THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Wednesday, October 9, 2024
The Standing Senate Committee on Foreign Affairs and International Trade met this day by videoconference at 4:16 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: My name is Peter Boehm. I am a senator from Ontario and the chair of the Standing Senate 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: Welcome. Amina Gerba, Quebec, sponsor of Bill C-282.
[English]
Senator M. Deacon: Welcome. Marty Deacon, Ontario.
Senator Greene: Stephen Greene, Nova Scotia.
Senator MacDonald: Michael MacDonald, Cape Breton, Nova Scotia.
Senator McNair: John McNair, New Brunswick.
Senator Cardozo: Andrew Cardozo, Ontario.
[Translation]
Senator Housakos: Leo Housakos, Quebec.
[English]
Senator Woo: Yuen Pau Woo, British Columbia.
Senator Harder: Peter Harder, Ontario.
Senator Boniface: Gwen Boniface, Ontario. Welcome.
Senator Black: Rob Black, Ontario.
Senator Coyle: Mary Coyle, Nova Scotia.
Senator Ross: Krista Ross, New Brunswick.
Senator Gold: Marc Gold, Quebec.
The Chair: I’d like to acknowledge that Senator Cardozo and Senator Black, both of whom are from Ontario, are guests of the committee today.
I would like to welcome people watching on ParlVU. Today we are continuing our study on 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 from the Egg Farmers of Canada, Emmanuel Destrijker, 2nd Vice-Chair; and Drew Black, Chief Executive Officer. From the Union des producteurs agricoles, Martin Caron, Chairman and Chief Executive Officer.
[Translation]
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.
[English]
We are now ready to hear your opening remarks, which will be followed — as we usually do here — by questions from senators. Mr. Destrijker, you have the floor.
[Translation]
Emmanuel Destrijker, 2nd Vice-Chair, Egg Farmers of Canada: We appreciate the committee’s dedication in supporting the government as they negotiate trade deals while ensuring that Canada’s system of supply management can continue to deliver for Canadians.
These agreements are an important part of our economy and help the agricultural sector achieve its full potential. However, when pursuing these trade targets, we must achieve balance between export-oriented sectors and our domestic sectors. This is why we are here to express our support for measures that strengthen supply management.
Contrary to what some critics would like you to believe, all countries have sensitive sectors that they protect in trade agreements — this is the norm in negotiations. As Canada builds on its trade legacy, passing Bill C-282 would send a clear signal to our trading partners that, while doing so, supply management and the food security of our country are off the table.
In fact, this bill clearly aligns Canada’s commitment to protect supply management in trade talks, with the added economic benefit of a predictable future. These actions are especially important given that food insecurity and supply chain instability are on the rise around the world because of geopolitical tensions and climate change.
Through the stable foundation of supply management, egg farmers have been able to continue championing growth and protect our food supply. Aligning our international trade position with this reality will help our farmers, rural communities and all Canadians continue to thrive. Simply put, supporting Bill C-282 is not about placing one sector above the other or judging the merits of one system against the other — that view is narrow. The opportunity ahead of us is about recognizing the important role of agriculture to our economy and moving ahead with a structure that ensures all farmers are successful.
I would also like to highlight the vital importance of maintaining small, family farms. We have seen first-hand the struggles of farmers around the world who cannot recoup their cost of production. This results in family farms disappearing and young people no longer seeing a future in farming. We have only to look to our American neighbours to witness the effects of a decentralized system, where becoming bigger is the only way to survive. This model favours industrial farming and drives smaller farms out of business. As these farms disappear, so do other businesses and the people in these regions.
This high degree of consolidation has triggered serious issues to the U.S. food supply, with U.S. consumers experiencing record price increases and widespread shortages. Here in Canada, one of our main strengths is the number of small farms, with production distributed across the country. We are well positioned to handle supply chain pressures and do not experience the same market disruptions that impact the U.S. For example, if there is an avian influenza outbreak that affects one region of Canada, egg production can be increased in other provinces to make up for gaps. This allows farmers to work together to maintain the supply of eggs.
As you have seen, support for supply management extends well beyond the farm gate; it is a national priority. Just last week, the minister responsible for negotiating trade agreements reiterated the government’s commitment that “supply management will be protected and won’t be a part of any future trade negotiations.” This has been a clear message to both our sector and Canada’s trading partners for many years. It is why passing Bill C-282 is important to our collective future. It gives Canadians further confidence that their food supply is secure. It also gives farmers the assurance that they can invest in their operations without being worried that their market will be traded away.
By passing Bill C-282, senators are showing Canadians that they understand the uniqueness of agriculture in Canada and value our rural communities. We urge you to take action today and add your support to this bill. By doing so, you are taking an important step to safeguard supply management and ensuring our food system will thrive well into the future.
Thank you for your attention.
The Chair: Thank you for your remarks, Mr. Destrijker.
Martin Caron, Chairman and Chief Executive Officer, Union des producteurs agricoles: Honourable senators and committee members, I’m pleased to be here as a dairy and field crop producer from Louiseville, in the Mauricie region, and also as chairman and CEO of the Union des producteurs agricoles, which represents all 42,000 agricultural producers in Quebec. We represent production sectors on local, national and international markets.
I am also here as spokesperson for the Mouvement pour la gestion de l’offre, which brings together the UPA and Quebec dairy and poultry farmers.
The organizations that spoke before me have discussed the major economic spinoffs of supply management. Let me simply remind you that in Quebec, the 6,500 family farms involved in supply-managed production account for around 40% of the province’s farm income. These farming families therefore play a decisive economic, food and territorial role in the province, as they do elsewhere in the country.
I’d also like to point out that consensus for supply management is among the broadest in Canada. Through their marketing model, supply-managed producers meet the food needs of the domestic market with high-quality local production. What’s more, they do so without contributing to overproduction on the world market.
Supply management also makes it easier for Canada to achieve major global biodiversity objectives. I’m referring in particular to the collectivization of resources such as transportation, and, by the same token, the maintenance of small and medium-sized farms across the country.
Supply management is also a model that ensures stability for farmers, processors, distributors and consumers, while also limiting food waste and delivering food security for Canadians. An entire social, food and commercial ecosystem benefits from it.
In terms of government support, supply management is just as important for dairy and poultry farmers as government risk management programs are for other production sectors.
In that regard, it’s important to remember that supply management is not an impediment to exporting other Canadian agricultural commodities. No matter what, our products are successful on international markets because they are of exceptional quality.
Unfortunately, supply management is regularly undermined when international trade deals are negotiated. Our dairy and poultry farmers have paid a heavy price for the last three trade agreements. Compensation in these three sectors has never fully covered the costs of producers and processors.
As we know, Canada will continue to negotiate and conclude other trade agreements in the future. This is why it’s so important to send a clear signal now, first and foremost to Canada’s dairy, egg and poultry farmers. All these farming families cannot always see the cost of negotiations dumped on them, as is currently the case. They expect and deserve unwavering support from the Canadian government.
The next step is to send a signal to the international community and our trading partners, especially our neighbours south of the border. Like all other countries, the U.S. government protects its key sectors in all negotiations. This is particularly true of sugar and cotton, which the Americans defend tooth and nail in agreement after agreement.
Like every other country on the planet, Canada can very well open up to the globalization of trade and defend its most important markets. Those two things are not mutually exclusive. Nothing is more important than sustainably feeding our fellow Canadians and helping our communities across Canada provide for their families.
We saw during the pandemic how crucial people’s food security was. This is literally a matter of national security. I hope that all senators will move forward and act on the Canadian consensus around supply management.
Thank you very much.
The Chair: Thank you, Mr. Caron. Will now open the floor to questions from senators.
I wish to inform members that you will each have a maximum of only four minutes for the first round. This includes questions and answers.
Senator Gold: Welcome to the Senate, and thank you for your presentations this afternoon. As you probably know, there has been a lot of talk about the political motivations behind this bill and the benefits it would bring to Quebec, which I proudly represent in the Senate.
However, in your sector in particular, I would say that the economic potential is significant and has a positive impact on all regions of the country. For example, in Newfoundland and Labrador, according to provincial government data, farm receipts from the egg industry are over $12 million, and the average flock size has grown from 12,000 to 23,000 since 1986.
To put things in perspective, in Atlantic Canada alone, the egg industry’s economic contribution injected nearly $94 million into Canada’s gross domestic product, which is significant. Canada as a whole contributed close to $1.3 billion to its GDP. When you put these numbers in perspective, wouldn’t you agree that Bill C-282 further strengthens important protective measures for your industry, which represents all provinces and territories? The question is for all the witnesses.
