Debates of June 7th, 2005

Excise Tax Act

[Guy Côté, Bloc, Portneuf, QC]

Mr. Speaker, I am pleased to rise again today to speak to Bill C-259, an act to amend the Excise Tax Act, more specifically to eliminate the excise tax on jewellery.

Perhaps a bit of history is in order. First, as mentioned on a number of occasions in our various debates, this tax was introduced in 1916, at which time it applied to luxury goods. Understandably, in the early part of the 20th century, clocks, watches and jewellery in general were considered luxury goods.

Members will agree with me that the situation has changed considerably over almost a century. In many instances, goods that were indeed luxuries in 1916 are now commonly used. Who does not own a watch? How many women have earrings? These are items one can find in any dollar store.

Another case in point is the fact that the tax applied to various goods, including items made in whole or in part of natural shells. Once again, if we go back 100 years or so, we can understand that jewellery made with natural shells might have been less common. Transportation has evolved so much since 1916 that it is much easier now. Such items can no longer be considered luxury goods.

Many groups have opposed this tax from the beginning and called for its removal. Over the years and the decades, there has been a steady stream of representations and testimonies to the successive finance ministers. Basically, they all asked for the same thing: the removal of this tax which was viewed as a drag on industry.

During the 36th Parliament, the member for North Vancouver introduced a very similar bill to have this tax removed. Also, as part of the prebudget consultation process, many representations were made over the years to have this tax removed. In that context, both in 1996 and in 1997, the Bloc Québécois supported legislation to remove this tax.

I am tempted to say that, this year, in a spirit of conciliation, to try to lay the groundwork so that the minister would bow to the arguments of this industry, the Standing Committee on Finance recommended that the tax be abolished over a five-year period. This recommendation was accepted, almost in a spirit of negotiation. Indeed, the numerous previous finance ministers had always ignored these recommendations.

We thought that, instead of proposing to abolish the tax immediately we could suggest doing it over five years, in the hope that the government might listen. And, indeed, the 2005 budget plan includes this recommendation to eliminate the excise tax over a period of five years. However, let us be clear. This was not what the industry and the vast majority of stakeholders were asking for. Indeed, they wanted the tax to be abolished immediately.

When the committee reviewed Bill C-259, it heard a number of witnesses. It seemed there might be some benefits to eliminating this tax over five years. In order to find out, I asked these people point blank if five years was good enough, or if they wanted the tax to be immediately abolished. They made it very clear that the industry wanted the excise eliminated immediately.

So, this was a compromise, at least in the eyes of the Bloc Québécois members sitting on the Standing Committee on Finance. This compromise, which was agreed to by the Minister of Finance for the first time, did not exactly meet the industry's demands. It only partially met them. By contrast, Bill C-259 proposed by the hon. member for Vancouver Island North effectively meets the industry's demands by proposing the complete elimination of this excise tax.

In this regard, I want to briefly quote an excerpt from the 2005 budget plan. The budget plan may not have been worded with the immediate abolition of the excise tax in mind, but I think it provides some very good arguments in favour of such a measure.

The 2005 budget plan provides that, “Phasing out the excise tax on jewellery ensures equitable treatment of the Canadian jewellery industry and recognizes that jewellery is available at all price levels and enjoys widespread consumption among Canadian households”.

Again, I realize that this wording was prepared with a phasing out period of five-year in mind. However, the case for the immediate elimination of this excise tax remains valid. Earlier, the Liberal member talked about the importance of ensuring that all the measures be taken in the context of all the other measures.

The excise tax would bring in approximately $50 million. I will submit that, compared to last year's budget surplus of $9.1 billion, the amount of $50 million is—all things being relative—a rather small amount. As far as the administration of this tax is concerned, the various stakeholders do not completely agree on that.

According to the Minister of Finance, it will cost about $1.5 million to administer, whereas several others have given figures of up to $14 million to administer revenues of $50 million. Based on that, I say that the cost to the government is no longer $50 million but $36 billion.

There are other reasons to be in favour of this bill. Now there is a variety of jewellery available at a broad range of prices, and the very large majority of people in Canada and Quebec buy it. There is a serious problem: the federal excise tax at present favours imports over jewellery made in Canada and Quebec.

Reference was made earlier to the importance of supporting various businesses and industries. It seems to me that maintaining this measure, even if for only five years, is not likely to encourage the growth of this type of industry.

We have also heard it said that the excise tax hindered job creation and the development of the Canadian jewellery market, and sometimes forced the industry to carry out some operations under the table or off-shore. If these situations can be put en end to as quickly as possible, I encourage my colleagues to move now and not wait five years. It seems to me that we need to find a way of putting an end to any measure that would in any way encourage the underground economy. I think that immediate elimination would do away with that problem.

My colleague from North Vancouver said that the growth of the Canadian diamond industry made it urgent to abolish a tax that he termed—and I totally agree with him on this—an anachronism, when Canada is the third-ranking producer of diamonds and might well, judging by various forecasts, jump to first by 2012.

I see I have but a minute left. I will therefore close by saying that the recommendations of the Standing Committee on Finance were made in a spirit of compromise, somewhat to our surprise. I must, however, thank the Minister of Finance for having retained those recommendations. The industry, however, is for the most part calling for the immediate abolition of the excise tax. We will be supporting this bill.

[Raymond Simard, Liberal, Parliamentary Secretary to the Deputy Leader of the Government in the House of Commons]

Mr. Speaker, this private member's bill, Bill C-259, asks parliamentarians to legislate the repeal of the excise tax on jewellery. I am very pleased to have the opportunity to further debate this proposal. It is an issue that I have been very active on and I was very pleased that we were able to have this tax removed over five years.

Given that Bill C-259 touches on the taxation system and has implications for the fiscal framework, let me begin by making reference to Canada's fiscal record over the past 10 years and the impressive social and economic progress that has followed.

This government has recorded eight consecutive surplus budgets and has reduced the federal debt by more than $60 billion. At the same time, more than $100 billion in cumulative tax cuts has been delivered since 1996, with a primary focus on middle and low income families, and more than $200 billion has been invested in Canada's highest social and economic priorities: health care and equalization; the well-being of children and families; learning, skills and innovation; affordable housing, community infrastructure; and the environment.

We achieved these results through our unwavering commitment to budget balance and fiscal prudence. Indeed, the commitment to fiscal responsibility is a cornerstone of this government. Furthermore, the federal budget tabled in this House on February 23 projects balanced budgets or better in 2004-05 and in each of the next five fiscal years.

