THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Wednesday, October 30, 2024
The Standing Senate Committee on Foreign Affairs and International Trade met with videoconference this day at 4:14 p.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.
[Translation]
The Chair: Good afternoon, honourable senators.
My name is Peter Boehm. I’m a senator from Ontario, and the chair of the Standing Senate Committee on Foreign Affairs and International Trade.
I would now like to invite the committee members who are here today to introduce themselves, starting on my left.
Senator Gerba: Amina Gerba from Quebec.
Senator Gold: Marc Gold from Quebec.
[English]
Senator Greene: Steve Greene, Nova Scotia.
Senator Adler: Charles Adler, Manitoba.
Senator Ravalia: Mohamed Ravalia, Newfoundland and Labrador.
[Translation]
Senator Verner: Josée Verner from Quebec.
[English]
Senator Dean: Tony Dean, Ontario.
Senator Woo: Yuen Pau Woo, British Columbia.
Senator M. Deacon: Welcome. Marty Deacon, Ontario.
Senator Busson: I’m Bev Busson from British Columbia.
Senator Coyle: Mary Coyle, Antigonish, Nova Scotia.
Senator Cuzner: Rodger Cuzner, Cape Breton, Nova Scotia.
Senator Klyne: Marty Klyne, senator from Saskatchewan, Treaty 4 territory.
Senator MacDonald: Michael MacDonald, Cape Breton, Nova Scotia.
The Chair: Welcome, senators and everyone. I’d like to welcome those who have joined us in the room today as well as those across the country who may be watching us on ParlVU. Today, we continue 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 the Honourable Mark Eyking, former member of Parliament and former chair of the House of Commons Standing Committee on International Trade. From the Beef Farmers of Ontario, we welcome Jason Leblond, Vice-President. From the Fruit and Vegetable Growers of Canada, we have George Gilvesy, Chair, Ontario Greenhouse Vegetable Growers. By video conference, we welcome, from Cereals Canada, Mark Walker, Vice-President, Market and Trade. Finally, from the Saskatchewan Cattlemen’s Association, we welcome Grant McLellan, Chief Executive Officer. Thank you all for being with us today. It’s a very large panel with three in the room and two virtual witnesses.
Before we hear your remarks and proceed to questions and answers, I would ask everyone present to please mute notifications on your devices, as that interferes with both our broadcast and, frankly, our concentration.
We are limiting the opening statements to three minutes each, witnesses. That’s important if we want to have a full round of questions and answers with the senators. I should also add that senators Busson, Adler and Cuzner are here as observing senators today, but they will also be given a chance to ask a question.
Without further ado, Mr. Eyking, the floor is yours.
Hon. Mark Eyking, Former Member of Parliament and former Chair of the House of Commons Standing Committee on International Trade, as an individual: Thank you, chair and committee members, for inviting me here today. I’m glad to sit beside my colleagues here from the agriculture industry. As a Cape Breton MP, along with my friend Rodger Cuzner, we have six elections and 19 years under our belt. We got to know the Hill well. I congratulate him on joining your chamber.
As I mentioned, I served on the House of Commons committees for agriculture, trade as well as foreign affairs many times. It’s great to be here.
My parents were Dutch immigrants to Canada in the early 1950s. I’m number 5 of 10 children. We grew up on a mixed farm of eggs, vegetables, beef and greenhouses. I witnessed first‑hand the chaos in our egg industry in the early 1970s for farmers and consumers. My dad, along with Mr. Whelan and many others, straightened out that industry. They had their problems, but they straightened it out quite well. We thank those previous people before us for setting that up.
My wife, Pamela, is here with me today. She and I took over the vegetable portion of the farm. We grew it to a very successful operation of 300 acres. We were also nominated as Outstanding Young Farmers in the 1990s for Nova Scotia. We’re also in the export business; we ship many shipments of romaine lettuce and cabbage to the U.S. and the Caribbean. I have first‑hand knowledge of the importance of protecting our food supply and trading products worldwide.
As a committee member of the House of Commons, we visited a lot of countries. Most countries that our committees visited were often envious of our supply management and wished they had it in their country. Many times, they would want to dump their products in our country.
Many of these governments wanted access to our markets for political reasons, whether it was to get the Wisconsin vote or various reasons. Many times, I don’t think it benefited their farms in the long run. When in trade negotiations with other countries in trading blocs, we give up access to our poultry and dairy markets only to witness in future years these countries put up non-tariff barriers on our beef, grain, pork and other products.
Our poultry and dairy farmers have done a lot over the last 50 years. They’ve improved the living quality of their animals, providing healthy, safe food and affordable prices for our consumers. Too often, we trade our agricultural sector for access to foreign products and markets. During the COVID pandemic, we saw all too well what happens when the food supply chain is disrupted. Is there anything more important than our domestic food security?
Are there improvements that can be made in the supply management? Yes. It would be important for it to be more accessible for young farmers. If they have excess products, it should somehow be distributed to the poor either locally or around the world. I think they have had their challenges with the avian flu, whether in the poultry or dairy sector. I think they’re on top of that. As Canadian farmers, they can live up to and solve these problems.
Mr. Chairman, I don’t have much more to say. I believe Bill C-282 is a good piece of legislation and it may give clarity to negotiators going forward. Thank you.