Mr. Destrijker: Thank you, senator. The numbers you mentioned are the real numbers. As you also said, supply management is not limited to one province, it is present across Canada, even in places that have almost no agricultural production anymore. There are supply-managed farming operations in those regions, and it also helps to develop them. It’s not just agricultural production, it’s not just the farm that will remain there — the whole community stands to benefit from the spinoffs of supply management. It’s important that this be the reality across Canada and, as you said, people must continue to defend that.
The Chair: Do you have a follow-up question?
Senator Gold: No; do any other witnesses wish to add anything?
Mr. Caron: Thank you for the question. You brought up the economic aspect, but I’d also like to talk about all the agreements being reached across Canada at the moment, such as environmental or climate change agreements and, beyond the numbers, on the financial and economic fronts. The fact remains that the supply management system enables us to have farms everywhere, and there is diversification across all territories. This represents added value, because it pushes us to perform better to honour those agreements within the framework of the Conference of the Parties, or COP, assemblies when it comes to biodiversity, the fight against climate change, carbon footprints and greenhouse gases. Many other countries are problematic. Concentration is happening, whereas supply management means that farms can be everywhere. It’s an important consideration, and that’s why we want this bill to pass.
Senator Gold: Thank you.
[English]
Senator MacDonald: This past September, Michael Harvey, the Executive Director of the Canadian Agri-Food Trade Alliance, authored an article in the Financial Post in which he referred to Bill C-282 as “terrible trade policy.” According to Mr. Harvey:
Keeping supply management off the table forever, whether in multilateral or bilateral trade talks, would hurt Canada’s ability to make decisions in the national interest and, by laying down a protectionist marker, would undermine our leadership and influence at international forums like the World Trade Organization or the trans-Pacific partnership.
What is your reaction to his comments? How do you respond to them?
[Translation]
Mr. Caron: Thank you for the question, senator. Let’s look at the current history on a global scale: Over the past 20 years, food exports have gone up by 350% — in the past 20 years. We can see that trade has risen to 6%, 8% or 9% worldwide. Take Quebec: It has seen a 95% increase in exports over the past five years, even though we’re a province with a high rate of supply‑managed production. That’s why Quebec is able to lead the way for a number products, whether it’s maple syrup, cranberries, wild blueberries or pork production. Quebec is a leading exporter.
People who buy our products abroad are buying quality products, because we’re able to deliver that. We shouldn’t compete with each other and say that supply management doesn’t allow for quality products. The reason we’re a leader for the products I mentioned is much more the quality of our products. That also carries added value, because those products stay in Canada; many products, about 30% of them, are still processed in Canada. In Quebec, 66% of products are processed in the province. We also have the potential to increase other exports.
[English]
Senator MacDonald: To the Egg Farmers of Canada, with the bill restricting trade commitments that could affect supply-management sectors, what do you see as the potential risks of becoming isolated from international markets? How can the egg‑farming industry leverage its protection not only to maintain its current position but also to innovate and expand in what is obviously a competitive global environment?
Drew Black, Chief Executive Officer, Egg Farmers of Canada: Thank you for the question.
Our focus has always been on growing the Canadian domestic market. One of the real benefits through supply management is, as you heard, having the distributed farms. We’re very proud to have all 10 provinces as well as the Northwest Territories in our case as well. So we’re able to provide very local and very nutritious foods to Canadians.
We have had a tremendous amount of growth in our sector, actually. That translates not only for growth in per capita consumption of eggs; part of that is related to the increased population growth, certainly in the last few years. Canadians are increasingly choosing to consume eggs outside of our typical breakfast, as well, so there has been a great amount of innovation in new egg products that have hit the markets and in our ability to have the predictability that comes through our system and responding to shocks, whether that’s highly pathogenic avian influenza, the pandemic we faced a number of years ago and being able to make quick decisions to make some quick turns. For example, as we saw, the 30-packs of eggs just exploded as people were increasingly going to retail, as opposed to when we had some of the restaurants and some of the other sectors that, unfortunately, had closures or reduced sales.
Within that, we’ve been able to be quite innovative in many ways. That remains our focus very much.
We are not against international trade, certainly. I would posit that our farmers have chosen supply management unequivocally as the best marketing system for them. That doesn’t discount other farmers, of course, and other agriculture groups for pursuing what is best for them.
The Chair: Thank you, Mr. Black. We’re just over time there.
Senator Boniface: Thank you all for being here. I have two questions. The first should be rather quick.
I’ve heard you and previous witnesses refer to small and medium farms. Given the difference in farms across the country, what do you define as “small” and “medium”?
Mr. Destrijker: The average farm in Canada is roughly around 22,000 layers per farm. It could seem to be big, but the average farm in the U.S. is over 1 million birds per farm. The three largest egg producers in the U.S. each, individually, are bigger than all the Canadian producers together, and they call them “family farms.”
So that’s the different reality that we have in the two countries.
Senator Boniface: Okay.
My second question is one I ask with great respect, but I’m trying to get to the bottom line. I heard in the opening comments that this isn’t divisive. I raised this with a group last week, particularly in the agriculture community. So I just want to give you a couple of pieces of mail I’ve received, and I invite your response in terms of what they have said. I’m trying to figure out where the balance is, and earlier, you indicated trying to strike a balance.
The Canadian Cattle Association said that they strongly encourage members of Parliament to oppose Bill C-282. The National Cattle Feeders’ Association said the same thing. The International Cheese Council of Canada called upon us to do the same thing. The Canadian Canola Growers Association — the same. Cereals Canada — the same.
I’m just trying to understand how you square that, and how we can understand that best, when your perspective is, obviously, different in that you say it doesn’t have an impact on the agriculture community, generally.
Mr. Destrijker: We just have two different realities. As I said, no one is better than the other. It’s just two different ways to produce different products in Canada. I think that’s what makes a success of Canadian agriculture. Part of it supplies the Canadian market, and some other productions are related to exports. Like I said, no one is better than the other. We should all work together. As supply management, we should work with our colleague exporters to make sure they have access to more markets. At the same time, they should work with us, not to defend or protect supply management, but to promote supply management outside of the country.
We shouldn’t be afraid of promoting supply management. It’s just two different models. As I said, we should work together in the future and make sure we work hand in hand with them. It’s just two different realities.
Senator Boniface: Would it be fair to say that you understand their position? Or do you see the position differently?
Mr. Destrijker: I see the position differently. I respect it, but I don’t agree.
Senator Boniface: Okay.
Mr. Destrijker: It’s just a different point of view, but one is not better than the other.
Senator Boniface: I appreciate that. Did you want to add something?
[Translation]
Mr. Caron: Thank you for the question. I mentioned that in my statement. Taking beef for example, 15% to 20% of people consume it, just in Quebec. The rest is consumed by people outside Quebec. I am in favour of exports, but at the same time beef is consumed outside Quebec. I am talking about Quebec only, but we could also look to see what is happening in Canada. I would for instance like to produce beef that is consumed directly and in higher volume. That is one aspect.
The other aspect, as I said, is the system, risk management. As a canola producer, I am a grain producer. I produce grain, corn and soy that are exported. I produce wheat that is exported. I produce processing vegetables and beans that are exported. I have an insurance program, though: crop insurance. The risk management program exists. The government covers 60% of it and farmers cover the remaining 40%.
Supply management is the same protection system. It provides predictability for investments. It is a value added. There is really no need to compare…. I understand people, but I think we have to realize something that I have said: When we are able to export products, it is because of their quality. I represent farmers and we have to make sure of one thing: that there is equity and that farmers receive a fair and stable price. We cannot just export.
The Chair: Thank you, Mr. Caron. Time is up for this part of the meeting.
[English]
Senator Harder: Thank you to our witnesses.
You’ve talked a lot about the virtues of supply management in Canada today and historically. I don’t want to dispute that, but the bill that is before us is not really about supply management; it’s about negotiations. The sponsors have used the Department of Foreign Affairs, Trade and Development Act. Are you aware of any country that uses a foundational act to define what cannot be negotiated? I’m not.
Mr. Black: It’s not my area of expertise, I’m afraid.
Senator Harder: Would you agree with me that the debate this bill introduces is not about the virtues of supply management, but about the nature of negotiations?