According to the Organisation for Economic Co-operation and Development, the OECD, Canada was the only group of seven, or G-7, country to record a total government budget surplus in 2004, for the third consecutive year, and is projected to be the only country in surplus again in 2005-06.

Against this backdrop I would like to turn now to discuss private members' bills, in particular those that affect the taxation system. It is worth noting that the number of such bills tabled in the current session is now approaching 20, all of which propose tax relief in specific circumstances and could collectively represent a total fiscal cost of as much as $3 billion in annual tax relief measures.

Each of these private members' bills deals with a unique aspect of the taxation system. The measures that are proposed in these bills range from the income tax treatment of tools required by employment to deductions for public transportation costs and to the creation of a deduction for charity workers and volunteers.

There can be no doubt that these bills put forward by private members are done out of genuine concern for Canadians and their interaction with the taxation system. At the same time, it is important to remember that each and every one of these bills carries a cost for the fiscal framework.

For example, one private member's bill, Bill C-252, proposes a tax credit for fees pertaining to participation of an individual in physical activity or amateur sport. There can be little doubt as to the many benefits of physical activity and exercise, but with an estimated cost of over $400 million per annum, it is plain that this proposal needs to be rigorously evaluated against other fiscal priorities, including both spending priorities and tax relief priorities. That is to say, we all may agree that encouraging physical activity is a good thing, but we need to consider whether it is the best way to spend over $400 million per year or whether there are more pressing priorities.

This is one of the central points I would like to make: that no matter how laudable or defensible any given proposal might be on its own merits, it is imperative that we not lose sight of the broader implications for the integrity of the taxation system and fiscal framework.

For example, individual proposals, even those that are relatively inexpensive, may create unfairness relative to other taxpayers who then need to be considered as well. Bills may create difficult precedents, have unintended effects or even create opportunities for tax avoidance or evasion and hence end up costing more money. Indeed, the continued consideration of one-off measures may over time increase the complexity of the tax system and affect its overall operation.

Given these concerns, I would suggest that caution must be exercised when giving consideration to private members' bills affecting the taxation system. Rather than being considered on an ad hoc basis, what is required is that these proposals be managed in the context of an integrated policy and fiscal framework.

Indeed, this is precisely the type of approach that underlies the annual budget process, whereby the government consults with Canadians on their priorities for the next budget in order to help determine the important choices that must be made in a world of limited resources. It is this type of comprehensive approach to fiscal planning that has not only preserved the robustness and integrity of the federal tax system, but has also facilitated Canada's impressive economic and social progress over the past decade.

This performance, which has required some difficult choices along the way, provides the foundation for the continued delivery of initiatives that matter most to Canadians, including announcements concerning additional funding for health care, improvements to the equalization system and new funds for community infrastructure across Canada.

These and other initiatives can only be addressed where our economy continues to thrive and it is rooted in a prudent and disciplined approach to fiscal and taxation policy. Within the context of a comprehensive approach to consultation and evaluation of budgetary proposals, I would like to draw the attention of members to the important role that is played by the House of Commons Standing Committee on Finance in advising the government on the initiative proposed in budget 2005 respecting the excise tax on jewellery.

Going back to the lead-up to budget 2005, it is noteworthy that budget 2004 referred to the importance of suggestions from entrepreneurs and small business as part of the budget consultation process. In order to assist the government in identifying the best options for future consideration among the broad range of competing priorities, the government indicated at that time that it would seek the advice of the Standing Committee on Finance.

This provided the finance committee with an opportunity to assess the merits of proposed small business tax relief measures and to advise the government on the relative priority that should be accorded to them, taking into account limited fiscal resources.

In fact, the finance committee delivered in October of 2004 its second report on small business tax measures, focusing on excise duties and taxes as they affect Canada's winemakers, small brewers and jewellers. The finance committee put forward as its priority recommendation two options for phasing out the excise tax on jewellery over five years, either by reducing the rate or increasing the threshold at which the tax applies.

In deciding between these options, the committee indicated that consideration should be given to which of the options would be the more expeditious and involve greater administrative simplicity for the jewellery sector.

The finance committee went on to note that there are many other small business sectors that would benefit from the implementation of appropriate tax changes and that the committee would welcome comments from these sectors during the next round of prebudget consultations. Significantly, the committee was also expressly mindful of the fact that the number of worthy tax relief proposals brought to its attention exceeded the ability of the government to finance them all in a fiscally responsible manner.

The government was very pleased to receive the report from the committee and gave careful attention to the views of the committee on these and other proposals for tax relief in the deliberations leading up to budget 2005. Indeed, the government followed the advice of the finance committee in budget 2005 and proposed that the excise tax on jewellery, clocks and watches and items made of semi-precious stones be phased out through a series of rate reductions over the next four years.

The budget stated that this phase-out would be accomplished by an immediate reduction in the rate of tax on jewellery to 8% from 10% and would then be reduced by an additional two percentage points in each of the next four years until the tax was eliminated. This proposal sets out a clear plan to remove the excise tax to benefit the Canadian jewellery industry in a manner that is entirely consistent with the report and recommendation from the finance committee and that also respects the need to develop and deliver tax policy in a comprehensive, integrated manner.

Bearing these facts in mind, I must admit that it is somewhat disconcerting and disappointing to see that the finance committee is no longer willing to follow its own advice to the House that the excise tax on jewellery should be phased out over a number of years. Instead, contrary to its own report and recommendation, the finance committee has chosen to endorse the private member's bill, Bill C-259, which would repeal the existing tax, although not on all items, on royal assent.

Accordingly, I would like to conclude by noting that the endorsement of Bill C-259 by the finance committee simply does not demonstrate the kind of fiscal prudence and financial responsibility that has allowed Canada to enjoy eight consecutive surplus budgets.

[Merv Tweed, Conservative, Brandon—Souris, MB]

Mr. Speaker, is it not ironic that we would hear a Liberal government talk about making rash decisions, when in the middle of the night in a dimly lit room, it committed $4.6 billion of taxpayer money, overnight, in a heart beat? Now the Liberals are talking about a tax that has been imposed upon the Canadian public since 1918. All of a sudden they wake up and say that they cannot make this happen that fast. It is unbelievable the government has the conscience to even suggest that to the Canadian public.

