THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Wednesday, September 25, 2024
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:14 p.m. [ET] to study Bill C-282, An Act to amend the Department of Foreign Affairs, Trade and Development Act (supply management).
Senator Peter M. Boehm (Chair) in the chair.
[Translation]
The Chair: Honourable senators, my name is Peter Boehm. I am a senator from Ontario and the chair of the Committee on Foreign Affairs and International Trade.
I wish to invite committee members participating in today’s meeting to introduce themselves, starting on my left.
Senator Gerba: Amina Gerba from Quebec.
Senator Housakos: Leo Housakos from Quebec.
[English]
Senator MacDonald: Michael MacDonald, Nova Scotia.
Senator Robinson: Mary Robinson, Prince Edward Island.
Senator Ravalia: Mohamed Ravalia, Newfoundland and Labrador.
[Translation]
Senator Woo: Yuen Pau Woo from British Columbia.
[English]
Senator M. Deacon: Welcome. Marty Deacon, Ontario.
Senator Harder: Peter Harder, Ontario.
Senator Boniface: Gwen Boniface, Ontario.
[Translation]
Senator Gold: Marc Gold from Quebec.
[English]
Senator Black: Robert Black, Ontario.
Senator Greene: Stephen Greene, Nova Scotia.
[Translation]
Senator Coyle: Mary Coyle from Nova Scotia.
The Chair: I wish to welcome all of you as well as people across Canada who may be watching on ParlVU. Today we begin our study of Bill C-282, An Act to amend the Department of Foreign Affairs, Trade and Development Act (supply management).
For our first panel today, we are pleased to welcome Luc Thériault, Member of Parliament for Montcalm, the sponsor of the bill; Yves Perron, Member of Parliament for Berthier-Maskinongé, the Bloc Québécois spokesperson for agriculture, agri-food and supply management; and Simon-Pierre Savard-Tremblay, Member of Parliament for Saint-Hyacinthe-Bagot.
Thank you all for being with us today. Before we hear your remarks and proceed to questions and answers, I would ask everyone present to please mute notifications on their devices. We are now ready to hear your opening remarks, which will be followed by questions from senators. You have a maximum of 10 minutes, which will be shared among the three of you. Mr. Thériault, the floor is yours.
Luc Thériault, Member of Parliament for Montcalm, sponsor of the bill: Thank you very much. Mr. Chair and members of this committee, I want to thank you for welcoming us here today. We have brought this bill in a co-operative and non-partisan manner, and its purpose is to protect supply-managed agricultural sectors from potential new gaps in future international trade negotiations.
The House of Commons agrees that it is necessary to protect and not undermine supply management. Several motions were adopted to that effect during negotiations at the World Trade Organisation, the WTO, on November 22, 2005; in the renegotiation of the North American Free Trade Agreement, NAFTA, on September 26, 2017; and, in this instance, for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership agreement, the CPTPP. Unfortunately, in the Trans-Pacific agreement, the Canada-United States-Mexico agreement, or CUSMA, and the agreement with Europe, the government lost market share, which is why we decided to introduce a bill to remove supply management from future negotiations.
According to figures from the Library of Parliament, supply-managed production accounts for more than 40% of agricultural sector revenue in Newfoundland and Labrador, at least 30% in British Columbia, Nova Scotia and Quebec, an average of 25% in Ontario and New Brunswick, more than 10% in Prince Edward Island and 2.5% to 10% in Alberta, Saskatchewan and Manitoba. From east to west, entire regions are being revitalized by producers who are united by the supply management model. This bill is therefore a positive for Canada as a whole.
We are delighted with the massive support the Bill C-282 has received in the House of Commons since it was introduced, particularly from the Minister of Agriculture and Agri-Food at that time, who made a commitment on behalf of the government to support it through all stages. At third reading, on June 21, 2023, 262 members voted for the bill and 51 against. The bill, which has the government’s obvious support, isn’t just a mere piece of legislation. It represents the clear will of the executive and legislative powers and a large majority of MPs, and it must promptly be put to a vote in the Senate.
Simon-Pierre Savard-Tremblay, Member of Parliament for Saint-Hyacinthe—Bagot: Good afternoon. I am pleased to be here in my capacity as the member for Saint-Hyacinthe—Bagot, the capital of agri-food processing in Quebec and Canada, and the Bloc Québécois’ spokesperson on international trade.
I want to say at the outset that this bill won’t tie negotiators’ hands; negotiators are always given political mandates, in any negotiation, at any time. That’s not new. Bill C-282 provides an additional tool in trade negotiations because Ottawa wants to be able to resist its partners. In that respect, the act will empower negotiators to state that Parliament doesn’t want to make new concessions. To give away market share, the government will have to go back to Parliament. The World Trade Organisation’s rules guarantee all countries protection for a certain number of tariff lines. The Americans don’t hesitate to protect, by force of law, sectors such as sugar and cotton, which they consider sensitive. The same is true of the Japanese and rice.
Ottawa suffers from a significant lack of participation by its MPs, who nevertheless derive their legitimacy from the democratic mandate they receive from the people in trade agreement processes. The European Union doesn’t hesitate to compel its members to debate and vote on what they want to see or not to see in future trade agreements.
The Parliament of the United Kingdom has a partial right of veto over ratifications. In 1966, Ottawa formally abandoned the resolution of 1926, which provided that the government could not advise ratification of an agreement or convention without Parliament’s approval. Canada has only a policy under which a minister may introduce, within a sufficient period of time, an implementation bill in parliament together with an explanatory brief, requiring parliamentarians’ approval before any ratification can be made, but that bill isn’t even strictly speaking a piece of legislation. What is more, we ultimately vote, as parliamentarians, on an implementation bill, not the international agreement itself, as a result of which any possible opportunity to amend it is moot. Our role is limited to putting our stamp on a finished product. And yet we are told that, in a parliamentary system such Canada’s, Parliament should be master of all things.
Under Bill C-282, we are ultimately taking one step forward to ensure more political transparency.
In conclusion, I would like to note that, since 1985, the Investment Canada Act has provided that the government may only accept investments that benefit Canada. Consequently, all agreements provide that the principle of investment liberalization is a fact, but subject to the act. In spite of that act, Canada has signed some 40 bilateral investment protection agreements containing chapters that address investment protection in some 50 agreements. Thank you.
Yves Perron, Member of Parliament for Berthier—Maskinongé: Good afternoon to all the members of the committee. The production of milk, chicken, turkey, and hatching and consumption eggs is governed by the supply management system. For this model to work, three elements, which may be viewed as the members of a three-legged stool, must be in exact equilibrium.
First of all, we control prices that are based on demand and average production costs; then we control the quantities produced in order to meet that demand. However, for those two legs to function, we absolutely must control the quantities that enter the system from outside in order to maintain market equilibrium. In the milk sector, which is the most affected by trade agreements, foreign products will ultimately occupy 18% of the market. That means approximately one in every five quarts of milk; that’s enormous.
As a result, when producers want to cut production to address market changes, foreign products will continue to come in, and our authorities will eventually be unable to regulate quantities entering the market, as a result of which the system will collapse. No one wants to see that happen.
Supply management guarantees fairness and predictability throughout the production chain. Producers can live off their farming with hardly any government assistance and without harming other links in the chain since revenues will be fair for each of those links.
Thanks to that predictability, producers can innovate without fear and invest in their businesses to make them more efficient. Supply management is a critical part of our economic ecosystem and helps maintain the vitality of our regions, preserve our family-size businesses and keep our towns and small businesses alive.
All these businesses combined through solidarity thus become one single extremely solid business, thus guaranteeing that our food resilience will remain stable. Their ability to handle unforeseen factors such as bird flu — thanks to the benefit of having numerous small production points limiting the spread of infections, as well as the stability they afford our citizens in supplying quality food at fair and stable prices — make supply management a significant asset that we must preserve.
One need only think of the price of a dozen eggs in the United States, which reached new highs during COVID and the bird flu epidemic, to understand the benefits we enjoy by keeping our system in good health. Supply management also lends stability to the agricultural ecosystem in our regions by providing stability for suppliers and ensuring that those suppliers are still up and running while other sectors that are in trouble are recovering.
Consequently, supply-managed production sectors don’t compete with other agricultural sectors. The two marketing systems have long coexisted and can continue to do so without harming each other. We need to stop viewing them as competing against each other. The two approaches must be viewed as complementary. For our producers, the concessions made in previous trade agreements are permanent blows that are only partially softened by ad hoc compensation. We can’t promise to protect supply management, to put it in our back pocket and then on the table at the first opportunity. It’s a matter of honesty and integrity. We all need to stand up and maintain the institutions and infrastructure in our regions, thus guaranteeing that they will remain vital. That will not prevent the government in any way from entering into international trade agreements that benefit all other sectors.