Mr. Destrijker: I would disagree with you, Senator Harder. With all due respect, this bill will only put on paper what the government has said: Nothing less, nothing more. It’s going to put on paper what all the parties in the House said loudly and clearly.
Senator Harder: Is law not different than speech?
Mr. Destrijker: That’s why we want to have it on paper.
Senator Harder: I can understand that. Thank you very much.
Mr. Destrijker: Trust and verify.
[Translation]
Senator Gerba: Senator Harder asked a good question. We are not debating supply management, but rather a condition to ensure that supply management continues to operate. In order for the condition to apply, we have to amend an act relating to supply management. So in a sense, Senator Harder, the answer is yes.
My question relates to the pandemic, which taught us a number of lessons regarding food security. We saw the significant impact of the concentration of U.S. production in factories at the time of avian influenza. Can you explain the risks to our food security if we were to lose supply management? In what way would the current system in Canada, which is protected by supply management — in the end, how does supply management offset that type of risk?
[English]
Mr. Black: Thank you for your question. There is no doubt that many of our farmers were dramatically impacted by the highly pathogenic avian influenza, or HPAI, especially a couple of years ago. We saw that in the U.S. It is present in the wild migratory bird population here in Canada, but thankfully we’ve been okay for the last little while.
As you were alluding to in your question, because we have farms in all provinces and all eco-zones across Canada, that is a risk-management approach that has turned out to be very productive in terms of insulating the impact when we have faced avian influenza on the farm to the supply chain and to consumers’ pockets as well. Unlike where there were very big impacts in the U.S. and Australia, to some degree, which resulted in egg prices going up for consumers at the retail level, when there is an impact on production in Canada, we do not have an impact on the farm gate price. We don’t have those same linkages, thanks to our system.
When we do have an impact, thankfully our farms aren’t as large, so the overall impact is subdued as a result, and we’re able to work collaboratively across provinces and companies to ensure that the supply is there for Canadians.
[Translation]
Senator Gerba: Farmers under supply management received compensation as a result of concessions made during trade negotiations. Why would this bill be necessary, considering that they receive compensation?
Mr. Destrijker: Farmers under supply management do not want to receive compensation, period. That is not our business model and that is not how we run our farms. For my part, that is not how my parents taught me to farm. It is not about receiving a cheque from the government but rather being paid for a product that I put on the market. Concessions were made, compensation was paid, it is not even…. Honestly, senator, I would be willing to give you back the cheque. I do not want a cheque. I do not want a cheque from the government. I want to farm and to be paid for what I produce as a farmer.
Senator Gerba: Thank you.
[English]
Senator Woo: Thank you, witnesses. The design of supply management is to regulate the amount of production, so that it matches consumption — principally domestic consumption — so exports are not really a major consideration. Even so, we have fairly substantial exports of eggs around the world; in fact, $60, $70 million a year. Can you tell me more about the egg export sector in Canada. Who are these people? Are they supply-management exempt? Are they part of your organization? What are they selling? To whom are they selling?
Mr. Black: We represent the farmers. There is a separate organization that represents the processors, and those would be the larger exports.
Certainly, there are some.
Senator Woo: Are they supply-management exempt?
Mr. Black: We only supply manage the on-farm production. Not to get too much into the specifics here, but it’s the next stage of the value chain. Farmers produce the eggs, which are then sent to the grader possibly for further value-added processing as well, and then from there, they are free to sell to whomever they choose.
Senator Woo: Would you agree that they’ve been quite successful expanding the markets overseas, exporting Canadian eggs to new markets, including some of the innovative eggs that farmers have come up with over the years?
Mr. Destrijker: Honestly, I don’t think it’s a major part of our market; it’s probably a smaller part. You’re right, probably some of the new products that have been created in the last couple of years will probably have some potential for export, I would say. Part of it is serving some of the cruises in B.C. All of the cruise lines are part of it because most of them are coming from the U.S. If you consider that an export, yes, that’s part of the export of the Canadian market.
Senator Woo: Would these exporters of Canadian egg products — because they are originating in Canada technically — not be disadvantaged by this bill because trading partners might well shut the door or increase tariffs on those very products in retaliation for our legal prohibition on increasing concessions?
Mr. Black: I would be surprised if that were to happen. This isn’t a trade negotiation in and of itself at the moment. Once this bill is passed, the current flows of trade are not going to be impacted in any way.
Senator Woo: No, I’m talking retaliation, further to our closing off of any further concessions in supply-managed industry. You don’t think other countries will respond in a negative way?
Mr. Black: I think we have a clear commitment from the current government that there will be no concessions. With this bill passed, I don’t necessarily see that commitment changing.
Senator Woo: Your view is that if we were to loosen up supply management, the industry would suffer greatly because we’re a relatively small country with a small number of farms and so on. Can you tell me which is the most important egg exporter in the world, which country? It’s a country half of our size, the Netherlands, with 17 million people. Do you think there is a prospect that Canadian egg exporters, who make terrific eggs, can be successful in export markets?
Mr. Black: I think by virtue of where the Netherlands is situated in Europe and their proximity to many other different other markets does provide them a different advantage compared to how Canada is situated. We have the U.S., very much our close cousins to the south, who have a much milder climate in the southern regions where eggs are produced and don’t have to deal with the same and number of costs compared to Canadian producers.
Senator Woo: Your view is that Canada cannot be as competitive internationally as other egg exporters?
Mr. Black: On the egg side, no.
Senator Woo: Thank you.
Senator Coyle: Four of my questions have been asked already, so I would like to just go back to basics. We have received a lot of communication on this bill from various experts, farmers and farming associations, supply managed and others not supply managed. I’ll go back to this issue of trade negotiations. This is a quote from an expert:
If passed into law, Bill C-282 would seriously handicap Canadian governments and their trade negotiators to accommodate the give-and-take of future trade negotiations to open up new markets and secure valued access for Canadian products, services and investments.
Not just agricultural, but others. You mentioned in Quebec, Mr. Caron, maple syrup and other things that are not in the supply managed world, but there are other products beyond the agricultural sector. How would you have us answer that suggestion that this would be damaging to Canada’s economy?
[Translation]
Mr. Caron: Thank you for the question, senator.
As I said earlier, exports are rising under the current system. As farmers under supply management, we also offer other products. Whether we sell grains for export or beans, the same farmer can operate both ways, even though there is only one system.
I am pleased with the questions that have been asked. We have to get to a higher level. Today, we are talking about food security for Canadians. Even if no other country has this system, we have a duty to protect food safety for Canadians. Supply management and other systems allow us to do that.
Without this system, we would have concentration. We have seen that in other countries, in Europe in particular, such as in France. Farms have to be located beside or close to processing plants because farmers are responsible for transportation costs.
Our system is balanced now. Farmers under supply management contribute to society. They pool together to cover transportation costs. As to biosecurity, all farmers are responsible for that and prioritize having farms everywhere.
I do not want to dash the hopes of young people who want to go into farming in any rural community in Canada. It has to be a national priority. This has been said already and we experienced it during the pandemic: There is a risk to our food supply. It is high time that the U.S. and other countries make decisions about their own food supply and the way they feed themselves. Canadians say that they want locally grown products. We have to be able to deliver that. That does not exclude exports, but we need to get to a higher level. We are talking about Canadians’ food supply today.
Senator Coyle: Thank you.
[English]
Senator Ross: This question, I believe, is for you, Mr. Destrijker. It’s my understanding that previous trade negotiations that have impacted or included supply managed products have provided compensation, and you’ve mentioned that you didn’t want the compensation. I read about the Poultry and Egg On-Farm Investment Program, and egg producers were provided $219 million based on shares of the national quota. Can you tell me what the distribution looked like and what the program looked like?
Mr. Destrijker: Yes. Thanks for the question. The program and how the money is spent between the producers is based on the number of birds they have on their own farm. The producers have to submit a project to Agriculture and Agri-Food Canada, or AAFC. That project needs to be for either retooling the barn or bringing in some new technology or new innovation, and it’s up to 70% of the cost of the project. Roughly, that’s what it is.
Senator Ross: Can you give me a sense of what the tariff rate quota, or TRQ, fill rates for egg products are under the agreements that are already in place?