I would like to congratulate my colleague, the member for Vancouver Island North. I know he has worked hard on the bill and I know this is not the first time it has been brought to the House. In the past the Liberals with their majorities voted against it. They had no intention of even moving on the bill had it not been brought forward by my hon. colleague and had it not been brought forward at a time when all members had an interest and concern about the tax. Then they decided to do something. I give my colleague great kudos for doing it and for having the perseverance to continue to present this in a way that Canadians expect and will appreciate when it receives royal assent.

This is termed a luxury tax and it is one area on which I would like to dwell.

It is interesting that we may go out and buy a piece of jewellery for ourselves or for our friends or family. Quite often at this time of the year, with graduation rolling around, jewellery is one of the things we look at to present to our young graduates. It is interesting that if it is a $10 piece of jewellery or a $50 piece of jewellery, there is tax on it. If I had the wherewithal, I could out and buy a $80,000 or $100,000 vehicle and there would be no luxury tax on it. It is about the difference between what is a luxury and what is not. In today's world many of the things we are talking about under this bill are necessities. They are items that we like to own, use and share with our families.

One of the members opposite mentioned the ability to export and that it did not create an unfair competitive advantage. Yet we know that Canadian diamonds can be bought cheaper abroad than in Canada because of this tax. If that is not a disincentive for the diamond industry, I do not know what is. Who would want to set up in Canada and start to manufacture these types of goods. We know the Internet has made shopping much easier and a lot more accessible around the world. I have heard, and I believe it probably to be true, that often a way of avoiding taxes and duties is dealing through the Internet.

It is an unfair tax. At the time it was presented, it was presented as a benefit for all Canadians and I believed it served its purpose. However, how many years later do we continue to pay a tax on something at this level? This is beyond me. I know that this is not new to the government. It is something of which it has been made aware. It has been aware of the issue for the past several years. As my colleague mentioned, the Canadian Jewellers Association was formed on the sole principle of eliminating this tax. It had no other mandate except to eliminate the tax. That would suggest is something that is long overdue. I congratulate my colleague for bringing the bill forward.

As a new candidate in the last federal election, this was the issue at the first door on which I knocked. Having spoken to the person involved and having a better understanding of it, I encouraged my colleague to bring it forward. I offered all the support I could garner to him and I continue to do that today.

The jewellery industry in Canada has a pretty interesting group of people. They are mainly small businesses, a lot of times family owned and operated. There are approximately 5,000 jewellery businesses in Canada. We are not necessarily talking about a small group, but when we spread it across the broadness of Canada, there is the inability of these businesses to get together to develop policy and lobbying groups to bring to the government and advance some of their cases and issues.

We know the industry employs about 40,000 Canadians. I do not think any of us here would suggest that is not a substantial employee rate. It is a $1.2 billion a year industry. Who would not want a piece of that in their constituencies across Canada?

I understand that when we get into the manufacturing side, it is an opportunity. I have been told by the jewellery industry and others that it has the potential to create a real second industry. I see it as an opportunity for remote and rural communities in Canada . It is probably an opportunity that we have as rural Canadians to entice an industry to come to our communities and set up shop. A lot of industries would look at the size of a community and suggest that it probably would not feasible.

By eliminating this tax, the hope is that we will be a leading diamond producer. It will encourage domestic jewellery manufacturing to grow. In the future this would be very positive for Canadians.

I sat in on many of the debates around the tax itself. If people are retailers and they have this tax imposed upon them, it very quickly becomes a burden of doing business. Some of the debate was around whether we should eliminate the 10% immediately or whether we should do it over a period of time. It was suggested that it may be a hit for the industry to take the 10% right off the top, but people in the industry were prepared to do that because they knew it was the right thing to do.

If we are given only one choice, then we have to look at whatever is put in front of us. However, fortunately through the perseverance of the member for Vancouver Island North, this rose above the government's priorities and it was brought in by a private member's bill. We are very fortunate to have had the opportunity to debate this, and to continue to do so.

One of the issues that was discussed with me, and I know the member talked about it, was companies that would set up because of our tax system. Business people are business people, no matter where we go. If they can make the tax rules work for them, they do.

We have seen that in some of this industry where the plateaus are hit and companies are collapsed. Then they start out as a second company under a new name. That is probably not good for the business people who are doing it, although they are within the guidelines. They probably want to contribute in another way to the growth of Canada.

I recognize that my time is quickly closing, but I want to emphasize again to the government that it is important it move on this. There has been the argument that it is irrational decision making, that it is a cost that will impact the government. We have seen the way the government has acted in the last few months. Its members have run around the country spending money. The time has come for this tax to be removed and it should be removed immediately. I am very pleased to support my colleague, the member for Vancouver Island North, to eliminate the excise tax on jewellery.

[Don Bell, Liberal, North Vancouver, BC]

Mr. Speaker, I would like to congratulate the member for Vancouver Island North on his initiative on this. I sit on the finance committee, and I was there when this item came forward for consideration. The history which has been given is correct with respect to this going back many years. The Canadian Jewellers Association was formed for the express purpose of having this excise tax removed. I believe this goes back to the time of the war effort when the tax was justified.

At committee we considered the proposal to remove the tax from watches, jewellery and clocks. The original proposal that came from the member for Vancouver Island North dealt with jewellery and the issue that watches had not been included. That was dealt with by virtue of a proposed amendment at the committee.

The main concern is, as diamond production grows in Canada, perhaps making us one of the largest diamond producers in the world, we want to ensure that jewellers and their business, particularly those located close to the border, are in a competitive position.

The primary discussion that we had at the committee with respect to the jewellery industry was whether it should be phased out in one move, as is proposed by the hon. member, or whether it should be phased out as proposed by the government. The previous committee was sympathetic and the government was agreeable with the minister that the tax should be removed

I would point out that there are some 12 or 13 private members' bills, many of which are very well-intentioned and have good value, as is the bill of my colleague across the room. However, the our concern is that the cost of all these well-intentioned private members' bills is something like $2.5 billion. In fact the lost revenue from this proposal alone would amount to $85 million a year when phased out. Those were the issues that we had to consider.

We received delegations from the industry--

[The Deputy Speaker]

The time provided for the consideration of private members' business has now expired and the order is dropped to the bottom of the order of precedence on the order paper.

Pursuant to order made Friday, June 3, the House shall now resolve itself into committee of the whole to consider Government Business No.14. I do now leave the Chair for the House to go into committee of the whole.

