerns while preserving the operation of the system, including the three pillars that are at its heart.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you for that hard work.