Mr. Black: Sure. There are three main ones. The World Trade Organization, or WTO, as well as the Canada-United States-Mexico Agreement, or CUSMA. Under both of those, the TRQ fill rates are usually around 90 to 90% plus year over year. There is a third agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP — please don’t make me spell that one out. Under that, it was negotiated initially when the U.S. was part of it, so there was some egg TRQ allocated. Our understanding is that remained in the final agreement, although the U.S. removed itself from that agreement. Presently, none of those countries that are party to the agreement are economically capable of providing the freight and the additional cost to export eggs economically to Canada. There are a number of other sanitary and phytosanitary, or SPS, requirements that are required by that.
Presently that one remains at zero. We do not think it will remain at zero forever. We’re absolutely certain. It is just a matter of when those rates will begin to take up when people make investments or, possibly, we could see the U.S. rejoining that agreement in the future.
Senator Ross: Is the compensation model based on the TRQs, or on the potential TRQs?
Mr. Black: It is based on the total access that was provided.
Senator Ross: So even if it is zero, the compensation is still provided.
Mr. Black: Yes.
Senator Ross: Thank you very much.
[Translation]
Senator Cardozo: Thank you for being here and for your presentations.
I think supply management serves to protect certain products and to help farmers. Do you think a day will come when that protection is no longer needed? Is it permanent?
Mr. Destrijker: I think the system will have to remain in place for a long time to come. As Martin said, it offers protection and ensures product quality for Canadian consumers. Our production conditions are different from those in the U.S. Our realities are different, and without such a system, we would not be able to produce eggs in Canada and be at the same level as our competitors from the U.S.
You have to remember that farmers under supply management do not receive any government subsidies. Prices are directly determined by consumers, and not by taxes they pay that are then returned to farmers.
So it is not the same balance. Without supply management, we would have assistance programs like the ones for other types of products. I do not think that is what we want or what Canadian consumers want.
[English]
Mr. Black: The system brings with it a predictability that is probably the envy of many different business owners in the sense that we’ve been able to increase the number of farms in Canada, year over year. In the egg sector, I think we’re up about 200 farms compared to where we were 10 years ago. There are few agriculture sectors that could indicate the same.
We also have one of the youngest ages of farmers. Age is an issue that I’m sure is no surprise; the increasing age of the average farmer has been a national concern. That is partly because we have been able to set up programs to encourage new entrants so that there is stability and predictability for farm families to transition to the next generation. That is very much enabled by knowing the market is there and assured.
Senator Cardozo: So the concern of some trade negotiators is that this one issue could hang in the balance of completing a trade negotiation. Does that concern you?
Mr. Black: Any one issue could hang in the balance of determining what that final trade agreement is. As you’ve heard before, we are but one small part in any trade agreement. We don’t think that we ourselves are that important, necessarily.
The Chair: Thank you. We will go to round two. My guidance is the same as before, which is four minutes each. Please keep your preambles concise.
Senator MacDonald: Over three quarters of our national trade in all economic sectors is with our powerful neighbour to the south. We may have to renegotiate the CUSMA in 2026, perhaps with a different administration in the White House. I think we know what that means.
Supply management has been around for over half a century. Supply management has never needed legal protection before, so why do we need it now, especially when you advise us that the government has said it will never be on the table anyway?
[Translation]
Mr. Destrijker: I think you said it, senator. This bill will simply put down in black and white what the political parties have promised. You said we will no longer be at the bargaining table. I would really like to trust my government, but looking at past experience, that is not what happened. All the parties have always defended supply management and, as you said, we were the last bargaining chip at the end of negotiations.
You will say it is just a small percentage, but that percentage and other percentages really add up in terms of egg production. In the case of egg production, 6.2% of the production is lost. That corresponds to the production of New Brunswick, Nova Scotia, Newfoundland and Prince Edward Island combined.
We have already lost that production in Canada. We must not say that it is not serious, because the next province might be the equivalent of Saskatchewan or Manitoba. You will say it is just a little bit, but a little bit added to a little bit adds up to a lot. We have to avoid that during the next negotiations.
Mr. Caron: I would like to add to what Emmanuel just said. Compared to other sectors, farming requires the most capitalization to generate $1 in revenue.
Right now, it takes $7 in investments to generate $1 in revenue. In many other sectors, it is $2 for $1. You have to remember that investments made in the farming sector are spread out over 15 or 20 years. So we need predictability. That is why, as I said earlier, in terms of supply management or our other programs, we need support because we invest over the long term. That is our reality, and undermining the system would have a huge impact because there is already a level of debt.
That is something that has to be reconsidered because, compared to other sectors that we want to negotiate, food is an important product, as I said. I would even go so far as to say that protecting our food supply should be the federal government’s chief endeavour.
Senator Gerba: Mr. Caron, according to Statistics Canada, Quebec has lost half of its dairy farms in the past 20 years and the trend appears to be continuing. Can you elaborate on the impact these losses will have on rural areas in Quebec and Canada?
How have the concessions made in the last three free trade agreements impacted the number of dairy farms in Quebec and Canada?
Mr. Caron: Thank you for the question, senator. As to the number of farms lost in Canada as compared to the U.S., we have lost a lot fewer here in Canada. The sector is still on a human scale, which is what Mr. Destrijker was saying a bit earlier. There are impacts, because our farms have become ecosystems and do not simply produce products with an economic impact.
As a farmer, I am now expected to fight climate change, to protect and increase biodiversity in Canada, and then I am supposed to play a role in decarbonization in Canada.
That is why rural communities are losing farms. We are losing tools that can be effective because when it comes to finding solutions or answers, farms can serve that role. At the same time, farms have to be able to survive and get a fair price for their products without being exposed to risk.
I would like to share another figure with you: For every dollar invested in a rural area, 71 cents stays in the rural area. That is significant. We are not just talking about supporting agriculture, but investing in agriculture, which benefits rural communities right across Canada.
[English]
The Chair: Okay, I have a classic chair’s dilemma: We have eight minutes left and three senators who want to ask questions. What I propose is that those senators ask their questions in sequence and make them pretty short, which will give the maximum time for our witnesses to respond.
Senator Coyle: This is for Mr. Caron.
You spoke about food security, predictable income security for farmers and the sustainability of rural communities. You’ve also spoken about national security. Could you speak a little bit more about the relationship between this bill that we’re looking at here and how, if we pass this bill, it contributes to national security?
Senator Ross: My question is for Mr. Caron also.
You spoke about innovation on farms. A lot of innovation is taking place. Mr. Black, you referred to the youth of this generation of farmers and the innovation that’s occurring. That’s all happening without this bill in place.
Give me a sense of what you think would happen if this bill does or does not pass, in terms of the innovation for moving forward?
Also, with regard to the compensation, Mr. Destrijker, you mentioned that the compensation is for projects, and many of those would probably be for new and innovative projects and new ways of doing things.
Senator Woo: This bill would take off the table our ability to offer any more concessions on future trade negotiations, but we already have deals with Europe, the U.S., Mexico and much of the Indo-Pacific region. We’ve covered a lot of the world already.
If you take out those deals and any renegotiation of those deals, what new deals are you hypothetically most concerned about that we might give up more market share? Which countries are you concerned about?
[Translation]
Mr. Caron: Regarding stability, it is often said that the bill will provide predictability, as I said, for investments. The support to rural areas is quite significant because, as I said earlier, under supply management we pool together to cover transportation costs and we have farms of various sizes; that is important. It goes further still, because we do promotion and research through this system.
In Quebec alone, farmers under supply management invest $4.3 million in research every year; we can work together because of this system. It allows for research to be conducted.
That brings me right to the second question, regarding innovation. In terms of robotics and new technologies, we certainly need some predictability in that regard as well. We need that vision of investment and it has to be cost-effective.
Regarding investments, as I said earlier, they have increased to $7 for every dollar of revenue. That means hundreds and millions of dollars invested in our operations for an extended period.
I would say that our collective marketing system and supply management afford us great opportunities. We have land and good soil in Canada.
I would add an important point regarding the concessions we make to other countries: Canada has 20% of the world’s fresh water; we are very fortunate. And people think that other countries will not want our products, given the expanding global population?
I think we are well positioned in Canada to be leaders and to honour our people, and also to feed people around the world under equitable conditions, in terms of salaries and the environment.
The Chair: Thank you, Mr. Caron. For the last question, I’m not sure if Mr. Destrijker or Mr. Black would like to answer.
