International Trade Committee on March 23rd, 2023

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

[The Chair, Liberal, Judy Sgro]

We're going to end this panel at this time.

To our panellists, if you weren't able to get any points across and you would like to submit something to the clerk in writing, she will ensure that the committee members receive it.

I have to ask you to quickly move so we can bring another panel into place, so that the committee will have time to get their questions answered.

[The Chair, Liberal, Judy Sgro]

I call the meeting back to order.

We now have witnesses from the Canadian Poultry and Egg Processors Council, Mr. Jean-Michel Laurin, president and chief executive officer, and Ian McFall, chair of the board of directors. From the Canola Council of Canada, we have Troy Sherman, director, government relations. From the Fédération des producteurs d'oefs du Québec, we have Paulin Bouchard, president, and Sylvain Lapierre, first vice-president.

Welcome to all. Please accept our apologies for the late start and the limited amount of time.

Mr. Laurin or Mr. McFall, I invite you to have an opening statement of no more than four minutes, please.

[Ian McFall, Chair of the Board of Directors, Canadian Poultry and Egg Processors Council]

Thank you, Ms. Chair.

Good afternoon. Thank you for the invitation to appear before the committee.

My name is Ian McFall, and I chair the board of directors of the Canadian Poultry and Egg Processors Council. While I’m here as the chair of CPEPC, I’m also the executive vice-president and family shareholder at Burnbrae Farms, a family-owned company with egg grading, processing and farming operations in five provinces across Canada.

I’m joined here today by our association’s president and CEO, Jean-Michel Laurin.

CPEPC represents Canadian hatcheries, egg graders and processors, chicken and turkey processors, and further processors. While our members are not supply-managed, you can see us as representing Canadian poultry and egg farmers’ main customers. Collectively, our membership represents more than 180 establishments of all sizes, and processes over 90% of the poultry and egg products raised by Canadian farmers.

Our association strongly supports Canada’s supply management system and international trade policies that are consistent with the system. We believe Bill C-282 is consistent with that system.

The poultry and egg supply chain that we represent, the people we employ and the communities we touch depend on ensuring that we have a strong supply management system in Canada. The market access granted for poultry and egg products through CPTPP and CUSMA, in addition to the existing market access through WTO, will have an impact on supply-managed producers and processors. It is worth noting that our industry is still adjusting to the escalating impact of these agreements. For instance, in the case of CPTPP, Chile just ratified the agreement. It also just banned poultry exports due to avian influenza.

For these agreements, it is worth noting that the government is providing financial compensation to supply-managed sectors. In the case of poultry and egg processors, the government is contributing to plant investments through the supply management processing investment fund. This fund will provide, on average, $17 million per year over six years to poultry and egg processors looking to increase their productivity and improve their competitiveness. This fund is in high demand. After being in place for almost a full year, it is now clear that it will benefit only some processors given the high volume of demand for this fund. It is also worth noting that the funding allocated under this fund represents a fraction of the expected impact of the trade agreements.

Bill C-282 is tied to Canada’s import controls regime. This is one of the three pillars that are key to upholding the supply management system. We acknowledge that some have concerns with the bill. Trade agreements are critical to non-supply managed commodities. We believe Canada can protect its supply-managed sectors while successfully negotiating trade deals that benefit Canadians. It is also our understanding that it is not the intent of the bill to restrict Canada’s ability to negotiate new agreements.

Access to imports in controlled and limited volumes for our members is also critical to supply-managed sectors. It is our understanding that Bill C-282 will not change the market access already granted to trading partners under current agreements or impact other trade legislation.

In closing, CPEPC believes this bill is consistent with Canada’s supply management system, a system that we strongly support.

We thank you for your time and would be pleased to answer your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Sherman, you have four minutes, please.

[Troy Sherman, Director, Government Relations, Canola Council of Canada]

Thank you, Chair Sgro and members of the committee.

My name is Troy Sherman, and I am the director of government relations for the Canola Council of Canada. The council encompasses all links in the canola value chain. Our members include canola growers, life science companies, grain handlers, exporters, processors and others. Our shared goal is ensuring the industry's continued growth and success, and doing so by meeting global demand for canola and canola-based products, which include food, feed and fuel.

Canola's success is Canada's success. Our industry represents almost $30 billion in economic activity, annually, 207,000 jobs across the country, $12 billion in wages and the largest share of farm cash receipts in the country. With over 90% of Canadian canola exported to as many as 50 different markets, the canola industry depends on ambitious and fair science- and rules-based trade.

For many years, we have worked with Canada's trade negotiators to make sure Canada and Canadian canola are well positioned to help feed the world. Central to these trade negotiations is the foundational principle that negotiators should be empowered to reach the best agreements for Canadians and the Canadian economy. Negotiators have been able to achieve this by availing themselves of all the tools in our trade-negotiating tool box, working closely with industry, academics and civil society to ensure Canada's trade agreements achieve what is in our national interest.