Many agreements were signed without causing any gaps before the sad round of concessions that started in 2008. We must put a stop to this dangerous slide. It’s absolutely feasible to sign flawless agreements; we simply need to have the political will, and the House has expressed that will on numerous occasions. We can help feed the world without compromising our principles and our food resilience.
This bill has been before the Senate for more than a year, and notwithstanding objections that may be legitimate, we are asking the members of this committee to proceed promptly and put this bill to a vote before all members of the Senate.
We thank the members of this committee for welcoming us today, and we are now prepared to answer your questions. Thank you very much.
The Chair: Thank you, gentlemen, and congratulations: that was exactly 10 minutes, so hats off.
Colleagues, I would like to make a brief statement before we go to questions.
[English]
I think it is no surprise to any of you, given my background, that I oppose the bill. For me, it is not about supply management but rather about curtailing the executive branch of government under the Royal Prerogative to negotiate international trade agreements. Therefore, I think it is not in the national interest — by that I mean Canada — to pass it, as it divides the agricultural community across the country and will have implications for future trade negotiations, particularly in the context of the Canada–United States–Mexico Agreement, or CUSMA, in 2026.
I chose not to speak to the bill at second reading and have refrained from media interviews since the bill was referred to this committee, as I will continue to do.
[Translation]
Regardless of my opinions, which I shared before the bill was referred to this committee, I intend to conduct these meetings fairly and to respect the opinions expressed by all the witnesses and to do so throughout consideration of this bill. I say that simply to clarify a point.
[English]
We will now move to questions, colleagues. You have four minutes each. Please keep your questions precise so that our witnesses will have enough time to respond.
Senator M. Deacon: Thank you all for being here.
Listening this afternoon, I feel it is my duty as a senator to give bills objective review and to implement our sober second thought. In that vein, the speed and the popularity of this bill, depending on the region and on the house, have certainly raised alarm bells for me. The statement of the chair today makes those alarm bells a little more potent.
It raises concern that this bill is good politics but not good policy. I feel that I would not be doing my job if I didn’t try to parse out the policy from this piece of legislation, and today, I do need some convincing that supply management, an already protectionist measure in a free-trading country like Canada, needs this further protection at what will likely be the possible expense of other industries in Canada that are much more exposed.
[Translation]
Mr. Perron: Thank you for your question.
Talking about speed and popularity, depending on the region or the party, Mr. Thériault demonstrated in his introduction that this bill is good for Canada as a whole. When the Bloc Québécois introduces a bill, people tend to think it’s just for Quebec. That’s why we explained it clearly. We have people in the room who come from across Canada. This is a bill that is good for all provinces and territories.
Why do we need this bill? I explained that briefly in my introduction. For example, in the milk sector, which is the most affected one, this represents 18%. That’s a lot.
I used the example of a three-legged stool to help understand supply management. The stool has to be balanced in order to stand. We control prices and quantity. If too many goods enter the system from outside, the system stops working.
Senators, this system was created in the 1970s. It’s extremely efficient. You need only look at the businesses in this sector. They are thriving. They are able to invest because they have predictability, which gives the entire agricultural sector stability. If we destabilize and undo all that, we will undermine confidence within the sector over the last three agreements. We have to stop all that. That’s why this bill is necessary. Despite the willingness that members have expressed many times in the House, concessions have been made during negotiations for recent agreements. I hope that’s a satisfactory answer to your question.
[English]
Senator M. Deacon: Thank you. We have had supply management in some form for 50 years, since the early 1970s. In these five decades we have seen numerous trade agreements — we have had a number of trade agreements — and supply management remains strong. What has changed either at home or internationally in the systems of free trade that you feel that it is now under threat such that we again require this legislation in 2024?
[Translation]
Mr. Perron: The answer is simple: What has changed is that we started making concessions in international negotiations in 2008.
It’s important to remember that, in all the years preceding 2008, apart from an update by the World Trade Organisation in the early 1990s in which we had made concessions somewhere, a whole host of international agreements were signed without affecting supply management. That has never prevented the country from signing favourable agreements.
What has changed, senator, is that we’ve started putting supply management on the table in the last three agreements. When we put something on the table, our partner will come back during the next negotiation and will want a little more. If we destabilize the entire system, it will stop working. We have to be honest with our producers. If we claim to protect them, we have to preserve them. These are relatively marginal markets for an American neighbour, for example. In all, Canada produces less milk than Wisconsin alone. These are not major gains for them. For us, however, they represent our basic ecosystem, which provides security for our rural areas.
The Chair: Thank you, Mr. Perron.
[English]
Senator Coyle: Thank you very much to our witnesses for being with us and for your hard work and passion in representing the supply management sectors in Canada — not just in Quebec, but in Canada. As we proceed with our questions, it won’t be because we are against supply-managed agriculture if we ask hard questions, okay? I think that is important to put on the table. We can support supply-managed sectors of agriculture in our country and still ask questions.
In that regard, I want to ask you a question. Commenting on this bill, the Canadian Agri-Food Trade Alliance suggests that the legislation creates a dangerous precedent and diminishes Canada as a free trade partner. Moreover, they believe that it contradicts established trade rules and severely constrains Canada in our ability to negotiate the best free trade agreements, or FTAs, for all sectors of the Canadian economy, with the result being a less ambitious free trade agenda for Canada and less commercially meaningful outcomes for our country.
Whoever wants to take the lead, could you tell me first whether you agree or disagree with these comments and why? In your view, how would the enactment of Bill C-282 affect Canada’s ability to negotiate trade agreements that are advantageous for Canada. Those are my two questions.
[Translation]
Mr. Perron: Thank you very much for your question. We are all aware of the background, and that’s why we’re here: to answer questions.
First, the people you refer to represent agriculture and agri-food exporters. They are often characterized as representatives of the agriculture sector. That’s an important nuance. They represent people who want to export. They say in that statement that they’re in favour of supply management, but they want you to keep it in your pocket. We need them in order to have a market advantage. We want them on the table. That’s what I was telling you earlier. If we fool around with that, we’ll endanger supply management.
Clarifying negotiation conditions at the outset won’t prevent negotiations. On the contrary, it will facilitate them because they will be clear to negotiators from the start: If we seek to change supply management, they won’t get that mandate. They’ll have to go back to the executive branch. In a pinch, a Parliament could decide to amend the bill because it wants to include it, but what we’ve included in this bill is a protection.
I’d like my colleague Simon-Pierre Savard-Tremblay to provide a few international examples. Some countries already protect specific sectors and have signed a host of favourable agreements for them.
Mr. Savard-Tremblay: I’d like to go back to an example that I cited in my introduction. Let’s just talk about Canada. I concluded my opening remarks on this. This 1985 act is an act of Parliament. Parliament said, “Here are the limits that we would like to see regarding such and such an element or investment liberalization.” Even if we agree on the principle, trade and free trade, that’s where we set the limit. Free trade isn’t a religion. It’s a principle that’s intended to be beneficial. If it isn’t, we must be able to set some limits.
That hasn’t prevented Canada from entering into 40 or so bilateral investment protection agreements. There’s a chapter on investment protection in some 50 agreements. This type of act has prevented nothing. We can go back to the United States, which has an act on sugar and cotton. Japan has one on rice. Can we say that those countries aren’t trading with other countries and that that harms them? When we talk about the United States, we’re talking about a fierce negotiator that we fear most of the time. In the case of the European Union, which has also signed many tens of agreements, we conduct debates with its members and we often seek mandates and votes from members before sending in negotiators.
The Chair: Thank you, Mr. Savard-Tremblay.
[English]
Senator Ravalia: Thank you for being with us today and for your advocacy. As a senator from Newfoundland and Labrador, I’m concerned about the regional implications of Bill C-282. In Atlantic Canada, our economy is highly dependent on export-driven sectors, particularly in fishery, aquaculture, forestry, natural resources and energy. Unlike other provinces, we have limited exposure to the supply-managed industries that this bill will seek to protect. By rigidly safeguarding supply management, we risk alienating export-dependent regions like ours, which rely on open markets and trade agreements to grow and sustain our economic activity.
How does Bill C-282, with its narrow focus on protecting supply-managed industries, risk undermining both agricultural and non-agricultural sectors in Atlantic Canada? Are we inadvertently placing these vital industries in a weaker position during trade negotiations? Thank you.
[Translation]
Mr. Perron: Thank you for that question. Based on the Library of Parliament figures that my colleague read to you during his introduction, I understand that you mentioned that perhaps there’s less agriculture in your province. For all agriculture in Newfoundland and Labrador, that represents 40%. It’s the province that has the most concentrated supply management. That represents the interests of many producers in your region.
You asked me if this will alienate other groups. Quebec is a major logging and mining producer. It’s an aluminum producer. It exports in various sectors. That doesn’t prevent it from supporting protection for the supply-managed sector that, I would remind you, has opted for a different marketing method.