[English]
Mr. Black: In terms of what we’re worried about, there are two thoughts here. There are a number of countries where we don’t have agreements. Brazil is the largest chicken exporter in the world. They are more of a threat on finished egg products. They have three harvests a year with their climate. They have lower costs. We know there are a number of other trade discussions with which Canada is engaged. We also used to have more predictability in terms of knowing that we have the North American Free Trade Agreement, or NAFTA, the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA, but then the U.K.’s geopolitical situation has changed in a way that, a number of years ago, we would have been very surprised about. Who is to say what the future may bring. That’s why we’re asking this committee for your support with this, to continue to ensure that our farmers have that predictability for their future markets.
The Chair: Thank you very much. I want to thank our witnesses, Emmanuel Destrijker, Drew Black and Martin Caron. We were enriched by your testimony. I also want to thank your supporters and your fellow advocates who are behind you who have been listening and following this process. Thank you very much.
We now move to our second panel. We’re pleased to welcome Colin Robertson, Fellow, Canadian Global Affairs Institute and a former senior Canadian diplomat; and Deanna Horton, Distinguished Fellow, Munk School of Global Affairs and Public Policy, University of Toronto, joining us by video conference. Welcome to you both, and thank you for being with us.
You will each have three to four minutes for an opening statement, and then we’ll move on to questions. We’ll start with Mr. Robertson. You have the floor.
Colin Robertson, Fellow, Canadian Global Affairs Institute, as an individual: Thank you, chair.
I applaud the committee for giving this legislation the sober second thought this chamber is designed to provide. In hearing testimony, keep in mind these questions. First, does this help or hinder Canadian efforts to create new markets for our goods and services? Put another way, does this give our trade negotiators more or less latitude in their negotiations? When we declare something non-negotiable, we pay a price and forfeit a potential gain. As you will all appreciate, good negotiators do not show their hand at the outset.
Second, does this advance the public good or simply protect a narrow interest? The public good is you, me and every other consumer who has to pay considerably more for milk, yogurt, cheese and eggs. If this legislation protects a narrow interest, ask yourself this: Do they really need this kind of legislative protection? Providing tailored adjustment assistance worked well after we concluded our previous trade agreements.
Third, if you satisfy this narrow interest with legislation, what will you do when others demand equal treatment?
More than most nations, Canada depends upon trade for our prosperity. Trade generates two thirds of our income. Always a trading nation, we are becoming a nation of traders. Through our trade agreements, we have opened doors that have helped us become an agri-food power. In the case of our grains, pulse, pork, beef and seafood, when we abandoned protectionism, our producers proved they are more than competitive. In the case of dairy, chicken and eggs, I feel we are looking at things through the wrong end of the telescope. We produce quality products that, in the case of our artisanal cheeses, especially those from Quebec, are world-class. As an example, le cendrillon was named best cheese in the world in 2009. It can be bought across the street.
Our problem is not quality; it’s in our marketing beyond our borders. That is where we should invest. Look at what Australia has done with their wines or New Zealand with their cheese. We should and can do the same. Instead of protectionism, we should continue to enhance competition through trade negotiations. Rather than tying the hands of our negotiators by telling them what they cannot do, let us instead give them maximum scope to create the rules that give us more market access for our goods and services, because we know Canada and Canadians can compete.
Thank you.
The Chair: Thank you, Mr. Robertson. We will now go to Ms. Horton. You have the floor.
Deanna Horton, Distinguished Fellow, Munk School of Global Affairs and Public Policy, University of Toronto, as an individual: Thank you, Mr. Chair and everyone, for the opportunity to appear before this committee.
I am speaking to you today from the perspective of a former trade negotiator — I was involved in the original NAFTA negotiations — but also as an observer and researcher on trading and investment patterns in North American and Asia, in addition to having led the advocacy secretariat at the Canadian Embassy in Washington from 2010 to 2013.
My purpose today is not to comment on Canada’s supply-management system but rather on how Bill C-282 will affect Canada’s ability to serve our national interests through the negotiation and implementation of trade liberalization agreements.
For Canada’s trade negotiators and for the industries that benefit from improved access to the international markets that are critical to Canada’s economic prosperity, it is important that we put all our cards on the table: Canada is almost always the demandeur in negotiating with our largest trading partners, and the best possible access to markets, not only in the U.S.A. but also in the Indo-Pacific, is an imperative for our economic future.
Should Bill C-282 come into effect, we will undoubtedly see an impact in terms of the renewal of CUSMA, which is scheduled for 2026. No matter which U.S. administration comes into power in 2025, the trend toward protectionism and industrial policies that give preference to domestic industries in the U.S. will continue, and Canada will continue to have to scramble to avoid undue harm.
Canada is now negotiating trade agreements with Southeast Asia — ASEAN — one of the world’s fastest-growing economic regions. Passing Bill C-282 would invite pushback, and it could also impact future accessions to CPTPP.
Yes, every country has its sensitive sectors, but Canada is particularly vulnerable for a few reasons. First, as we all know, Canada is disproportionately dependent on trade. Trade has made up over 60% of our GDP for decades. On top of that, we are disproportionately dependent upon one market, the U.S.A. The size of our economy is not so significant that we can dictate the terms of engagement. That means that when crises emerge and trade is weaponized, we suffer. Trade coercion is the weapon of economic superpowers, and Canada has borne trade coercion from both the U.S.A. and China. We have little recourse, and we must ensure that we have every measure at our disposal. Taking our cards off the table before the game proceeds is tantamount to inviting defeat.
Thank you, and I’d be happy to answer questions.
The Chair: Thank you very much, Ms. Horton.
Colleagues, as before, we’re looking at four-minute rounds, so please keep your preambles short and your questions concise.
Senator Harder: Thank you to our witnesses for your testimony. I want to ask each of you a question, and I’ll start with Colin Robertson, because you’re sitting across from me and you posed the questions that we should be asking; I want you to answer them. In other words, my question to you and Ms. Horton is this: What do you think the reaction will be in the United States, our biggest market, should this bill pass and CUSMA is up for renewal?
You have both had experiences with the first negotiations of the free-trade agreement, NAFTA and then CUSMA as it became. You have a long history of advice to offer us, so please let us have it.
Mr. Robertson: The Americans have already decided they’re going to come after us again. They feel we are unduly protectionist and have not lived up to our obligations on dairy. They have taken us, through NAFTA and CUSMA, to the tribunals that we have set up for redress. We’ve wriggled through in some cases, but we’re still up on others. So that is for sure going to come.
Then there are the U.S. domestic politics. Senator Schumer, who is the current Senate Majority Leader, is from New York, and New Yorkers are unhappy in particular with the way we’re doing this.
Former Speaker Ryan was from Wisconsin, the state that cares about cheese. We are on the agenda. If you look at the USTR, which publishes a list every year of the trade irritants with countries, supply marketing is at the top of their list. It is inevitable. Mr. Lighthizer, who was the U.S. negotiator under Mr. Trump, who may well reappear in the administration, has already identified this.
Senator Harder: Which sectors will pay the price then?
Mr. Robertson: Probably other agricultural sectors, because they play a wonderful game of divide and conquer. We know this. This is how it works in negotiations. We will say, we’re not going to grant you access to this or that, and this may be our beef industry, which is hugely successful, or our pork industry. The piglets go down to the Dakotas, for example, and back — they’ll cut that off and that will be the tradeoff. First, in the agricultural sector, they will go at things, and then they may go at things in other sectors. We may pay a price on strategic minerals, for examples. They’ll want more. That’s how the Americans work. We know where they’re coming from, and we should be under no illusions that this is not already being discussed and prepared both in the current administration, in a potential Trump administration, and within congress itself.
Ms. Horton: I’m just going to add to what Mr. Robertson has had to say. Yes, the Americans have been interested in supply management for a long time, and they have taken us to dispute settlement. I don’t know whether you could argue this has had a really deleterious effect on our supply management system in spite of their concerns.
What I’m more concerned about is whether this holds up the entire agreement. I think there are people in the United States who would be happy if there were no further agreement. It could be that this will not survive, it could be that we end up with a series of sectoral agreements instead, but I cannot believe that this is going to be beneficial to us in any way. This is kind of like waving a red flag. You know the bull is coming to you, but is it really necessary to anger the bull before you get into the ring? This is exactly what this bill would do.
Senator Coyle: Thank you to our witnesses today. Mr. Robertson, you gave us questions to consider. One of them was what we will do when others demand similar protections.
We’ve provided some protections to supply managed sectors in previous negotiations, not through legislation but just through practice. Have you seen examples of when other sectors have said, okay, you’re doing that for them, what about us? What have we seen in the past even without legislation in place?
