Mr. Speaker, I would like to start by congratulating the hon. member for Richmond—Arthabaska on his work, on introducing this motion in the House, and especially on asking me to second it. I am proud to do so.
Contrary to what a Conservative member was saying a little while ago, this is the right time for the motion. For too long and on too many occasions, the government—whether that of the previous Liberals or the current Conservatives—has claimed that it could not defend managed supply, have assistance programs in the apparel and textile sector, and do something to save the bicycle industry because the time was not right. They claim that something is happening now at the World Trade Organization and we cannot frustrate our trading partners. If we did, they would take a dim view of Canada, and that would weaken our negotiating position.
Let us look at the facts. They did not have any plan to help the apparel and textile sector. The Hong Kong meeting was, at best, a continuation of the work. No major progress was made. In the meantime, we have lost a tremendous number of jobs in these sectors and are still doing so. Still there is no assistance program.
It is the same in the bicycle industry. They do not want to antagonize China and Vietnam, with the result that nothing is done. They are prepared to sacrifice our industries for some alleged progress in trade agreements. We know that the WTO is currently deadlocked, not only in agriculture but in other areas as well. Nevertheless, they still say that the time is not ripe yet to help an economic sector or an employment sector in Canada.
I have been listening to this argument for as long as I have been here: it is never the right time to introduce a motion defending anyone in Canada and Quebec.
In actual fact, passing this motion, like the one last November 22, would send a clear message at a time when the director general of the World Trade Organization, Mr. Pascal Lamy, is talking about a deadline of maybe July 31 to reach an agreement on agriculture.
It is important for the House to reaffirm its support for supply management, especially in relation to something new. It is obviously not directly a question of supply management in this debate but rather of a flaw in the Canadian customs system that makes it possible for milk substitutes to enter freely and undermine managed supply.
If this motion were adopted by this House—I hope and think it will be—not only would we be sending a clear message about this very specific issue of milk proteins, but we would also be sending a very clear message to the entire international community that our supply management system is very important to us. There is room for negotiation on various aspects. However, there is no room for compromise on the pillars of this system. We will try to sort out the necessary adjustments with the others.
I want to remind hon. members that the World Trade Organization is responsible for controlling international trade relations. It is not there just to outright lift restrictions on all trade relations. That is true for agriculture, culture and for other areas. In that respect, too often people think—I get the feeling this is the case for the Conservative party—that the equation is as follows: the World Trade Organization equals excessive easing of restrictions on trade. That is not it. The World Trade Organization is there to civilize trade and ensure that disputes are resolved without applying the might is right rule. That does not mean we necessarily have to end up with agreements that further ease restrictions on trade. This is particularly true when it comes to agriculture.
We would not be having this debate if, on January 31, the Federal Court had not confirmed the decision of the Canadian International Trade Tribunal opening the Canadian market to imports of milk protein concentrates. As hon. members know, for supply management to work, imports have to be highly regulated. Under this system, supply meets demand and price is agreed upon with processors and producers to ensure suitable income for agricultural producers. However, in order to be able to adjust supply to demand, we must ensure that the Canadian and Quebec market is not invaded through the back by foreign imports.
There was a real weakness there, which has been exposed in this House several times.
We are all well aware that new technology has made it possible to break milk down into several parts. Instead of importing milk into Canada, we are importing milk proteins. We can import butter fat and completely reconstitute milk from a number of products not currently covered under tariff lines.
Dairy producers have asked, and rightly so, that milk protein concentrates be considered as dairy products, just like milk, and be subject to tariff lines and quotas. This is not yet the case. In this respect, I must say that the federal government has not fulfilled its part of the social contract because—it must be said—supply management is a social contract wherein each party has certain responsibilities.
As we all know, when there is a surplus, producers are required to absorb it. Currently, given that there are no import quotas for milk proteins, these surpluses are growing and posing a real threat to supply management.
For example, we are told that in cheese production, milk protein concentrates could replace up to 25% of Canadian milk proteins. That will make for a very significant shortfall.
I remember that in a previous debate, someone stated that this type of import could cause losses amounting to $175 million for Canada and about $70 million for Quebec producers.