(House in committee of the whole on Government Business No. 14, Mr. Strahl in the chair.)

Supply Management

[Andy Mitchell, Liberal, for the Minister for Internal Trade]

moved:

That this Committee take note of supply management.

Mr. Chair, I appreciate the opportunity to rise in debate tonight in the House on the very important issue of supply management in Canada. Supply management, as I am sure the House is aware, is an important part of our agricultural industry. It represents 20% of our farm cash receipts nationally. In the province of Quebec it represents almost 40% of farm cash receipts. In fact, there are over 22,000 supply managed producers here in Canada, a very important part of the agricultural industry in Canada.

Let me say one thing at the beginning that I think is absolutely essential to make clear. The Government of Canada, the Liberal Party, supports supply management. In my view, it is clearly a system that works. It is one that provides consumers with a quality product, it provides an assurance of supply, and it allows for producers to get a reasonable return from the marketplace.

Over the years that support of supply management by the Liberal Party, by the government, has been a real support, one that has been there from the very beginning. In fact, we were there as a party when supply management was first developed and put into place, and that support has continued over the years.

We have defended supply management through a number of international negotiations. As recently as last July, when we were in Geneva and negotiated a framework agreement with our other WTO partners, we worked to achieve all of Canada's trade objectives, but at the same time we made sure we had a framework agreement that would allow Canadian producers to do what Canadian producers should have the right to do, and that is to choose the domestic marketing system they want.

I have met on a number of occasions since that time with representatives from countries in various forums across the world, and in all of those I have taken the opportunity to point out that Canada, in working to achieve its objectives in the WTO negotiations, was determined to do so in a way that allowed Canadian producers to choose their domestic marketing regimes.

We have worked hard with the dairy industry on a number of issues. We have dealt with it on labelling issues and we intend to deal with it on a series of other issues, including standards. As I mentioned, we are committed to achieving a WTO agreement that respects and allows for the continuation of supply management.

I know there are some issues around the WTO negotiations and other issues in terms of how to approach the current situation. There have been suggestions made by many, including the Dairy Farmers of Canada. One of them is that we should proceed with an article XXVIII action immediately.

Let me make something clear. I am not ruling out taking an article XXVIII action, but I want to make one thing absolutely certain. My bottom-line objective, what I am trying to achieve, is to ensure that the outcome of the WTO negotiations is a favourable one in respect of maintaining and enhancing the supply managed industries here in Canada. I want to make sure that the steps and the approach I take lend themselves to achieving that objective. In my view, taking an article XXVIII action at this particular time does not assist in achieving that goal.

I should point out that by choosing not to do it at this moment in no way precludes the opportunity to use it at any point in time as we move down the road. It is our right to use article XXVIII, and we are determined to provide border protection for our supply managed industries. I understand as well that if we take an action next month or the month after or the month after that, there can potentially be some cost to the industry in delaying it for a period of time. But that needs to be clearly weighed against what cost there would be if we impair our ability to achieve our objectives under the WTO.

The issue of an article XXVIII is not one of substance. It is not one of trying to achieve what it is we want to achieve, and that is to have a strong supply managed system in this country. It is one of strategy. It is about the best strategic approach to take. It is important that we work on this issue on an ongoing basis.

To that end, we now have the agreement of the Canada Border Services Agency that it will provide to us on a monthly basis the actual imports that are taking place in those products the DFC has identified.

It is also my intent, and I have made this clear to the industry, that we will sit down on a monthly basis to examine exactly what is taking place in terms of imports on those particular products so that we can evaluate exactly what kind of action we should be taking on an ongoing basis.

Clearly, it is not something we are simply saying no to, but it is something we are saying we need to balance the appropriate time to take such action, and if we achieve what it is we want to achieve, which is the successful outcome of the WTO negotiations, then we may not need to use that tool whatsoever.

I have talked quite a bit about the WTO negotiations. Let us be clear. Supply management in and of itself is not something that is the subject of those negotiations. What is, is a number of issues within those negotiations that can have an impact on supply management.

From Canada's perspective, we are trying to achieve a number of important objectives and goals of the WTO. We want to see the elimination of export subsidies. We want to see the reduction of domestic supports. We do in fact want to see increased market access--a real increase of market access. But we also want to make sure that it is done in a way that allows Canadian producers, as I mentioned earlier, to make their choices about the type of domestic marketing system they want to have. So we need to deal with these issues.

Each one of these pillars in the WTO negotiations has a potential impact on supply management, whether it deals with export subsidies, which has an impact on our ability to sell our products abroad, or whether it deals with domestic supports. There are issues with domestic supports in terms of our administered pricing. Although that does not represent a cash outlay for the government, the amount does count against the total AMS, the total amount of domestic supports we are able to provide.

There are discussions that are taking place in terms of product-specific caps and the basis upon which those caps would be established, and that has the potential to impact in terms of supply management.

In market access there is a whole series of issues. It has to do with the whole issue of tariffs, with our over-quota tariffs, with the expansion of our quotas. Canada's position has been very clear; that is, as a government, as a country, we need to have the flexibility to achieve market access in a way that makes the best sense for us in Canada. That is an argument that we have taken forward in the WTO. It is an argument that I make on an ongoing basis with our trading partners. It is one that we believe is a sound approach for us to take. So there are critical issues for supply management that are at stake in these WTO negotiations.

I should mention that one of the things we have been determined to do, and that we continue to do, is to engage fully the industry in respect of our WTO negotiations. That is something that is very different between ourselves and other countries. When we go and negotiate, we are not there alone; the government is not there by itself. It is there with the industry. It is there with the supply-managed industries. It is there with other Canadian industries. We work with them, as well as consulting with members of the opposition, which we did when we were in Geneva last year, and with the provinces to achieve our objectives.

I want there to be no illusion. There are significant challenges ahead that we need to address and that we need to meet. But we have dealt with this before. We have faced those challenges before, we have been successful in meeting them in the past, and we are determined to be successful in meeting them in the future.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Chair, I appreciate the minister being here tonight to discuss this. He has been open to discussion with us in the past.

The question on which we want a little more clarity is that we have a promise from the government to monitor what is coming over the border. For nine years we have seen what has been coming over the border. We have lost 50% of our ice cream market and we have not seen any action.

