International Trade Committee on March 23rd, 2023

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I call the meeting to order. This is meeting 54 of the Standing Committee on International Trade.

Today's meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022. Therefore, members are attending in person in the room and remotely using the Zoom application.

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Pursuant to the order of reference of Wednesday, February 8, the committee is resuming the study of Bill C-282, an act to amend the Department of Foreign Affairs, Trade and Development Act regarding supply management.

We have with us today for the first panel, from the Canadian Canola Growers Association, Rick White, president and chief executive officer, and Roger Chevraux by video conference. From the Chicken Farmers of Canada, we have Yves Ruel, associate executive director, and Tim Klompmaker, chair. From the International Cheese Council of Canada, we have Joe Dal Ferro, chair, and Helen Dallimore, associate member.

My apologies to all of you for the delay, but Parliament has to function and the votes have to happen.

We're going to ask you all to keep your remarks as brief as you can, up to four minutes each.

We will start with Mr. Chevraux, please.

Go ahead.

[Roger Chevraux, Chair, Canadian Canola Growers Association]

Thank you for the opportunity for the Canadian Canola Growers Association to appear on your study of Bill C-282. We appear in opposition of the bill.

I am joining today from Killam, Alberta, where our family farm, Century 12 Farms, grows cereals and oilseeds. I also serve as the chair of both Alberta Canola and the Canadian Canola Growers Association, known as the CCGA. I'm joined by Rick White, CCGA's president and CEO, who's based in Winnipeg.

I mentioned the name of my farm because it tells you about our family farm. My great-grandfather started farming on the land in 1912, which makes ours one of the oldest farms in our region of the Prairies. This makes me a fourth-generation farmer and makes my 27-year-old son a fifth-generation farmer.

CCGA represents Canada's 43,000 Canadian farmers on issues that impact their success. Canola is the number one revenue source, earning Canadian farmers $13.8 billion in revenue in 2022. That's more than cereals, horticulture and livestock, including dairy and poultry. It contributes roughly $30 billion in annual economic activity and creates over 200,000 jobs nationally.

Canola's success and its contribution to our economy is based on innovation, international trade and the series of free trade agreements successfully concluded by the government. As the world's largest producer and exporter of canola, Canada represents 90% of what we grow as seed, oil and meal, which were valued at $14.4 billion in 2022.

Free trade agreements eliminate barriers and provide clear rules of trade, providing predictability and stability and reducing market risks. For example, the North American Free Trade Agreement, now the CUSMA, spurred development of the Canadian canola sector in growing acres, attracting value-added activities and generating the innovation needed to grow a sustainable crop and to be partners in Canada's climate change commitments. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership diversified market opportunities for oil and meal, keeping the processing at home and generating a multiplier effect in rural areas as well as urban centres.

I want to state up front that I am not opposed to supply management or to the concept of protecting it. However, I am opposed to this bill because it is a bad policy that is not necessary, I believe, to protect our supply management system.

Bill C-282 is bad policy on many fronts.

First, if passed, Canada's attractiveness as a free trade agreement partner would diminish, which would adversely affect Canada's ability to launch and enter into new negotiations. Canada's leverage in successfully renewing the CUSMA under President Trump or in negotiating a membership to and conclusion of the CPTPP agreement would have been greatly diminished if such a bill were in place.

Second, the bill would constrain negotiators' ability to seek the best and most ambitious deal for Canada as a whole. According to the department's website, Canada is negotiating bilateral or regional FTAs with a dozen partners, as well as advancing World Trade Organization modernization and renewal of the Agreement on Agriculture. Robust negotiating strategies, flexibility and compromise are required to achieve successful conclusions. This fact was acknowledged during the department's testimony on February 16 regarding the CUSMA.

Third, the bill creates a dangerous precedent that invites our trade partners to also seek exclusions and undermines Canada's reputation globally. CCGA supports ongoing government efforts to diversify our exports and strengthen free trade worldwide. This bill contradicts those efforts and sends a strong protectionist signal globally at a time where it has never been more important to avoid new trade barriers and to discourage trade and/or access to food.

Canada needs a new agriculture trade strategy where FTAs are a central trade policy tool. The Indo-Pacific strategy commits $2.3 billion over the next five years to expand our political, economic and security relationships with the Indo-Pacific region, including through FTAs with Association of Southeast Asian Nations, India and Indonesia. Countries that are developing their—

[The Chair, Liberal, Judy Sgro]

Mr. Chevraux, I'm sorry. I have to interrupt.

You can try to get your last comments in when you answer some of the members' questions. The members have a lot of questions, and I'm just trying to be as fair with time as possible.

Mr. Ruel or Mr. Klompmaker, whoever wants to speak for your side on the issue can go ahead.