Mr. Robertson: Senator, my observation is on the auto industry, for example, steel and aluminum, where they become a target and then they ask for protection as well. I think our adjustment program has worked very well, and I think that in the case of supply management, when we’ve opened up the market slightly — keep in mind that 80% of the market is still completely controlled by Canadians — we’ve always provided redress to them in terms of financial compensation and other incentives to help improve the industry. This has worked extremely well.
This is the way to handle it, not to, as my colleague Deanna Horton says, put the red flag out in front and know they will come at us and then we will pay in other ways right off the top. You go into the negotiations on the defensive, and as Ms. Horton also suggests, the danger is with the Canada-United States-Mexico Agreement where there is a group within the United States that simply doesn’t want to see any kind of trade agreement and have big problems with Mexico, and that we could put at risk this whole trade agreement from a Canadian perspective.
As it has been pointed out by other witnesses, despite our best efforts to diversify, three quarters of our market is still with the United States, and for new business, particularly for women and minorities who want to get involved in trade, their preferred market is the United States. This is where we have preferred access, which we have achieved over the years going back to the Automotive Products Trade Agreement, also known as the Canada-U.S. Auto Pact, and the original Canada-U.S. Free Trade Agreement. It worked extraordinarily well for Canada and for the United States, and we have friends down there. Why would we want to put this at risk for something which I think is completely unnecessary because there are sufficient protections we can take without the risk of countermeasures from the United States?
Senator Coyle: For both of you — one of the questions you asked us to consider was, does this advance the public good in Canada? What’s your answer?
Mr. Robertson: I feel it does not advance the public’s good because we live by trade and we compete extremely well.
This is the other point I want to make. This is an industry that is world class. I believe that the industry could compete very well. When the Australians gave this up, the New Zealanders gave this up; now they have a huge part of the world market. There is a huge demand for protein in the Indo-Pacific where we’re seeking to do trade agreements. They’ll be looking for what we have to offer.
Years ago, I lived through watching the crow’s nest on grains and things, and we had to protect everything, and we did a similar thing beef and pork. We opened it up and now compete extremely well. Why are we handicapping ourselves, particularly in an industry which is, I think, brilliant in terms of marketing in Canada? I think they could do so well abroad as well.
Some of the Canadian firms in the dairy industry that have gotten involved like Saputo and Agropur are doing extremely well. There is no reason why Canada can’t become a dairy superpower as well and join the rest of the group that in the past enjoyed some level of protection and have gone out to compete internationally. There will be a demand, particularly for protein, going forward in developed markets.
The Chair: Thank you. I’m to interrupt, but we’re out of time on that segment.
Senator Woo: Thank you, Colin Robertson and Deanna Horton. My first question for Ms. Horton is to ask if she would elaborate on the scenario of the U.S. bailing out of CUSMA altogether. I recall that in the early stages of the CUSMA negotiations, there was a sunset clause that the Americans had proposed and we were able to fend that off to have the review process.
Tell us, how would it work for the Americans and, indeed, the Mexicans to terminate the agreement altogether if things do not go the way they want perhaps because of this bill?
Ms. Horton: It’s up for renewal in 2026, and all parties have to agree that it should be renewed. When you look at the trading and investment patterns between the U.S. and Mexico, one of the things that is interesting to me is the fact that there is so much more investment in Mexico. They don’t have as much to lose in some ways as we do, because there is so much investment that has gone into Mexico. There are so many industries in the U.S. that are now dependent on Mexico. The supply chains are very strong. If you look at the possibility of perhaps going to sectoral agreements, for example, perhaps the loss of the overall agreement doesn’t matter to them as it does to us. I think that is a real concern, and if we don’t, we’re going to have to work on that. I know that the embassy is already working very hard.
We also have to think about the entire supply chain. I’m going to cite an example from Japan, where I lived for 12 years. It used to be that Japan was very protectionist on rice, but now Japan is an exporter of sake. I’m a big sake drinker and appreciator of good sake. Way back when, there was no interest on the part of the government in promoting sake. They weren’t interested in export markets. It wasn’t until their hand was forced that they started to really work on how to make better-quality sake for export, and now they’re doing extremely well. All this to say, that is a downstream product.
To echo what Colin was saying, if you have cheese, you have to make sure that your cheese producers have access to low-cost inputs. You have to think of the entire supply chain from that perspective. That is what Canada does have — real quality assurance and excellent food quality. I think in Asia, this is very well appreciated and this will continue. We have to ensure that is still our reputation, so I appreciate that completely.
The Chair: Thank you very much. I’m still dealing with your sake references, but that’s okay.
Senator M. Deacon: Thank you for being here today. Many of the questions I’ve started to think about have been asked, particularly the questions that you posed to us. I appreciate my colleagues flipping it back to you.
I also appreciate you talking about Saputo because that’s the company that I followed and tracked to understand better what’s going on here.
Mr. Robertson, in one of your comments you indicated that we should look at investing in marketing across our borders. This is where we should spend our time and energy.
Can you talk a little bit more about what that would mean to you that would be new and different?
Mr. Robertson: Sure. Recently you’ve had testimony presented indicating that Canada is seen as a quality brand. That’s something that is extremely desirable because around the world people want to be sure that they’re getting quality, both in terms of health and inspection. That’s something we also have to take very seriously in Canada. When the Chinese, for example, have come at us on things like the canola question, it’s usually specious, but it’s usually relating to sanitary health conditions. Our inspection system has to be the best. That is up to the industry, and the industry appreciates that this will keep us in the top quality. Once you have that, then you’re like New Zealand and Australia, who have also put a lot of effort into marketing their products abroad.
The Australians, for example, marketed their wines through their embassies and missions abroad. Now they have a substantial part of the market. We tried it and could have done a better job of it. The New Zealanders with their cheese and dairy products have set a model for what Canada could do even better because you could plunk New Zealand into southern Alberta and still have a lot of space. We have land, cows and things that can produce. We do this extremely well, and there is no reason — particularly when it comes to protein and the demand for protein products, eggs and chickens — why can we not also be a major world supplier on quality. I heard reference to Brazil. No one is going to put Brazil on the top quality side, but they can put Canada there. That’s what we can do more of, and it would be positive when working with the industry.
I will say this about the dairy industry: I’m impressed about their marketing across Canada about their superior product, and I would say, take that skill they already have, and with that superior product they produce and let’s take it abroad because I know they can compete.
When I was in Los Angeles, we would bring down Quebec cheeses. We fought and won the foreign language award, working with the Quebec director general, he brought in the Quebec cheese and beer — we didn’t have sake — and we served it, and it helped us in our campaign to win the Oscar for a Canadian foreign-language film.
My argument here is that we can do this by working with the provinces and working with others and do it extremely well. It has been proven. The problem is that we can’t get our goods into the U.S. market probably because of their own protectionism. Again, by taking a more offensive view on this, we push the Americans on their back heels because they are huge protectionists as well. Look at the farm bill: It is a huge subsidy bill. Instead, we’re playing defence off the top on something we can’t afford because of our asymmetrical relationship with the United States being so much more important to us than we are to them, to go back to Senator Harder’s initial question.
Senator Ross: This question is for both of you, Mr. Robertson and Ms. Horton. Given your background, can you give you perspective on how other countries abroad view Canada as a trading partner, how they view supply management and how you think this legislation would impact our trading partners — not just our current trading partners, but also future trading partners? You have talked a lot about our reputation. Give us a sense of what you think would happen.
Ms. Horton: I can go first if you would like. Canada — as I think I mentioned in my testimony — is almost always the demandeur. We were the ones who went to knock on the door for the Trans-Pacific Partnership, or TPP. We went knocking on the door with NAFTA because originally it was just the U.S. and Mexico. Canada is welcome at the table, but people don’t see as much of an opportunity in Canada as they do in the U.S. We often sell ourselves as if we are part of the North American market. We want you to invest in Canada, but our market isn’t big enough, particularly on goods. It’s not quite the same on services. But we often sell ourselves as if we are part of the North American platform. If you invest in Canada, you will also be able to export to the U.S. Supply management is not a huge issue for most countries. In fact, other than New Zealand and the U.S., where we have been subject to trade litigation, most countries don’t care about that so much, as mentioned by the earlier panel. In some cases they’re too far away. In any case, what is important is that this bill sends a signal, and everybody can deal with supply management, but to take it off the table before you even arrive at the table is inviting defeat.