Bill C-282 risks undermining Canada's reputation as a trading nation and, consequently, our national interest during trade negotiations. It does this in a number of ways, including putting in place legislative prohibitions on what our negotiators can discuss at the negotiation table and diminishing Canada's desirability as a market with which to pursue trade agreements.

On the first point, Bill C-282 proposes prohibiting what Canada's trade negotiators can discuss at the negotiation table. To the best of our knowledge, and as noted by officials at Global Affairs Canada, no other country legislatively prohibits negotiators from discussing certain topics during trade negotiations. Canada would be an outlier, and needlessly so.

In June 2021, an official from Global Affairs appeared before this very committee on Bill C-216, Bill C-282's predecessor. At the time, they stated the following: “Canada has been able to successfully conclude 15 trade agreements that cover 51 countries while preserving Canada's supply management system”. The official went on to say:

If we were to start from the position that we would not be dealing with 100% of the items that we would negotiate on, it does risk having an agreement that's not necessarily completely beneficial to Canadian exporters and producers and it does risk being an agreement that does not necessarily provide the full economic benefits to Canada that one might have expected.

What was true when it was said two years ago remains true today. Bill C-282 is a solution in search of a problem, and it risks undermining other industries and sectors of the economy, including Canadian canola. Passing Bill C-282 will set a dangerous precedent for additional amendments to the Department of Foreign Affairs, Trade and Development Act, to either protect certain industries or mandate restrictive language in trade agreements in specific areas of interest.

Regarding the second challenge mentioned, Bill C-282 will significantly diminish Canada's desirability as a country with which to pursue trade negotiations. By legislating that our negotiators are not able to include supply management as part of the negotiations, Canada is significantly shrinking the trade prospect pie and potentially forcing Canadian concessions in other areas of interest. If Canada is viewed as an obstacle for new entrants to plurilateral agreements, or less attractive to engage with—given our legislated red line on supply management—our trading partners may question the value of having Canada at the negotiation table.

To conclude, Bill C-282 represents a significant departure from Canada's principled, fair and rules-based free trade posture. No industry, sector or issue should be off the table during trade negotiations. Our trade negotiators have delivered tangible results and benefits for the Canadian economy and industries, including canola.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Go ahead, please, Mr. Bouchard, for up to four minutes.

[Paulin Bouchard, President, Fédération des producteurs d’œufs du Québec]

Thank you, Madam Chair. Good afternoon, everyone. Thank you for the invitation.

I am Paulin Bouchard, president of the Fédération des producteurs d'œufs du Québec. I am here with our vice-president, Mr. Sylvain Lapierre. We are both egg producers from Quebec.

Our federation represents 199 producers whose 5.7 million laying hens produce 1.8 billion eggs per year. We also represent the interests of 108 replacement chicken producers and six egg producers who work for the vaccine sector, that is to say a pharmaceutical company that is involved in protecting Canadians' health.

Right now, all the federal parties and witnesses are saying that they support supply management, but for different reasons. On the one side, we have MPs that support Bill C‑282 to protect supply management production from any more concessions of our market shares to foreign producers. These MPs know that the advantages for Canadian consumers and citizens are better than what we could hope to gain during the negotiation of any future trade deals.

On the other side, when we look at the testimony provided by witnesses at previous meetings, we see that for others, the supply management system is just a trade currency that is used by Canadian negotiators. Indeed, we get the message that those MPs believe in supply management, because the protected markets are useful aces in the hole that Canadian negotiators can use to deal with foreign negotiators over domestic market shares.

You have heard previous witnesses state that without this ace up their sleeves, Canadian negotiators would be sitting ducks at negotiations. That is basically saying that Canadian negotiators have nothing to bargain with, contrary to their foreign counterparts, and would not be able to gain any concessions without this ace. It makes us wonder what negotiators from other countries do when they don't have supply managed markets.

I would remind you that it is possible to hammer out trade deals without sacrificing supply‑managed production. Canada has signed 12 trade agreements since 1997 and has negotiated with 15 countries, without giving any access to its domestic markets. Why do Canadian negotiators feel such a need to trade our protected markets whereas American and Japanese negotiators are able to make gains without putting their rice, sugar and cotton markets on the negotiating table?

During your committee meetings, witnesses and MPs have been unable to provide statistics on Canada's revenue and exports volumes after conceding market shares to foreign exporters. Supply management producers can provide figures for their losses, and Canadian taxpayers can say how much they have had to pay to compensate for the concessions made.

If Bill C‑282 had been passed at the beginning of this century, we would have never conceded our market shares. Bill C‑282 is a necessary tool to protect Canadian citizens and consumers and a system that everyone benefits from. Voting against Bill C‑282 is voting for individual interests as opposed to collective ones and sacrificing our production during the next round of negotiations.

Madam Chair, everything has been said during the meetings held on Bills C-216and C‑282. Quebec's egg producers are asking parliamentarians—

[The Chair, Liberal, Judy Sgro]

You have my apologies, Mr. Bouchard. I have to interrupt. I'm so sorry.

Mr. Baldinelli, you have four minutes, please.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

Thank you to the witnesses for being with us today.