[Tim Klompmaker, Chair, Chicken Farmers of Canada]

Thank you, Madam Chair.

My name is Tim Klompmaker. I'm a chicken farmer from Norwood, Ontario, and chair of Chicken Farmers of Canada. Supply management is the reason why I am a farmer. My parents took over the farm from my grandparents in 1972, and supply management was the reason why they encouraged me to purchase my own farm in 1984.

My wife and I raised three sons, who are now also chicken farmers thanks to supply management. It is a uniquely Canadian system that supports generations of farmers and feeds millions of Canadians. We're all here to talk about the same thing. Whether we're government officials or members of the Canadian Federation of Agriculture or other farm groups, we're all worried about the same thing: How do we continue to provide safe, high-quality food to feed people? We're all unified in the fact that farmers feed Canadians and the world. We require the tools and support to continue doing so in our own unique ways.

Bill C-282 is welcomed by Chicken Farmers of Canada. It would ensure the Government of Canada grants no further concessions in the supply management sectors in any future trade deal. We cannot afford to lose part of our market with every trade agreement. The Chicken Farmers of Canada board of directors, comprising farmers, processors, further processors and members of the food service sector, carefully determines how much chicken Canada needs for the coming months, and farmers from coast to coast produce that amount. It also considers how much is coming from imports, making it predictable and reliable. Any additional access granted undermines the import control pillar of the system, meaning it can't function as intended.

I can't stress this enough: If supply management is weakened, the Canadian chicken sector cannot guarantee safe, local chicken raised with care for Canadians, threatening food security in all 10 of the provinces in which we operate. Supply management allows our sector to enforce mandatory, audited food safety and animal care programs under the “raised by a Canadian farmer” brand. These enforcement measures are of particular importance during outbreaks of animal diseases like avian influenza, as we are seeing now. Guaranteed food safety and animal care programs are some of the many reasons why supply management works.

With headlines stating that food security is at risk due to weather events, disease and global conflict, the last thing we want is for consumers to fear there will be no food to feed their families. A supply-managed farmer's job, first and foremost, is providing food for Canadians. Every time Canada enters trade negotiations, this ability to provide is at risk. Trade is important to our country, but it should not harm supply management, particularly given that Canadian chicken production is only 1.3% of world chicken production.

Recently, the CPTPP and CUSMA trade agreements have significantly impacted Canadian chicken farmers. We have never stood in the way of Canada achieving a fair deal. Our sector provides stability at home, while sectors with greater export potential can pursue opportunities in international markets. We also note that most countries have sensitive sectors they wish to protect. For example, New Zealand has strict biosecurity laws that impose extreme cooking requirements on imported poultry products.

By adopting legislation that ensures no further access to supply management is granted in any future trade agreement, parliamentarians will show Canada's dairy, poultry and egg farmers that they stand by them, just as we have always been there for Canadians.

Supporting this bill is not bad trade policy. It is good domestic policy. Supply management means looking out for Canadians.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir. I appreciate that.

We'll move on to Mr. Dal Ferro for four minutes.

[Joe Dal Ferro, Chair, International Cheese Council of Canada]

Good afternoon. My name is Joe Dal Ferro, and I'm the chair of the International Cheese Council of Canada. I am joined by Helen Dallimore, representing one of our associate members, Coombe Castle.

The ICCC was founded in 1976. We are an association of small and medium-sized cheese importers and their suppliers. Our members are Canadian-based importers of cheese. Our associate members include cheese producers and processors from various countries that have international trade agreements with Canada.

The ICCC has coexisted with Canada’s supply-managed dairy sector for over four decades and accepts the rationale underlying Canada’s supply management system. We are not advocating for its dismantling. Rather, we are continuing to work with the government to ensure that its TRQ allocation and administration system respects our trade commitments in the dairy sector. Moreover, many of our members, including my company, are proud to be distributors of domestic cheeses across all over Canada.

I am here today to offer the committee several compelling reasons why Bill C-282 should not be supported by parliamentarians.

First, parliamentarians must seriously consider the significant negative financial impacts that this bill will have on the many Canadian small to medium-sized businesses that import cheese. The future for Canadian importers of cheese is already uncertain. This bill is only adding to the unpredictability. The unknown outcome of Global Affairs' TRQ phase II review—which initially started in 2019—is creating ambiguity and inhibiting business planning. Moreover, it may require importers to significantly change their business methods and model if the new quota policy is unfavourable to our industry.

If Bill C-282 becomes law, it risks obstructing even the possibility of addressing the market access requested by the U.K. as part of the ongoing bilateral negotiations. If the U.K. is forced to settle for a portion of the WTO non-EU quota, Canadian importers will be limited to exclusively using this method of access to import British cheeses. This pool is already fully utilized with cheeses from the U.S., New Zealand, Switzerland and Norway, among others. Otherwise, they will find themselves faced with three options, all of which will result in financial harm to Canadian businesses.

