Mr. Speaker, I thank my colleague from Joliette for supporting this motion, which is asking the government that the first report of the Standing Committee on Agriculture and Agri-Food, presented on Thursday, June 8, 2006, be concurred in.
As usual, the Bloc Québécois is standing up for Quebec's milk producers. We have been working for a long time on the issue of milk protein imports. In committee, my colleague from the Bloc Québécois and myself decided to give priority to this motion regarding milk protein imports from various places, particularly Europe and New Zealand. These imports cause serious market distortions in Quebec and in Canada to the detriment of milk producers.
I want to thank my colleagues from the Liberal Party and the NDP who voted in favour of this motion. As a result, the committee adopted a very specific and very clear motion regarding milk protein.
I will read to the House the committee recommendations on this issue:
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. 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. 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 is what was requested by the Standing Committee on Agriculture and Agri-Food. As I said, the vote was split. Unfortunately, the government in power, the Conservative government, through its members on the committee, refused to protect the interests of dairy producers in Canada and Quebec. I hope that the Conservatives will correct that today, since I expect they will be able to participate in this debate.
I would like to give a brief historical overview of the milk protein concentrate issue. Since 1994 and the Uruguay round, Canada has consistently tried to limit the importation of milk proteins. Negotiations were underway at the WTO. Milk protein concentrates were classified under tariff line 0404. So far, so good.
In 1996, Canada successfully defended its position before the NAFTA panel as well. The problem arose shortly after, when the Canada Border Services Agency classified one milk protein concentrate, known in more technical terms as PROMILK 872B, under line 3502, which is tariff free. That made a huge difference, because the manufacturers of this milk protein could then export it without any tariff being applied. This meant that processors could take advantage of low prices to use more and more of this milk protein.
Obviously, milk protein imports rose in the wake of this decision by the Canada Border Services Agency. I have always said that the decision was a mistake. In 2003, the agency reviewed its classification and admitted that there was a problem and that it had been a mistake to classify that protein under tariff line 3502. PROMILK 872B was reclassified under line 0404. That had been Canada's intention all along, except during the brief time when the decision was made to change the classification.
Of course, the company that manufactures the protein contested the reclassification. The Canadian International Trade Tribunal decided in the manufacturer's favour, and the decision was upheld in January by the Federal Court.
We could lay down our arms and give up the fight, because a court ruled following the decision by the Canadian International Trade Tribunal. Milk protein would then be able to enter Canada and Quebec without problem and without tariff. But this would seriously threaten the whole supply management system. I will come back to this in a moment.
We know that 40% of farm income in Quebec comes from supply-managed industries. That is why it is so important for the Bloc Québécois and all my colleagues to protect the supply management system.
Canada lost a right it had negotiated at the WTO and always defended. What should we do at a time like that? We should stand up and make a decision. If we have the political will to defend our farmers, we will simply classify milk proteins under the proper tariff line. That is how a responsible government should act. This was not done, but it must and can be done. That is the beauty of it, and that is why we are making this motion.
The government, in cooperation with all the members of Parliament, can make a decision today that milk proteins will simply be classified under the tariff line they have always come under, except during the brief time when the Border Services Agency made that mistake, as I said earlier. Other countries do this. The Americans, correctly, do not hesitate to limit milk protein imports. Canada can follow suit. There are solutions. I mentioned them when I listed the recommendations we made in the Standing Committee on Agriculture and Agri-Food.
It is rather unfortunate, but milk and cream are being replaced more and more by milk proteins in cheese, yogurt and ice cream. How can this be remedied? Simple political will could allow this motion to be adopted. Clearly, this would be the first action to take. Besides, this is what Agriculture and Agri-food Canada officials who appeared before the committee have said. The government can take action to limit milk protein imports, if it wants to. Nothing is stopping it. The government has the right and the duty to control milk protein concentrate imports and has several options in terms of how to do so. Those options are indicated in the motion, as I said a few moments ago.
Pursuant to section 13 of the Customs Tariff, the minister can in fact modify the list of tariff provisions to change the tariff item number. Our interpretation is that of the Fédération des producteurs de lait du Québec who say that this could be modified simply via regulation, namely, a government decision that does not even require the support of Parliament. Others say that legislation must be passed. Not everyone agrees on which action to take. However, if that were the case, there would be no problem and I would like to assure the government of the Bloc Québécois' support. If the government were to decide to use that channel to modify this tariff line, all 51 Bloc Québécois members would agree, with no problem.
