Thank you, Madam Chair.
Members of the committee, good afternoon. My name is Joe Dal Ferro, chair of the International Cheese Council of Canada, or ICCC. In my everyday life, I work as president of Finica Food Specialties Ltd., an importer of fine specialty foods based in the Toronto area since 1968.
I am joined today by Patrick Pelliccione, vice-chair of the ICCC and president of Jan K. Overweel Ltd.
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. We also have associate members who are cheese producers and processors from various countries that have international trade agreements with Canada.
The ICCC accepts the rationale underlying Canada's supply-managed dairy sector. In partnership with Global Affairs Canada, or GAC, we operate within the system with a shared objective of ensuring that the system both respects Canada's trade commitments and works for Canadian businesses and consumers. However, we have concerns over how Canada's TRQ allocation and administration policy has affected importers and their customers across the country. As such, today I am here to provide a real-world perspective on the impacts of these non-tariff barriers. I will also offer some recommendations on how Canada could address these issues in current and future agreements.
First, parliamentarians must seriously consider how the TRQ allocation and administration, wholly chosen and administered by Canada, can create unintended yet serious impacts on Canadian businesses.
I'll use CETA as an example. Though market access was theoretically expanded, the implementation of CETA created severe challenges for cheese importers across the country. The allocation formula for the CETA “cheese of all types” TRQ leads the allocations to vary in size drastically from year to year, from hundreds of thousands of kilos in one year to barely 10,000 kilos in another. It is not only challenging to run an import program with such uncertainty; it also forces importers to rely on transfers, which is when we have to rent quota from other CETA quota holders for a fee, thus increasing the cost for Canadian consumers. At times the transfer price gets so high that some ICCC members just can't compete and must settle for their meagre initial allocation.
Second, as a result of the TRQ allocation mechanism across various trade agreements, importers receive allocations that are not economically viable. In our industry, an allocation is called economically viable when it is about the size of a shipping container—that is, about 20,000 kilos. Something like 10,000 kilos may seem big, but we are simply unable to support the cost associated with a load smaller than 20,000 kilos because of the fixed costs of bringing in the cheese from overseas or overland and distributing it. While we have shared this concern with Global Affairs Canada for years, we have yet to see allocations that actually reflect the needs and the realities of businesses that participate in the cheese trade.
Canada's approach to TRQ allocation and administration has had several negative effects on members. The lack of quota available for distributors has created uncertainty. Our members, who import products as their livelihood, face the prospect of not being able to fulfill their contractual obligations with the businesses they supply. This uncertainty has stifled economic growth. Moreover, the lack of available quota has also increased costs and bureaucratic work for companies, which are forced to hunt down and pay for those transfers.
Finally, members are unable to establish long-term relationships with suppliers, which is essential for a successful cheese program, due to the uncertainty in GAC's annual TRQ allocation model. This has led some companies to lose customers at a cost of millions of dollars.
The unknown outcome of Global Affairs' TRQ phase two review, which initially started in 2019, is creating ambiguity and inhibiting business planning. Moreover, it may require importers to significantly change their business models if the quota policy that emerges from this review is unfavourable to our industry.
We encourage the government to incorporate this committee's eventual report into its deliberations as it revises its TRQ allocation and administrative policy. It is imperative to ensure that Canada's approach aligns with our country's trade obligations and reflects Minister Ng's mandate to ensure that trade benefits small and medium-sized enterprises across Canada.
Thank you.