The Chair: Thank you, Mr. Eyking. Mr. Leblond, please.
Jason Leblond, Vice-President, Beef Farmers of Ontario: Good afternoon. My name is Jason Leblond. As stated, I’m the Vice-President of Beef Farmers of Ontario, an association that represents 19,000 beef producers in the province of Ontario. My family and I farm in Chisholm Township, near Powassan. To clarify, that’s four hours north of Toronto and four hours west of here. I want to thank you for the opportunity to appear before you today.
Nearly every witness has spoken about the importance of trade for Canada’s economy; it’s incredibly important. But to put this into context from my farm’s point of view, 40% of the value of my cattle can now be attributed to international trade, thanks in part to decades of progressive trade access improvements. Regardless of how or where I market my animals or beef, trade agreements have a positive impact on the value of the products I sell because beef cattle are priced on the global market. A rising tide really does lift all boats.
With respect to Bill C-282, we fully support the previous testimony from our colleagues at the Canadian Cattle Association and the National Cattle Feeders’ Association. We are here today to reinforce those concerns and the concerns of the Ontario beef sector and all export-dependent sectors, both within and outside of agriculture, that Bill C-282 is a bad trade policy and a bad deal for Canada.
Bill C-282, if passed, would limit negotiators before talks even begin. This could result in less ambitious trade agreements, jeopardizing key industries, particularly those dependent on exports, like the beef and cattle sector. Amending the Department of Foreign Affairs, Trade and Development Act would be an unprecedented protectionist move at a time when we are preparing to renegotiate with our largest and most important trading partner, the U.S. Pre-empting these negotiations with the potential passage of Bill C-282 is alarming to me.
It was mentioned by a previous witness, but it’s worth repeating: Canadian and former U.S. officials are on record noting that had Bill C-282 been in place prior to NAFTA renegotiations, we would not have been successful. We want to be clear Bill C-282 is not a referendum on supply management, nor should it be treated that way. This is about trade policy and, ultimately, governments must keep all options on the table to support the most meaningful and robust trade agreements possible. Bill C-282 would degrade that ability.
As a farmer in an export-dependent sector, I urge you and your colleagues to vote against Bill C-282. This bill provides no practical value to the Ontario or Canadian economy. Thank you.
The Chair: Thank you very much. Mr. Gilvesy, please.
George Gilvesy, Chair, Ontario Green House Vegetable Growers, Fruit and Vegetable Growers of Canada: Thank you. Good afternoon, senators and committee members. My name is George Gilvesy. I’m the Chair of the Ontario Greenhouse Vegetable Growers, and I’m here on behalf of the Fruit and Vegetable Growers of Canada, or FVGC. Thank you for the opportunity to appear.
While we support the privilege supply management affords some producers, today’s discussion isn’t a debate about that. It’s about safeguarding Canada’s status as a trading nation, ensuring our negotiators have flexibility on the eve of critical continental talks and avoiding a bull’s eye on non-supply-managed commodities vital to our economy and food security.
Consider the greenhouse sector as a prime example of these trade challenges. With over 80% of greenhouse exports directed to the United States, this industry alone contributes $4.8 billion to Canada’s economy and sustains 34,000 jobs across the supply chain. The sector’s growth is vital to a secure, integrated North American food system, evidenced by 11 years of rising farm‑gate sales, reaching $2.5 billion in 2023. These figures highlight both the economic impact and the critical need for stable cross‑border trade policies.
Canada has recent experience defending against retaliatory measures, and this is not hypothetical. The 2020 U.S. global safeguard and fact-finding investigations on blueberries, strawberries, fresh bell peppers, cucumbers and squash threatened to impose new U.S. tariffs and other restrictions on imports. Such trade actions, along with anti-dumping measures, could destabilize the integrated North American produce market, potentially forcing Canadian growers to expand operations in the U.S. and creating cross-border investment leakage risk.
Canadian agricultural policy should be sustainable and adaptive, not permanently entrenching one group’s rights over another. Canada’s skilled trade negotiators have repeatedly secured robust agreements that serve our national interests and preserve essential market access. They need every tool to continue achieving balanced trade outcomes for all of Canada’s producers.
FVGC believes that Bill C-282’s protectionist carve-out worsens the competitive imbalance and complicates negotiations on critical trade irritants. Already, the bill’s consideration has attracted unnecessary scrutiny from major trading partners, threatening our ability to negotiate trade terms without added barriers. We owe it to our sector and to Canadian consumers to give negotiators the flexibility needed to uphold Canada’s agricultural strength.
Thank you for your time and consideration.
The Chair: Thank you very much, Mr. Gilvesy.
[Translation]
Mark Walker, Vice-President, Market and Trade, Cereals Canada: Mr. Chair, members of the committee, thank you for having me today. My name is Mark Walker, and I’m Vice‑President of Market and Trade at Cereals Canada.
[English]
I also serve as the Treasurer of the Canadian Agri-Food Trade Alliance.