From the outset, they’ve said, “We won’t export; we’ll self-regulate and provide the public with a stable, high-quality product at a stated price, and we will adjust. If people need less, we’ll adjust, and vice versa.” That explains why they can’t absorb quantities from outside. It’s not the same kind of market. According to some arguments, it’s less competitive than if it involves a big business.
Supply-managed producers are very forward-looking and innovative. You know that they’ve cut their greenhouse gas emissions sharply in the past few years. They’re making massive investments in their farms, improving animal health and well-being every day and setting requirements for themselves before the government asks them to do so. What enables them to do it? They wouldn’t be able to do it if they were in a competitive context, in a supply and demand “jungle”. What enables them to do it is the stability of the environment they’ve created. Preserving that foundation that, for foreign markets, represents relatively marginal market shares doesn’t amount to alienating other sectors. It’s not something that’s essential to entering into trade agreements, but it secures us an extremely sound and stable foundation.
Since I’m often on the ground dealing with agriculture and agri-food issues, I can tell you that many producers from other agricultural sectors rely on supply management principles. They won’t be setting up supply management operations tomorrow morning, but they will attempt joint marketing efforts. It’s a model that’s inspiring others. You mustn’t view the two as mutually contradictory. I hope that answers your question.
The Chair: Time is up.
[English]
Senator MacDonald: Thank you to the witnesses here today. It’s great to see all of you from the House.
Supply management has a long and successful history in this country. We know that. This bill aims to protect supply management sectors, but some critics argue that it prioritizes these industries over consumer choice and American competition. How would you alleviate these concerns that maintaining strong protections for supply management may potentially drive up costs for the consumers and limit the variety of products available on the Canadian market?
[Translation]
Mr. Perron: As I said earlier, all supply management does is establish a solid base. During COVID, we talked a lot about food resilience and our ability to feed people. We were short of masks, it was hard to get vaccines and respirators, and we realized we had to invest in a minimum number of vaccine structures or something else. Supply management gives us that, plus basic security. Our producers will be there, but they give us something more stable. I’ll let my colleague complete my answer.
Mr. Savard-Tremblay: Remember that we’re talking about five types of production and that many producers represent sectors that are experiencing problems on a day-to-day basis and that have some of the best quality animal welfare and environmental standards in the world. We are second to none. But processing is nevertheless a fact, and we still have a variety of products. That would answer the first part of your question. Second, there’s an increasing trend in trade agreement negotiations, be they bilateral, trilateral or multilateral — and my colleague Mr. Perron cited the COVID example, where there was a lack of independence in many sectors — are offering basic protections with partners deemed reliable in order to achieve greater independence in certain sectors.
Mr. Thériault: I wanted to add something. We saw during COVID that supply management really provided food security. Prices remained stable, we didn’t see any incredible increases, and we wanted for nothing: milk, dairy products, poultry or eggs. I’d say it’s a model that has a long history and is also a model for the future, for the 21st century. When I consider what the Americans do compared to what we do, I’ve always thought, and still think, that it’s what we all share, just as the House thinks: Supply management is a distinctive characteristic of Canadian identity compared to our southern neighbours. We mustn’t feel ashamed to come to the bargaining table and say we won’t change something because it distinguishes us. We won’t waste thousands of litres of milk because we’re overproducing and we’d like to sell it to you when we can’t control its quality. In my opinion, just on this, and this is a matter of a political decision; it isn’t a bargaining matter; it is first and foremost a matter of political choice. Then the negotiators, as good as they are, will get to work, precisely because they’re good.
[English]
Senator Boniface: Thank you very much for being here, and thank you for your answers.
I will pick up on Senator MacDonald’s question. I would like to know, prior to drafting the bill, how you weighed the other sectors’ interests in this, and how you gauged their reaction to it. I know what I’m getting in the mail. It’s likely the same as you’re getting in your email. I would like to understand how you weighed those variety of organizations across the agricultural sector and how their interests may be affected by this.
[Translation]
Mr. Perron: We talked to them. This touches somewhat on Senator Coyle’s previous questions. You told me the others feel threatened by that. The other sectors that oppose protection for supply management do so thinking that supply management will be useful to them in acquiring new markets. I think from the outset that that’s a wrong way to view matters. You don’t have to sacrifice your neighbour to get ahead. You have to stop thinking the two are mutually exclusive. I can seem to be very much convinced about supply management, and I am, but I also work for the other sectors as spokesperson for agri-food and supply management.
I’ve been to Asia several times with the minister, and I worked hard to open up the pork market, and the beef market as well. Which leads me to the following sidebar: There’s a trap in negotiations. You will remember the concessions that were made in the European agreement, enabling fine cheese to enter and hurt our local cheesemakers very badly; in return, Canadian beef and pork were able to enter the European market. However, we use a particular acid in cleaning carcasses that they don’t use in Europe. They refused to validate it as an equivalent. That’s called a non-tariff barrier. In that contract, we lost on both ends. We sacrificed supply management and gained nothing for our producers. That’s why our beef and pork producers, for whom I work and with whom I regularly meet, asked us not to concede and to eliminate those tariff barriers in the negotiations with Great Britain.
So we have work to do in that respect. Under supply management, producers are independent. It’s a self-regulated system. We simply must leave it alone. It must be understood that this system requires little or nothing in the way of government subsidies. Producers will have an investment program, but they will never request subsidies. When you look at dairy farms in the United States, they’re subsidized upstream. American citizens pay twice for their milk. That’s often the case with international production.
It’s an invaluable advantage; it provides a solid foundation and doesn’t compete with other sectors. I don’t know how to say it any other way.
Mr. Savard-Tremblay: I would say that one issue that would undoubtedly be more relevant in the medium and long term would be the harmonization of non-tariff barriers and health measures. That would definitely be a much better option than rejecting this bill.
I’d say we’ve often heard this argument before: We’re in favour of supply management, but we have to keep our cards in play and keep our options open. We’ve heard that argument advanced against this bill, but I think it’s the best argument in favour of the bill. It shows us that many people in the political class still imagine themselves hanging on to small gaps that can be little loopholes that can be presented to us as minuscule whereas, ultimately, when they’re added to all the others, what we see is a fairly imposing crater.
Senator Gerba: Welcome to the witnesses.
The benefit of following everyone else is that most of the questions have already been asked, but I nevertheless have a few questions that, as we say in Quebec, I’ll try to ask all at once in the hope there’s enough time to get some answers.
You correctly said in your introduction that supply management is actually used across Canada and benefits all farmers in the entire country. The proof of that is that 40% of them in Labrador rely on supply management, 30% in Quebec and Nova Scotia and 25% in Ontario. That was one of my questions: What do you think the consequences would be for producers, consumers and local economies if this bill weren’t adopted?
Mr. Perron: The consequences would be appalling. I’m going to use dairy production as an example because it’s best known. Some businesses have thousands of cows — that’s the way it is in the United States — and, as my colleague Luc mentioned, they dump thousands of litres of milk in fields every week because the cows are on hormones and produce a lot of milk. There’s no production control and they want to sell off stock. These are huge businesses. If I look at supply-managed businesses, which have an average of 80 cows, for example, they’ll disappear soon. If I have 10 families on a range in a rural municipality of Quebec, Newfoundland and Labrador, New Brunswick or elsewhere, and I remove supply management, I’ll be lucky if 1 family is still there in 10 years because one single business will have absorbed all the others as a result of growth, overproduction and economies of scale.
That means I’ll have nine fewer children in the village school. Multiply that by the number of ranges, and that’s the impact of supply management. With supply management, solidarity and working together, a milk producer in Gaspésie has the same transportation costs as a milk producer in Laval who’s located very close to the markets. That guarantees dynamic land use and provides a solid base. It means that small businesses in those towns can get by. Removing supply management means removing that foundation.
Senator Gerba: Thank you. Many detractors say that consumers pay more for their eggs, milk and poultry in Canada than in other countries that don’t have supply management. Do you agree with that statement?
Mr. Perron: Yes, sometimes it may seem that we pay more — I’ll try to move this along — but that’s fundamentally incorrect because we pay the fair price to enable each of the links in the production chain to have a good livelihood from what they produce. That’s the first fact that we have to bear in mind.
Second, as I said earlier, agricultural producers in the United States are subsidized upstream. When consumers buy their milk at a grocery store or convenience store, they’ve already paid for it through their direct and indirect taxes in the form of producer subsidies, which our producers here, under the supply management system, don’t ask us to do.
