Madam Speaker, my party's position on Bill C-86 is very clear. We support this bill, which enables milk producers to meet the requirements contained in the international trade agreements signed by Canada. This bill provides for the creation of a national pooling system of market returns which will help support the export of milk products.
Among the interesting proposals, we notice that, from now on, the Canadian Dairy Commission will manage a common fund made up of returns from the sale of dairy products. Previously, the commission deducted levies from producers' pay cheques. With this bill, the commission will ensure that the provinces fund exports proportionally to their milk quotas. For instance, Quebec which exports more dairy products than the other provinces, will be assured that producers will share equally in the risks and in the costs of the system, as was the case under the old levy system.
On April 4, I mentioned in this House that six provinces had signed a memorandum of agreement aimed at merging their milk supply systems. This bill is being tabled while Quebec, Ontario, Manitoba, Prince Edward Island, Nova Scotia and New Brunswick have signed a memorandum of agreement providing for the common marketing of industrial milk and fluid milk in these six provinces. Even if the provinces keep their present quotas, there will be only one class of milk and one price and no more distinction between industrial and fluid milk.
Quebec has played a major role in the signing of this agreement, I want to make that clear. I want to mention it because, even with the upcoming referendum on Quebec's future, the other provinces recognize the importance of an economic union with Quebec. Federalists say that, if Quebec separates, it will lose its present part of the quotas. I say this is false.
Come on. Quebec will keep the supply management process, mainly because it is in the interests of milk producers in other provinces. If the federalist threat were true, Quebec products would create a very harsh competition for dairy farmers from the rest of Canada and there could even be a shortage of these products on the Canadian market.
The fearmongering campaign of the federalists caught on rapidly in Quebec. One of their key arguments is the threat that a sovereign Quebec will lose half of its industrial milk quotas and that thousands of dairy farms will be out of business in Quebec. Roger B. Buckland, a vice-principal at McGill University, suggested in the Opinion rurale column of the March 2nd issue of the magazine La Terre de chez-nous that the United States would drive many dairy farms to the brink of bankruptcy.
According to him, the United States would refuse to maintain the tariffs agreed to under GATT in an agreement which would make an independent Quebec part of NAFTA. He argues that sovereignty would have a negative impact on Quebec dairy farmers since, within Confederation, they supply 48 per cent of the industrial milk sold on the Canadian market when Quebec has only 25 per cent of the population.
Fortunately, the same publication also ran a reply from a sociologist, Stéphane Paré, in its issue of March 30 to April 5. Here are some excerpts from this reply:
"Will Americans swallow us? Will they take advantage of the situation to make NAFTA prevail over GATT? Will Canadians produce more milk and will Quebecers have to reduce their production? Quebec, even if it separates, will remain a signatory to GATT, at least that is the way we interpret international law. It is called "state succession", and it means that the successor state abides by the laws and obligations of the country it was part of previously.
Mr. Buckland, I can just see you rushing in to argue that the rule of successor states does not necessarily apply. You are right. In fact, this is one of the reasons why I believe that Canada would be interested in siding with us against Uncle Sam. Canadians know very well that, without Quebec, they would be an easy prey for the Americans. Therefore, they would see the advantages of sitting down with Quebec to negotiate. If there is a possibility that Chile could join NAFTA, I fail to see why the signatories would be harder on Quebec. We must keep in mind that, for the U.S., Quebec is a more important economic partner than France is, for example. As for the fate of dairy producers in
Quebec, you should know that they do not need Quebec's independence to disappear. All they have to do is to let Mr. Martin do his thing".
Rational arguments always prevail over fear, and Quebecers will not be fooled on the day of the referendum. Why claim that a sovereign Quebec would not be allowed to trade with the rest of Canada, when we know that Canada's dairy production is an economic reality? Trade between Quebec and Canada exceeds $80 billion.
Do you think that it would be in Canada's interest to cut all ties to an independent Quebec? If Quebec loses, how can Canada expect to gain? The need to maintain a Quebec-Canada economic zone is obvious.
The agreement in principle reached between the six provinces that we referred to earlier is an increasingly relevant case in point. Dairy producers in the other provinces know that Canada will maintain economic ties with a sovereign Quebec. Economic reality will prevail over feelings of emotion and vengeance. Furthermore, the Quebec government is committed to maintaining a quota system, which it sees as essential to both producers and processors.