Maybe this minister is a little more energetic than the last minister, but we want to have a real clear message to producers that if this trade appeal that is going before the CITT fails, the government will stand up and apply article XXVIII. That is the question, and we are hearing a very different message from the international trade minister, who cannot seem to think under what circumstances Canada would stand up and apply article XXVIII.

We are not saying tonight that we want the minister to stand up and immediately invoke article XXVIII. We recognize there have to be negotiations. However, we want a message to our producers and to the international markets that if we do not have action soon and if we do not have our way, then we will invoke it. It is not a question of just having it in the toolbox.

Will the minister commit tonight to ensure that the government will apply article XXVIII if we do not have a reasonable response within a reasonable length of time?

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Mr. Chair, let me try to reiterate some of the things I have said in response to this issue, particularly in terms of dealing with other countries.

One of the things I said clearly in dealing with countries like Australia and New Zealand, et cetera, was, look, on the one hand you cannot take action against us when we try to export; you cannot take action against us when we try to control our borders to protect our supply management industry, and do not expect that you will get a reaction from Canada, because you know what? You will. If you attack our producers, if you attack their opportunity to have a livelihood, then we will respond.

Clearly what I said, and I will reiterate, is that we are determined to make sure we get a WTO result that achieves those objectives in terms of domestic supports, in terms of export subsidies and market access, but we are also determined to do it in a way that preserves the ability of our producers to choose to market their products using their own domestic choices, which means protecting supply management.

I will use the set of tools that allow me the best opportunity to do that. To me, the primary way of doing that is to achieve the results we want in terms of the WTO negotiations. If we are unable to do that, then we are going to have to take a look at what other actions we can take, and I have made it clear that we have not ruled out that an article XXVIII action is one of those.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Mr. Chair, I want to put the faith of the farmer in this discussion.

I come from a riding, Nanaimo—Cowichan, where there are many small dairy farmers. When they met with us a couple of weeks ago, I thought I was a pretty aware consumer. Part of their concern is not only in protecting the family farms and the small farmers in our communities, who are the lifeblood of our communities, but it is also in protecting the consumer.

One of the reasons they are asking for supply management and some protection is something called modified milk products. They asked me to look at the next package of cheese I buy in the supermarket. At the very top of the list is a product called modified milk products. There is no listing of what is in that product. The farmers said that not only is it hurting them in terms of their production, in terms of their ability to compete in the market for ice cream, but they are also concerned about what is in that product and what consumers are actually being exposed to.

I wonder if the minister could comment on that specifically.

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Yes, Mr. Chair, the hon. member points out quite correctly that there is a series of issues beyond simply the WTO trade-related ones, and one of them has to do with labelling.

It is my understanding—and I have my parliamentary secretary right here—that during the discussions in committee, specifically on Bill C-27, amendments were put forward to deal with the issues of labelling. From what I have been able to see, those amendments make good sense. The agriculture committee is a hardworking group of individual MPs and they do excellent work. I may not always agree with all of the members all of the time, but I have to say that it is a hardworking group of men and women, dedicated to the well-being of producers and of the industry as a whole. They have taken steps in terms of amendments to Bill C-27 to deal with the issue of labelling, and I am pleased that the committee saw fit to do that. If I am correct, and I will ask the parliamentary secretary, that was unanimous in terms of the committee supporting those amendments.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Chair, I am sitting in on the Bill C-27 hearings and the New Democrats brought labelling issues forward, as did other members. We have been working on that. The question is, is it sufficient to start to win back the 50% of our ice cream market that we have lost? We are losing serious chunks of our yogourt and cheese markets because we have seen nine years of indifference on this file. The dairy farmers have been pushing for this for nine years on labelling issues and suddenly now we are getting action. Are we getting action because we have a minority government? I would think so.

Is this going to be sufficient? We have seen nothing in the past from the government on the issue of labelling and nothing from the CFIA on labelling. It was just allowed to happen and all the while we saw our market share continue to erode. Is this a first step? Yes, it is, and it is a good first step, but are we actually going to see a second step? We have to look at the record of the government and it has been pretty poor on this file.

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Mr. Chair, a number of steps are taking place. The members in the New Democratic Party mentioned the labelling issue. As the hon. member for Timmins—James Bay mentioned, we have launched an appeal of the latest CITT decision. We have clearly said that we are going to monitor on a monthly basis and include the industry in that monitoring process. We have clearly stated what our objectives are in terms of the WTO result that we want to achieve.

We demonstrated it last July when we went to Geneva. We worked quite hard in terms of putting that framework agreement in a way that preserved our ability to continue negotiations along the lines we felt were important to take place. I believe that the labelling is one action but it is not the only one we have taken. We have worked hard to support supply management. We have not done it on our own. We have worked very much with the industry itself, with members from all sides of the House. That is something we are committed to continue to do as we go through a very critical point between now and when the negotiations are scheduled to come to the next milestone at the end of the year with the ministerial conference in Hong Kong.

[Diane Finley, Conservative, Haldimand—Norfolk, ON]

Mr. Chair, if over quota tariffs are lowered at the WTO negotiations, then one of the three pillars of supply management will be compromised. What are the minister's plans for the supply management industry should that happen?

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Mr. Chair, our plan is to pursue the negotiations in a way that allows us and all countries to achieve increased market access by using a combination of tools and allowing individual countries the flexibility to achieve it. I believe this is critically important. If a country has an over quota tariff, what is referred to as a great deal of water in it, and there are countries that have such over quota tariffs, they can go around and say they need this great big cut in an over quota tariff and that they are compliant, but the reality may be that in terms of increased market access, the result may be zero.

That is why we believe the more appropriate way to ensure that there is real increased market access, the quota itself should be expanded. That is the position we have clearly taken. We believe it is necessary in moving forward on these negotiations that individual countries such as Canada be given the flexibility in which to achieve the objective of increased market access. As I have said to many of our trading partners, be wary of some of the suggestions that purport to provide increased market access which in fact really do not.

[Diane Finley, Conservative, Haldimand—Norfolk, ON]

Mr. Chair, I rise in the House today to address supply managed agricultural production.

Canada's dairy, chicken, turkey and egg producers work hard to provide Canadians with safe and reliable food products. The supply management system is a domestic policy choice made by Canadian dairy and poultry producers. These industries are producer led and do not require government subsidies, but the government does have a very significant role to play in determining the future of these industries.

