Mr. Speaker, I am pleased to be able to speak to this motion in the House of Commons.
I would like to begin by reiterating the words of the Minister of Agriculture and Agri-Food, who has emphasized the firm and unflagging support of the present government for supply management.
The system has served milk producers and processors well for many years and will continue to do so.
That is the crux of the matter, that is, support for supply management and the best approach to take in this connection.
Defending supply management represents a priority for this government. Why? Because supply management is an appropriate and efficient approach to take in agricultural production.
Not only does supply management enable producers to get a fair return on the market, but it is also ensures reliable quality and supply for consumers. Supply management is also a means of providing everyone in the value chain with a means of enabling them to collaborate and make shared gains.
It has been shown over the years that supply management makes it possible to achieve set goals. Of course it has evolved and been reinforced over time so as to support the interests of producers and consumers.
Supply management was the choice of milk, poultry and egg producers, and I can affirm that it is also the choice that Canada will firmly continue to support.
Let us look now at the action we have taken.
The present government is fully aware of the concerns of Canada’s milk producers concerning imports of milk protein concentrates. This is why the issue is one of the government’s big priorities.
The government has taken action to ensure that imports of milk concentrates containing up to 85% protein are subject to tariff quotas.
As for concentrates containing over 85% protein, we are keeping a very close watch on the situation. To date nothing indicates that there will be a rise in imports in this category.
In addition, the present government firmly believes that this question must be followed up in a spirit of collaboration, not of confrontation.
This is why the minister has invited sector leaders to form a task force in which all industry stakeholders can get together and consider not only specific questions concerning milk protein concentrates, but also long-term prospects with a view to boosting growth in the dairy sector.
The issues and challenges facing the dairy industry in Canada cannot be dealt with unless producers and processors work in close cooperation.
To that end, the executives of the Dairy Farmers of Canada and the Dairy Processors Association of Canada have accepted the minister’s invitation. They have undertaken discussions for the purpose of developing a joint position for answering those questions and getting the dairy industry growing again.
The minister assigned the following tasks to the working group: develop a strategy to promote growth in the industry; develop joint positions relating to standards for the use of milk and milk ingredients; address the questions of price setting and profitability; and determine how the industry and the government can combine their efforts to draw up plans that will enable them to meet other challenges in future, including the repercussions that the WTO negotiations may have.
The best way to solve these problems and many others is for producers and processors to work together.
There is no doubt that considerable pressure is being brought to bear on the dairy industry in Canada at present. Processors have concerns about the stagnant or declining market for dairy products, their capacity to develop new products and technologies that will help to develop markets.
Producers’ concerns focus on questions like the recent quota reductions, the size of the skimmed milk surplus and the associated costs, the erosion of domestic markets under the effects of imports of certain dairy products, and the pressure that Canada is currently under in the WTO negotiations.
As well, producers and processors are concerned about the continuing decline in milk consumption and about problems caused by prices and profitability. Milk protein concentrates are only one of the many difficulties that the industry is facing at present.
The best way to deal with problems in the industry, in the interests of both parties, is to sit down at the same table and find realistic solutions. This is by far the most desirable approach, because it allows us to find solutions that suit both parties. It is preferable to settle our domestic differences this way rather than to take the issue of concentrates to the WTO.
The government is well aware that the industry recommends invoking article XXVIII of the GATT, so that the government could impose a tariff quota on milk protein concentrates with a protein concentration higher than 85%. That approach would have serious repercussions that we must weigh very carefully. I will explain why.
First, invoking XXVIII could be negative in terms of Canada’s ability to pursue its broad trade objectives at the WTO. We are at a delicate point in the Doha Round negotiations right now. In other words, from a strategic point of view, this is not the time to initiate that kind of process.
The government is of the opinion that Canada can better defend itself and support the interests of dairy producers and, in fact, the interests of the entire Canadian agriculture sector, by preserving its credibility and its influence in the negotiations.
Some major member countries of the WTO have warned Canada against invoking article XXVIII at this stage of the negotiations, that is, that it could seriously undermine our credibility and influence.
If the industry presents a united front and works to achieve a common objective, it will be able to meet the shared challenges more effectively. To do that, we will continue to work closely with the industry, in order to resolve the question of milk protein concentrates. More generally, we are also planning to pursue consultations with the supply managed industries regarding Canada’s participation in the WTO agriculture negotiations.
The WTO agriculture negotiations have reached a delicate point in Geneva. The government is continuing to work closely with supply managed industries and with all industries, as the negotiations progress.
I know that the supply managed bodies have taken an active part in the process, and I would point out that their firm commitment to this is greatly appreciated.
This kind of joint effort is important for Canada, and it is also important that the other WTO member countries see it.
The Minister of Agriculture and Agri-Food continues to work closely with all stakeholders in the agri-food sector, including the sectors under supply management, and is exchanging information and analyses on the main issues in order to flesh out Canada’s negotiation strategy.
I want to assure you that this close working relationship will be maintained as the negotiations proceed.
Canada is a firm believer in the merit of the WTO process. We are confident in the process and our negotiating team has our unreserved support. We believe that, through the WTO, we can make the rules of the game fairer at the international level by eliminating export subsidies, substantially reducing trade-distorting domestic support measures, and greatly improving access to foreign markets.
We are determined to defend our interests and obtain the best possible results at the WTO for the entire Canadian agricultural sector.
At the same time, there is no question that the key issues essential to supply management are under substantial pressure at the WTO negotiations.
We must keep in mind that the other 148 member countries of the WTO are prepared to accept at least some tariff reduction and some increase in tariff quotas for all sensitive products.
We have expended a good deal of effort defending the elements we consider important to our supply management system, but we are under enormous pressure and no other country supports our position. Whatever the case, we will continue to vigorously defend our interests. We must also dismiss any idea of abandoning or simply withdrawing from the WTO process.
Canada will not be withdrawing from the negotiations, as the Minister has clearly indicated. We have to sit down at the table to negotiate an agreement that is beneficial for our export-dependent sectors and to defend our supply-managed sectors.
The second reason I am opposed to the use of article XXVIII of GATT at the WTO is that it would not be effective in putting an end to imports of protein concentrates from the United States and Mexico. Those imports would in fact be authorized under NAFTA, and we fear that they will continue. However they would no longer be coming from overseas, but from our neighbours to the south.
At least two major plants in the United States are manufacturing protein concentrates. These could easily fill the void created by the absence of imports from New Zealand and Europe.
The other risk, if Canada decided simply to stop these imports from all its trading partners, would probably take the form of a trade challenge from the United States. We all know how much the Americans like our supply management system. Not only might they challenge on this particular issue, but they could also take advantage of the opportunity to re-start old battles that we already won. This could mean greater risk for the entire supply managed sector. That is why the minister has advised us to play it safe.
In conclusion, I would like to add that the government is convinced that the best solution is for the working group to get together and formulate what will be needed to help strengthen the supply management system and dairy sector of the future to ensure a healthier, more stable agricultural sector.
We are confident that the working group will come up with practical solutions that will make it possible to avoid the risks and dangers to which we would expose ourselves if we took this issue to the WTO.
The best solutions to these challenges will be those that dairy producers and processors come up with together. The working group is exactly the right body to find solutions that are acceptable to all parties.
We will be very happy to learn the results of their work in the near future.
Finally, the essence of supply management, historically as well as under current conditions, is in the cooperation of all the links in the value chain, especially producers and processors, who work together to provide consumers with quality products.
It is thanks to this spirit of cooperation that supply management works well. In my view, the working group will be imbued with this same spirit in its formulation of realistic solutions that serve the interests of all the stakeholders in this sector.