THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Thursday, September 26, 2024
The Standing Senate Committee on Foreign Affairs and International Trade met with videoconference this day at 11:30 a.m. [ET] to examine 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.
[English]
The Chair: My name is Peter Boehm, I am a senator from Ontario, and I am the chair of the Standing Senate Committee on Foreign Affairs and International Trade. I would like to invite committee members participating in today’s meeting to introduce themselves.
Senator Coyle: Mary Coyle, a senator representing Nova Scotia, from Antigonish.
Senator M. Deacon: Hello. Marty Deacon, Ontario.
Senator Boniface: Gwen Boniface, Ontario.
Senator Harder: Peter Harder, Ontario.
Senator Woo: Yuen Pau Woo, British Columbia.
Senator Robinson: Good morning. I am Mary Robinson, from Prince Edward Island.
Senator MacDonald: Michael MacDonald, Nova Scotia.
Senator Ravalia: Good morning and welcome. Mohamed Ravalia, Newfoundland Labrador.
[Translation]
Senator Gerba: Welcome. Amina Gerba, Quebec.
[English]
The Chair: I welcome all of you, senators, and also those who are watching us across Canada on ParlVU.
Today, we continue 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, we are pleased to welcome Daniel Gobeil, Vice-President, Dairy Farmers of Canada; Phil Mount, Vice‑President, Operations, National Farmers Union; Tim Klompmaker, Chair, Chicken Farmers of Canada; and Yves Ruel, Associate Executive Director, Chicken Farmers of Canada. 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 your devices. That goes for everyone in the room, please.
We have four witnesses. We have one hour. We are looking at statements from each witness of three minutes, and then we will move to questions and answers. I ask everyone to try to stick to time to allow for more exchanges at this meeting.
[Translation]
We are now ready to hear your opening remarks, which will be followed by questions from senators. Mr. Gobeil, you have the floor
Daniel Gobeil, Vice-President, Dairy Farmers of Canada: Mr. Chair, honourable senators and committee members, thank you for inviting me to address the committee today. My name is Daniel Gobeil, and I am vice-president of Dairy Farmers of Canada. I have a dairy farm in La Baie, in the Saguenay—Lac-Saint-Jean region.
I welcome this opportunity to express the strong support of nearly 10,000 dairy farmers across Canada for Bill C-282.
If it passes, Bill C-282 would protect the sustainability and viability of Canadian supply-managed farms by preventing further concessions under current or future trade agreements.
Supply management is a unique Canadian policy framework that ensures Canadians a steady supply of high-quality, locally produced dairy, poultry and egg products in all regions. For more than 50 years, supply management has guaranteed price security for Canadian families and a fair income for producers that reflects their production costs.
Unfortunately, the resilience of the dairy and other sectors has been put to the test in recent years by three successive trade agreements. Adding to these agreements concessions already made to the World Trade Organization, or WTO, Dairy Farmers of Canada estimates that market access granted under the Comprehensive Economic and Trade Agreement, or CETA, between Canada and the European Union, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, and the Canada-United States-Mexico Agreement, or CUSMA, has the potential to replace the equivalent of 18% of Canada’s domestic milk production.
Canada’s unique supply management system is weakened every time dairy, poultry and egg market access concessions are granted to foreign countries.
As a result, not only are Canadian products being replaced by imported ones on our grocery shelves, but concessions are also having a considerable impact on agricultural producers’ ability to plan and make investments for the future of their farms and to meet society’s growing expectations in terms of the environment and animal welfare.
Dairy farmers have already paid enough to secure Canada’s access to recent international trade agreements. International trade negotiations must not pit Canadian industries against each other; it is incumbent on Canadian negotiators to defend the interests of all Canadian agricultural production, while ensuring that no further concessions are made in the dairy market and the market for other supply-managed products.
Finally, Bill C-282 is an important and necessary step to protect supply-managed farms in Canada. We ask the committee members to protect Canadian producers, to move the bill forward quickly and, ultimately, to pass it at third reading. Thank you for your attention.
The Chair: Thank you, Mr. Gobeil.
[English]
Phil Mount, Vice-President, Operations, National Farmers Union: Good morning, members of the standing committee. As was mentioned earlier, my name is Phil Mount, and I am vice‑president of operations for the National Farmers Union. We support this bill and recommend that all senators on this committee vote in favour of it.
I should also mention that I was born and raised on our family’s dairy farm in rural Ottawa. Today, my wife and I raise sheep on a different farm in the south end of Ottawa next to a brother who continues in dairy.
We’re here in support of Bill C-282 because it would prevent any future trade deal from transferring market share in Canada’s dairy, chicken, turkey and egg sectors to foreign companies. Recent history has shown that allowing more imports into our supply managed sectors would have a large negative impact on Canadian farmers, their workers, communities and customers, with little to no benefit to other Canadian farmers.
We have seen this in trade deals over the past decade, as mentioned earlier. Canada gave away 16,000 tonnes of fine cheese quota to the European Union under CETA as a trade-off needed to gain access to the EU hog and beef market. The EU has used all of this excess cheese quota in Canada, but Canadian hog and beef producers have used virtually none of their new market access in Europe. Similarly, the Canada-United States-Mexico Agreement gave away a share of our chicken market, which increases each year, as well as more of our dairy market. Canadian demand has been growing for both chicken and dairy products, and instead of new, young farmers in Canada providing for those growing Canadian market needs, American corporations are filling that demand.
Countries that don’t have supply management have volatile markets and wild price swings tied to overproduction. They want access to our market to dump their overproduction. This is why we must maintain control of imports in these sectors.
When prices go down, dairy farmers cannot lay off their cows. Unlike non-perishable commodities, these farmers cannot just store milk, eggs or meat until prices recover. They have to keep feeding and caring for their livestock. They have moral and ethical investments that are not recognized by the market.
This is why supply management stands on these three pillars: production discipline, ensuring we can always provide what is needed without overproducing; cost of production pricing to ensure farmers earn a fair income based on actual cost data; and import controls to protect our marketplace from dumping. All three of these pillars must be strong for this system to work. Allowing other countries to dump their surplus product in Canada below their cost of production weakens that third pillar, making collapse a real possibility.
Supply management in Canada has offered farmers a decent, predictable livelihood, allowing them to invest in environmentally friendly technology, use sustainable management practices and employ local workers at good living wage rates.
Thank you.
The Chair: Thank you very much, Mr. Mount.
I would like to acknowledge that Senator Al Zaibak of Ontario and Senator Gold of Quebec have joined us.
Tim Klompmaker, Chair, Chicken Farmers of Canada: Good morning. My name is Tim Klompmaker, and I am a third-generation chicken farmer from Norwood, Ontario, and chair of Chicken Farmers of Canada.
The Canadian chicken sector is important to the Canadian economy and to Canadian families, supporting more than 100,000 jobs. Our 2,800 farmers, located in all ten provinces, work hard to produce safe, high-quality chicken raised with care.
We are equally as proud that, in Canadian agriculture, we do work together. We support each other in promoting and advocating for the Canadian brand, and we work hard as a value chain to ensure there is food for Canadians.
Some say Bill C-282 has created division, but division is a reality of trade agreements. Thankfully, what this bill has done is acted as a reminder about what we all equally believe in. We are proud to grow high-quality food.
In supply management, we raise our products for the domestic market. For export-oriented sectors, their focus is to increase access to foreign markets. The goal is always the same: we want to feed people.
We welcome Bill C-282, as it would ensure the Government of Canada grants no further concessions into supply management in any future trade agreements. Any additional access granted means a gradual erosion of our ability to contribute to the economy and an unstable Canadian chicken sector.
Not wanting additional access does not mean we want to restrict export commodities’ ability to trade; it just means supply management can be left out of those discussions and no longer be used as trade currency. We would expect export-focused groups to support what is important to us as well.
Canadian chicken farmers support this bill, because recent trade agreements have significantly impacted the Canadian production, namely the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, and the Canada-United States-Mexico Agreement, or CUSMA, trade agreements. The access granted in both agreements, combined with our World Trade Organization, or WTO, obligations, makes Canada’s total market access of 129.6 million kilograms of chicken, which represents 10.8% of Canadian production when these concessions were made. This is an impact that is felt in every province across Canada, permanently. By adopting this legislation, parliamentarians would show Canada’s dairy, poultry and egg farmers that they stand by them.