[Translation]
Cereals Canada is Canada’s national industry association for wheat, durum, barley and oats. We represent the entire value chain, from farmers and crop developers to grain handlers and exporters. Our members focus on the benefits of export-led growth, facilitated by access to diverse global markets. Canadian grain is a staple exported to over 80 countries. In an average year, this sector generates $68.8 billion in economic activity and more than 370,000 jobs in Canada.
[English]
Today, I will highlight not only how Bill C-282 will negatively impact our ability to negotiate trade agreements and our standing as a rules-based trading nation, but also how contradictory the bill is in relation to the Department of Foreign Affairs, Trade and Development Act.
Our sector has carefully built itself into a food supplier to the world. Canada needs effective market access to continue to play our role in supporting food security. The use of trade agreements is key to protecting this access. Even now, our negotiators are working to cement trade agreements with key wheat markets such as Indonesia, Ecuador and the Association of Southeast Asian Nations, or ASEAN. Export trade is the lifeblood of the cereals sector. Globally, Canada is known for our food.
Senators, this bill is bad policy. Cereals Canada does work around the world, in countries like Algeria, Morocco, Nigeria, Ghana and Kenya. When our team meets with our partners in these countries, we are recognized for the quality of our agricultural products and the assistance we lend governments and businesses in certainty of process and terms of trade. Canada leads by example as a champion of rules-based trade. Passing this bill will have significant impacts on our international standing and ability to do business with the world.
In seeking to amend section 10 of the act, this bill contradicts section 13, outlining the duties of the Minister for International Trade. Section 13 states that the minister is to foster the expansion of Canada’s international trade and commerce by “. . . improving the access of Canadian produce, products and services to external markets through trade negotiations” and “fostering trade relations with other countries . . . .”
The committee has heard from our world-class negotiating professionals that protecting one sector at the expense of others will not allow us to negotiate trade agreements like the Canada‑United States-Mexico Agreement, or CUSMA. This bill will not assist Canadians in their international marketing initiatives or promote export sales, and it will negatively impact access of Canadian products through trade negotiations. Additionally, it will significantly limit our negotiators’ ability to pursue non‑economic trade outcomes, which our trade agreements pursue with increasing frequency.
Given the detrimental impacts to the economy resulting from this bill, Cereals Canada would ask the committee to not allow Bill C-282 to move forward. I look forward to any questions you may have.
The Chair: Thank you, Mr. Walker.
Grant McLellan, Chief Executive Officer, Saskatchewan Cattlemen’s Association: Good afternoon. Thank you very much for the opportunity to appear here in front of you today. My name is Grant McLellan, and I’m the CEO of the Saskatchewan Cattlemen’s Association. I’m here today representing Saskatchewan’s 12,000 beef farmers and ranchers, the majority of whom run family farms. I grew up on a farm near Holdfast, Saskatchewan, which my brother and father still operate.
Saskatchewan is home to the second-largest cattle herd in country. Our producers manage approximately 19 million acres of land that grows native prairie grass and forage. The lands we manage are home to a variety of birds and wildlife, including several species at risk, as well as fragile native grasses.
Our industry accounted for more than half the livestock receipts in the province at $2.4 billion last year alone. Like the animals our producers raise, we provide a strong economic, environmental and social benefit to the province and the country. We are the backbone of rural Saskatchewan, providing jobs, managing grasslands, wetlands and wildlife and supporting the rural communities in which we live.
Our industry is heavily trade-reliant, exporting more than half of the product we produce. In Saskatchewan, our main trading partner is the United States, to which we primarily export live cattle. Mexico, however, is also becoming an important market for beef genetics from our province.
We rely on access to new and existing markets to sustain our industry. The fact that Bill C-282, a bill that would hinder our trade negotiators’ ability to seek further access around the world, is still in play, clearly indicates this is not a policy issue but rather a political one. Trade should not a political game — these are our livelihoods.
Bill C-282 is not about supply management. We’re not here to talk about supply management, because Bill C-282, at its core, is bad trade policy. It’s, frankly, a shame that this piece of legislation is being used as a wedge to divide an agricultural sector that is so interconnected. CUSMA is a very important trade agreement for the cattle sector. As we head toward the 2026 review of the agreement, we have already heard how Bill C-282 is going to create unnecessary tensions before even beginning negotiations. State-level officials and stakeholders across North America have raised significant concerns about what Bill C-282 will do to our trading relationships.
Since the Senate began studying Bill C-282, both American presidential candidates have come out and said they will renegotiate CUSMA. This should be alarming for every business and commodity in Canada, as 60% of our economy relies on trade with the U.S.
I’ll just take an example from one of the organizations here in Saskatchewan. The Saskatchewan Industrial and Mining Suppliers Association, a member organization with over 360 companies in Saskatchewan that represents the supply chain for companies like Nutrien, Cameco and BHP, has voiced serious concerns about this legislation and the continued ability to expand their markets. Those members represent $17 billion in sales and employ over 34,000 people in Saskatchewan. Frankly, this can even have implications for Canada’s green initiatives, as much of the work going into the development of our domestic rare earth elements industry is so that we can hopefully absorb some of the market share that is dominated by China — work that is being funded currently by the governments of Saskatchewan and Canada.
The Chair: Mr. McLellan, I’m sorry to interrupt you, but we’ve gone over time on your segment. Perhaps you can make some additional points during the question and answer period.