Consider the price of eggs, for example. In the United States, there are two businesses that, each alone, can supply Canada with all the eggs it needs. That gives you an idea of the size of the businesses I’m telling you about. What do you think happened when bird flu broke out? Eggs disappeared overnight. The price of eggs rose to $9 in Hawaii and from $1 to $4.50 in the continental United States. That’s what we’re protecting our consumers from with a stable and regular price and healthy supply. If one site is contaminated with bird flu, we isolate and clean it and all farms…. Remember what I said earlier: All farms coalesce into one megabusiness. All other farms operate as production sites that will offset the market. We have a supply —
Senator Housakos: Thank you for being here, sir. I have a few concerns.
Can you explain to me why this bill has languished so long, nearly one year, in the Senate of Canada? It’s a bill that was supported by the vast majority of members in the elected House. I should point out that, as of today, in 2024, 80% of Senate appointments have been made by the Trudeau government. We can see that the government has given priority to bills in the House. It doesn’t take a year or a year and a half for bills to become law. Why this reluctance?
I don’t understand the Trudeau government’s reluctance. In reality, since we’ve conducted free trade negotiations since the 1980s under the Mulroney and Harper governments, we fought for and defended supply management. We don’t have a choice because the truth is that, if you look at all our partners in all our free trade agreements — the Americans, Europe and Mexico — they take extreme measures to defend their agricultural sector. I think it’s inevitable and unavoidable that Canada does the same.
Mr. Perron: Thank you for that question, Senator Housakos. To be honest, I also don’t understand why this has taken a year. I’m aware that the Senate doesn’t operate in the same way as the House of Commons, but I expected to be here earlier, perhaps even this past January.
And so here we are today. I said in my introduction that I can understand why people are reluctant. That’s why you are conducting a study and answering your questions. We will also be available to answer any questions you may have even after the committee meeting. However, this has to move forward. You heard my colleague Luc say this: The vote was clear and our intention is clear. We don’t understand because the government supported the bill. It’s very rare to see a private member’s bill supported by the minister, who states, on behalf of the executive branch, that she will support it at all stages. That’s why we said in our introduction that this isn’t just a private member’s bill; it’s also a bill that has the government’s support. It has to move forward.
Mr. Thériault: We’ve worked very hard to make this a transpartisan bill. On the day that 262 MPs voted for the bill, we emerged into the foyer with everyone else, with all those who had voted for it, including the executive and the minister. So it wasn’t the triumphal feeling of having won and worked for ourselves alone. We completely cast that aside. Consequently, I do find it hard to understand why we’re still at this stage after a year and a half with a bill that is so important for our people. I won’t keep harping on this.
Why don’t we have…. We respected you. We respected the Senate. We greatly respect the Senate. It’s entitled to do what it wishes with bills. However, it seems to me that the time has come. There are people here who have travelled — and who will continue to travel — throughout our deliberations and who are waiting for us to leave them in peace. When you have three consecutive agreements that will afford them minor gains, then, with an accumulation of minor gains, you wind up with major gains.
[English]
The Chair: As the chair, I wish to offer a clarification.
This committee operates through a steering committee, on which all groups are represented. What we are studying is a private member’s bill. What we have been working on are two major studies: one on sanctions, one on the Foreign Service. We are currently involved in a study on Africa and, if people haven’t noticed, there are a few wars going on.
We’re doing our best to have these hearings now. They will be full and complete. We will continue. I appreciate the testimony of our witnesses.
Senator Woo: Thank you to the witnesses.
I want to ask you about the state of supply-managed companies, businesses, in the period you are most concerned about, which is when we entered agreements such as CETA, with the Europeans, and the CPTPP. We also renegotiated NAFTA.
Can you tell us how supply-managed sectors have been doing in the last decade in terms of their net cash receipts and net operating income?
[Translation]
Mr. Perron: The advantage of the supply management system is that it’s stabilized. Consequently, there’s a regular progression: increased market share comes with increased population. What’s unfortunate and what prevents sectors from growing fully and completely are the gaps that allow outside products to secure new market share. That notwithstanding, they are so efficient and well organized that they nevertheless manage to grow, and to go into debt.
Before borrowing $2 million or $3 million and investing it in your farm, stable, hatchery or chicken coop, you have to consider that that’s a lot of money; it’s a long-term commitment, and you have to have a certain predictability. These people can do it; they live well, and that’s what we love; that’s what we have to preserve, because that affords stability for our regions.
[English]
Senator Woo: In fact, [Technical difficulties] lost market share, which you are unhappy about. Net cash receipts went up by over 50% over a decade. Net operating income also went up by 50-60% over that same period.
It seems to me they are doing quite well even under the so-called concessions. They are quite small; we’re talking about five, six percentage points of market share. Even giving up those amounts of market share, it seems that our supply management sector is not only surviving but thriving. Would that be a fair statement?
[Translation]
Mr. Perron: You’re right in saying that they’re doing well in spite of it all, because they’re efficient and well organized. They could be doing even better. The milk sector is at 18%, not 5%. For the other sectors, it could be about 10%. That’s a lot. What you have to understand, Senator Woo, is that those concessions are permanent, aren’t they?
I assure you that, with Bill C-282, no one will say we’re cancelling the previous international trade agreements. All Bill C-282 says is that we won’t give up more market share. I take what you’re telling me as a positive factor for supply-managed businesses. That demonstrates their resilience and efficiency. Imagine where they might be if they’d had more support.
Mr. Savard-Tremblay: It’s important to note that market openings are progressive; you can’t create them with a snap of your fingers. Your question concerns industries in those sectors; our reality is completely different from that of producers. They are two separate things. I don’t think the issue is the same here.
Mr. Thériault: And I would add that the number of dairy farms in Lanaudière has now declined from 222 to 155. I would also say that what people want is to get producers closer to their plates. These are human-scale farms, not megaproducers that are no longer under any control and ultimately send poor-quality products across borders. You have to tell it like it is. You have to defend quality and the ecological character of supply management. Our production is logical, and other businesses are based on an illogical principle. Why should we pick up the pieces for our southern neighbours, who, according to what the negotiators told us, wanted to eliminate supply management? Seriously, you have to stand up to people like that.
The Chair: Thank you, Mr. Thériault.
[English]
Senator Harder: Thank you to our colleagues from the other place for joining us.
We have talked a lot about supply management. The bill we have before us is really about the Department of Foreign Affairs, Trade and Development Act. It prohibits the negotiation of supply management.
On that narrow point, can you tell me whether there is any other legislation anywhere in the world that uses a departmental act of foreign affairs or international trade that prohibits a particular negotiation?
[Translation]
Mr. Perron: As we said earlier, the United States protects its sugar.
[English]
Senator Harder: No, in a foundational act of a department.
You could have done a stand-alone legislation, but you chose not to. You chose to use the departmental act, which is very unique. There is nobody else in the world who has done that.
[Translation]
Mr. Perron: Let’s be innovative. I’m going to let Mr. Savard-Tremblay add his comments to mine. What I want to tell you, senator, is that we’ve arrived at this option after many years of trying to protect supply management by introducing motions, but we realized that wasn’t achieving the desired result. We figured that was it, the solution. Let me say it again: Every government has the authority to amend its acts.
The only thing it will have to do transparently is put the matter before Parliament again and amend this act.
[English]
Senator Harder: Are you saying that our negotiators haven’t done Canada well? Are you saying other sectors, maybe the auto sector or the steel sector or the other agricultural sectors should put up their hand and amend the departmental act as well?
[Translation]
Mr. Perron: No, absolutely not; that’s not at all what I’m saying.
[English]
Senator Harder: You are special.
[Translation]
Mr. Perron: Special…. That’s why I took the trouble to explain in my opening remarks how supply management works. We’re in a situation where, politically speaking, we’re being somewhat hypocritical with our supply-managed producers. We’re telling them that we love them and that we’re going to protect them, but, at the same time, we’re creating insecurity and destabilizing the system. One quart of milk in five comes from outside the country; don’t you think that’s enough? If we go above that, we won’t be able to continue guaranteeing the system’s survival. I’m going to let Simon-Pierre continue.
Mr. Savard-Tremblay: Briefly, the examples you cite, such as steel and wood, are strategic sectors of considerable importance, but none of them concerns food or food security. We’re involved in something infinitely more delicate here. In addition, in the Department of Foreign Affairs, Trade and Development Act, to which you referred, there may be no obligations, but certain things are stated. It provides that a negotiator must take into consideration compliance with human rights. That’s not a clear mandate, but it’s nevertheless stated that a negotiator may not sign an agreement that violates human rights. The act nevertheless lays down certain guidelines.
[English]
Senator Harder: But it doesn’t exclude. You are excluding from negotiations a particular sector. That’s the difference. That’s why I’m very concerned about this bill. Thank you.