We are strong supporters of Canada’s trade efforts, but they should not harm nor weaken supply management. We implore this committee to support Bill C-282 and guarantee there will be no further concessions to the Canadian chicken sector. Anyone opposing this bill is willing to accept concessions for supply management in the future.
Thank you.
The Chair: Thank you, Mr. Klompmaker. My understanding is that you were speaking also on behalf of your colleague Mr. Ruel as well.
We will go to questions. Colleagues, as per usual, four minutes for questions and answers. Please keep your preambles short and your questions concise. The same to the witnesses, if you can be concise in your responses.
Senator MacDonald: Thank you to the witnesses.
I will preface my remarks by saying that I have been around the Canada-United States Inter-Parliamentary Group, or IPG, for 15 years, and I have been the Senate chair on it for almost 10 years. I deal with this constantly in the U.S. when we meet with the American legislators. I have always been able to deflect their accusations about supply management, because I always say to them, “You subsidize your agriculture to the tune of $30 to $40 billion a year. We don’t subsidize our agriculture. When you get rid of your subsidies, come back and talk to us.” Of course, they are not going to get rid of their subsidies, so it sort of quiets them down. However, there will be pressure again. There is another negotiation is coming up.
One question I have is, do you envision a circumstance when supply management will be unnecessary? Indeed, would there be a circumstance where it might even be detrimental to your long‑term interests? Do you envision that? Anybody can speak to it.
Yves Ruel, Associate Executive Director, Chicken Farmers of Canada: Thank you, senator.
In the environment that we are in, especially, as you mentioned, the Canada/U.S. reality, if I just take the chicken example, the U.S. chicken industry produces 17 times more than the Canadian chicken industry, so any tiny surplus in the U.S. for a month, for a week or for a few months can just be trucked across the border to destabilize our market, and there will be no Canadian chicken production left after a few months due to the U.S. basically disposing of their surplus in the Canadian market. I don’t see any future where we wouldn’t need supply management. The system has proven over the last 50 years that it works well. It is very helpful for all Canadian provinces, mainly rural areas but also in the cities where most of the processing plants are located. It is of huge economic benefit to Canada, and without that, our production would be minimal or non-existent completely. Our reality makes it essential that we have supply management.
Senator MacDonald: Anybody else?
[Translation]
Mr. Gobeil: I would like to add some information. Supply is managed, but we produce enough to meet the needs of all Canadians. With the pandemic, we saw how important food security is for Canadians. We’re seeing it more and more with all the effects of climate change. Many regions had opted for an export economy and conquering markets; several countries want the same market and this is causing food waste and production cutbacks right now in countries like New Zealand, France and the Netherlands, where the export market has its limits when it comes to feeding the people.
[English]
Senator MacDonald: In terms of innovation in your sector, is the presence of supply management a drag on innovation? Is there a downside when it comes to innovation and efficiencies in your various sectors?
Mr. Klompmaker: From an innovation standpoint, I think that the stability that the supply management system actually gives farmers means they have the confidence to know that their pricing is going to be stable and their markets are stable, and they are willing to make long-term investments in their operations. I will give my kids as an example. They are doing the expansions now, but they are investing in innovation, in heat exchangers and those types of things that are long-term investments that are bringing efficiencies to our sector. As I said, they have the confidence in the system that they can make those investments because they think they are going to be here for the long term.
Senator Ravalia: Thank you for your testimony and for your contributions to our economy.
No doubt, through all the discussions we have had, you have heard some critics argue that this bill could limit Canada’s ability to secure comprehensive trade deals. How do you respond to the concerns that protecting your sectors through this legislation might result in trade-offs in other sectors, potentially affecting broader Canadian economic interests and future trade negotiations? Mr. Klompmaker, could we start with you?
Mr. Klompmaker: I hear that people feel that the supply management sector is going to negatively impact future trade agreements, but I also hear comments made by the former chief negotiator for CUSMA, who said that he does not feel that any future trade negotiations would be impacted by Bill C-282. I think it is pretty relevant that we have the former chief negotiator making those kinds of statements.
When you look at a trade agreement, there are about 30 chapters. In those 30 chapters, there are about 10,000 lines that are tariff related. Supply management represents less than 1% of those 10,000 lines. I don’t think that a country is going to step away from the negotiating table for 1% of the 10,000 tariff lines. I think that it is not going to negatively impact us at all.
Countries across the world have their red lines that they will not cross. There are countries that protect the rice market or sugar market. I don’t see that being a problem.
Senator Ravalia: Would any other members of the panel like to comment on that?
[Translation]
Mr. Gobeil: To give you some more information, I think there are people around the table in an even better position than I am, but in my opinion, in any trade negotiation, a country must have both an offensive position to develop export markets where regions don’t have this production, and a defensive position, such as our supply management policy, which has existed for over 50 years in Canada and hasn’t stopped us from concluding more than 13 trade agreements on supply management without negotiations with more than 15 countries.
Negotiations are ongoing across Canada and supply management is not on the table with other countries. We sincerely believe that the Canadian agri-food sector will develop not by putting sectors in a competitive situation, but by respecting each other’s rules and differences. We talked earlier about models with subsidies, but here we have a sector that derives its revenue from the market.
[English]
Senator Ravalia: Thank you.
Senator M. Deacon: Thank you, all of you, for being here today.
This is our second day — we started this last night — although the reality is that I know we have met with many of you or folks who represent you over the last year, and we are still trying to dig deep down into this bill. My question touches upon what my colleagues have mentioned, and I will carry on pursuing them in a different vein.
We talked about trade agreements like CETA, CPTPP and CUSMA, which were all thought or said to be a threat to supply management, and yet between 2010 and 2021, years in which all of the agreements were concluded, dairy producers saw an increase in revenue of 40%. We have that information. Supply managed goods consistently remain above the rate of inflation. When those times were pretty good for industries with these trade agreements, why are they posing such a threat when we look at this kind of data over the last 10 or 11 years?
Mr. Klompmaker: First of all, when you take a look at farm gate receipts, certainly, yes, they have gone up, but our expenses have gone up. Just because farm gate receipts increase does not mean profitability on the farm increases. That needs to be taken into consideration when you look at those factors.
[Translation]
Mr. Gobeil: We have survey instruments on production costs associated with the consumer price index that bring a fair income to the producer. In 2020, with everything we’d been through because of the war in Ukraine, which caused very high inflation in the grain sector — the highest we’ve ever seen — I would say that in general, when we look at the price consumers pay at the grocery store and the inflation indexes for the consumer, the price of dairy products is very competitive with other sectors. Consumers don’t foot the bill. On the other hand, when it comes to inputs, fuel and fertilizers — products that have been heavily impacted by global uncertainty — producers have incurred very high costs. Everything is now coming back down to normal thresholds that are comparable to what we experienced in times of stability.
[English]
Senator M. Deacon: Thank you.
In partnership with my colleague Senator MacDonald, I’m involved with Canada-U.S. trade and communications. I come back to this again: Both parties down south have made it no secret that supply management, frankly, is a bee in their bonnet when it comes to bilateral trade. We’re coming up for renewal in 2026, and if this bill passes, from a trade perspective, we are going to spoil any good-faith approach to this renegotiation by saying that we will not allow any access to the supply managed sectors, which can hinder negotiations from the get‑go. Concessions disallowed in any trade negotiations by way of this legislation will have to be made some somewhere else.
My question is, what is it about the supply managed sectors that elevate their importance or their perceived importance above the importance of other sectors of the Canadian economy which will not receive the same protections in trade negotiations and, in fact, could suffer? I know the comment made earlier was that we do not want to compete, and I heard that, but I am interested in your response, because the negotiations are forced to perhaps make further concessions in some of these other areas. If you could respond to that, any one of you, I would appreciate it.
The Chair: I am afraid that you will have to respond to that later, because we have run out of time on your segment, senator. I apologize for that. It’s an important question, and I want to ensure it is given due justice, perhaps in the second round, if you agree.
Senator M. Deacon: Thank you.
Senator Woo: Good morning.