Mr. Robertson: We have a reputation as being a free trader, although in recent years because of our approach to supply management, we’re no longer seen in the same league as Australia. There was something called the Caron Group that were real free traders right across the board, and we had to pull away because of our protections in agriculture. That hurt us somewhat, particularly in Asian markets.
To your other question: Is this good for Canada? No, it’s not, because we are, as a whole series of witnesses pointed out, a trading nation. I will never forget I worked at one point for a minister of foreign affairs who later became a senator, Allan MacEachen, who used to ask, “Does this put bread on the table?” He was a free trader because he said it put bread on the table for Canadians. We had to trade because of our relatively small size, but we have extraordinary riches thanks to our resources, land mass and the capacity of our farmers.
[Translation]
Senator Gerba: Welcome. My question is for both witnesses.
Steve Verheul, Canada’s chief trade negotiator from 2017 to 2021 — who was also in charge at the conclusion of CUSMA and CPTPP — stated a few months ago that Bill C-282 is a political signal and is not likely to threaten future deals. He said, and I quote:
I don’t think there’s actually an imminent threat. This is about politics, about support. I don’t expect this to have a huge impact on negotiations going forward.
Mr. Verheul went on to say that each side always has its own red lines at the start of negotiations, so there are really no surprises. How do you explain your differences of opinion with Canada’s former chief negotiator?
[English]
Mr. Robertson: Our previous negotiator — I’ve read some of the testimony — talked about setting red lines at the outset. You do this in your informal negotiations. You don’t necessarily do it right off the top and signal things because you know you’re then going to have to forfeit, as I said in my testimony, opportunities going forward. It’s like playing poker: You don’t show your hand early on. We don’t need to show our hand early on.
They’re certainly well aware that we’re going to be protecting supply management, but by passing this legislation, as others have suggested before, this really is a red flag. You can be sure the Americans are going to be coming for us in terms of the CUSMA renegotiation. We talk about a renewal, but it’s not a renewal; it’s a renegotiation. Already, the Americans have given us notice of that. When we talk about a renewal, we would love to have a renewal, but it’s not going to happen. It’s going to be a renegotiation once again because of Americans’ greater concern for what’s going on with Mexico. We’ll fall into that, and this will be one of the things they will be using.
I’ll pass this to Ms. Horton, who, I’m sure, will have a perspective.
Ms. Horton: Oh, yes, absolutely.
I agree that it is a question of policy; however, there is a difference between policy and legislation. The government has already indicated support for supply management. We’ve been negotiating on supply management for decades, so there is nothing new there. Yes, every country protects certain sectors. I get all of that. When he said “no imminent threat,” perhaps not imminent, but in 2026, as Mr. Robertson just mentioned, we are going to be renegotiating CUSMA, and this will put us at a disadvantage.
We also have to remember that this is an asymmetrical negotiation, and we are not the powerful player. That’s why I mentioned trade coercion, because the U.S. uses trade coercion. I think that we should be doing everything to protect our flanks but not send out a signal by implementing legislation that will be seen, guaranteed, in the United States to be directed at the United States.
Senator MacDonald: It is good to see you again, Mr. Robertson.
You mentioned our dependence upon the U.S. market — we all know that’s very important — so we should diversify when we get a reasonable opportunity to diversify our trading relationship.
Last January — and I was disappointed when this occurred — the United Kingdom suspended talks with Canada on a bilateral trade agreement. News reports indicated that concerns about access to Canada’s cheese market, among other issues, caused the U.K. to walk away from the negotiations. U.K. negotiators had reportedly sought an increase tariff rate quota so that more British cheese products would receive a preferred tariff rate.
How might the enactment of Bill C-282 affect our possible negotiations with the U.K. or other advanced economies?
Mr. Robertson: In terms of the British, when we spoke with some of their negotiators when they were over here, I think your understanding of why they pulled away from the negotiations is accurate. They would like to get some access for their cheese. There are still negotiations with the European Union because of the way Brexit worked out.
In return, we would be negotiating for better access for our other agricultural products — beef, pork and what have you. Again, I think that’s costing us potential sales in the U.K. market, which is an important market for us. The U.K. has a relatively weak hand but they’ve made the decision, because they’re trying to find trade agreements all over the world. They are in the CPTPP now.
It seems to me short-sighted on our part not to be sitting down and to be able to negotiate with the British, because we would like to get a deal that would serve Canadian broad interests as well.
Again, my problem with this legislation is that it’s giving special protections to a narrow sector. It’s forgetting that the common good would be better served right across the board if we could make an agreement with the British, for example, and get better access. If we had to open up our market on the cheese products, for example, another couple of percentages, they are compensatory mechanisms in place that we have used in previous agreements that seemed to work well for an industry that is, bluntly, not suffering. My argument is that they could also compete. Canadian cheddars would do very well in the British market.
Yes, it has hurt us. As you pointed out, we do want to reduce our dependence on the United States, and an agreement with the British would slightly increase our ability to diversify.
Senator MacDonald: I will ask both witnesses this: We know that some countries have sensitive sectors they want to protect, but are there any countries with advanced, modern economies that use legislation to preemptively limit their trade negotiators’ flexibility?
Mr. Robertson: I don’t know what Ms. Horton will say, but I’ve never seen anything like this.
Ms. Horton: No, I’m not aware of any country that would restrict things in this way.
Senator MacDonald: Thank you.
Senator Boniface: Thank you both very much for being here and for the wealth of background you have on this issue.
I want to focus on CUSMA, particularly, and the challenge we have coming into it not knowing who the parties will be on the other side of the table; we will know that soon. I think it’s clear with the position that both candidates have taken already.
If you were sitting on the other side of the table and you saw this legislation coming, what would you target from the Canadians? From the perspective of an American negotiator, what would you see as being the impact of this, and what would you be looking at targeting? That is my first question.
Second, if the CUSMA agreement does not materialize, where does that leave Canada?
Ms. Horton: I can start if you like.
If I were an American negotiator — and I’ve actually watched American negotiators over the years, including Robert Lighthizer, who is a very skilled negotiator — and I think this is going to happen no matter what. First of all, I would be targeting other agricultural sectors, because there are a lot of protectionists in Washington and industries that are asking for protection at any given moment. The Department of Commerce is besieged by anti-dumping subsidies, every plus section — all the different trade legislation in the U.S.
The U.S. is a protectionist country; there is no doubt about that. On the other hand, if I were the U.S., I would hit Canada in the areas it cares about, such as automotive.
If there is no CUSMA, my guess is that we would revert to sectoral agreements. That would be a loss, because having a trade agreement — the psychological impact of that — is important for companies in terms of their investment planning. It’s the uncertainty that makes it difficult.
We also want to diversify, so we also have to think about Asia.
Mr. Robertson: I don’t think that would work. We looked at this back in 1983. I mentioned Allan MacEachen earlier. When he was foreign minister, we did a study as to whether we could do more sectoral agreements with the United States, and the U.S. chair at the time, Bill Brock — we wanted things like steel, and they wanted things like pharmaceuticals. We couldn’t come to a deal. The Americans said they weren’t interested in that.
Things then sat. The MacDonald Commission came and asked whether Canada could compete. Brian Mulroney and Ronald Reagan came in. Reagan had a different view. We got into a full‑fledged trade agreement out of which we did extraordinarily well. It was the Canada-U.S. Free Trade Agreement.
I don’t think the Americans will be terribly interested in sectoral agreements, and the sectors we want will be the ones for which they will say, “sorry.” So we should be doing our absolute best to keep the agreement we already have in place.
To answer your question specifically, I agree with Ms. Horton: They’ll look after agricultural products, because when it comes to agriculture, we are seen as a competitor, particularly in the areas in which we’re doing very well abroad, such as beef, pork and the things I talked about. We might look at some grains. I also think they are likely to come at us on cars because they will probably say they will have more U.S.-made content. Of course, that’s a huge industry.
We open ourselves up unnecessarily with this kind of legislation and the long-term implications. I do not believe that we have thought it through, which is why, again, I applaud this committee and the Senate for taking the time to look at what the longer-term implications of this may be.
The Chair: I’m interrupting you, Mr. Robertson. Sorry, we’re at more than time there.
Senator Gold, and then we’ll move to round two.
Senator Gold: Thank you for being here. I apologize that I arrived a little late to miss your initial presentations.