Mr. McLellan: Thank you.
The Chair: Thank you. I’d like to acknowledge that Senator Dagenais from Quebec has joined us.
We will now go to questions and answers. As per usual, senators, you will have four minutes. That is for the question and the answer, so in the interests of everyone, if you could keep your preamble and your question fairly concise, that will mean we will extract maximum value from our witnesses.
The other point I’d like to make is that I’m going to be very tough on time because we have five witnesses, and I know many of you have questions, and they have things to say to us.
Senator Ravalia: Thank you very much to all of our witnesses for your compelling testimony today. My question is for Mr. Leblond.
You’ve outlined the potential negative impacts this bill could have on your industry and your farming operation personally. Do you feel any amendments could be made to address the trade concerns while presenting core protection that the bill seeks to offer?
Mr. Leblond: With all due respect, I’m not a politician, so I’m going to be very blunt most of the time. And I’m hard of hearing, so I watch your lips and stare.
I don’t know about core protection. I’m going to leave it up to the trade people. That’s why I’m so against Bill C-282. You’re asking me if there’s something we can do at that table. I’m not that expert. I can tell you that when my cows and calves leave the farm, whichever it is, 40% of the value is there because it’s trade-related. There are parts of the cattle that are not used here in Canada and other places, more so now than ever before as our culture changes and that kind of thing. In the end, 40% of the value of my cow is from international trade. Our largest trading partner is the U.S., which is 75% of Ontario’s exports.
Senator Ravalia: Should the bill proceed and our trade partners retaliate in the like, what would be the economic impacts on your farm and on similar farms across the country, do you believe?
Mr. Leblond: You’re starting to reduce the value. Now we’re talking about shipping even further, possibly. If you’re bargaining away — again, trading is trade. I work in municipal government. I have lines; I have rules; I have things I can bargain with. It’s the same thing for our trade experts, not the farmer from Chisholm, I’m sorry.
That’s what the value is currently. If you start taking away that value, I’m going to make less money. I’m a first-generation farmer who has built my empire. Now you’re talking about governing something that’s going to cause me to lose money, and I’m trying to make my farm work.
Senator Ravalia: Mr. Walker, could I perhaps get you to comment on those lines, please?
Mr. Walker: Absolutely. Thank you for the question. The clearest path forward with this bill is just to stop it at this committee. I think that with amendments, you’re getting into splitting hairs. Trade is not a zero-sum game, and that’s the issue with this bill. There’s nuance that can only be ascertained at the negotiating table.
To your question on competitiveness and what would happen, we would see more protectionist measures put up against our exports in countries where we currently enjoy good market access, which will result in producers getting less money for their product at market. Our commodity trades globally. We would see a decline in profitability. It would negatively impact rural communities and the 370,000 jobs that Canadian cereals support in Canada — very significant and very real impacts.
Senator Ravalia: Thank you.
Senator Gold: Thank you and welcome to all the witnesses. This is a question for you, Mr. Eyking.
Just today, the committee received briefs from agricultural stakeholders across the country that include the BC Egg Producers’ Association and the Egg Farmers of New Brunswick. From their point of view, they’re urging the committee to recognize Canada’s unique agricultural sector by ensuring supply management commodities are not part of trade negotiations.
I want your views because you were previously parliamentary secretary to the Minister of International Trade and to the Minister of Agriculture and Agri-Food. You’ve heard the story from both sides. What is your perspective on balancing the needs of the supply management sector, which is also worried about their farms and their well-being, as we all recognize and as you are too, witnesses, while at the same time negotiating good trade deals? We’ve done it previously. Do you think Bill C-282 would change anything in that regard?
Mr. Eyking: First of all, between being on the Hill and on all those committees and being on Bob Speller’s task force, I have learned agriculture quite well in the country, and I’ve been at trade tables. I learned a lot from my parents’ kitchen table. My brothers had supply management. I had to go through; there was no protection for me. My wife and I, we created market trades, so trade was good for us.
I think you can do both here. If this bill doesn’t go through, would it be disastrous for us? No. But I think it is helpful because I found from our trade negotiations with Europe, the States and various countries that everybody has sensitive products that they don’t want on the table. I find that, too many times, the low-hanging fruit when they come to us is dairy; everybody wants to sell us more cheese or butter or whatever. I think the dairy farmers take a hit every time.
It is more of a political thing for these. We have such a small market. We are such small producers in the scheme of things for our dairy farmers. Our dairy herds average 50 cows. Look at the States.
So, yes, other countries have sensitive products. They say you can’t touch that, whether it is in the arts or whatever. So I think we should go in and say that we have a system that works well. We are not dumping our eggs and our milk on the rest of the world. And then we can go in and say we can trade our beef or whatever, but we are not dumping these products on the world. We have a good system.
I think it’s good for our consumers. I have seen it. I’ve seen it in the States. Eggs there are more expensive than in Canada. I’ve seen how it works. I’ve seen how their farms are. I am not criticizing Americans and how they farm, but we do a nice job up here.