[Translation]
Mr. Thériault: I’m somewhat concerned about the reaction of Senator Harder, who asks us if we think the negotiators did a bad job. Earlier I said that the negotiators are doing a good job. However, they should have clear mandates, and they will do their work in accordance with those mandates. We have never claimed that the negotiators were doing a poor job. No one should take what’s being done and this bill personally; on the contrary. Since we have three consecutive agreements in which we are negotiating gaps, those people have done their job, and everyone wants this model. Let’s protect it, that’s all; it’s as simple as that.
The Chair: Thank you, Mr. Thériault.
[English]
Colleagues, we are at this point where, whenever we have a rich and animated discussion, as we are having today thanks to our witnesses, we have a round 2. I have five senators who want to ask questions. What I propose, colleagues, if you are fine with it, is that we’ll have the five senators make their questions really sharp, or if you want to yield, that’s fine too. Then we will allow our witnesses to answer all the questions together as they see fit. I think that’s the fairest way.
[Translation]
Senator Gerba: I’d like to begin by clarifying something. We received a legal opinion indicating that Bill C-282 doesn’t adversely affect the prerogatives of the Crown. We can share that opinion with you if you wish.
That’s a subject that the chair has raised, but I would also like to note that 12 agreements have been ratified without making any concession with respect to supply management.
Have those 12 agreements that were ratified without concerning supply management had an impact on other products?
Senator Housakos: I’d like to note that this independent Senate, in which a majority of senators have been appointed by the Trudeau government, has shown on numerous occasions that, when it gives priority to a bill, it promptly adopts it, but that isn’t the case of bills to which it has not given priority.
In a situation in which your bill hasn’t been supported by a large majority of the Senate, by senators appointed by the Trudeau government, will you withdraw your support for the Trudeau government in the House of Commons?
[English]
Senator Woo: A dispute settlement panel raised by New Zealand under CPTPP made a ruling that partly went against Canada in September 2023. Canada is preparing a response. This has to do with dairy supply management TRQs, the tariff rate quotas. We haven’t come up with the response yet. If we pass this bill, are you saying that Canada should just walk away from that dispute settlement decision, not make a decision and just say that we don’t care?
The Chair: Thank you, senator.
[Translation]
The witnesses have four minutes to answer the questions.
Mr. Perron: The 12 agreements were positive for the entire Canadian and Quebec economy; that’s guaranteed. We’re in the process of doing that.
As regards prioritization, Senator Housakos, I don’t know if you’ve seen the news today, but it’s been included in our seniors’ pensions. It was also mentioned that we wanted supply management. We think that’s possible because the work began here; the chair assured us earlier that the work has begun and everything’s on track, so we’re pleased.
As for New Zealand, the dispute settlement process is important in trade agreements, and I believe we can defend our points.
Mr. Savard-Tremblay: The dispute mechanism between states is responsible for implementing and applying the provisions in the event of disputes under agreements ratified, signed and implemented. The bill that we are introducing will apply from the moment it is adopted and will also apply to future agreements.
All negotiations with respect to previous disputes, such as those with New Zealand, do not apply; they have no connection with this bill.
Mr. Thériault: Senator Housakos, you may think me naïve, but I have always believed that the Senate did an independent job and was a counterweight to the executive power, which, when in the majority, can at times govern as though it were an absolute king.
The Senate’s work is important. Today you’re telling me that, when the government supports a bill — which is the case here, as I demonstrated in my introduction — the order of priorities in the Senate usually changes and that we could have dealt with it in less than a year and a half; that’s what I’m hearing.
Senator Housakos, are you telling me that you operate in that manner on your side, the Conservative side? When a bill is introduced, do you have a catchword for intervening in the Senate so that you work the way the elected members wish?
The Chair: Thank you, Mr. Thériault, but it isn’t your turn to ask questions.
Senator Housakos: I can answer if the chair allows me time to do so.
The Chair: I would like to thank our three witnesses, MPs Thériault, Perron and Savard-Tremblay. Thank you for being with us today.
[English]
We are now moving to our second panel, and we’re very pleased to welcome the following witnesses: From Global Affairs Canada, we welcome Doug Forsyth, Director General, Market Access and Trade Controls Bureau; and Sandra Leduc, Executive Director, Criminal, Security and Diplomatic Law Division. From Agriculture and Agri-Food Canada, we welcome Tom Rosser, Assistant Deputy Minister, Market and Industry Services Branch. Welcome to all three of you.
We’re ready to hear your opening remarks, which will be followed by questions from senators. Colleagues, I just want to emphasize that we have before us officials now, not politicians. They are the technical experts. They will be giving technical advice and not personal opinions. Please bear that in mind as you ask your questions.
We’re ready to hear your opening remarks. Mr. Forsyth, you have the floor.
Doug Forsyth, Director General, Market Access and Trade Controls Bureau, Global Affairs Canada: Good afternoon, honourable members. Thank you for the invitation to appear before the Standing Senate Committee on Foreign Affairs and International Trade for its review of Bill C-282.
The bill proposes to amend the Department of Foreign Affairs, Trade and Development Act so that the Government of Canada cannot make any commitment in an international trade treaty that would have the effect of increasing tariff rate quota volumes or reducing over-quota tariff rates for dairy products, poultry or eggs. The intent of the bill is to reinforce the long-standing Government of Canada policy to maintain Canada’s supply management system, including its three pillars: production control, pricing mechanisms and import controls.
Past management of this policy has allowed Canada to successfully conclude 15 ambitious free trade agreements that cover 51 countries. Through these agreements Canadian businesses now have preferential access to over 60% of the world’s GDP and 1.5 billion consumers.
New market access for the supply-managed products has been provided in three agreements: the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA; the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP; and the Canada–United States–Mexico Agreement, or CUSMA. The decision to provide increased market access for supply-managed goods in the context of those negotiations facilitated the achievement of other market access goals, but was not taken lightly. Such commitments were accepted only when it was deemed necessary to conclude trade agreements that were in Canada’s overall economic interest.
[Translation]
For example, under those agreements Canada was able to maintain its preferential access to U.S. markets and to significantly improve access to European and Japanese markets as well as other important markets.
[English]
It is important to highlight that while new access for supply-managed products was provided in those agreements, integrity of the supply management system itself, including its three pillars, was fully maintained. Particularly in the case of CUSMA, there was significant pressure to dismantle the whole system, as that was the original negotiating position of the United States. That is, they were looking for full tariff elimination and no tariff rate quotas.
In recent years, the government has communicated a policy commitment to make no additional market access concessions for supply-managed products in future trade negotiations.
[Translation]
In the recently signed trade agreement between Canada and the United Kingdom, the Canada-United Kingdom Trade Continuity Agreement, Canada did not grant new access to markets for cheese or any other supply-managed product, even in connection with important issues for the United Kingdom in its negotiations.
[English]
Bill C-282 proposes to make the policy commitment into a legal requirement by amending the Department of Foreign Affairs, Trade and Development Act. This would strengthen the policy of defending the integrity of Canada’s supply management system by enshrining it into law. I note that while the bill has received broad political support, it could have implications for future trade negotiations. Along with my colleagues here today, we welcome your questions. Thank you.
The Chair: Thank you, Mr. Forsyth. Mr. Rosser, you have the floor.
Tom Rosser, Assistant Deputy Minister, Market and Industry Services Branch, Agriculture and Agri-Food Canada: Thank you, Mr. Chair.
Good afternoon, honourable members. I appreciate the opportunity to appear before the Standing Senate Committee on Foreign Affairs and International Trade in its review of Bill C-282.
Agriculture and Agri-Food Canada, or AAFC, works closely with Global Affairs Canada in advancing Canada’s free trade agenda, playing an important role in trade negotiations, particularly in areas related to market access for agricultural goods.
As said by my colleagues from Global Affairs Canada, the Government of Canada has had a long-standing policy to defend the integrity of Canada’s supply management system for dairy products, poultry and eggs. This includes clear commitments made by the Prime Minister and the Minister of Agriculture and Agri-Food not to provide any new market access for supply-managed products in future trade agreements. This bill is consistent with this policy.
Canada’s supply-managed dairy, poultry and egg farmers are a backbone of rural communities across the country, generating over $15 billion in farm-gate sales in 2023 and creating over 100,000 direct jobs in production and processing activities across the country.
With respect to the market access provided to Canada’s trade partners, it has only been provided in exceptional circumstances — as noted by Mr. Forsyth — such as the WTO Agreement and the three recent trade agreements. While not taken lightly, these trade agreements are overwhelmingly in the interest of Canada and to the overall benefit of Canada’s agricultural sector.
[Translation]
Furthermore, in the case of CUSMA, it is important to remember that the original negotiating position of the United States was complete elimination of the supply management system.
The outcome in CUSMA, while difficult and challenging, allows the supply management system to continue operating with respect to its three pillars: pricing, production and import controls.
The Government of Canada is also fully and fairly compensating producers and processors of supply-managed commodities who have lost market share under recent trade agreements.