You have shared your views about the extent to which you believe that the bill would hinder trade negotiators. I understand the perspectives you are offering, and I respect your views, but I’d like to come at it from a slightly different vantage point.
One of the contexts that you have underlined repeatedly is our reliance on access to the American market, the asymmetrical nature of that relationship, and protectionism in the United States. I’m going to put words into your mouth, Ms. Horton, and I apologize. I hope you’ll correct me, but it seems to me, at least from my understanding — I was around for the first free trade agreement, did a major conference on it and did a book on it in my academic life — Americans are going to come after all of these things anyway. That’s what they do. You’ve painted kind of a scary picture, but I do want to suggest and ask for your views to look at it differently.
Knowing that there are segments within the United States that have had supply management in their gun sights for some time for ideological reasons, or economic reasons or for both. Would you not think that, given the fears that not only the dairy industry — you’ve talked about cheese, and I’m from Quebec, I love Quebec cheese — but there are industries across the country, poultry and others, that have benefited from supply management, supported by governments of all stripes for many decades that are concerned about their industry and the scale and the impact on their communities. Would you not think that translating this policy into law sends a strong signal to the United States who would go after supply management?
This is an important element of Canadian policy around preserving our smaller farms and preserving our communities that we are willing to protect, and they know it already. This is just a strong signal to that so that Canada can stand. We have great negotiators, and we are sending a strong signal that we believe in this system. Maybe you don’t believe in the system and there are reasonable differences, but this is government policy and it’s not just this particular government’s policy. I just wondered whether that perspective has any allure to you.
The Chair: You have about a minute to answer, both of you, together.
Mr. Robertson: I think we already have a belt and suspenders, are we going to need to put on another pair of suspenders and a belt and life jackets to save an industry that could be globally competitive? I don’t think we need that.
Ms. Horton: I would agree. I think we already know. The U.S., as you mentioned, is already going after supply management. It’s not a huge portion, but they know that already. Why do we need legislation in order to continue protecting supply management, which we have been doing and negotiating for decades? Any concessions that have been made are not significant, I would argue.
Senator Gold: I live in rural Quebec. I have neighbours that have small operations that survive because of supply management and supply my community and surrounding communities with quality food that we can really rely upon in terms of quality. So I think there is a dimension to this.
In trade, we talk about the aggregate, and I get that, but there are distributional impacts. They cut, perhaps, both ways, as I think you’ve pointed out. But I don’t think we should neglect the actual impact on actual communities of access that we’ve already given up through negotiations. Thank you.
The Chair: Senator Gold, we’re out of time there. We’re going to round two. We have four senators and about 12 minutes, so I’m reducing the rounds to three minutes each.
Senator Woo: First, I have a comment, since there has been a bit of discussion on the export competitiveness of some supply-managed products. I would recommend that this committee hear from some of those subsectors, particularly the egg sector, which we’ve learned is quite successfully exporting to other markets. What can we learn from them, and how would they be impacted by this bill, perhaps through retaliatory tariffs on the part of the countries they export to?
My question for either of our witnesses is: In thinking about countries that we don’t yet have agreements with but which could be problematic if this bill were to pass — we heard from a previous witness that Brazil was one of them. I take that to mean that we would not want to pursue a deal with Brazil because it would be very difficult because we took that off the market. What is your sense of closing of the option of negotiating a deal with Brazil which is, after all, the B in the BRICS?
The Chair: Maybe I can help to say that it would probably not be a bilateral with Brazil, but one with MERCOSUR.
Mr. Robertson: Brazil has never shown any particular interest. As you know, we’ve had big challenges in the past around aircraft and cattle beef as well, so I don’t see that as likely. I think the likelihood of MERCOSUR is also slim at this point, but I think it’s always useful for us to be scouting out the field, which is what we’ve been doing. We have been involved in that kind of negotiation for quite some time, but it has not come to fruition.
The British one, I think, we should try and see through. I think the enlargement of the Trans-Pacific Partnership makes a lot of sense — an area that you know a lot about, senator. I think that in the agreements we have, there are still opportunities in all of them.
Ms. Horton: I was going to mention the Association of Southeast Asian Nations, or ASEAN. ASEAN has huge potential for Canada, and it’s more a signal than anything else. It’s not necessarily that this is going to be their number one concern, but it also encourages them to do the same thing, and that could happen in sectors that we really care about.
The Chair: Thank you.
Senator Ross: Last week, the Business Council of Canada wrote a submission or a letter to this committee and they entitled it “Beware of unintended consequences in proposed trade law changes.” One of the lines in the letter says:
It could prevent Canada from fulfilling its obligations in a number of scenarios including the exercise of trade dispute resolution mechanisms.
Can either or both of you speak to this?
Mr. Robertson: I read the letter, and I agreed with the overall context of Goldy Hyder, but I’m not exactly sure what you mean. Ms. Horton, do you?
Ms. Horton: I’m assuming that means in terms of how countries carry out trade dispute resolution. First of all, WTO really isn’t operational because of the concerns with the appellate body, et cetera, but I think for every country that is in a trade agreement, the faith in the dispute settlement mechanism is very important. Anything that will impinge on Canada’s ability to carry out trade dispute resolution for areas that have already been negotiated and where we have obligations, there would be a bad impact on that.
Senator Ross: To clarify, it says:
If the Minister cannot make any commitment with respect to the tariff rate quota status quo, it could undermine the review of the Canada-U.S.-Mexico Agreement (CUSMA) . . . .
And CETA, and they talk about the various ones that we are already involved in.
Ms. Horton: Yes.
Senator Ross: I think that’s what they’re referring to.
Ms. Horton: Yes. That’s what they’re referring to.
[Translation]
Senator Gerba: I would like to say something regarding Senator Gold’s question.
You said that Americans are very protectionist, meaning that with or without supply management, the U.S. negotiators will always impose their conditions.
Mr. Robertson, you pointed out that the United Kingdom withdrew from recent negotiations specifically because of a special import quota on British cheese. Yet Martin Buckle, the head of the British Canadian Chamber of Trade and Commerce, told the magazine Les Affaires that, roughly translated, it was:
…very surprising that the British government withdrew from the negotiations because the problem with dairy products was well known.
Do you think Canadian beef was part of the domestic policy that influenced the British negotiators to withdraw?
[English]
Mr. Robertson: I’ll answer the last question. The British know we want better access for our beef and pork and meats, and they want better access for their cheese. We’ve signalled that it’s not even up for discussion. That is one of the factors.
I don’t think it was the only factor. I was part of the team that negotiated the original Canada-U.S. agreement, and at one point we walked out on the Americans on a couple of issues, but at the end of the day we insisted that dispute settlement. We basically stopped the clock on the negotiations on that so that we secured dispute settlement. This is a negotiation with the British. I think there are various factors at play here, but certainly the beef and the cheese was a part of it. I hope we arrive at an agreement with Britain, and I think the Brits do want an agreement with us.
[Translation]
Senator Gerba: Getting back to the negotiations with the U.S., one of our witnesses said that each trade agreement has 30 chapters and that agriculture accounts for just one chapter in those negotiations. Why should we sacrifice a system that has existed for more than 50 years, at the risk of blocking agreements? According to some parties, 12 of the past agreements were concluded without affecting supply management. Did that result in any changes to other sectors?
The Chair: My apologies, Senator Gerba, but our time is up. We can come back to that at a future meeting.
[English]
Senator MacDonald: We also have free trade agreements with Chile and South Korea. The Harper government signed many free trade agreements when he was there. Is there anything in those agreements that would be triggered or affected if this bill is passed?
The Chair: Perhaps we can go to Deanna Horton on that. She has worked on the Asian side.
Ms. Horton: I do not believe that this is going to affect existing agreements with South Korea or Chile, for example. If we wish to expand every time you sign a trade agreement, it’s often on things that are existing today and in the past, but things move on to the future. Often you end up — as we did with the free trade agreement to the NAFTA to CUSMA — with trade expanding in different ways. There are a whole lot of different elements that we now cover on trade agreements that were not covered initially.
Often you go for what we can get an agreement on now.
Where it’s going to have an impact is when we engage in future negotiations: When we want to expand these agreements, when we want to go in with new countries, and, of course, with CUSMA, the renegotiation.
The Chair: Thank you very much. That brings us to the end of our session. On behalf of the committee, I’d like to thank Colin Robertson and Deanna Horton for their testimony. I think it was a good discussion, just like the previous meeting.
(The committee adjourned.)