The government could also have recourse to article XXVIII of the GATT to negotiate a tariff rate quota with its trade partners. Canada would reserve the right to add tariff rate quotas, even in cases of failed negotiations with its partners. Has article XXVIII ever been used? Yes, by several countries. In the agriculture sector, the most recent example that comes to mind is the European Union, in 2002, concerning wheat and barley. At that time, European Union countries simply decided to protect their wheat and barley producers, which they successfully managed to do.
Article XXVIII of the GATT can be used, but there are consequences. Once negotiations with our trading partners have taken place under this article, we accept a 10% increase in imports. Therefore, it is not necessarily the first option we should resort to. We would prefer a government decision through regulation to prohibit or at least limit milk protein imports. Still, if necessary, we should not hesitate to use article XXVIII of the GATT. It is meant to be used for that purpose and it is totally consistent with WTO rules. We are not inventing anything by using this article; we are simply protecting what we have.
Our failure to do anything would obviously have serious consequences. Supply management is threatened. That is what I wanted to talk to you about earlier. There are three pillars to supply management: setting prices, limiting production through quotas and, of course, limiting imports. Therefore, if we weaken one of these pillars—let us take imports for example since that is what we are discussing here—we are compromising the whole supply management system in Quebec and in Canada.
Milk protein imports might replace over 25% of protein contained in milk that is produced here. That is what will happen if we do not act fast, if this government does not have the political will to protect what we have. The more milk protein we import, the more worthless milk powder will be produced, since processors will continue to use milk fat.
This huge quantity of milk powder is impossible to manage. Obviously, all this will cause a collapse in the price structure.
Furthermore, each tonne of milk protein concentrate replaces 2.6 tonnes of milk powder.
Imports cost $235 million in 2005. This is an increase of $60 million over 2004. We are talking about no less than $5 million a month. That is what it cost milk producers in Canada.
In Quebec, they are talking about a loss of revenue of $70 million. We can imagine what that represents in the dairy products sector, a loss of revenue of $70 million.
As I was saying, we estimate that, if the government goes on doing nothing in this file, milk producers will be facing serious economic consequences of some $500 million a year.
Supply management enables producers to make a fair income from the market without subsidies. During negotiations at the WTO, lots of countries have suggested or supposed for a long time that Canada is subsidizing its milk, poultry and egg producers, because of the supply management system in place. That is totally wrong.
Up to now, Canadian governments have always defended the system, but they are hesitating a little more now. All we have to do is look at the questions being put in the House to the Minister of Agriculture and Agri-Food since the beginning of the session, to realize what serious concerns there are. We need only think back to the arrival in Montreal, barely a few days ago, of the Director-General of the WTO, Pascal Lamy. He said that Canada should make concessions on its supply management system so that negotiations could conclude. The whole burden of proof, the whole weight is now on Canada’s shoulders. I think that is a lot to bear, when more than 150 countries belong to the WTO. I think that the other countries also have a lot of concessions to make before being able to ask us to disrupt our supply management system.
Also, in addition to avoiding subsidies, the system benefits consumers. They are provided with a basket of quality products that are among the least expensive in the world. A survey, which I can quote here and which has been done 18 times since 1997, shows that dairy products cost 16% less here on average than in the U.S. This system must absolutely be protected.
Speaking of consumers, one may wonder if they are paying less, given that imports of low-cost milk proteins are coming into the country. Unfortunately, the answer is no; consumers are not even benefiting from this.
I can return to the example of one of the great battles of the Bloc Québécois, on butter oils in ice cream. Imports of butter oils used in making ice cream rose 557% between 1997 and 2002. That cost Quebec milk producers alone more than half a billion dollars. That is not negligible and the government of the time did nothing to prevent these butter oil imports which were coming mainly from the United States, as opposed to milk proteins which came mainly from Europe.