These are the three unappealing options. The first is ceasing to import U.K. cheese products altogether in Canada, meaning that many Canadians’ beloved British cheeses could be gone forever. The second is substituting some of their imports from other non-EU countries with imports from the U.K., ensuring a shortage of available cheeses from multiple jurisdictions. The third is importing U.K. cheese with the prohibitive 245% tariff. This would nearly triple the cost of certain cheeses already on the market and make them unaffordable to all but the richest of Canadians. In this era of rising inflation, parliamentarians don’t want to forcibly make imported cheeses an even more expensive proposition.

All of these unfortunate scenarios unfairly penalize Canadian businesses, despite the increasing demand by Canadians for British cheeses. Businesses' ability to meet this demand at an affordable price will be severely constrained if this bill passes. Not only will these Canadian businesses be prevented from generating market growth, but they will almost certainly lose business, which will mean job losses in Canada.

Let me be clear. The CPTPP is not a solution for Canadian importers of British cheeses.

Based on these facts, we are also concerned that Bill C-282 could have a dramatic impact on our trade relationships. Our trade allies have shown increasing dissatisfaction with the administration of Canada’s dairy TRQs—so much so that two of our trade partners have already launched trade disputes, alleging that Canada is failing to respect its existing trade agreements.

For these reasons, the ICCC respectfully urges members of this committee to consider the consequences of this bill and to vote against Bill C-282.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Dal Ferro.

We'll move on to the members, with Mr. Seeback for four minutes, please.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Thank you, Madam Chair.

I say just about every time I ask questions that I'm a supporter of supply management. There are many supply-managed farms in dairy, poultry and eggs in my riding. Predominantly, the number one employer and contributor to the GDP in my riding is farming.

I have concerns about this bill that I keep hearing about. It seems to me that, if you're in the supply management sector, you're in favour of this bill. Every other sector outside of supply management in Canada is saying that it's gravely concerned about the impact this could have on existing trade agreements and new trade agreements.

My first questions are for the Canadian Canola Growers Association. How big is the American market for your products?

[Roger Chevraux]

That's a very good question. It's actually our number one customer. I think the number is.... We are presently selling about seven billion dollars' worth of canola and some of our value-added products, which are oil and meal, to them at this moment in time.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

There's a six-year review of CUSMA or USMCA, whatever way you want to look at it. We just went through a very difficult round of renegotiations with the United States. Our government officials who came today said it would have been very difficult to renegotiate that if supply management were off the table. This is coming up in three years. We're now three years out.

Are you concerned that this bill may affect the renegotiation or the review of USMCA in three years and the effects that would have on your industry?

[Roger Chevraux]

Absolutely I am, one hundred per cent. They represent, as I said, 82% of our value-added in oil and 60% of our meal. If we don't have predictability and stability in our trade agreements with the U.S., we risk a large amount of that market, which is, as I said, seven billion dollars' worth of the canola exports alone. That is a massive amount, and we're very concerned about this. That's particularly a worry for us since we're aware of the fact that, if we had happened to have this kind of bill when we were renegotiating with the Trump administration, we would likely not have been successful in reaching an agreement. That's a big risk for us.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

I asked the sponsor of this bill, when he came to the committee, about his consultation with industries. It seemed as though he had consulted only the dairy industry in Quebec. Was your industry consulted with respect to this bill?

I'll ask the same question to the cheese council.

[Roger Chevraux]

I'll deflect that one to Rick White.

[Rick White, President and Chief Executive Officer, Canadian Canola Growers Association]

Thank you.

I would say there was a somewhat open consultation on it. We have all had our input on this, but again, it was relatively open. That's the response.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Did the member reach out to you to discuss this bill?

[Rick White]

No, they did not directly.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

No.

Were you consulted at all by the sponsor of this bill? Did the sponsor reach out to you and ask your thoughts on how you would be affected?

[Joe Dal Ferro]

No, they did not.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

The only way that either of you would have been able to give your thoughts on this bill was by coming to this committee today.

[Joe Dal Ferro]

Yes.

[Roger Chevraux]

That's the most effective way. Yes.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Would you agree with me that we should probably consult as many industries and businesses and products as possible as to what they think this bill might do to them?

[Joe Dal Ferro]

I would say yes.

[Roger Chevraux]

Yes, I would, and I would include not only agricultural products but also products outside of the agricultural field. The CUSMA deal is good for all of the Canadian economy, not just agriculture. This bill is not necessarily against agriculture alone. It is a concern for our entire Canadian economy.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We move now to Mr. Virani for four minutes.

Go ahead, please.