Outside of the farmer led production and marketing systems, producers are in need of competitive tax regimes, reduced red tape and representation of their interests at trade negotiations. This is the job of the federal government. It is up to the government to ensure that these industries can continue operating in the way that producers want and need them to.

Instead though, what the Liberal government has done is to pay lip service to supply management. Its policies say one thing but its actions say something entirely different. Conversely, the Conservative Party has an inherent respect for agriculture. Most important, we recognize that Canadian agriculture is diverse and that different sectors of the industry have different needs. We deem this so important that we have now enshrined this view in our agriculture policy.

At this point I would like to talk briefly about avian influenza and its effect on the poultry industry. I have spoken about this before in the House, but I want to make it absolutely clear that what happened in the Fraser Valley will not soon be forgotten. While CFIA officials were scrambling to contain the disease without a predetermined plan, marketing boards were at work ensuring that there would be very little market disruption in Canada's poultry supply and therefore market prices.

The supply management system has been credited for the effective market flow of poultry products during this crisis, but it must be remembered that it was the producer led structure of the industry that prevented market disruption and limited the effect of the crisis on the consumer.

Another issue that has affected supply management recently, and which is far from over of course, is BSE. When the U.S. border closed to Canadian cattle, dairy producers watched the market collapse for their veal calves, replacement heifers and cull cows. There has since been price recovery for some of these animals, but the problem of what to do with cull cows continues to plague dairy farmers. Over 30 month cattle are a real challenge because most of these animals were processed in the U.S. and meat production from these animals has very little foreign market access.

Prices for steers and heifers have rebounded from the lows of 2003, but prices for cull cows have remained depressed. The fact that a U.S. border opening for live cattle will not include over 30 month animals further reinforces the need to assist owners of these animals until increased capacity comes on line.

The Conservative Party of Canada has been calling on the government for a year and a half now to do something about the surplus of older animals in Canada. We have developed and communicated practical solutions to the government but our solutions to deal with BSE continue to be ignored.

As the livestock industry teetered on the edge of collapse, the Liberal Party chased its tail trying to find someone to blame for the BSE crisis. I know that international diplomacy is not a strong Liberal point, but instead of focusing on getting the border open, the government implemented poorly designed aid programs that failed to address concerns brought forward by producers that would be viable in the long run.

The 2003 cull animal program is a case in point. An obvious flaw in the program was the determination of cull rates. The cull animal program did not compensate producers on these full cull rates, rather program cull rates were determined by taking 60% of those values. This resulted in much criticism from all cattle producers, but particularly the dairy industry.

The average dairy cull rate of 25% is essential to the operating nature of supply management. The last program only allowed compensation of 16% of mature dairy animals.

Our suggestion to the government has been a cull cow program to compensate producers for all cull cows that have become a burden due to the lack of market access. A reduction of the national herd with compensation to farmers would serve three purposes. It would provide immediate direct cash to farmers. It would relieve farmers of the burden of feeding cattle. It would reduce the national herd size so that market prices could be maintained.

It was interesting that the agriculture minister's press secretary was quoted in the Medicine Hat News this past weekend regarding a possible total closure of the U.S. border to Canadian beef. Her comments sounded an awful lot like what Conservative Party people have been saying for over a year, and I quote her, “The Canadian cattle industry will look at a number of options, including a culling of older animals”. It is nice to see that the agriculture minister is finally coming around to see that the Conservative Party has been right all along.

Obviously the biggest challenge that supply management faces is the international pressure to reduce tariffs on all agricultural commodities. Without tariffs, Canada's supply managed industries are not able to predict the amount of imports and the whole system is disturbed.

During this round of talks at the WTO, the Prime Minister and his Liberals are once again promising to protect supply management, but based on the Liberals' record and their complete lack of accountability as demonstrated by the sponsorship scandal, I wonder if Canadian dairy, poultry and egg producers can really trust them.

The last time around, the Liberals sold out Canada's farmers by signing away article XI, which protected the industry with quantitative import restrictions. These were replaced with tariffs which have proven to be a failure at protecting Canadian producers from international competition. A case in point: we are witnessing substitute products designed to get around the tariffs displacing Canadian dairy products in the production of ice cream.

The Liberals' utter failure to do something about the importation of butter-oil-sugar blends is just another example of the government's negligence in addressing issues that impact Canada's dairy farmers.

The Conservative Party of Canada recognizes the challenges facing the dairy industry as it pertains to the use of modified milk ingredients. We understand that dairy producers are concerned with the use of non-dairy substitutes in the production of products which are similar to ice cream and cheese but not actually processed with authentic dairy products.

We recognize that this is a complex trade issue that affects supply management producers on one side and food processors on the other. To this effect, the Conservative Party supports the comments of Peter Gould, general manager of the Dairy Farmers of Ontario, who just today expressed the need for dairy farmers and processors to get together and hash out possible solutions that can mutually benefit both dairy producers and the processors.

Another partial solution that the Conservative Party is considering supporting is truth in labelling legislation that would ensure that dairy terms referring to milk and milk products are used accurately in the description and presentation of food.

This truth in labelling legislation would allow consumers the freedom to make informed decisions as to what food products they wish to purchase and consume. I encourage the supply management industries to work with other representatives of Canadian agriculture, including the export dependent sectors, to develop solutions that will meet the needs of all Canadian agriculture and which will be accepted by our international trading partners.

I would like to assure Canadian dairy, poultry and egg producers that their next government, a Conservative government, will not bargain their domestic interests away. Rather than be part of the problem like the Liberals, we will continue to be part of the solutions.

[Wayne Easter, Liberal, Parliamentary Secretary to the Minister of Agriculture and Agri-Food (Rural Development)]

Mr. Chair, I listened closely to the remarks by the member opposite. The member really tried to avoid saying much about the Conservative Party position on supply management. She talked about policies and actions.

I can tell that member this: it was the Liberal Party that brought in supply management and it is the Liberal Party that has stood behind supply management for 35 years.

Let us talk about the supply management policy of the Conservative Party. I will be really interested tonight to see if there are any former Alliance members not from Ontario who come here to speak on supply management, because I believe that the Alliance Party really controls that party over there.

We will look at its policy. I will read out the Conservative Party's policy statement of February 4 of last year and I ask members to listen closely:

A Conservative government will ensure that any agreement which impacts supply management gives our producers guaranteed access to foreign markets, and that there will be a significant transition period in any move towards a market-driven environment.