I would like to pick up on Senator Deacon’s question and ask about the performance of your respective supply management industries in the period when market share was given up, the roughly 10-to-15-year period. You pointed out that farm gate receipts are not the correct measure because expenses have gone up, but expenses going up has nothing to do, of course, with giving up market share. Perhaps each of you can provide us with data on cash receipts, net operating income, employment, output and profitability, of course, in your various sectors over this period of time and help us to understand your correlation between the loss of market share and the statistics that you share with us. The theory of supply management is that it actually allows you to maintain your income because you control supply. It is not clear to me that there is a direct correlation between the loss of up to 18 percentage points and any adverse effect that you might see on your industry.
Mr. Ruel: Thank you for that question. It can be complex. Numbers can lead you to anything.
In terms of which years we use, hearing the questions from yesterday, I looked at the farm cash receipts last night. In the farm cash receipts over the last ten years, from 2014 to 2023, there is an increase in about every commodity. It is not because you showed that there is an increase in one supply management sector that it shows that there was no impact. Just in the crop sectors for those ten years, the increase in farm cash receipts was 82%, much greater than any of our sectors.
On the other question around controlling supply, we hope to grow the market. We are working hard to grow the Canadian chicken market. We have a promotion program in Canada to ensure that consumers are attracted by Canadian chicken meat. Any time there is a trade agreement, we lose some of that growth. If I look, for example, at the annual increase in our chicken production — I could show you that graph later — over the years of 2015 to 2018, we were growing at about 5% per year. When the additional imports from CUSMA and CPTPP started to kick in, our growth is now more around 2% to 3% per year. We are still growing, thankfully, because we have a good protein for Canadians, but at the same time, we do not grow at the same rate that we used to grow. It is less potential expansion.
Senator Woo: Thank you for that.
Can you provide us with the data that I asked for? Not just cash receipts, of course, but net operating income, output, employment, all of the relevant sectors, and give us your reasoning for the correlation between the loss of market share and the change in the output measures. That would be very helpful for us.
I want you to also give us data on the prices of your supply managed products. My own calculations suggest that, in the case of milk, in the last 18 months or so, the increase in the price of a two-litre jug of milk is at least 50% more than the overall basket of food items and more than CPI. I would like to understand your comment about providing price stability to consumers under a supply management regime.
[Translation]
The Chair: I’m sorry, Mr. Gobeil, your time is up.
[English]
We welcome, as Senator Woo suggested, any statistics you have related to his question. Just send them in writing to Chantal Cardinal, who is the clerk of this committee, and we will include them in our deliberations.
Senator Coyle: Thank you very much to all of our witnesses who are here with us today. This is a very important conversation we’re having, and we take your testimony seriously.
My question was along the line of conversation that has already been initiated here, so if Mr. Gorbeil would like to answer Senator Woo’s question first, I will ask another question if there is time.
[Translation]
Mr. Gobeil: For the past year, among Canada’s dairy farmers, the price of milk when up 1.77%, and that was deferred for three months to account for the inflationary context among consumers. It’s not the farmers and farmers’ organizations that set the retail price; the grocery chains set the price consumers pay.
A lot of work has been done within the Canadian government to study what’s happening with retail in Canada.
Last year, production costs fell among Canada’s dairy farmers, and the rise was attributed to the CPI, which was almost 5%.
[English]
Senator Coyle: Thank you, and I look forward to the statistical information across the board as well. That was a question I had.
This question is for Mr. Mount. You spoke about smaller farms, family farms, et cetera. Could you tell us in a little more detail what you think the impact on small family farms would be if the protections under Bill C-282 were not enacted?
Mr. Mount: Certainly. Thank you for the question.
If there is one thing that supply management does and has shown us over the last 50 years, it is that it protects farming on a family scale. I was raised on a family-scale farm. It’s not a licence to print money. It is a licence to work hard and to continue to produce for your family. It protects against the automatic drive to scale up and produce on an industrial scale in order to keep ahead of market rates in an unregulated market, as we see in other products.
Senator Coyle: If I may, are we seeing things otherwise happening in the market that are causing some consolidation and expansion of larger farms, over and above this kind of pressure that we are talking about here?
Mr. Mount: Exactly, yes. In other sectors, we definitely see a drive to scale up in a way that we have not seen in the supply managed commodities. Some folks look at chicken farms with barns that house tens of thousands of birds, but if you look south of the border, look in other jurisdictions, you will see a scale that is just unimaginable to most Canadian consumers. Certainly, if you look at dairy farming, we have held on to an average herd size in this country that is still under 100. Again, that’s just not seen in other jurisdictions where they have allowed the market free rein, if you will.
Senator Coyle: I have run out of time. I wanted to go to food security next. Next round.
The Chair: We can get to that. Thank you.
Senator Gold: Welcome.
We have heard today, and indeed yesterday in one of the panels, of the importance of supply management for food security and for the security both of producers and the communities in which they live. We heard it today again from Phil Mount and others. But we also heard other things, and we will hear from those who produce for export. What do you say to export-focused producers or processors, with whom you deal in many cases, I am sure, with regard to this bill and their preoccupations? Thank you.
Mr. Klompmaker: We are not in favour of standing in the way of any commodity that’s looking for export markets. That’s not what we’re talking about. We in supply management are saying we want our sector of domestic supply protected and taken care of and that it is off the table for any future trade agreements. That’s what our goal is here. We’ve never stood in the way of any trade negotiations and said, “Don’t access these export markets to protect supply management.” We’ve never come across that way. It has always been the case that we have supported our agricultural commodity partners that are not supply managed to attempt to achieve those export markets they are looking for. We don’t believe there is any value for Canadians if you trade off one for the other. We just don’t see the value in that. We are totally supportive of those looking for those export markets.
[Translation]
Mr. Gobeil: With respect to CETA with the European Union, we saw results after several years. The sector conceded 17,700 tonnes of Canadian cheese to the European market. After several years, and despite promises to give access to a growing European population, pork and beef have failed to penetrate these markets through non-tariff barriers. Clearly, when we take part in negotiations, we have to make sure that all parties benefit. We don’t want to be in competition. However, food is a local product and should not be considered the same way as iron or aluminum bars are.
[English]
Senator Boniface: Thank you for being here.
Senator Gold stole my question, so I will take it further. The farming industry — I will put it that way; I was born and raised on a farm — on the small farms is interested in what their neighbours produce, interested in the success of their neighbourhood, and that, in turn, contributes to the well-being of a farming community.
I want to pursue the question on where this bill brings clear divisions — I see that when I read the stuff from the House of Commons study, and I think we have to acknowledge that — between those who are supplied management who want the bill adopted and those are not supplied management who want to see it defeated. I would ask you from a broad farming community perspective: How do we bridge this divide? Or is it even possible?
Mr. Klompmaker: I certainly think it does cause a bit of tension. As I said in my opening comments, trade agreements do bring some division. That’s just the nature of the beast, so to speak. But it is important to take note that the Canadian Federation of Agriculture made a submission at the House of Commons hearings as well. They represent supply management farmers, but they also represent a lot of commodities that are not supply managed. We are sitting here with a member from the National Farmers Union who also represents supply management and non-supply management. I’m not sure the division is as big as what some are led to believe.
Senator Boniface: I think you are getting different mail than I am.
Mr. Klompmaker: It’s quite possible.
Senator Boniface: Mr. Mount, I would like to hear your comments on it, given the group you represent.
Mr. Mount: At a broad level, at the NFU national table, we have had consensus over the years in our ongoing support for supply management from farmers from all sectors. In many cases, we feel like this divide is manufactured by folks who have ideological reasons for creating division. By and large, it is not an either/or situation. If you look carefully at some of these trade agreements where it has made the news that such a division exists — in the EU trade agreement for example, it made no sense that we were pushing for dramatically expanded quota in a pork sector where we weren’t even up against the limits of what we could export. Over the last six years, since that treaty has been in place, the amount Canada has exported in the pork sector has gone down 90%. Quite often, these divisions are nonsensical, in my mind.
Senator Boniface: Thank you.
[Translation]
Senator Gerba: Thank you all for being here. Thank you also for the work you do to ensure food security and economic development for our regions.
It is for these reasons in particular that I agreed to sponsor this bill.