Back to the sensitive products, we can go to the table and say we will not trade any more dairy or poultry away just so somebody can go back to their capitals and say they got a little more of the Canadians’ milk or dairy, just for political reasons, and then we turn around, and we get these non-tariff barriers constantly, whether it’s our Christmas trees or potatoes — all of a sudden, up come the non-tariff barriers. Our beef, when our science says our beef is clean, all of a sudden, their border is not opening. I have seen it all. When it comes to the table, they say, “Get a little more dairy from them, and get a little more feather industry.”
That’s why I say we have to go in there and be proud of our system. It is a sensitive system and industry that we have. It is important to us. We are in a northern climate. It costs a little more to produce stuff. Maybe we have to do a better selling job to the rest of the world about why our system is the way it is.
I think we can do both. We have done both before, but we have to go in there as a unified voice and explain that both systems can exist. We can trade with both systems.
[Translation]
Senator Gerba: Thank you for being here today. My question is for the Honourable Mark Eyking.
We’re interested in your many years of experience. Continuing in the same vein as Senator Gold, I’d like you to describe how future concessions in trade negotiations would impact producers and rural communities if supply management were to come to an end.
Some people tell us that this bill isn’t about supply management, but in reality, there are three pillars to supply management. You need to control the products coming in, or imports, so that prices can be controlled more effectively and producers can continue to invest. What impact could these past and possible future concessions have on producers?
[English]
Mr. Eyking: Thank you for the question, senator.
It could vary in the different industries — whether you are in the turkey industry or the egg industry — but at the end of the day, if you allow certain products to enter into Canada from wherever in the world — whether, all of a sudden, we say that New Zealand can bring butter in here, for instance — what is the impact? How does that trigger? You think they aren’t looking for our market for fluid milk, because it is expensive to transport fluid milk from New Zealand to Canada, but it’s great to be able to export butter and cheese. So what does that do for the farmer who has 100 milking cows? They take a chunk out of the trade negotiation, take another chunk. Everybody is cutting back. What happens to the farmer is that he has fewer cows; he gets less efficient; there is not enough milk to produce ice cream in a certain area — it all has an impact.
That’s my concern with these. I have seen it, the trade negotiations. They all come in looking for a little part of that dairy industry, Europeans, especially. The Irish would love to sell more cheese here. The French would like to sell more butter here. It is a good political thing. You can go back home and say you stuck up for your farmers. But it chisels away, and when you keep chiselling away at our supply management system, it will eventually collapse because you don’t have that momentum to keep it going. And we will see production like in the United States. That concerns me big time. They have huge farms. They had the problem with the avian flu now on their dairy farms, which is unheard of. It’s because they have these huge farms, and the animals are outside.
Now, I believe in our system. I believe in the price, and I believe in the way we are taking care of our welfare. The egg farmers have more friendly cages now. There is a whole thing that is evolving, and it has taken 50 years.
But if you want those rural communities in Quebec and Ontario to survive — if you took supply management out of there, or if you had farms like they have in the States, or if our milk is going to come from across the border, those communities would drastically change. I think that would answer your question.
Senator Woo: Thank you, witnesses, for appearing today. My question is for Mr. Eyking, please.
Is it your view that Bill C-282 should be binding on the Crown and its ministers to absolutely have no flexibility whatsoever in terms of giving up more market share in future trade negotiations?
Mr. Eyking: I am a trader, and this is a hard one for me, but I believe that time and time again, from my experience, they always look for more access from the dairy and the feather industry. People say turkeys are cheaper in the United States. They might be right across the border or whatever, but overall, if these other countries or trade blocs know that this is the low‑hanging fruit, that they can always get that supply management — we as Canadians, if we believe in a system, we have to stand up for it. In fairness, if we sell it right — because we have probably 0.5% of the production of dairy in the world. I’m just guessing. It’s a political reason why many of these countries want a piece of it to take home. Why can’t we go forward saying, “Look. Hands off our supply management.”
Senator Woo: You think it should be binding?
Mr. Eyking: Well, if not, they should know going in there. We don’t have to hang it up and wave it in front of everybody, but keep it off the table.
Senator Woo: Is it your view that this bill, as written, is binding on the government to not be able, at all, to offer more concessions?
Mr. Eyking: What I sense from the bill is fairly straightforward. When you have negotiators going into Washington, let’s not talk about supply management.
Senator Woo: If the bill is for some technical reason not binding, and it allows some wiggle room for the government to sneak in a concession on supply-managed industries, would you say the bill is, therefore, flawed or inadequate in some ways?
Mr. Eyking: Not really. We experienced what happened with the last negotiation with the Americans.
Senator Woo: So you are open to the idea that Canada should have some flexibility to —
Mr. Eyking: No, no.
Senator Woo: Okay.
Mr. Eyking: I used it in the last negotiation with the Trump administration. It was for Wisconsin, a swing state, and they wanted to have that little bit of dairy. Do you think it would change the whole dairy industry in the United States? No. It didn’t change anything. I talked to dairy farmers; it didn’t help them. It was a political move. I don’t believe we should let these political achievements be taken on the backs of our dairy farmers. You have to be firm going into that, that it is not negotiable.
Senator Woo: So is it your view that this bill should be non‑negotiable, binding and that it, in fact, is binding on the government to not allow any further concessions?
Mr. Eyking: Unless they are going to let us sell more milk to them and the other way around.