That, I believe, is the real agenda of that party over there, although it is trying to cover it up a bit with its new policy statement of this year, which really says that supply management remains viable and it will support supply management and its goal “to deliver a high quality product to consumers for a fair price with a reasonable return to the producer”.

Does that party really stand behind the pillars of supply management? That is my question to the member opposite. Does she really stand behind the policies? Does she have the support of her leader in doing that? And which policy of the Conservative Party opposite really exists? I believe it is the one which will really mean at the end of the day that there will be a “significant transition period in any move toward a market-driven environment”, because that is the real objective.

I am really very interested in seeing if any of the former Alliance members who are not from Ontario will be speaking in support of supply management here tonight.

[Diane Finley, Conservative, Haldimand—Norfolk, ON]

Mr. Chair, I find it interesting that the member opposite disqualifies any of us who live in Ontario from having a viable opinion on this, because I was with the Canadian Alliance, I supported our policy and I have been taking a very strong lead role in developing the current policy, a policy which, I should point out, was almost unanimously endorsed by the over 3,000 members of our party and delegates who were at our convention.

[An hon. member]

It barely passed.

[An hon. member]

Yes, it barely passed.

[Diane Finley, Conservative, Haldimand—Norfolk, ON]

Mr. Chair, I beg to correct the members opposite. It was virtually unanimous, the support for this particular position at our convention. If those members would bother to take the time to read through the results of that convention and all of our policies, which, let us face it, are very strong--we have a much more broadly based and a much more comprehensive agriculture policy than the Liberal Party has ever developed--then they would see that this is a party that truly understands and respects agriculture and is prepared to act for it, not in spite of it.

[Scott Reid, Conservative, Lanark—Frontenac—Lennox and Addington, ON]

Mr. Chair, I am sorry, but the irony of hearing Liberal members talking about things that have barely passed after this government is surviving on the basis of a tie vote, the only government in Canadian history to survive on the basis of a tie vote decided by the Speaker, is just really laughable.

I was at the Montreal convention of our party. I actually was involved in a fairly controversial issue at that convention, so I know a little about things barely passing, and I can assure members that there was widespread support for the pillars of supply management, for the policy our party now has.

I want to point out as well that I am a former member of Parliament from the Canadian Alliance and I am very much in support of the policy put forward at that convention. It was our agriculture critic who led the charge on it. She herself is a member of Parliament from Ontario and a former Canadian Alliance member.

What this indicates to me, in the special way in which the member opposite chose to word his question, is that he is trying to design it so he can find some way of finding someone who does not support our policy. Then he can leave the impression out there that somehow, despite a clearly stated policy, we are wavering, when in fact his government's policy with regard to agriculture has been one of absolute neglect.

It has been one of absolute neglect and there was not one penny in the latest budget for agriculture, not one penny in the worst year in agriculture in Canadian history. That is the record of the Liberal government. The Liberals should hang their heads in shame. That member in particular should hang his head in shame for not giving the slightest amount of interest to the farmers who put him here in the first place.

My question is simply this. Going back to 2003, our party has taken quite a strong approach on cull cows and as well on increasing slaughter capacity, which is of no small interest to those producers, both supply managed and not, who have cull cows in their herds. I wonder if the critic could comment on plans to deal with slaughter capacity.

[Diane Finley, Conservative, Haldimand—Norfolk, ON]

Mr. Chair, I would like to thank my colleague for setting the record straight on the reality of what happened in Montreal.

It is interesting that we hear a lot of talk these days, as we have since September or longer, about the government's stated priority of increasing slaughter capacity for our cattle in this country. The Liberals said they would make it a priority for the CFIA to expedite the opening of additional capacity when in fact there was a facility in Salmon Arm, B.C., which was slated to be open in July of last year.

Interestingly enough, when the CFIA went in to give the final approval, the operators were told that they needed to fix just a couple of things and if they fixed them the CFIA would be back the next week. The next week the CFIA went back and, oops, there were a few more things that had not been noticed the first time. This went on for months. This is not how we expedite opening up the capacity.

In fact, our party raised the issue in the House in the fall, five months into the process, and that was when, 48 hours after that discussion, finally the slaughterhouse magically was granted its operational permit and was open for running. If that is the government's idea of opening, encouraging and expediting slaughterhouse capacity, I would hate to see what it would do if it was trying to drag its heels.

Any increase in slaughter capacity is desperately needed in this country. We have been pushing for it, with real progress, but instead, any increase that has come has been in spite of and certainly not because of any government programs.

The loan loss reserve program for all intents and purposes does not exist. The forms are not available. Finally, after the five banks would not sign on, the government talked its own agency, the FCC, into coming on board with this. There was a great announcement about it, except that two weeks later when I spoke to my local FCC rep, he told me he had never heard of the program. If he has not heard of it, how can he do any good with it?

I ask members, what kind of effectiveness is that? It does not make it happen. There is a lot of talk, but it is A for announcements and D for delivery.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Chair, I appreciate the critic's comments. I have absolutely no doubt about her commitment to supply management. My question is about the fact that I have absolutely no belief that the member's leader has any commitment to supply management. As for any Canadians who fell for that, my God, what would they buy at the market? A cow with no legs?

The fact is that we have to look at the choices. Who did that leader choose for the international trade critic? A man who has been an avowed attacker of our supply management system at the WTO, a man who is on record as saying we slept through the WTO and how we had to stand up and make sure we would not do that anymore. That is who the international trade critic is. That is the man who is going to speak for the Conservatives at the WTO.

Let us look at the Wheat Board critic. The Wheat Board is one of the fundamentals of supply management. If we look at the website of the member for Cypress Hills—Grasslands, we will see that it is like a conspiracy theory; the black helicopters are coming.

He stood up in the House and made accusations about the farmer led Wheat Board being involved in illegal and corrupt activities. We had the national farmers union writing to the leader of that party demanding his removal because it was a disgrace, his treatment of and his lack of respect for one of Canada's great success stories, which is the Wheat Board. In fact, I will refer to the Western Producer of June 2, which talks about the sudden shift in the Conservative Party on supply management and which it suggests is being done so the party can win some votes in Ontario and Quebec.

I would find that the record on supply management support from that party has been almost entirely zero.

[Diane Finley, Conservative, Haldimand—Norfolk, ON]

Mr. Chair, I am not quite sure where to begin with all of that, because first of all there is an issue of credibility when the critic for agriculture for the New Democratic Party describes the Wheat Board as supply management. That is not the way it is. There are three colours to supply management and the Wheat Board ain't it.