We know that scrapping this system would not be in the best interest of any dairy industry in Quebec and Canada. As the Bloc Quebecois demonstrated during the official opposition day on agriculture, excluding Quebec from the quota system would expose dairy producers in the other provinces to the fierce competition of their Quebec counterparts, in addition to creating a shortage of dairy products in those provinces.
GATT rules virtually preclude the imposition, by Canada, of restrictive measures to prevent Quebec dairy products from getting in. These rules seem to be open to a legal challenge. So, we will leave it to the lawyers.
Maintaining a common economic zone within the dairy industry will make it possible to resist pressure from the United States. Quebec and Canada will have to join forces if they want to counter constant American opposition to custom tariffs on our dairy products. The bill before the House, Bill C-86, will probably be challenged by the Americans.
It should not come as a surprise to us to hear that the U.S. are accusing Canada of dumping by reason of the fact that Canada intends to promote low prices for milk in dairy products for the export market. However, it will be up to our neighbours to the South to prove that Canadian exports have an injurious effect on their market. This will not be an easy task, for our products are exported in small amounts and generally processed.
At any rate, we know that all European GATT members subsidize their dairy exports. Canada is not there yet. Therefore, there is no reason to worry too much. However, if Canada were to act on the federalists' threat to break off any ties with an independent Quebec, the American ogre would be sitting pretty. The federalists also threatened Quebec dairy producers with the loss of tariffs negotiated with the U.S. under NAFTA if and when Quebec became sovereign. Come on.
The U.S. appetite for international trade is well known and I am convinced that they will not change their ways with a sovereign Quebec. Naturally, they will try to get more than they already have and to renegotiate the agreement with an independent Quebec. But the fact of the matter is that this is already going on now with Canada. Like Canada, Quebec will reply that customs tariffs are protected by GATT.
The Americans are putting the pressure on and will continue to do so, whether Quebec becomes sovereign or not. However, they do understand that money talks. With exports of $14 billion and imports of $27 billion to and from Quebec, it is not the economic considerations involving Quebec's dairy industry that would keep Americans from signing a new free trade agreement with us.
There is currently very limited trade between Quebec and the U.S. involving the dairy industry, because of high tariffs. It is easy to see that we would have a new free trade agreement without having to make concessions on agricultural tariffs. So, where is the catastrophe for the Quebec dairy industry in a sovereign Quebec?
Where is the catastrophe, if it is wrong to claim that a sovereign Quebec would lose half of its industrial milk quota, which would result, if we are to believe the fearmongers, in the closure of thousands of dairy farms in the province? Where is the catastrophe, if it is wrong to claim that sovereignty would adversely affect Quebec producers, because they provide 48 per cent of Canada's industrial milk production, while accounting for only 25 per cent of the country's population? Where is the catastrope, if it is wrong to claim that Quebec dairy producers will lose the benefit of the existing tariffs with the U.S., under NAFTA. Where then is the real threat?
The real threat was tabled by this government not long ago. The real threat for Quebec's dairy industry is the last federal budget, as I said a few moments ago, when I quoted a Quebec sociologist. Because of that budget, the federal subsidy for industrial milk is reduced by 30 per cent over a two year period.
We mentioned earlier that Quebec accounts for 48 per cent of Canada's industrial milk production. So, who do you think will bear the brunt of these cuts? It is pretty easy to figure out. These cuts amount to a loss of income of $3,775 for an average size dairy farm producing about 2,500 hectolitres of milk. This means a 15 per cent loss of income for a producer with a net income of $25,000. And this is not taking into account the
increased feed costs, following the elimination of transport subsidies for grain and feed. Quebec farmers have been left high and dry. The finance minister's budget does not provide any compensation for them, even though they are the most affected by it.
This bill will allow producers to adjust to the requirements of international trade agreements signed by Canada. As we said, this is why the official opposition supports Bill C-86. However, the problem confronting our daiary producers is certainly not solved, given the obstacles set in their way by the finance minister's budget.
What gives me hope however is the agreement in principle signed by Quebec, Ontario and the four other provinces to pool their milk supply system. This shows that a sovereign Quebec would not be isolated for mere emotional reasons, when it is economic considerations that really count.