Senator Woo: No, but we don’t have an export —
Mr. Eyking: I know.
Senator Woo: That doesn’t make sense. Okay. Thank you.
The Chair: Colleagues, I remind you that we also have two witnesses who are with us virtually and they might be getting a little lonely. Just a comment there.
Senator MacDonald: Well, they will have to be lonely for another session because I’m going to ask my friend Mark Eyking a few questions.
Mark, it is great to see you. Eyking Farms is one of the great agricultural success stories in Cape Breton, a lot of sweat equity. Your father was a great entrepreneur. My first question is what impact NAFTA or CUSMA had on the viability or stability of your egg production and your business.
Mr. Eyking: I have to clarify. There are different parts of Eyking Farms. My wife and I had vegetables. The impact on the Eyking Farm families, I think — my nephew is growing cucumbers. That might help.
Senator MacDonald: What about the eggs?
Mr. Eyking: Oh, about the eggs.
Senator MacDonald: About the egg industry.
Mr. Eyking: I think with the eggs it was very stable because there was no egg quota given up in that last round.
Senator MacDonald: So our negotiators did a pretty good job at protecting the egg industry?
Mr. Eyking: Yes, but nobody asked for it. Everyone seems to go for the dairy all the time. What is next? Is it turkey? But you’re right; the question is it was not impacted.
Senator MacDonald: You mentioned the vegetables. If your vegetable production were all of a sudden facing some countervailing action, how would it impact your industry, that part of your business?
Mr. Eyking: I think it would be the same as what happened with the potato farmers in P.E.I. — they got non-tariff barriers — or the Christmas tree farmers. They put these things on there that either slow down your egg selling to them or — now, most of what my nephew sells is vegetables; he exports them to the Caribbean. They want his cabbage. They are not putting up barriers. They can’t grow that quality cabbage because theirs is a winter cabbage, and you used that example.
Ideally, we sell to people who want to buy our product. It gets more complicated when you are competing with Australian beef and whatever; I get that. As of right now, there are no tariffs against our cabbage going down there or vice versa.
Senator MacDonald: What percentage would go to the U.S., do you know?
Mr. Eyking: Less goes to the U.S. now than when we had the business. We sold a lot into Boston and the southern states. But the Caribbean seems to be a better market for various reasons, and they have a good deal with McCain, and they send shipments down there. I am a trader, and I believe in it, but I also believe there are certain things you have to protect. It is a hard one for me. I had the argument at the kitchen table with my brothers about this, but, you know, yes, it has an impact.
I feel proud buying milk that’s produced locally. There’s only one way it will stay that way, and that’s to protect those industries. They are just too big in the States for us to compete with them. If you open the border a crack, it keeps coming.
Senator MacDonald: Thank you.
Senator M. Deacon: Mr. Walker from Cereals Canada, I would like to ask you a question first if I could. It concerns your economic relationship with supply-managed sectors.
Our dairy and poultry farmers need to buy animal feed from somewhere. For our representatives from Cereals Canada, are you aware of how much of this feed, such as oats or barley, for instance, is bought from Canadian suppliers versus those imported?
Mr. Walker: The answer is it depends on the given year. We trade a global commodity across all of our commodities that we represent. There are years when we have significant cross-border flows between Canada and the U.S. or Canada and the Indo-Pacific, and there are years where we will sell more into our domestic market, depending on that price delta.
Senator M. Deacon: Thank you very much. You’ve heard a lot of testimony here. You have seen and been part of some submissions. Is there anything we have not touched on, from your perspective, that you want to remind us of, emphasize as we go into our final week of hearings?
Mr. McLellan: I would go back to something that Mark just touched on very well. These are very interconnected industries. Certainly, we are more trade-exposed than some of these other internal industries, but it really is still about trade. We could talk about food security; that’s certainly a point of discussion around the committee. We all pride ourselves as farmers to contribute to both Canada’s food security as well as global food security. But at the end of the day, Canada is an export nation. I argue that we have a moral imperative to help feed the world. We should not be putting forth bad trade policy that exposes or reduces our ability to negotiate good trade deals in the future.
Senator M. Deacon: Mr. Leblond, I’m looking at compensation and trying to get the whole spectrum here from past trade deals. We heard in different hearings that dairy and egg producers and processors are expected to receive more than $1.7 billion in direct payments and investment programs in response to impacts relating to CUSMA. This is in addition to over $3 billion in direct payments from the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP. We are to understand these programs will help drive innovation and growth in the supply‑managed sectors. Have any of your sectors received compensation for any trade concessions made in the past?
Mr. Leblond: Again, I’m a first-generation farmer. In 2006, I started. In my time since then, there has been none that I know of, but I can’t swear on the Bible.
Senator M. Deacon: I appreciate that.
Mr. Leblond: I can tell you some of those other concessions and funding that does have an impact on our industry.
Senator M. Deacon: Thank you very much. Does anyone else have a response that they want to finish that off with? Thank you.
Senator Coyle: Thank you to all of our witnesses today. Most of you — all but one — have told us this is bad policy: bad for your industry, bad for Canada and bad for international food security. Mr. Eyking has spoken about every nation having sensitive products. Canada does too, and they are our supply‑managed sectors. Those are our sensitive products. As you know, because you’ve been involved in this, they’ve been protected to a great degree in past trade negotiations, but it has not been legislated.