Having started with that, let us establish where we are. First, the Wheat Board is not supply management. I would encourage the member opposite to understand that. Second, in terms of our international trade critic's credentials, let us remember one thing, that is, not all farmers in Canada are supply managed. Some 90% are not. Of our farmers in Canada, 90% are export oriented and international trade is very important to them.

In that critic's office is one of the greatest proponents of supply management in this country. It makes for a nice balance along with me; I am of the opinion that absolutely no sector of our Canadian agricultural groups wants to profit at the expense of another. We must take a balanced approach. We must not sacrifice one agricultural sector for another in any negotiations or in any progress.

Finally, just to clarify one thing, the leader of this party has been on record many times as saying that he supports supply management. He has signed the Dairy Farmers of Canada pledge, just as the leader of the fourth party did, so the fact is that he does support it. He has said so many times. He has met with them one on one many times. They understand his commitment even if the member opposite does not.

[Denise Poirier-Rivard, Bloc, Châteauguay—Saint-Constant, QC]

Mr. Chair, a little over a month ago, the Fédération des producteurs de lait du Québec launched a widespread campaign to raise awareness with MPs from Quebec about the importation of subsidized artificial milk ingredients. One after the other, federal MPs from Quebec were visited by local dairy producers, asking them to press the government to staunch the hemorrhage affecting their industry.

But what is the problem exactly? Why are dairy producers calling for firm action by the federal government at this time?

The dairy producers of Quebec and Canada want to raise public awareness of the fact that milk ingredients subsidized by foreign governments are coming through our borders. These ingredients are increasingly replacing milk in producing dairy products such as cheese and yogourt.

These modified milk ingredients, including casein, caseinates and butter oil with sugar, circumvent supply management regulations to compete with locally produced milk. In fact, this is loophole in the free trade agreement that foreign producers take advantage of to invade our market in Quebec and Canada, which is supposedly supported by a supply management system.

What are the three gold standards for supply management? First is production planning, whereby production must be limited to what can be absorbed by the demand, ensuring that dairy producers produce 100% of what will be used, nothing more, nothing less.

Second is a pricing mechanism that ensures a fair market income, so that producers do not have to rely on government subsidies, as they still do in many countries, despite the free trade agreements.

Third is import control, not the closure of borders but control, so that the industry can know how much is imported and that local production can be planned accordingly.

In a nutshell, these three standards, these three pillars are interdependent, and should one fall, the entire supply management system would collapse.

It should be noted right off that the system of supply management provides a number of benefits. By correcting the imbalance in the forces of a market without subsidies, supply management enables producers to earn a fair income from a market that has the unfortunate tendency to treat producers unfavourably. Supply management thus saves taxpayers' money, since producers do not enjoy generous government subsidies. It also benefits consumers, who can find Quebec and Canadian dairy products on grocery shelves at some of the world's lowest prices.

It can therefore safely be said that a market operating under a supply management system is the model promoting healthy and responsible farming in which all participants, producers and consumers, come out ahead. It is a win-win situation.

Members know, as I do, that there is no stopping scientific advances. In recent years, new technologies have made it possible to fractionate milk, as milk producers themselves say, into a number of elements and milk proteins. The problem lies in the fact that the Liberal government in Ottawa did not include this modern technological development in the application of the law.

Indeed, while real milk imports were monitored, new milk proteins appeared and were not considered to be in the same category as real milk. The law was therefore unable to stop modified milk products from entering the Quebec and Canadian markets, which, it will be remembered, operate under the supply management system.

Milk processors, those who take milk and turn it into cheese and yogurt, for example, are no fools. In the face of these new proteins even less expensive than local milk, because they are subsidized outside the country, processors have no qualms about using them in the manufacture of their cheese and yogurt.

Where does this lead? In the dairy products everyone eats daily, there are fewer and fewer real dairy products and more and more artificial dairy substances subsidized by foreign countries.

In addition, the entry of the modified milk products into the Quebec and Canadian markets has lowered the demand by processors for real dairy products from Quebec and Canada.

Since domestic demand dropped, dairy producers either have to cut production or sell their milk at a loss. Either way, the supply management system is completely off kilter and has been jeopardized as a whole.

As a result, dairy producers have lost nearly 50% of the ice cream market due to butter oil-sugar blends, which the Liberal government decided not to include in the list of imported ingredients subject to supply management. Ice cream is just one of many examples. As a result of these imports violating the principle of supply management, actual annual losses are set at $175 million for producers in Canada and nearly $70 million for producers in Quebec. This does not take into account the $100 million that dairy producers lost in 2004 alone due to fallout from the mad cow crisis. At that rate, given the many ingredients that slip through the overly generous loopholes, dairy producers estimate that their industry could lose up to 30% of the combined market share for all dairy ingredients. This is the real disaster they tried to warn us about by dumping no less than two tonnes of skim milk powder in the offices of 75 Quebec MPs to condemn the unacceptable inaction of this government.

The worst part is that, at the end of the day, the imported modified milk products subsidized abroad do not even benefit consumers here. In some cases, cheese and yogurt made of modified milk products are more expensive. We are robbing Peter to pay Paul and benefiting the processors at the expense of the farmers, while ensuring that the foreign dairy substitute products is prospering at the expense of our industry.

Imports without restriction and unlimited dairy ingredients, including milk proteins, prevents the dairy industry in Quebec and Canada from predicting with certainty the demand for milk proteins, which contributes to knocking down the three pillars of supply management that I was talking about earlier.

There is an urgent need for the government to put an end to this quiet demolition of the supply management system. Some farmers I met with at my office in Châteauguay made a very good point. They said that the losses caused by the imports will never be recovered and can no longer be minimized. The only thing the Canadian government can do is prevent further losses. For that, the government has to set new tariff quotas on certain dairy ingredients in order to protect the balance needed in a system like ours that operates under supply management.

I do not understand, nor do the farmers, the Liberal government's stubborn refusal to do anything about this. It is completely legal, within the framework of the WTO rules, to invoke article XXVIII to stop the foreign influx that threatens a system like supply management, which does not contravene world trade rules.

The use of article XXVIII of the GATT would just allow one very beneficial thing to happen to the dairy industry, and that is to update our tariff quotas list by using the techniques developed over the past decade. It would only be fair to fix the cracks in the foundation of our supply management system.