As announced this past November, dairy, poultry and egg producers and processors are expected to receive more than $1.7 billion in direct payments and investment programs in response to the impacts related to CUSMA. This is in addition to over $3 billion in direct payments and investment programs for CETA and CPTPP. These programs will help drive innovation and growth in the supply-managed sectors.
In conclusion, the integrity of the supply management system has been successfully defended during multiple trade negotiations. The Government of Canada is working hard to ensure that the supply management system remains strong and that producers and processors operating in this system remain productive and sustainable.
Bill C-282 would protect these sectors from additional market access concessions in the context of future trade negotiations and, as such, is fully consistent with existing policy.
Thank you again, Mr. Chair. Along with my colleagues, I’m happy to take your questions.
The Chair: We will now continue the period of questions. As usual, you will have four minutes each.
[English]
Senator MacDonald: Thank you to the witnesses who are here today.
This bill apparently imposes restrictions on Canada’s ability to make trade commitments involved in supply-managed products, which potentially could limit the government’s flexibility in trade negotiations.
What impact do you foresee this having on Canada’s ability to secure beneficial trade deals? Could it affect Canada’s reputation and credibility in international trade discussions? Anybody can answer.
Mr. Forsyth: Thank you for the question. From a trade negotiating perspective, the passage of the bill would certainly narrow the range of concessions that could be made to reach an agreement. I think it would be reasonable to expect future negotiating partners to adjust their own approach to negotiations with Canada, which could well limit our opportunity to maximize the overall commercial significance of new trade agreements for Canada in the negotiation. I would add that some of these risks were highlighted by both my colleagues and me during the House committee as part of our testimony.
Senator MacDonald: Thank you. We have an upcoming review of the Canada-United States-Mexico Agreement in 2026. This could become a flash point in these negotiations. How might the enactment of this bill raise tensions or create new trade issues with the U.S. and Mexico? What strategies should or could Canada consider to address these challenges, especially during the major negotiations of trade agreements?
Mr. Forsyth: Thank you for the question. I think the upcoming 2026 CUSMA review is top of mind for all of us throughout the government as we turn our attention to that major file and its importance to Canada.
How important could this be? I look back at the original CUSMA negotiations, and, as I mentioned in my opening remarks, supply management was a key focus of the United States during the negotiations. We did manage to negotiate an outcome that maintained the access that we had to the U.S. market. It did provide additional access to the United States, but it was deemed essentially an existential outcome for the Canadian economy.
As we go into the review and we’re examining the range of what that review could look like, I think that Canada, the United States and Mexico are all doing that right now. We won’t have a good sense of what that will look like until after the U.S. election in November, but we need to be ready. We’re looking at a range of outcomes.
As to what we would do to address that, we’re starting to do our internal homework. Minister Ng announced a consultation process late in August to get stakeholders’ views on that. We have already heard from a number of stakeholders. We will take all of that information as we get past the election and into the review and decide the best course of negotiation for Canada.
How might this impact it? Honestly, all of our trading partners are watching. They are watching what this bill looks like, how it has moved through the House and now in the Senate. I don’t know how the U.S. will react to it, but I can’t imagine that it would be positive.
The Chair: Thank you very much.
[Translation]
Senator Gerba: Welcome to our witnesses. We often hear it said that Bill C-282 would be an obstacle to Canada’s ability to enter into trade agreements. Mr. Forsyth, would you please tell us, as a negotiator, how many chapters are usually devoted to agriculture and to supply-managed products in particular?
[English]
Mr. Forsyth: To clarify, was that related to the CUSMA?
[Translation]
Senator Gerba: Is there any discussion of the number of chapters in most negotiations concerning agriculture in general?
Mr. Forsyth: Thank you for that clarification.
[English]
In general, a fully negotiated trade agreement has about 30 chapters. They range from chapters on services to investment, intellectual property, goods, rules of origin — all those kinds of topics from A to Z. Off of the top of my head, agriculture would touch a number of those, but I think the major issues would be the goods market access as well as SPS, or sanitary and phytosanitary measures, and probably rules of origin. I may have missed a couple.
[Translation]
Senator Gerba: According to the information I have, agriculture is generally a single subject that occupies some 30 chapters. The witnesses on a previous witness panel explained to us that 12 agreements have been negotiated without any concession being granted with respect to supply management. Would you please give us or confirm for us a rough estimation?
[English]
Mr. Forsyth: To clarify, when I said where agriculture lies in the chapters — I understand where you’re going with the question, and, yes, you would deal mainly in the market access for goods section, but it does touch other ones. I wanted to make sure to clarify on the SPS side and rules of origin, but predominantly goods.
To your other question, yes, absolutely, we negotiated other FTAs that did not involve providing market access concessions on supply-managed goods at all. Just to note, we have done that over the last 20-plus years. As I mentioned in my opening remarks as well, that is the mandate that negotiators have going forward as well. Supply-managed goods are not part and parcel of the negotiations. That has been clear from the Prime Minister on down.
[Translation]
Senator Gerba: Do you think this bill is really an obstacle to future negotiations, and why? If you could provide us with more details…. How would it be an obstacle to future negotiations if this bill were passed?
The Chair: I’m sorry, but time is up.
[English]
Senator Ravalia: Thank you for being here today. Critics of Bill C-282 suggest that by legislating the exclusion of certain sectors like dairy, poultry and eggs from trade negotiations, Canada could inadvertently encourage other countries to adopt similar protectionist measures. How do you view the potential ripple effect of such protectionism on global trade dynamics? Specifically, how might this affect Canadian exporters in sectors that rely heavily on open markets and tariff reductions, such as energy, manufacturing and agriculture?
Mr. Forsyth: Thank you for the question. With respect to protectionism, I think we are seeing more and more protectionism. It is just the environment that is in the international trade world right now for various reasons.
Something like this would certainly build on all the protectionism that is already out there, and it would put into law the policy mandate that we already have. We have been negotiating agreements without it. This has certainly caught the view, as I mentioned, of our other negotiating partners. In any future negotiation, if this bill were to come into law, then certainly by taking things off the table up front, you would see other negotiating partners do that as well. That is one of the bigger impacts that we would likely see at the negotiating table.
Would it have an impact on other sectors? It certainly could. All countries have sensitivities. We would expect to see more and more of these sensitivities highlighted in a negotiation. It could have an impact on our other sectors, for sure, where we would like to see more exports.
Senator Ravalia: Thank you.
Given Canada’s leadership in promoting free trade globally, does Bill C-282 risk undermining our credibility in advocating for open markets? Could this shift towards protectionism impact Canada’s ability to negotiate future trade agreements that benefit all regions, including those reliant on global exports?
Mr. Forsyth: Thank you for the question. It could; it’s a risk that this would happen. We don’t know that for a fact. As I mentioned, this would codify our current practice. It could have the impact that you flag, but we don’t know. Honestly, there certainly is a risk that we have highlighted in front of this committee and elsewhere as well. I think you certainly have heard that from other witnesses, too.
Senator Ravalia: Thank you.
Senator Woo: Good afternoon. Does the current policy mandate to not allow any additional market access in the supply-managed sectors extend to the way we manage our TRQs, for example, under an adverse ruling from the dispute settlement panel such as the CPTPP decision in September 2023?
Mr. Forsyth: Thank you for the question. With respect to that ruling, the challenge that New Zealand took into the CPTPP was quite similar to the challenge that the United States took under CUSMA. Despite the mixed review that we got from the CPTPP panel, we continue to believe that we have implemented that decision in a manner that respects what the panel’s decision was. I think there is some disagreement with New Zealand, and we’ll see what happens with that, but I think that’s the lay of the land.
Will this bill have an impact on that? No, because the bill is about increased access. I think the challenge from New Zealand and the United States was about how we administer the tariff rate quotas.
Senator Woo: My question is whether the current policy mandate precludes us from changing the way we manage our TRQs. Regardless of how right we feel we are about it, if there were a clear adverse decision on the way we manage our TRQs, will we say, “I’m sorry; it’s off limits. It’s our policy position”?
Mr. Forsyth: No, Canada has consistently implemented adverse decisions against it. I would anticipate that would continue in the future if we were to lose.
Senator Woo: So if the Americans were to come back to us — because they lost that decision — in the renegotiation in 2026 and say they were duped the first time around because the wording obviously favoured Canada, and they want to change the wording so that they don’t have the same kind of adverse decision on their ability to access Canadian markets through downstream users of cheese products and so on, would this bill preclude us from negotiating that request?
Mr. Forsyth: This bill would preclude us from increasing any market access, yes. Yes, it would.
Senator Woo: So if the Americans said they were very unhappy with our decision and they needed to take a look at the wording again, would we say, “Sorry, off limits”?
Mr. Forsyth: If this bill were enacted, and they wanted to increase market access, yes, we would.