We hear a lot about division. I’d like to come back to my colleagues question and the issues raised earlier. We often hear that this bill will reinforce division in the agricultural world, in particular by pitting supply-managed farmers against non‑supply-managed farmers.
My question is for those who work in both fields, because some do; for example, some produce milk and also produce beef.
Can one of you explain the point of view of those who do both and benefit from both? One sector is locally oriented and other sectors are export-oriented — and there are a lot more of them. What do you think?
Mr. Gobeil: Dairy Farmers of Canada has members in Saskatchewan and Alberta who have dairy farms and also do large-scale beef production. By playing on both sides of the fence, with a protectionist model like supply management, and with a model involving government support, subsidies and export opportunities, they still managed to do well in both areas, domestically and on the export market. I don’t feel that farmers are doing as well. When you talk about economic development, we’re all united for regional development, we all contribute to maintaining regional economic activities, such as pork, grain and supply management. We’re all part of the social fabric of Canada’s regions.
Senator Gerba: Thank you. Do I still have a minute left?
The Chair: One minute.
Senator Gerba: My next question will be for Mr. Klompmaker.
I’d like to know what the consequences have been for consumers and farmers of abandoning other systems similar to our supply management in countries like New Zealand, Australia and France. What have the consequences been for their consumers and producers?
[English]
Mr. Klompmaker: When you take a look at some of the countries that have abolished the supply management systems, you see the erosion of those sectors, of course. The farmers, in a lot of cases, have disappeared. The one thing that I think was misleading to those in those countries was the assumption that as soon as they got rid of supply management, that consumer prices would decrease, and that has not happened at all. It is a falsehood to say that the supply management has falsely kept prices high at the retail level. That’s not the case because, as I said, where you have seen them eliminate supply management, it has not decreased.
The Chair: Thank you very much.
Senator Harder: Thank you to our guests for appearing before us.
We have talked a lot about supply management, obviously, but the bill before us is actually quite narrow in the sense that it is using the Department of Foreign Affairs, Trade and Development Act to insert a prohibition to circumscribe the ability of our trade negotiators from dealing with supply management in any negotiation. It seems to me that this is a very large hammer in the context of what you, Mr. Klompmaker, described as all countries having sensitivities, and negotiations are, by definition, not giving satisfaction to everybody. But here you want to prohibit your sector from even being discussed.
You referenced a former trade negotiator whose firm, as I understand it, is advising the supply managed sector and who has suggested that there aren’t issues here, yet we’ve heard from others that it is a big handicap, and particularly a threat to other agricultural and other Canadian exporters. How do you balance this? My colleagues have been trying to get you to open up a bit on this. How do you balance the prohibitions you insist on and the negative effect that has on our export market?
Mr. Klompmaker: I will start off, and maybe I’ll get Yves to comment on this as well.
I guess I don’t see it in exactly the same way. I know that you have some concerns about the fact that it would become law versus mandate, but when I look at it, whether it becomes law that Canada says that they will not grant any concessions under supply management, whether it is in a law or it is the position of a government, I’m not sure that it makes any difference to a negotiator at the table.
Senator Harder: Let’s stop right there. That is the position of the Government of Canada, so why do we need to legislate?
Mr. Klompmaker: For us, it is a case of ensuring that, in the future, this is maintained. The concern we have is that it is a continuation. I know we can go back and talk about the last 15 trade agreements and that there has only been concessions made in the last three. I’ll go back a little bit further. I’ll go back to the 1980s. I recall the General Agreement on Tariffs and Trade when we had article XI within that agreement. We had zero access at that time. We lost article XI, we went to tariffication, and we ended up granting access under the newly renamed WTO.
Senator Harder: Do we not suggest that the trade agreements Canada has engaged in over that period have brought huge economic benefit to Canada?
Mr. Klompmaker: They have, but it has also come at a cost to some of the supply management sectors.
Senator Harder: Is that not why the Government of Canada has the position it has with respect to a prohibition? I don’t understand why we want to use the sledgehammer of a departmental act to protect your interests at the expense of others.
Mr. Klompmaker: I would say that it is because of the fact that some individuals will say we only gave up 1% or 2%, but as I said before, we are almost at 11% access on Canadian chicken. At what point does the supply management system become unable to function as intended, when those imports become so high that the system just doesn’t function as intended? That’s the concern we have. It’s almost a death by a thousand cuts.
Senator Harder: Do you not believe trade negotiators are sensitive to that?
Mr. Klompmaker: Trade negotiators in the past, in my opinion, have gotten to the end and, as I said in my opening comments, we become trade currency in order to get something across the line. It doesn’t necessarily have to mean that when concessions are made, it only has to be within agriculture. It can be within other sectors as well and other chapters.
Senator Robinson: Thank you for being here today to give your testimony.
Mr. Klompmaker, I just wanted to follow up Senator Boniface’s question when she asked about the gap in the ag community that this legislation may create. In your response, you mentioned the Canadian Federation of Agriculture, which represents both supply-managed and non-supply-managed commodity groups, and that the CFA spoke in support of this bill. I want some clarity. Could you help us all understand if the CFA’s membership represents all farmers in Canada, and in particular those commodities that are export-focused? Do you feel that their voice can really convey the sentiments of all farmers in Canada as to how Bill C-282 will impact them?
Mr. Klompmaker: CFA has been very open that they are supportive of Bill C-282 on supply management, but they have also conveyed that they are supportive of other commodities gaining access as far as export markets are concerned. They don’t represent all of the exporting commodities in agriculture either, though.
Senator Robinson: I wanted clarity on that, because I felt like we were left with the sense that the CFA did speak for all commodities. I think it is an important not nuanced but fairly obvious point that we have to make clear. Thank you.
The Chair: We enter round two, which I think can be called the knockout round. I have five senators and about nine minutes. Senators, we will take all of your questions together so that the panel can have more than a few minutes to respond, but I would like you to phrase your questions in under one minute, if you can. It’s a big test.
Senator M. Deacon: Parts of this were touched on, but the question I had asked — I don’t think I will do the preamble again. What is it about supply managed sectors that elevates their importance above the importance of other sectors in the Canadian economy that will not receive the same protection in trade negotiations and, in fact, could suffer if negotiators are forced to make further concessions in other areas?
Senator Woo: Is it your position that this bill should prohibit our negotiators from adjusting how we manage TRQs, particularly in the case of an adverse decision on a dispute settlement panel or in a generalized renegotiation of the agreement such as the CUSMA review in 2026?
Senator Coyle: I wanted to ask Mr. Mount if he could tell us about whether he sees supply management contributing to food security in Canada, and also if it contributes to food quality.
Senator MacDonald: Mr. Gobeil, you mentioned twice the concessions on cheese in the CETA agreement and the inability of the pork industry to penetrate the market, but there must be factors behind that. Is it inability to market? Is it price? There is no tariff and nothing to stop them from exporting. If you could clarify that, I would appreciate it. Thank you.
[Translation]
Senator Gerba: Mr. Ruel, can you confirm whether other countries have introduced bills to protect their sensitive sectors?
[English]
The Chair: Some of the questions were directed to individuals, so we will dispense with those first. I know the first question was a little bit more general.
Mr. Mount: On supply management contribution to food security and food quality, we have seen in supply-managed sectors over the decades how these organizations have managed to ensure the highest quality of production of perishable foodstuffs without sacrificing farmers’ ability to maintain a livelihood. We have among the highest levels of quality in the developed world of our supply-managed products. There is not a Canadian consumer out there who is going to question the quality of our Canadian-produced supply-managed goods. That’s one thing we can count on rock solidly.
As far as food security goes, I believe it was mentioned briefly earlier. We saw during the pandemic that these supply-managed organizations were among the most nimble at adapting to some very serious issues, but it is because our supply management organizations are essentially localized food supply that it enhanced our ability to maintain strong food chains during a troubling and very difficult time, especially for food transportation.
[Translation]
Mr. Gobeil: Thank you for the question, Senator MacDonald.
When I referred to different non-tariff barriers, what comes to mind are production models, various types of housing; we’re talking about barriers on the use of antibiotics, fertilizers or certain things that are allowed in Canada but banned elsewhere in the world. It’s a way of making certain concessions at the negotiating table, and then other parts of the world curb those imports with other non-tariff barriers.