All you need to do is go to the supermarket to buy good ice cream and carefully read the label to find out the ingredients. If the ice cream is made with modified milk ingredients, it is sacrificing the taste of real ice cream, which should be made with cream. There are still a few Quebec companies, such as Laiterie de Coaticook and Laiterie Lamothe et Frères, that make excellent ice cream with cream, but this is unfortunately no longer the case with most of the ice cream we find in our grocery stores.
The irony in all this is that the ice cream made by Laiterie Coaticook or Laiterie Lamothe et Frères is not more expensive than the ice cream made with modified milk ingredients. On the other hand, the other day in the grocery store I saw that a big multinational has decided to play the marketing card and offer an ice cream made with real cream. In addition to real cream, it contains modified milk ingredients, but the cream is there. This was indicated on the ice cream carton, but believe it or not, this ice cream costs a lot more than the other ice creams. That represents added value for this multinational, which uses it for marketing purposes; in reality, we could quite easily make all of our ice cream with good cream. Obviously, our dairy producers and consumers would be the winners if this happened.
Consumers are increasingly conscious of the issues.
On the butter oil issue, we did a lot of awareness raising with dairy producers.
I know that, just about all over Quebec, dairy producers have recently been going to grocery stores handing out leaflets to tell people what they could find in dairy products such as cheese, yogurt and ice cream. People are increasingly aware, and they are reading labels more and more.
The only thing is that, as I was saying earlier, in marketing matters, there is always some arrangement that can be made, some way of getting around the way things are done, particularly the way a product is presented. When that happens, people can sometimes become a little confused about ingredients. But still, they are increasingly aware of what is happening, even on the international level.
I just recently read a news release, dated June 12, about the Canadian dairy, poultry and egg sectors. These are the people who are part of supply management in Canada. The release refers to a survey Léger Marketing was recently asked to do.
This survey shows that:
—85% of Canadians agree that the federal government should support the supply management approach in the dairy, poultry and egg sectors. —98% feel that it is important to ensure Canadians have a stable supply of foods produced in Canada; 95% of respondents agree that family farms are an important part of the economy for rural communities; and 83% agree that supply management is a better approach than taxpayer-funded subsidies to ensuring an adequate quality of life for agricultural producers.
These numbers are interesting. They show that people are becoming more aware of how our system works.
Again from the news release:
The Canadian dairy, poultry and egg industries bring in approximately $7 billion in agricultural revenues, generate $39 billion worth of economic activity and provide jobs for several hundred thousand Canadians throughout the country.
These are very interesting statistics. As I said earlier, this is a very recent news release dated June 12, which is today. That is the consumers' perspective.
The milk protein importation issue has also generated a lot of support for dairy producers in Quebec and Canada. In April 2005, Quebec's National Assembly adopted a motion to support Quebec dairy producers in their struggle for adequate controls over the importation of dairy ingredients. The motion received unanimous consent from the National Assembly. A few months ago, I read in the newspaper, La Terre de chez nous, that Quebec's Minister of Agriculture was asking the federal government to act on this issue.
In May of that year, dairy producers gave bags of powdered milk to the Prime Minister of the day. Members of the Bloc Québécois, myself included, also took bags of milk to the Minister of Agriculture's office. People even built a wall of bags of milk in Montreal. These symbolic actions sent the message that bags of powdered milk had become worthless because of growing milk protein imports.
At the time, people wanted to use Article XXVIII of the GATT to limit milk protein imports. This issue has been dogging us for some time. Last January's Canadian International Trade Tribunal decision has made this urgency an emergency.
Other support includes that provided by 63 dairy processors. Finally, 75% of Quebec's processors, including the Agropur cooperative which processes over half the milk, support the milk producers' efforts. My colleague from Abitibi—Témiscamingue gave me a letter from the Amos cooperative, a processor in that region. I would like to quote from the letter. I will explain to a certain extent why even processors are supporting dairy producers in this situation:
—we hereby wish to inform you that the cooperative unreservedly supports the cause of our producers who, at present, are fighting to re-establish a tariff that would have our processors use, first and foremost, protein produced locally.
Given that this directly affects farm income and, consequently, the purchasing power of our major customers, you will understand that we in turn, as input suppliers, are suffering from the effects of this practice.
That is very explicit. I hope that Parliament will carefully consider this matter. We must absolutely protect our supply management system. As mentioned earlier, one of the pillars of supply management is limiting imports. That is what the government is being asked to do today.