Senator M. Deacon: Thank you all for being here tonight. It’s greatly appreciated.
I’m going to ask a question that is very similar to one that my colleague Senator Harder asked it in the last round, but I would like to ask it again. It’s for Ms. Leduc, who is right beside me here. Are there any comparable laws on our books that exclude a certain sector from trade negotiations?
Sandra Leduc, Executive Director, Criminal, Security and Diplomatic Law Division, Global Affairs Canada: Unfortunately, I can’t answer that question because it deals specifically with trade law, but I would take it back.
Senator M. Deacon: That would be great if you could take it back. When you take it back, could you also look at what that answer is internationally? I’ll focus on peer nations in Europe, Australia and New Zealand. I know the EU has a common agricultural policy, but I don’t know what it means internationally. If you could help us out, that would be great.
Mr. Forsyth: I think I can answer that question. The answer is no; we’re not aware of any other country that would prohibit the negotiation of a sensitive product in that market.
Senator M. Deacon: Okay. Thank you. I appreciate that.
This other question for Mr. Rosser. Something you mentioned was about the supply-managed sectors receiving compensation for the concessions we made for market access in trade agreements like CUSMA. I am wondering how this compensation compares to compensation other agricultural sectors receive when we allow foreign competition for their products. Is there any sort of comparison you could give us?
Mr. Rosser: I appreciate the question. Certainly, we offer programming and supports of various kinds across the agri-food value chain. In terms of explicitly compensating agricultural producers and processors, I can’t think of a close precedent to what was done in this particular situation where the government in the immediate aftermath of the conclusion of what turned out to be the CUSMA negotiations promised full and fair compensation. There was a process of calculating what the impact of these concessions was, and compensation was offered in line with the estimated magnitude of the impact and in the manner preferred by those impacted.
Like I said, we have offered programming to other people. I can’t think of any direct precedent to that, certainly not recently.
Senator M. Deacon: Thank you. Perhaps an easier piece that might be more straightforward in trying to garner the bigger picture here, I would like to have some statistics possibly. Of the Canadian GDP, how much does the agricultural sector account for? How much of that is made up by these supply-managed industries?
If you don’t have those numbers but could share those numbers with me, I would appreciate it.
Mr. Rosser: We would be happy to supply those numbers. The quick answer would be that primary agriculture is a relatively small part of our GDP, probably about 2% nationally. The supply-managed sectors within that will be a non-trivial subset, but still certainly a minority.
When you look at the broader value chain, particularly if you look at the full value chain, you start to see a much larger share of Canadian employment and GDP. Of course, the sector had $99 billion in exports last year. It’s an important part of our trade balance.
In terms of the direct contribution of supply-managed primary producers and processors to GDP, it would be a small number. I would be more than happy to make that data available.
Senator M. Deacon: In making that data available, I would also ask if you could give a comparison of the number of jobs the sectors support in both. Thank you.
The Chair: Thank you, Mr. Rosser. If you could make that available as soon as you can through Chantal Cardinal, the clerk of this committee, that would be much appreciated.
Senator Coyle: My questions have been asked, but I think this one really would be best to ask to Assistant Deputy Minister Rosser.
Our government obviously has a policy to support, protect and help along the supply managed agricultural sector. It also wants to have favourable trade agreements for our economic purposes as a country.
Can you help us understand how a government can balance those two objectives? We want to protect this healthy thing that is good for parts of Canada and good for the consumer in Canada; however, we want to do the overall good thing for our Canadian economy, which is to negotiate trade agreements that are going to be advantageous for our economy. We have been talking about balancing within the trade side of things, but there are two objectives here.
Mr. Rosser: I thank the senator for the question. She is indeed right that for the agricultural sector, the department and the government, there is a balance to be struck here. It may not always be easy. I would argue this has been one of the themes of the hearing to this point. From my perspective, we have found a way, over decades, to get it done. We have concluded 15 agreements involving 51 or 52 different trading partners. We protected the integrity of the supply management system.
We have continued, since the commitment from the Minister of Agriculture and the Prime Minister, to make no further market access concessions in supply management. And we continue. Indeed, there are bilateral negotiations proceeding as we speak. We have continued to advance that trade agenda despite making those policy commitments. It’s a tricky balance. My view, looking over the past couple of years and, indeed, over the past couple of decades, I would argue that we have been fairly successful in striking it.
Senator Coyle: Do you see cause for alarm at this particular moment that would necessitate the implementation of a bill such as the one we are currently considering here? Why now? Why this bill?
Mr. Rosser: As Doug Forsyth has mentioned, this is effectively codifying what has been government policy for a number of years now. It hasn’t impeded our ability to advance our trade agenda.
One can speculate about what might happen in the future. There may be legal and other significance to codifying this into law. From a trade negotiation standpoint, the day after it passes — if it were to pass — it doesn’t change the mandates of the ongoing negotiations. I don’t know if that answers the question.
Senator Coyle: And if it doesn’t pass?
Mr. Rosser: The mandate of the negotiators doesn’t change either way the day after is my point.
Senator Coyle: Thank you.
Senator Harder: Thank you to the officials for being here. I wish to thank you for your public service.
My question is for Mr. Forsyth. You made statements with respect to all countries having sensitivities. I would agree with that. Are you aware of any country that uses its foundational legislation of a trade department to circumscribe negotiations of a particular sector?
Mr. Forsyth: The simple answer is no. I am not aware of any country that does that, no.
Senator Harder: In your statement, you said the bill, if adopted, could have implications for future trade agreements. We have talked a little bit about that.
You said that should the bill pass, it would narrow the range of concessions. I would like you to expand on that. It is a heavily nuanced set of statements. When you narrow the range of concessions, you increase the vulnerability of those sectors that are protected in the nature of the negotiations. Could you confirm that? And the risks are, first of all, for the non-supply-managed agricultural sector, but they could also involve other sectors that are heavily reliant on trade, such as steel, the auto sector or other high-volume, high-impact sectors.
Give us some sense of what is behind that nuanced statement about narrowing the range of concessions.
Mr. Forsyth: Thank you for the question. I’ll approach it this way: As a trade negotiator, we start with saying everything is on the table, even though we recognize that not everything is on the table.
Senator Harder: For the other side, too.
Mr. Forsyth: The other side too, right. Everything is on the table.
You go into a negotiation with offensive and defensive interests. Clearly, supply management is always a defensive interest. We’re always looking to protect supply management as part of our mandate.
We also have offensive interests. You elaborated on some key areas, whether it’s the auto sector, steel, non-supply management, canola, pork, beef; those products are all part of our usual mandate when we go to look at our offensive interests in a trade negotiation.
As soon as you take things off, if you were to start removing things from the table, starting to narrow the scope of the negotiation, your trading partner does that as well. They may not take off the table areas where they are sensitive, knowing they are not going to make a concession there anyway. They may take things off the table that are of interest to you.
To your point — I think this is where you were going — it starts to narrow the scope of the negotiation. Then, would the FTA provide commercial benefits for Canada across the board? I think the answer is no. This is one of the risks that we face, right?
Senator Harder: Correct, thank you.
Senator Gold: Thank you for being here and for all you do on our behalf.
I am trying to square some of the comments with that which was offered by one of your former colleagues, Steve Verheul, a primary negotiator during CUSMA who clearly understands the dimensions of free trade negotiation. He is on the record. My understanding is that his opinion was he didn’t really believe Bill C-282 would threaten any future deals. I think he said it was “largely symbolic.” That dovetails a little bit with how you have described how you do work with the policy mandate and what might happen the day after. Clearly, this would be a change to the departmental act.
Would you comment on whether or not this is simply another tool to protect a vitally important sector of the Canadian economy and an example — because this bill was a product of democratic debate and support in the other place — of giving Parliament a role it often complains it doesn’t have when it comes to these matters?
Mr. Rosser: To begin, Mr. Chair, in terms of my best efforts to square the circle, I’m aware that different people have expressed different opinions on this bill, its significance and what it might mean in the future.
It gets back to the earlier point that, from a trade negotiation standpoint, nothing changes the day after it passes or doesn’t pass. That is not to say it wouldn’t be of significance in the future. Different people imagining different scenarios and different types of trade negotiations that may or may not manifest themselves in the future if the government’s policy of no new access were to change at some point come to different conclusions.
Inevitably, when you’re examining a law, you’re trying to think about what situations it might apply to at some point in the future. Different people, including experienced, expert people, come to different conclusions when they look forward and try to gaze into the crystal ball. That would be my best effort to explain.
Senator Housakos: Will you agree with the statement that all free trade deals like Canada has are not completely free? They are just trade deals. There are some elements in our favour; some elements are in the favour of the countries we deal with.