Mr. Ruel: To answer your question, Senator Gerba, as Global Affairs Canada representatives said yesterday, they are not aware of any other countries with similar laws in place.
However, there are clearly sensitive products in the trade policies of every country in the world. In trade negotiations, we always see countries strongly defending certain sectors or products through negotiations, but also through more discreet and roundabout means, such as sanitary measures and non-trade or non-tariff barriers that restrict access.
The bill sets a limit and delivers something very clear, which is a benefit. Finally, just because other countries aren’t doing it doesn’t mean we shouldn’t. If we have a good idea, why not do it in Canada?
[English]
The Chair: Mr. Klompmaker, can we go to you for the overall picture?
Mr. Klompmaker: There was one other question that was asked. I’ll start off with it, and then I’ll give it to Mr. Ruel. He is more of an expert on trade than I am.
If I understand your question correctly, you are alluding to the dispute that was happening with the dairy industry. I don’t believe Bill C-282 has any impact on that whatsoever because that’s part of an existing trade agreement. It is a dispute within CUSMA. I think New Zealand had that dispute under the CPTPP. Those are in past agreements. Bill C-282 is about what happens in the future.
Mr. Ruel: As Mr. Klompmaker mentioned, the TRQ panel that you referred to is about the current agreements. Bill C-282 is about future agreements. There is no relationship between those two.
Senator Woo: But we can expect the Americans to renegotiate the definition of a TRQ, the wording, when they review it in 2026, because they have lost all the dispute panels to date. It makes sense that they would bring it up again. Would you be opposed to Canada being open to those renegotiations?
Mr. Ruel: The bill talks about the access level and the reduction on the over-quota tariffs. The bill doesn’t talk about how TRQs are managed, which is an internal decision to Canada’s sovereignty.
The Chair: On behalf of the committee, I would like to thank Daniel Gobeil, Phil Mount, Tim Klompmaker and Yves Ruel for being such great witnesses today. Thank you for responding to our questions and enriching us with your answers. I also notice that you have brought interested parties with you, so I would like to thank the stakeholders who are also in the room with us today.
Moving to our second panel, we are pleased to welcome, from the Canadian Agri-Food Trade Alliance, Michael Harvey, Executive Director; and Greg Northey, President. Joining us by video conference from the C.D. Howe Institute, we have Daniel Schwanen, Senior Vice-President; and from the University of Calgary, Martha Hall Findlay, Director of the School of Public Policy. Again, we will have three statements of three minutes each by our witnesses and then will go straight into questions.
[Translation]
Michael Harvey, Executive Director, Canadian Agri–Food Trade Alliance: Thank you to the committee members for inviting me to explain why the Canadian Agri-Food Trade Alliance, or CAFTA, sees Bill C-282 as a threat to Canada’s export-oriented economy, including agri-food exporters.
CAFTA is a coalition of national organizations that advocates for a freer and fairer international trading environment for the agriculture and agri-food sector.
CAFTA members include farmers, ranchers, processors, producers and exporters in key trade sectors such as beef, pork, grains, oilseeds, sugar, pulses, soybeans and processed foods.
[English]
A fair and open international trade environment for agri-food is in Canada’s economic interest. Agri-food is responsible for one in nine jobs in Canada, and the majority are in export-based agri-food. In 2022, Canada exported $92.8 billion in agriculture and food products. More than half of our agriculture production is exported or processed to be exported.
Bill C-282 is a threat to this economic benefit and Canadian jobs. It is terrible trade policy for a country that depends on exports. It will hurt Canada’s ability to make decisions in the national interest, and it will set a protectionist precedent that undermines Canada’s credibility to exercise leadership and work at international forums like the WTO.
The timing for a bill like this could not be worse. Committee members are undoubtedly aware that the CUSMA is to be reviewed in 2026. In fact, the bill is already bringing negative U.S. attention to our trade policy at a time when we should be working to reduce irritants, not deepen them.
I wish to be very clear that Bill C-282 is not an agriculture bill. It is a bill about trade policy. All countries have their domestic sensitivities, and trade negotiators receive instructions to maintain trade protection for certain industries. However, legislating this protection to legally handcuff our negotiators and restrict Canada’s negotiating capacity ignores the negative consequences on Canada’s economic interests as a trade-dependent nation.
Due to political circumstances, Bill C-282 was, unfortunately, not closely studied in the House of Commons. Notably, there was little attention paid to the views of former Canadian trade negotiators. Senators Boehm and Harder — hello, Senator Harder — know these professionals well as former colleagues. They will all tell you that this bill will handcuff our negotiators in a way that will lead to trade-offs for Canada’s export-dependent sectors and overall less ambitious outcomes in future trade discussions. I think Mr. Doug Forsyth was very clear on this point yesterday.
It is also important to underline that we are not only thinking about new trade agreements. CUSMA has underlined the reality that existing trade agreements are regularly revised, modified or renegotiated. Bill C-282 threatens all of these.
[Translation]
To sum up, CAFTA is asking this committee to protect our country’s economic interests and recommends that Bill C-282 not be passed. I’d be happy to answer any questions you may have. Thank you.
[English]
The Chair: Thank you very much, Mr. Harvey.
Daniel Schwanen, Senior Vice-President, C.D. Howe Institute: Thank you, Mr. Chair, for the invitation to appear before this committee.
My topic today will not be about the virtues or drawbacks of supply management but about the costs to the Canadian economy if this bill becomes law. Dairy and other supply managed sectors comprise a very important but nevertheless small portion of the Canadian economy, about 1% of GDP and employment. Jobs, taxes paid and, of course, exports are overwhelmingly more important in those other Canadian sectors that depend on open, international trade.
What this bill says is that Canada is willing to unnecessarily curtail the ability of these other sectors to expand in global markets. That is because the bill ties the hands of our trade negotiators in a global context where protectionism is on the rise, and Canada will have to be nimble and creative in response to this challenge. That may involve negotiating new agreements or new trade arrangements or renegotiating and hopefully improving on existing ones.
Once we say that we will be entirely closed to improvements, however small, that our partners may seek to their ability to supply Canadian consumers, restaurateurs or food processors, you can be sure that our trade partners will seek to deny significant new opportunities to our other sectors in return. Making small concessions in supply-managed sectors was instrumental in securing recent beneficial trade agreements. From aluminum to forest products, from shrimp to beef and other food products, from services to technology, all of these Canadian exports are potentially hampered by this bill.
The bill ties our hands unnecessarily. Supply management will not go away. Much as sometimes I wish it would, it hasn’t gone away in recent major trade negotiations, and it doesn’t need to be protected in this costly fashion. Dairy farmers were compensated by Canadian taxpayers for the tiny portion of the dairy markets that were allocated to imports in the CETA, the CPTPP and the CUSMA, and they can likewise be compensated in the future.
I would draw a parallel between economic questions and environmental questions as follows: Water from the tap in our houses does not actually come from the tap. It comes from various sources of freshwater, which can be depleted by poor environmental stewardship. Similarly, the tax revenues that we need to fund, for example, increased payments to seniors come from taxpayers, and taxpayers’ capacity to pay depends upon whether they have good jobs, businesses are growing and the economy is flourishing. Canada’s economy has not been flourishing recently. We’re in the middle of a big national debate on how to kickstart it, and this bill, if it becomes law, will make those efforts less likely to succeed.
The Chair: Thank you, Mr. Schwanen.
Martha Hall Findlay, Director, School of Public Policy, University of Calgary: Thank you very much to the committee for inviting me to appear today.
I start by reinforcing that I have no vested interest in this issue, unlike, frankly, some of the clear self-interest of some earlier witnesses. My only interest is as a Canadian working for the best interests of Canada as a whole.
I have done a great deal of work to understand this issue, but I am not here to offer the overwhelming objective evidence that the time has long passed to move away from supply management, or to ask why Australia and New Zealand dairy farmers are far better off now by massive expansion into world markets post-supply management, or to ask why Quebec’s co-op Agropur now processes more U.S. milk than Canadian milk, or why Canada’s own Saputo has expanded massively outside the Canadian market.