Mr. Eyking, I want to know whether you know of examples of other countries that have actually legislated the kinds of protections that we are seeing in this bill.
Mr. Eyking: Well, yes. Maybe not agriculture, but there is no doubt about it. India does it with their rice. You can’t just dump rice in there. The U.S. has a bill that protects their defence and airplane industry. The Europeans have it. They all have these sensitivities, and we have seen it at the tables: “You can’t touch that” or “You can’t go there.” Some of it is cultural stuff, and we see it.
Senator Coyle: They’re sensitive —
Mr. Eyking: Sure, they’re sensitive.
Senator Coyle: — but are they legislated in the way that this bill legislates?
Mr. Eyking: Their negotiators know there’s no going in there.
Senator Coyle: Just as ours do with supply management.
Mr. Eyking: I think it is good to have something on the record to remind them about our sensitive products. That’s why I don’t see it — will this be a big red flag to the rest of the world? I don’t know. Maybe they will say that they knew it all along that Canadians were protecting those industries. I think it is kind of good to know going in that we are.
To answer your question, yes, other countries have sensitive products that they want to protect for cultural reasons or whatever, for jobs. So, yes.
Senator Coyle: That’s not my question. My question is about legislation. Sensitive products we know; we all have them.
Mr. Eyking: I don’t know if they have legislation. All I know is that when they come to the table, they know: Don’t touch this.
Senator Coyle: Sure, just as with Canada.
Mr. Eyking: Somebody told them on the way in.
Senator Coyle: Mr. Walker, you mentioned that trade is not a zero-sum game and that Canada is a leader and leads by example in the rules-based trade order, as one would say. Could you expand a little bit on both of those points and relate that to the bill that we have in front of us?
Mr. Walker: Absolutely. I think the previous witness just touched on that. Negotiators go in with an agenda all the time. It does not need to be legislated. We all know that. Our negotiators are world-class. The vast majority of our economy depends on exports, so we need flexibility. That’s not to say that we need to go in publicizing what we’re looking to negotiate. No one does that. You have to keep the cards to your chest, but making sure that our negotiators are as empowered as possible to demonstrate that we can get a deal done is really what we’re looking for here.
Senator Coyle: Mr. Gilvesy calls it a bull’s eye and that if this bill were to come in, we would be putting a bull’s eye on our trade products. Do you see it that way, Mr. Walker?
Mr. Walker: I absolutely do.
Senator Coyle: Thank you.
Senator Klyne: Welcome to our guests, and thank you for your presentations. My question is for Mr. McLellan.
Let’s assume the worst-case scenario that when the CUSMA review occurs in 2026, as a result of this bill, the Americans would rather pull out of the deal than extend it further. What economic impact would this have on your industries? How can you quantify the impact? Would you consider it devastating if there’s no comprehensive agreement with the United States, and how would your organizations try to recover?
Mr. McLellan: Part of it would be to appear at committees like this and strongly encourage the sober second thought in these types of chambers.
We’re exporting 70.7% of our beef to the United States. We only need to look back — talking in the context of beef and cattle — to the 2003 BSE crisis where the cattle market basically collapsed. Right now, we’re standing at the beef industry contributing $51.6 billion in production of goods and services, $21.8 billion to the GDP and $11.7 billion in labour income to Canada. That is highly exposed when you have such a large market.
The United States can’t satisfy internal demand, but there are other countries that can. Brazil is very much nipping at the heels, in terms of cattle production, of the United States. We’re still only producing about 2% to 3% of the world’s cattle, but we are still highly dependent on a relationship with the United States. As we had already mentioned, right now, Mexico is importing 80% of its cattle genetics for hybridization of some of their animals from Canada. There are alternative markets. Mexico has slipped, I believe, to third place in Canadian beef exports. I think Japan has recently overtaken them. If we’re talking about that whole document falling apart, we’re looking at billions and billions of dollars.
Senator Klyne: Thank you.
This question could be for, I suppose, anyone on the screen here, but I’ll throw it out to Mr. Walker: Were any of your organizations or any export-oriented organizations that you may have spoken to about this bill consulted in its drafting?
Mr. Walker: No.
Senator Klyne: That’s surprising. Thanks.
The Chair: Thank you. No one else on round 1? We’ll move to round 2, then.
[Translation]
Senator Gerba: My question is as much for the two witnesses online as for Mr. Leblond.
The Comprehensive Economic and Trade Agreement, or CETA, which came into force in 2017, eliminated import tariffs for 50,000 tonnes of beef and veal. I should point out that supply-managed sectors then had to sacrifice part of their domestic market through higher quotas for, among other things, cheese imports, which increased to 16,000 tonnes per year. However, in 2022, in the case of beef, only 0.3% of quotas provided for in the agreement were used in the same year.
What, then, is the point of curtailing supply management when the beef sector isn’t fully utilizing its quotas? Why cut supply management when beef quotas aren’t being met or used?
Mr. Leblond: I’ll answer in English.
[English]
You’re saying we have imports coming in, but we don’t eat all of the beef that we produce?
[Translation]
Senator Gerba: No.