Will you also agree that with every trade agreement that we have signed, Parliament’s hands are always tied when those agreements come to Parliament? I have been part of 40 free trade agreements ratified by the Senate. In every instance, successive governments say you can’t amend this or change that, of course, because then you reopen the negotiation. There is a lot of common sense to that.
Why wouldn’t Parliament have a legitimate right to set guidelines at the front end, before we get into negotiations, of what we expect in those deals and what values our negotiators should know are lines that you can’t cross?
Is this particular position of the government — and what you’re articulating here that this bill can be very risky — is this the first step towards basically saying we’re ready to give on supply management?
My last question is this: If you look at Europe, the United States and other countries we have deals with, they spend a disproportionate amount of resources to prop up and subsidize the agricultural industry, which in Canada our government does not.
Mr. Forsyth: Thank you for the questions. I’ll take the first few.
With respect to FTAs, a free trade agreement is a negotiation. As I mentioned in an earlier answer, you go in with offensive interests and defensive interests, but at the end of the day, it’s a negotiation. Everyone has to put some water in their wine in the negotiation. Everybody has to receive some benefits out of it, and at the end of the day, there is usually some pain on all sides. In general, that’s a negotiation. You see that in many FTAs. It is rare that you see both partners walk away 100% happy. But that happens. That’s a negotiation.
Are they all free trade negotiations? I guess it depends on your background. From a purely economic point of view, probably not. But at the end of the day, they are trade agreements. Are they full, fair and free? No, but all countries have different interests.
I want to come back to the parliamentary oversight question because it is an important one. The government has improved the parliamentary oversight. Now, in advance of any negotiation, we present the negotiating objectives that are presented for 21 sitting days, which provides parliamentarians with the opportunity to review those objectives. Most recently, we did that for the Canada-Ecuador FTA, which was put to Parliament, and then the Committee on International Trade reviewed it and provided their assessment and additional questions, and the government has responded to them.
That is part of our policy on the tabling of treaties, and it certainly strengthens the transparency of trade negotiations and provides opportunities to review the objectives and the economic merits of the agreement. Once the deal is completed, Parliament also has the opportunity to review the deal and provide their views on it. It doesn’t provide them the opportunity to change a clause, because it is a completed deal when it is negotiated and completed. Rather, it is presented for ratification. It is very difficult for the government of the day to change it at that point because the deal is negotiated and completed with the parties. Nevertheless, there is more opportunity now for parliamentarians to provide upfront oversight on the proposed negotiation.
The Chair: We’re at time here, but I’m letting it go over.
Mr. Rosser: While we do provide supports of various kinds to our agricultural sector, as do provincial and territorial governments, compared to some of our major trading partners they are proportionally much less generous. We have been active for a long time at the World Trade Organization, or WTO, to bring greater global disciplines to supports and to ensure that the supports offered minimize the distortions in global agricultural trading products. Over time, there have been some enormous successes, even though the WTO has struggled in recent years to reach consensus on further reforms of agricultural policy.
The Chair: Thank you very much.
[Translation]
Senator Gerba: I’d like to begin by noting that some countries already protect some sectors and that the World Trade Organisation, the WTO, allows exceptions to be made.
Talking about bills that have previously been adopted, there’s a Farm Bill in the United States — if you aren’t familiar with it, you can take a look at it — that protects American agricultural sectors. They also have protections for the rice industry in Japan.
Mr. Forsyth, you say both that you respect the idea of not giving up more market share and that the act would have a harmful effect on CUSMA.
What I understand from that is that you intend to give up some market share in the supply-managed sector in the next negotiations. Is that in fact what I’m understanding? Don’t you think it somewhat undermines the security of agricultural producers to say, on the one hand, that we are in favour of protection but, on the other hand, that we are sending a signal that the bill will prevent us from conducting new negotiations? Is that what I’m to understand?
Mr. Rosser: I know that the question was intended for my colleague, and I’m going to turn the floor over to him soon.
However, I wanted to confirm for the senators that it was only with sugar in the United States and rice in Japan. As we discussed, other countries protect certain sectors. I believe that the difference lies in the way that’s proposed here relative to what’s done with the Farm Bill and other mechanisms in other countries.
Senator Gerba: Would you please explain how they ensure protection, and what is the fundamental difference with this bill?
Mr. Rosser: I’m going to let my colleague answer the question. It concerns a change to a specific bill; it’s a unique mechanism for doing that compared to what’s done under the Farm Bill.
Mr. Forsyth: Was Mr. Rosser’s answer clear?
Senator Gerba: No, I don’t think so.
[English]
Mr. Forsyth: The United States has their farm bill that they use to protect certain of their agricultural commodities. They don’t have a system, per se, like supply management. They have tariff rate quotas, much like we do. They allow a limited importation of certain products, and they have high tariffs beyond that. But they don’t have the other two pieces of the stool, if I could put it that way, for the most part. They manage imports, but they don’t manage production or pricing, for the most part. It is not across the board, but, generally speaking, the United States just manages at the border. Honestly, I couldn’t explain the Japanese rice system. Sorry.
[Translation]
Senator Gerba: I understand. Thank you.
Do you think it’s abnormal or prejudicial that Canada can also establish its own lines and rules? Do we always have to follow exactly what other countries do? That’s the way we operate and it has worked for the past 50 years. Why wouldn’t we be able to protect this system that has worked for more than 50 years?
[English]
Mr. Forsyth: If I could just clarify that the mandate we have as negotiators is to protect the supply management system. Both my colleague and I have indicated that. The mandate we have from the Prime Minister and from cabinet is that there are no concessions on supply management. We have only provided concessions in three major trade agreements that are important to our economy throughout our negotiating history. We don’t go into a negotiation thinking, “I have some supply management in my back pocket that I can get rid of.” No. The mandate is clear. It is provided from the Prime Minister. He is clear about it. The Minister of Agriculture is clear about it; the Minister of International Trade is clear about it. It is clear to me as a negotiator. It is clear to my counterpart. Now, it is not in law, which is what this bill would do.
The Chair: Thank you very much.
Senator Harder: I would like to return to the bill that is before us. What is the purpose of the Department of Foreign Affairs, Trade and Development Act?
Mr. Forsyth: It establishes the mandate of the minister and provides a flexible framework for the government of the day to decide on and implement foreign international trade and development policy objectives in response to an often rapidly evolving international circumstance.
Senator Harder: Thank you. I just want to emphasize for the record that the purpose of the act that we have been asked to amend has nothing to do with supply management.
Mr. Forsyth: That is correct.
Senator Harder: Thank you.
Senator Gold: Senator Harder is always a tough act to follow.
I would like to build on a previous question from Senator Housakos. In a way, I hinted at in my other intervention. We all know that Parliament is very limited when it comes to dealing with free trade implementation because, rightfully and understandably, the agreements are a product, as you put it, of negotiations with our international trading partners.
Bill C-282, as I understand it, would give elected legislators a say in what they believe is important to form the basis of future negotiations because it reflects, at least in the views of the elected legislators in the case of this bill, the needs and interests of their respective communities and constituencies. I think it was alluded to earlier or perhaps in an earlier panel that legislation is always subject to amendment or change by Parliament if it turns out to be inconvenient going forward.
Doesn’t this bill enable you as negotiators to signal to your trade partners or future trade partners how vital this particular sector is, albeit relatively small compared to all the issues that are typically on the table, and how vital it is to not only the Canadian economy but the Canadian society, as we have heard in other panels as well?
Mr. Forsyth: As I have said a couple of times, the government supports supply management, period. I don’t think there is any debate about that. The mandate of a negotiator is to defend supply management, so what the bill does is make it illegal to do anything to supply management. You can’t increase the tariff rate quota quantity or amount, or the in-quota amount of imports. That’s what it does. That’s already our mandate.
Senator Gold: I understand your answer, but if it is the case that negotiators already in your approach, day one and throughout your negotiations, are constrained by mandates and policy directions of the government, what is the difference between being constrained by those and by the will of the elected members of Parliament who have pronounced on what they deem to be an important constraint on the negotiations going forward?
Mr. Forsyth: Well, if it is a law, then it is severely constrained. I don’t know if you want an adjective there, but it means that we cannot do anything about it; everything to do with supply management is completely off the table.
Notwithstanding the fact that this has been the government’s long-standing policy, it was deemed necessary in three major negotiations to offer some concessions in supply management. Can you say that would never be the case again? If you put it in the law, you can say that would never be the case again. Is there a negotiation out there where you might want to do that? There could well be. I don’t know.
Senator Gold: Thank you.
The Chair: Thank you very much. We have come to the end of our time. I want to thank our witnesses, Doug Forsyth, Sandra Leduc and Tom Rosser. I would like to thank you too, senators, for your good questions. I think this was a particularly good session today.
We will reconvene tomorrow at 11:30 in this room to continue our study of Bill C-282.
(The committee adjourned.)