This is not a debate about the pros and cons of supply management. This is about the major damage that Bill C-282 would cause for all other export sectors in Canada. This is particularly important for a country as dependent upon international trade as is Canada. Sixty-five per cent of Canada’s GDP depends on trade.
Anyone involved in any trade negotiations knows how challenging supply management has been for all of our other export sectors. Trade-offs have been required every time in other sectors to support supply management in Canada, and it is all about negotiations. However, enshrining this protection would take away our ability to negotiate, handcuff our negotiators’ ability to negotiate as we have in the past and, again, to support supply management.
Look no further than the United Kingdom’s refusal now to engage because of Bill C-282; and the Americans — you have heard this before, and both Democrats and Republicans, and that is critical — have made it abundantly clear that this will be key to their expected refusal to renew CUSMA when that comes up in 2026, which is critically important to Canada.
Mr. Gobeil made the astounding comment that we must not pit one sector against the other, yet this is exactly what this is doing. I would respectfully ask you, as Canadian parliamentarians, to show that you would not jeopardize the 3.6 million Canadian jobs that depend on exports, many of whom are other farmers in other farming sectors, for the fewer than 10,000 farmers. They should not be sacrificed either; do not get me wrong. They have been protected in all past negotiations.
This shows that Bill C-282 is not necessary, whereas this unprecedented change to that ability to negotiate on behalf of all of our export sectors is, frankly, selfish and harmful to the Canadian economy as a whole.
The Chair: Thank you very much.
We are ready to jump into questions. Colleagues, as usual, four minutes. Keep your questions concise, please, to allow for a longer answer.
[Translation]
Senator Gerba: Thank you to our witnesses for being here in person and virtually. My question is for Mr. Harvey. Our country is fundamentally an exporter; you have all said that. Canada exports 50% of its cattle, 65% of its soybeans, 70% of its pork, 80% of its wheat, 90% of its canola and 95% of its pulses and grains. We have always marketed our products worldwide while maintaining our policy of supply management. So why are you opposed to this bill, which aims to support a sector that has never been export-oriented, and has never prevented other sectors from exporting? We have proof that 12 agreements have been signed with no impact on supply management. Why?
Mr. Harvey: Thank you very much for putting together a good list of the people we represent. We don’t want to put all this at risk and handcuff our trade negotiators in a way that prevents them from advancing our country’s economic interests. We believe that this bill would end up undermining our credibility with other countries and would send a very bad message that Canada is no longer open, that he wants to do more protectionism and less trade, and that it doesn’t want to protect its economic interests.
Senator Gerba: However, the bill we’re considering today ensures that supply-managed farmers don’t suffer even more concessions. Your position is not to support this bill. Are we to understand that you maintain that the principle of supply management should be done away with?
Mr. Harvey: Not at all. We have no institutional view on supply management per se. What we do believe is that we shouldn’t legally handcuff our negotiators. Unfortunately, this bill forces us to protect our interests because it goes directly against our interests. If we didn’t have this bill in front of us, we wouldn’t have to talk about it.
Senator Gerba: Are you aware that some other countries have restrictions and that the WTO allows exclusions and exceptions in more fragile sectors?
Mr. Harvey: Of course, but no other country has tabled this kind of legislation and it shows; it gives Canada a very bad image abroad.
Senator Gerba: Can’t we innovate?
Mr. Harvey: It’s a bad idea to innovate in the wrong direction. You have to innovate to improve the situation, not to make it worse.
[English]
Senator Woo: Thank you, witnesses.
Even without this bill, it appears we have a current policy position to not put on the table any further concessions of market access in supply management sectors. To what extent does this bill make the situation worse, if I can put it that way, from your perspective? We already have a pretty hard negotiating starting point.
Mr. Harvey: Mr. Forsyth was quite clear yesterday that it will lead other countries to take things off of the table from the beginning. The room to manœuvre is limited. It is a signal that we are not serious. It is a signal that we want to be aggressive in some of our defensive positions. Frankly, in the context of the CUSMA review, we think it is a red flag.
Senator Woo: But that is the position already, even without this bill.
I want to extend the question to ask about what future trade negotiations you could envisage that might put us in a particularly bad position. As it turns out, we are quite lucky because we already have trade deals with major players in the world. We have Europe, CUSMA and CPTPP. There are some major markets we do not have agreements with. I want you to think about what future agreements we may want to pursue where this issue is going to be a particular problem for us. If we can carve out the deals we already have and protect them, what future deals do you worry about?
Mr. Harvey: First, I have to insist we cannot actually carve out the deals we already have and protect them because these deals get reviewed. CUSMA is the obvious example. The deal is that it will be reviewed in 2026.
Also, in the future, in all different parts of the world, there is a clear signal that we are not interested in sitting down at a negotiation table in a serious way.
Senator Woo: I wonder if Dr. Hall Findlay and Dr. Schwanen have comments.
Ms. Hall Findlay: Thank you, senator.
I would echo everything my fellow witnesses just said. Very clearly, Bill C-282 triggered some very negative reaction. Yes, protecting supply management has been a policy of ours for as long as we have had it, but as soon as Bill C-282 came out and was passed in the House, we saw the United Kingdom’s reaction. One need look no further than that to see actually trying to enshrine something away from the negotiating table had an immediate effect on that country with whom we should be having significantly better relations.
I simply cannot see that Bill C-282 improves the situation for the supply managed sectors, but there is no question that it definitely takes away from our ability, frankly, to defend and work with all of our other export sectors, which my colleague Daniel Schwanen has pointed out make up, by far, the larger part of the Canadian economy.
Mr. Schwanen: It is also a bad example for our trade partners. It would not be the first time that bad Canadian policy was adopted by other countries and then turned against us in sectors where we wanted to export. It is a negotiating position, as the senator mentioned, that seems uncompromising, and that is fine, but then we would go from a negotiating position to a non‑negotiating position, and that is an entirely different context for trade talks.
Senator M. Deacon: Thank you, witnesses, for being here today.
A comment was made in the opening saying that this wasn’t a farmer bill but a bill that was defined differently. The legislation has been framed as protecting farmers. It protects a narrower scope of farmers, as we heard yesterday, not a trivial subset, an important group of farmers, but a minority. The rest of the primary agriculture sector relies on exports. More than half of the farm output in these other sectors is exported abroad. When Canada considers shutting the door on concessions in egg, dairy and poultry, does that mean that other countries will do similar things to our beef, lentil and other agricultural producers? I am thinking about it, and it is worrying, particularly with CUSMA in the forward mirror here, around the corner.
Greg Northey, President, Canadian Agri-Food Trade Alliance: I can respond to that. I represent CAFTA, as the president of CAFTA, but I also work for Pulse Canada which represents the producers of pulse and special crops across Canada.
Yes, it is concerning. When we think about our export interests, to the point the other witnesses talked about, we’re looking for access in a variety of different markets. We hope that ambitious FTAs are signed. Our concern with this is the example that it would set. We are looking to access key markets. We have trade deals. In some key markets, India, for example, where we do not have a trade deal, we would like to see one. The example this bill sets for that is significant. They see it. They watch it. They see what Canada is doing in their trade policy. Canada has always been a beacon of rules-based trade, as a place where, at the WTO, you can rely on Canada to represent ambition to eliminate protectionism.
This bill, quite frankly, for what we see as very little benefit for the supply management sector, would absolutely create an environment that is very detrimental to the vast swath of farmers who represent rural municipalities. They are small- and medium‑sized farmers. Where the bill is often being described as protecting a certain type of farmer, it is not the case. We represent the exact same size of farmers who have the same interests in those communities and who have family farms. It has been unfortunate that it has been so focused on this agriculture aspect when the reality is, as Michael said, it is the trade precedent that it sets for us that is concerning.
Senator M. Deacon: Thank you.
On that point, there has been a heavy focus on the agriculture aspect. Are there other sectors we are not hearing from that we should be hearing from? I am asking the question because it has been 13 months mostly consulting with those related to farming.
Mr. Northey: The previous panel was discussing the unfortunate divide that happens. It is probably why this has been ongoing for a long time. But, yes, absolutely, the reality is — and I think it’s really important to point out — that the deals we are looking to sign now probably don’t have a ton of interest in supply-managed sectors. They may have it, but those markets are essential for not just agriculture but for minerals, for forestry, for all kinds of different sectors.