I want to build upon what my colleague mentioned earlier today. Several of us around this table support the supply management sector. In fact, I had meetings with the Dairy Farmers of Ontario just the other day in my office. In fact, I had the opportunity to work for the Dairy Farmers of Ontario.

Having said that, we are here to look at Bill C-282 and reconcile the two different kinds of visions that we're seeing here today.

I'm going to go to Mr. Sherman first.

Did the sponsor of the legislation reach out to your organization to seek feedback on this potential legislation?

[Troy Sherman]

Thanks for the question.

No, we were not approached by the sponsor of the bill on this piece of legislation.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Here's my concern. Earlier on, it was the Canadian Canola Growers Association that talked about how predictability and stability would be lost if Bill C-282 was implemented. However, we are hearing the supply-managed sectors talk about predictability and stability being gained by having this legislation. How do we reconcile those two competing parts?

Here at committee, we have had eight organizations come forward. We've had Pulse Canada, the Grain Growers of Canada, the National Cattle Feeders’ Association, the Canadian Cattle Association and the Canadian Agri-Food Trade Alliance. Today, three organizations—the Canadian Canola Growers Association, the International Cheese Council of Canada and the Canola Council of Canada—have brought forward their concerns.

I'm asking, from your standpoint, whether you believe that it would benefit this committee to hear more testimony from organizations on both sides, as well as trade experts, to advise this committee on the proper steps we should be taking to ensure that any legislation we have is the best piece of legislation we can implement.

[Troy Sherman]

Thank you for your question.

Yes, I think we would be supportive of other industries and sectors coming to the committee to speak on this bill. I don't believe—I think we don't believe as a council—that this is really an agricultural issue. This is a whole-of-economy issue.

Our concern isn't the fact that this is a bill about supply management. It's the principle of opening up a piece of legislation that is going to prohibit negotiators, whether it is in supply management this time, forestry and automobiles, or unions and labour chapters. I think it's a dangerous precedent that we're setting.

It happens to be a supply management bill now, but this is not about being against supply management. It's the principle that this act should not be opened to prohibit what our negotiators are able to do at the negotiating table.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Building on that, it's setting that dangerous precedent.

For example, when Canada goes into trade negotiations.... My colleague mentioned that, in three years, CUSMA will have to be renegotiated. If we're setting in legislation areas we're not going to talk about, what's to say our American trading partners, or even Mexico as well, won't put aside certain areas they're not going to talk about, which would be to the disadvantage of various different sectors?

Could I have your comment on that?

[Troy Sherman]

The U.S. is our largest export market, at close to $7 billion in 2022 alone. I think just talking about the market access piece isn't enough. We have to look at the totality of the agreement.

As we know, back during negotiations for CUSMA, dispute settlement was one of the sticking points with the U.S. administration at the time. It's something we've availed ourselves of as an entire sector in agriculture in the past, and it's a really strong tool for us, from a dispute settlement standpoint, to challenge the U.S. or the Mexicans on particular issues. We would never want to see that watered down in lieu of another part of a different chapter within the agreement.

[The Chair, Liberal, Judy Sgro]

I'm sorry, Mr. Baldinelli. You have four seconds left.

Mr. Drouin, please, go ahead.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Madam Chair, I will be splitting my time with my esteemed colleague from Nepean. We have two minutes each, I believe.

Mr. Bouchard, thank you for being here with us today. Welcome.

When we talk about supply management, it is often said that it leads to price increases. Are you aware of the impact of bird flu in the United States on the chicken and laying hen sector? Do you know what a dozen eggs cost in the United States right now in the free market compared to Canada?

[Paulin Bouchard]

Thank you for the question.

We have, of course, heard about what is going on in the United States with the severe outbreak of bird flu which has required the destruction of over 44 million sick laying hens. Prices have since skyrocketed and hit record highs in the United States and are currently much higher than in Canada.

We are therefore comparing an entirely free American market, which is very concentrated and subject to extreme price fluctuations, to a very stable Canadian market based on production costs which leads to much less fluctuation on the market. The other big difference is the price of eggs. Often, we confuse the price for the consumer in the supermarket with the price paid to the producer. What American and Canadian consumers will pay is very often similar, but American producers receive much less for their product than Canadian producers.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you very much, Mr. Bouchard.

Mr. Sherman, I only have 15 seconds left.

[The Chair, Liberal, Judy Sgro]

Mr. Drouin, you have nine seconds if you want to share your time with Mr. Arya.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Okay.

Just quickly, have you been approached by any other countries saying that suddenly.... I know that CAFTA has made some presentations, and they said this would set us back by decades. Are countries suddenly signalling they will cancel trade agreements?

[Troy Sherman]

Cancelling trade agreements, no, but there are definitely concerns raised by some members of the diplomatic community here in Ottawa.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

You haven't heard anything yet.

[Troy Sherman]

Not for my part.

[The Chair, Liberal, Judy Sgro]

Mr. Arya, go ahead, please. You have one minute and 40 seconds.