There is another aspect I think deserves some emphasis. Not only has this loophole weakened the supply management system, it has also undermined an agricultural development model, which is far more serious. If this system falls apart, we can say goodbye to family farms. Proof of this can be found in Australia and New Zealand. When they dropped the existing regulatory structure, which was not exactly like supply management, but quite similar, the number of farms shrank. Apparently, only industrial-scale farms were able to survive in that market.
For example, whereas the number of farms was declining by 1% to 2.4% in the years before deregulation in 2000-01, the rate of decrease in the number of dairy farms—I am still talking about Australia—went from 8.2% to 6.7%, 3.6%, 9.8% and 3.7% in the five years that followed deregulation. From nearly 14,000 in 1994-95, the number of dairy farms declined to just over 9,000 in 2004-05.
This is a societal choice that is being compromised by the federal government's inertia. This was true in the case of the Liberals, and it appears, unfortunately, that it is still true in the case of the Conservatives.
Judging by some members' remarks, we cannot say that we are going to drop supply management. Those members have voted on several occasions, as we have, to maintain supply management.
During the election campaign, the current Prime Minister promised to maintain this system. As I said when I began my remarks, the government will simply say that this is not the right time. But I think it is the right time. Management of the World Trade Organization is exerting an enormous amount of pressure on all the countries—not only Canada, but the European Union and the United States as well—to reach some kind of agreement by July 31.
In my opinion, passing this motion would send a strong message from all members of this House to the international community that we have a system that works well. Everyone agrees. We have a system that requires border control, first of quotas, then of quota-free tariff lines, and we have to maintain that system because it is our model of agricultural development.
For some time now, I have heard members referring to isolation, and that bothers me.
When he appeared before a committee, the Minister of Agriculture and Agri-Food, in answer to a question from the member for Richmond—Arthabaska, said that we were isolated. Are we that isolated? Of course, economically, Canada does not have the same dimensions as the European Union or the United States. When the Americans defend the Farm Bill, are they isolated? No, they seek to obtain the best for all their farmers, as we do during negotiations. When the European Union defends its subsidies and its domestic support, do we say that Europeans are isolated? No, we say that they defend their model of agricultural development that is the Common Agricultural Policy, the CAP. It is totally normal.
When it is Canada's turn to defend its farmers, then it is awful, because it seems that Canada will get isolated. I think that the government is playing on words. Wanting to defend agriculture and producers, particularly when it comes to the supply management system, will not lead to isolation. It is simply doing the work that it has to do as a responsible government. In this case, it is defending Canada's national interests. Indeed, Canada is not a nation; as you know, the Canadian territory is comprised of several nations. However, it defends what it has to defend and it will find the compromises that are necessary. However, shady deals are not acceptable.
It seems that the Conservative government clearly refuses to support the motion. That is the impression I get. I hope that at the end of the day, after our debate, the Conservatives will change their minds. It seems to me that there is nothing contentious about the motion. I will read the motion adopted by the Standing Committee on Agriculture and Agri-Food because I think it is important:
1. That, since all the parties support supply management, the government take immediate action to strengthen import control measures, which are crucial to supply management, by limiting the importation of milk protein concentrates and any product specifically designed to circumvent the supply management rules.
If we really want to keep the supply management system, we should come quite easily to an agreement.
2. That the government adopt regulations that would classify all milk protein concentrates, regardless of their protein content, under tariff line 0404, or a tariff quota to be negotiated.
I remind you that as far as I know, the Americans use that process. If the government does not want to do that and prefers to involve the whole House, very well. Then, legislation like that mentioned in the third part of the motion would be needed:
3. That the government invoke Article XXVIII of the GATT where necessary in order to cap imports of milk protein concentrates by immediately launching negotiations with its trade partners and by amending its tariff schedule through a legislative measure adopted by Parliament.
That goes to show that there are options. What may be lacking is the political will. As I indicated earlier, we are probably going to be told that the problem is not that the government does not want to ensure that all the conditions are in place for the supply management system to be maintained, but that the timing is not right. Those of us who have participated in negotiations in the past know that the timing is right to send a message, if we do not want to give the impression, as we did on the softwood lumber issue, that we are prepared to settle for a bargain basement deal.