The reality is that this bill would likely impact other exporting sectors just as much because of the precedent it would set. This is an example that, oh, if X country in the Indo-Pacific region, for instance, knows that Canada has a clear desire to export infrastructure, metal, minerals, what have you, they can decide that, well, we will enshrine legislation that —
The Chair: Sorry, Mr. Northey, I’m cutting you off. We went over time in that segment.
Senator Coyle: Thank you very much to all of our witnesses for being with us for this very important study of this bill.
I was not happy, but I was glad to hear the acknowledgment that this pill was not well studied in the House. That is a frustration and a disappointment for us in this house. It’s really incumbent upon us to do a thorough study of this bill, and I thank you for helping us with it.
You’ve all been pretty clear that you see this as bad for Canada’s economy, which is dependent on exports. Hopefully, it will grow its exports as opposed to reducing its exports. In fact, you say it is already creating a chill before it’s enacted in this context of rising protectionism and also the potential deals and existing deals that need soon to be renegotiated. Could you talk a little bit more about this changing context into which our negotiators will be thrust? They are already preparing for it, either for new deals or those deals that are coming up for renegotiation. I would like to hear a little bit more about the global context.
Mr. Harvey: Sure. The global context in the world of trade has generally been that the actual trade numbers haven’t really been going back. Some of the big things that have led to increased trade over the last couple of decades are technological changes, container ships and digitalization. We are not exactly moving back on those, but we are seeing political risk increasing radically. The political risk is increasing radically mainly because the most important economies in the world — the U.S., China, the EU — are backing away from the rules-based system. In that context, it is in Canada’s interest to be fighting for the rules-based system, both bilaterally with these partners and multilaterally. We think it’s a terrible idea for Canada to show that it’s not that interested.
Senator Coyle: So this could in fact be seen as a signal?
Mr. Harvey: Yes, a terrible signal.
Ms. Hall Findlay: I would respond for no reason other than to simply echo that view.
Again, this was a clear signal to the United Kingdom, and they reacted. For the CUSMA renewal, which has already started but happens officially in a year and a half, this has already proven to be a very big signal. If you’re a trade negotiator and you’re going into a negotiation where everything’s on the table, the other side is always hoping — believe me, they are always hoping — that they can get something out of our supply management system. That is how a negotiation works. If you don’t have that hope, if it is completely off the table, then it completely skews the negotiations. I could not agree more that this is already sending a signal. The fact that this has passed the House has already sent a very damaging signal. Frankly, senator, if I may, I commend the Senate and this committee for doing, in fact, the detailed work that something of this consequence desperately needs.
Mr. Schwanen: I will just add that we are seeking to expand the CPTPP to other countries, among which are producers of our supply-managed products, other than New Zealand. We are seeking, as Dr. Hall Findlay mentioned, to strengthen our trade relationship with the U.K. That’s become a stumbling block. Last but not least, among other examples, is the CUSMA. It is very likely to come on the table, and it is a lot easier to say, “No, I can’t. It is politically difficult,” because at least when you talk and you have a negotiation going, than to say, “No, my government doesn’t want me by law to talk about it.”
Senator Gold: Thank you, witnesses, for being here and for your engagement with us.
We’re talking about a bill that would enact into law the current policy vis-à-vis negotiations, yet so much of the testimony we’ve heard since the hearings have started has been either focused on negotiations almost in the abstract, if I can use that term — as a former academic, I like abstractions — or on supply management as an institution and the benefits it brings to the producers and their communities. I know that people have strong views, principled views, ideological views, and I don’t mean that in a negative way. It could be in favour of unfettered free trade with almost no limitations, as understood by some, or ideological commitments to or against supply management, again, because the market should rule or trade should be fairer and more regulated.
I am keen to ask the witnesses, if they are comfortable, to put their cards on the table. I would focus on supply management, if I could, because there were some allusions in the opening remarks that piqued my interest. Are you willing to be candid? In principle, what is your view of supply management? That seems to be in the air even as we discussed this particular bill. That question is really to the vice-president of the C.D. Howe Institute or to Ms. Hall Findlay, and, of course, Mr. Harvey.
The Chair: You have two minutes.
Mr. Schwanen: I’m happy to go. What we have said is that supply management should be managed more with the interests of consumers at heart. You will see that other countries, like Australia, which got rid of similar systems, are still supporting their farmers, still supporting especially the transition toward a more open industry, especially in industrial milk and at the consumer level.
Our position is that the industry should evolve, that supply management had not helped it to evolve, and that, right now, it will become almost sclerotic as a result. There are a number of independent studies that show that. I’m not in favour of supply management, but I agree with the one witness who said that, actually, the U.S. is also subsidized. Well, let’s use our anti‑dumping tools and countervailing duties to address that. We don’t want to let other subsidized products, subsidized milk, into Canada. That’s not the idea, but the idea is, yes, we would like supply management to be managed more with consumers in mind. That does mean a trickle of imports.
Ms. Hall Findlay: Senator Gold, it’s a very good question because it is true that some of us have spent a great deal of time studying this issue. I would be more than happy to engage in a much longer conversation. In fact, I did a report over 10 years ago, which has since been updated. It’s not ideological and not at all done because of some political partisan reason, but it’s based on all of the objective evidence we could pull together.
My colleague Dr. Schwanen mentioned consumers. A big part of my work was asking how the dairy farmers of Canada can take advantage of export markets that are denied them now. The Australian and other international examples show the way.
Senator Boniface: Thank you for being here.
I would like to ask my question of Mr. Harvey. You had an opinion piece this morning in the Financial Post. In it, you said that Bill C-282 could risk and threaten over a million jobs in rural and urban Canada and tens of billions in export. I would like to hear more about that, particularly given the importance of our rural communities.
Mr. Harvey: Thank you. As I said in my statement, agri-food is responsible for one in nine jobs in Canada, and the majority are in export-based agri-foods. In 2022, we had $92.8 billion in agriculture and food products. This bill directly threatens those jobs, that economic impact, by making it more difficult for us to export.
Senator Boniface: You are saying this provision, or the provisions in this bill, will negatively affect the negotiators’ ability to reach an agreement that will benefit those other industries?
Mr. Harvey: Absolutely. It is putting the interests of the smaller group ahead of the interests of the much larger group.
Senator Boniface: As you would appreciate, as senators, we have received a number of letters on this issue, pro and con. The question I asked a witness earlier was around the issue of the farming community generally, the broader community in all aspects of what product is produced. He indicated in his response that the sense there is a division is nonsensical, if I understood him correctly. That’s not what I’m hearing. When I see the impact this could have on the broader farming community, would you agree with me that, in fact, it does create a huge divide?
Mr. Northey: It is important to separate a divide between farmers who are and are not supply management. Our view, or at least what we hear from boards across the country who are in groups that are export-dependent, is that all farmers should be able to thrive. It doesn’t really matter what the system is.
Our issue is that Canada should never be at a vanguard of enshrining protectionism. It never ends well for us. We can see what is happening now with the issue with what we have done with Chinese EVs.
What it comes down to is not that supply management should not exist. Every government has supported the three pillars with tremendous support. Everyone knows how far they should go, how strong they are and what was required to maintain their strength. It is really mostly about ensuring that export-dependent farmers are not subject to too much protectionism where our ability to thrive is not there.
If we are enshrining this in the bill, it’s about the bill; it is not necessarily about the supply-managed system. That’s a very strong system. Everyone within government supports it. It’s not the fight we’re after. It is not where the divide is. It is about how Canada approaches trade negotiations and its view of protectionism, rules-based trade, our standing in the world and how we want to protect ourselves as a middle power. That’s really important for our producers who rely on markets.
Senator Harder: Thank you to our witnesses, both those who are here and those who are here virtually.
It won’t surprise you to know that I share your broad views. What I would like you to comment on are the views of those you represent. In the case of Dr. Hall Findlay in particular, you are sitting in Calgary. You’ve had some experience in Ottawa. Why are those who may well be most affected by this bad piece of legislation not more upset than they are? Let’s start with the West, please.
Ms. Hall Findlay: Thank you, senator.
In my comments to Senator Gold, I’m not a supporter, but this is not about supply management. This is about the challenge of enshrining this one sector in the legislation. That is the task at hand here.
I can tell you there is not a beef farmer in this country, senator, who supports supply management. It is a very frustrating thing. In my experience over the last 10 years working in and around this issue, you will often find, as humorous as it might seem, that there is a farmer down the road and his daughter just married the local dairy farmer. They are not going to engage in open division and battles with their colleagues in the farming community. I have a great deal of respect for that. It is frustrating because, behind the scenes, there is really big frustration.
With the reaction we’ve seen, the immediate effects on our canola farmers from one trade decision that we have taken in Canada to put tariffs on Chinese EVs, you can bet the canola farmers are upset now. Bill C-282 is also upsetting them. I don’t know if it is out of respect for other farmers, but they are not as vocal. You need to have some of these conversations behind some closed doors where people can feel more comfortable being open in their real views.
Senator Harder: Can I also suggest that the non-agricultural sectors that are heavily reliant on exports are not quite as aware as they ought to be, in my view, of the threat that this legislation poses? Here I am talking about auto, steel and aluminum. Someone will pay the price of a deal.
Ms. Hall Findlay: They all do. There is no question.
There is also a strong message from government in all trade negotiations that we are going to support supply management still. My view is that some of these other sectors, notwithstanding some frustration, sometimes feel, well, what is the point in really engaging because that decision has already been made? I may find it frustrating, but when you are a regulated industry and you want to make sure you are on the right side of government, or if you are working on establishing a plant somewhere, face it, you are in business, and you are not going to want to alienate the very government that you are trying to work with. Given that the government has had all-party support for supply management, many of these other sectors, senator, don’t get engaged because they see other battles that are potentially winnable they have to focus on.
Senator MacDonald: I wish to run something by you about these negotiations and comparing NAFTA to CUSMA.
In 2018, I was at The Council of State Governments meeting, east, in Westchester, New York. At 8:30 in the morning, just before we started our discussions, the leading trade lawyer with the binational corporations, Dan Szabo, came over to me. We know each other. We have met each other many times. He said, “Senator, you might be interested in something. Mexico and the U.S. are just sitting down to renegotiate NAFTA.” I said, “Who is there from Canada?” He said, “Nobody.” We weren’t invited to the initial negotiations. I was disappointed by that, and I astonished by it, too. I know why. I will not go into that. What’s your opinion of CUSMA as opposed to NAFTA when it came to protecting Canadian interests?
Mr. Harvey: CUSMA was a reaction to the political context of the moment which led us to renegotiate. I think Canada came out of it well. It is absolutely essential for the sectors that CAFTA represents. The issue today is that we don’t want to undermine the context where we are moving to a revision of it. It is of too great a national importance for Canada to be making gratuitous gestures that are like waving a red flag in front of a bull.
Mr. Northey: I would echo Michael’s comments. Because it is such an integrated North American market, it is table stakes for us to have it. We are seeing increased processing and movement across the borders. CUSMA brings us the ability to engage very closely with U.S. regulators within the context of the deal. Putting aside the trade elements, the working groups that get formed and everything that gets formed around ensuring the border is as thin as possible, around those elements, are essential. For us, it is an essential deal. As Michael said, the renegotiation or at least the review of it will be very important in 2026.
Mr. Schwanen: We did as well as we could under the circumstances with CUSMA. The real threat that it poses is this threat of constant renegotiation, possibly, which wasn’t in the air before. That has cost Canada a lot of investment. There is more uncertainty, and we are the smaller market. From that perspective, that’s one of the reasons we need to keep open all the possible options that we could discuss. We shouldn’t erase anything from the list, which is my issue with this legislation. They could come in handy, even just the ability to talk about them in this context of greater uncertainty, which exists, and the protectionism that is still rising. However, we did well, and we need to continue with this agreement or something close to it.
Ms. Hall Findlay: The information that we have now from both the Democrats and the Republicans, regardless of who becomes president, is that there are some key irritants in the relationship. Supply management absolutely is one of them. We’re not talking here about getting rid of supply management in order to placate the Americans; that’s not going to happen. But enshrining Bill C-282 will, in effect, ensure that we will not get a renewal of the CUSMA/USMCA in 2026. Why would we clearly do that to ourselves and ensure that we will not get a vote for renewal for the sake of a system that we are already protecting in our trade negotiations? It would be just so dangerous for us to do that.
Senator Ravalia: Thank you very much to our witnesses.
My question is for Dr. Hall Findlay. You have previously highlighted the need to modernize supply management, particularly in light of evolving global trade dynamics and domestic economic pressures. How do you envision modernizing Canada’s supply management system in a way that balances innovation and resilience? I know this has been your work, and perhaps this is an opportunity for you to highlight some of those points.
Ms. Hall Findlay: Thank you, senator.
Also a little bit in answer to Senator Gold, that’s really a much, much larger question. A large part of my work has been how to effect transition in a way that does not hurt our dairy farmers but, in fact, provides a combination of compensation and arrangements that would allow them to then export. I mentioned earlier that Agropur, which is a Quebec co-op, now processes more American milk. The opportunities outside of Canada economically are massive. The Australians and New Zealanders are not asking to have supply management be put back because they are benefiting immensely from those global markets.
To me, it’s a shame for the Canadian dairy farmers. There’s such irony in all of this. It’s such a shame. We are here talking about trade, and the global opportunities for them are also immense. We make — well, the cows make — really good milk, and we make really good cheese in this country. We are jeopardizing those opportunities.
Much of my work has been on how we get from here to there, to that place of greater opportunity, in a way that addresses the concerns of the farmers today, addresses their financial concerns, addresses their worries, frankly, about moving to a system that might require more competition, which it probably would. How do we help them with that kind of transition? You mentioned technology and innovation. We are very good at those things here in this country, and this would be a wonderful opportunity to blend those two capabilities together.
Senator Al Zaibak: Thank you to our witnesses for providing a very interesting perspective to us.
Unlike my other honourable colleagues, I don’t claim in-depth knowledge of the supply management system, but my understanding is that Canada’s supply management system regulates the production, pricing and import of dairy products, chicken, turkey, eggs and hatching eggs, ensuring market stability and income predictability for Canadian farmers. To your knowledge, does the current supply management system restrict the ability of the stakeholders, the Canadian farmers in these sectors, to export their products and expand and compete internationally? If not, why are we not going ahead to promote and export these products and to compete aggressively in the international market? That is for any of the witnesses.
Ms. Hall Findlay: The question is exactly the right question, from my perspective. As I just said, the opportunities are immense. Our cows produce good milk, and in this country, we do produce excellent cheese and other dairy products. We are not able to sell these products internationally because all the potential international markets say to us, “We will not import those products from Canada because you do not let us export to you.” It is the one sector that is so protected already.
But, again, this whole debate shouldn’t be about supply management in and of itself. That is a very interesting but a much longer conversation. Right now, Bill C-282 would only be enshrining a protection that is already there in our trade negotiation. It is the position of all parties in the government, but the enshrining of it would be unprecedented and, as we’ve discussed, very dangerous. That said, senator, I would be more than happy to have a much longer conversation with you about the opportunities of moving away from supply management.
Senator Al Zaibak: I didn’t mean or intend to suggest moving away from supply management. I was more wondering whether the supply management itself restricts export?
Ms. Hall Findlay: Yes, it does.
Senator Al Zaibak: My follow-up question, then, is, are there any other barriers facing the producers to exporting internationally?
Ms. Hall Findlay: International trade law will tell you that it is the system of supply management that prevents us from exporting. That’s why we have Canadian dairy organizations like Saputo and Agropur expanding internationally and setting up operations in order to take advantage of international markets, but they cannot do so from a Canadian base. That’s too bad, because that’s economic activity that is not in Canada that could be. But it is the supply management system itself that is the constraint here.
Senator Al Zaibak: Thank you so much.
The Chair: Thank you very much.
Regrettably, we won’t have time for round two. I noticed that several witnesses and senators said, “If we had more time . . .” We will be continuing our hearings on this bill.
I would like to thank, on behalf of the committee, our witnesses, Martha Hall Findlay, Daniel Schwanen, Greg Northey and Michael Harvey, for joining us today. Thank you for your candid responses, and we may see you again sometime.
(The committee adjourned.)