The Americans heard clearly. Today still, we know that negotiations are conducted based on the framework agreement and that a deadline has been set. The matter has to be resolved by a given time on a given date. Canada is the one setting this deadline for itself. So, what happens? The Americans sit and wait. As the deadline nears, the “bananisation”, to use the word coined by Mr. Parizeau to describe the action of causing oneself to slip on a banana peel, intensifies, as we put pressure on ourselves. That is precisely what we are doing right now by saying that Canada is isolated.
I think that it is important to remember something else. Before the election, the Bloc Québécois held, here in Ottawa, a working meeting between the Union des producteurs agricoles and all the embassy and consulate representatives to explain what supply management is all about. It is a fact that some do not understand what it is about. They think that it is a subsidized system. They heard about it from the Americans, who said it was not a very good system, or from the Australians or New-Zealanders.
If they were presented with the nuts and bolts of this system, I am convinced that a fair number of developing countries which want to have their own agricultural model could find in it a system they could adopt to have human-scale farms.
Naturally, we were once again told that New Zealand and Australia once had similar systems, which they abandoned, and that was for the best.
I will read a small excerpt from a document written by Daniel-Mercier Gouin, an economics professor at Université Laval. He said, in the conclusion of one of his studies on supply management, that:
New Zealand's experience can be enlightening. The deregulation gradually implemented in this sector in New Zealand between 1985 and 1993, which has since become total, does not seem, at first glance, to have benefited consumers with regard to prices...
We hear that type of comment often. Furthermore, Mr. Gouin said:
Not only did consumer prices increase more than anywhere else [Australia, the United States, the Netherlands, France and Canada, over an extended period], but the increase was the most dramatic for fluid milk, which in 2002 was priced at four times its 1981 level.
The consumer would not come out as a winner in deregulation.
I know the Conservative government does not want to deregulate, but allowing these substitutes, the milk proteins, to enter is causing us to deregulate this sector.
Mr. Gouin goes on to say:
Nor did deregulation in this sector benefit New Zealand dairy producers, who lost the market powers they held through the regulatory mechanisms that administered the farmgate price of fluid milk deliveries.
Who benefited? The distributors did—not the consumers.
We can even come back to another Canadian example that has been cause for much debate in this House. During the mad cow crisis, when we were forced to dispose of surplus cull meat, I never saw the price of beef go down. At home I do the grocery shopping. There are some people who pocketed the profits, but it was not the agricultural producers or the consumers. It was the middleman.
Behind this desire to deregulate, there is the reality that this would benefit neither consumers nor agricultural producers. Consequently, it seems to me that our parliamentary responsibility is to defend the interests of the majority, that is of both consumers and agricultural producers. To that end, and in order to find the right system, we must do more than just pay lip service to the protection of our supply management system—we must take appropriate action. We must take action at the WTO, we must take action in Canada, we must take action in this House.
I believe that the government should give a very considered response to the committee's question and, as I stated, review the possibility of adopting a regulation to again classify protein concentrates under tariff item 0404, or returning to this chamber and invoking article XXVIII of the WTO. It is allowed, as you know. As the member for Richmond—Arthabaska mentioned earlier, a special NAFTA group has already examined the validity of this step.
Thus, there are no technical barriers; it is simply a question of political will. There are solutions. I would like the government to change its position somewhat.
I will close by mentioning the surveys. Some may say that agricultural producers will obviously defend their system because it provides them with a reasonable income. It is also true that the opposition parties will support it because 40% of Quebec's agricultural income is derived from supply management. For us, it is an important sector and, in addition, people have placed their trust in us and hope that we will defend them. But a survey of 1,500 Canadians conducted between May 15 and May 21, 2006, by Léger Marketing revealed that the majority were in favour of the results of supply management or of the system itself.
In closing, I have a statistic that I find fascinating. Fifty per cent agreed with keeping supply management and 35% said they were somewhat in favour of it. We know that the concept of supply management is not always readily understood and that, as I mentioned, it should be explained more. So, just imagine if the Conservative government were to take to the road to explain the benefits of supply management to the international community and to Canadians. The approval rates for supply management would easily be in the neighbourhood of 90%.