Mr. Leblond: Okay, I apologize.
[English]
The Chair: Mr. McLellan, why don’t you go ahead?
Mr. McLellan: I think I caught the gist of the question here. It was negotiated into CPTPP. There was a beef cattle portion that allowed for up to a certain amount of poundage to be exported into those areas. Partially, right now, it’s due to our inability to supply, because in large swaths of the Canadian beef industry and the United States industry, we have seen drought for about six or seven years, and the cattle herd has decreased in such a manner that it’s a more costly market to get those products to.
Like I said, Japan has now jumped to being the second-highest export market for Canadian beef. That’s some of the traditional cuts and some of the more non-traditional cuts. That market opened to us just over a year and a half ago. They had been closed to us since about 2003. So we’re very pleased that in CPTPP there is room for increased growth for cattle and beef producers to continue to export to other markets. Frankly, diversifying our access to markets is just good trade policy, I think.
Senator MacDonald: This is such a great subject. Every answer creates another question. I’m going to go back to Mr. Eyking again about the egg farming.
You mentioned that neither NAFTA nor CUSMA had any effect on the egg industry because it was never on the table. The Americans must produce a lot of eggs. Why would it never be on the table?
Mr. Eyking: When you look at the world production of the different products, dairy or eggs — but especially dairy — the problem you have with dairy in many parts of the world is that it’s subsidized. The Europeans subsidize. If a farmer has 10 cows in Switzerland, they give them $1,000 per cow. Guess what? The cows end up producing too much.
Senator MacDonald: I’m not asking about dairy. I’m asking about eggs. Why would that not be on the table?
Mr. Eyking: Because I think that in a lot of these countries, they are not getting subsidized in their egg industry as much as in their dairy industry, so there is not an oversupply of eggs being pressured to come into Canada. It’s always the dairy products that seem to be the ones. Back home in France, they don’t like to see storages of butter and cheese that they can’t sell, so they negotiate. But it’s their problem; they’re overproducing their products.
The feather industry doesn’t seem to have that problem as much. Yes, there is pressure sometimes from the United States when turkeys are on special, and they’ll try to sell them along the border. There are probably cheaper turkeys and chicken down there, but our farmers are smaller, and that’s where it’s at.
I don’t know if that explains the answer, but dairy seems to be the one all the time, and it’s because of the way they produce it and subsidize it in other countries that everyone wants to sell more when they go to negotiate. It always seems to be that way. Not so much the New Zealanders because their biggest advantage is that they can produce cheap milk because they don’t have barns for their cows. They can produce so much milk. So they want it in a different way. They’re a big exporter — there are only 3 or 4 million people there, and they export more than 10 times what Canada produces. But it’s because they can produce so cheap.
The other side is subsidization, and that’s why they’re trying to sell.
Senator MacDonald: Thank you.
Senator Coyle: I have a question for Mr. Leblond.
You said that Bill C-282 is not a referendum on supply management, and you said it’s bad for Canada. We heard from Mr. Eyking that he’s worried about us chiselling away at our supply management system to such a degree that it could collapse, and that’s why he thinks this bill is a good one.
Could you talk to us about how you see it as not being a referendum on the supply-managed sector? Do you share his concerns about this ultimately collapsing our supply management system if we don’t enshrine this in law?
Mr. Leblond: I’ve watched some of the sessions, and during many of the sessions where witnesses have talked, there have been 12 trade agreements in a time frame — the last 12, I think, were referenced. They talked about the last three where there were concessions in the supply-managed sector. All of those concessions were — I don’t want to say subsidized; I’m going to use the wrong term — but they were given compensation to offset that.
The trade people are experts. That is not me. I don’t see it chiselling away. We do not need to put this in writing. It’s already being done; it has been done successfully by my co‑witness here today for many years, so I just don’t see the reasoning. It doesn’t make sense to do this at all.
It’s a private member’s bill from the other place. It should have never made it here. It doesn’t make sense.
Senator Coyle: Thank you.
Senator Woo: For Mr. Eyking, you are a former parliamentary secretary for trade, so I’d like to ask you a trade policy question.
Do you think passing this bill is worth the risk of jeopardizing our continental trade agreement with the United States and Mexico, given that we have a renewal of negotiations coming up in 2026?
Mr. Eyking: I don’t think it’s going to jeopardize that much. I think they know where we stand with our supply management. I think a lot of farmers in the United States wish they had supply management. I think we have to be more upfront during our negotiations to say that this is a sensitive product. We live in a northern country, and we need to protect those industries.
Ideally, it would be better if we all knew going to the table that we weren’t going to trade any milk or dairy away, but sometimes when you’re around that table, decisions are made at the last minute, and then all of a sudden —
At the end of the day, dairy farmers do not want more money. They don’t want to lose their market and receive money for it. They want to keep farming. They want their 50 cows. They want to have a nice family farm. They don’t want to be told, “We’re going to give you so many hundred thousand dollars, and you’re going to have five fewer animals next year.” They don’t want that.
I don’t think this will jeopardize their trading very much. Is it going to raise eyebrows? Yes. But if this is important enough to Canada, I think we should put it out there that it is important enough that we’re going to protect it.
Senator Woo: Would it be right to summarize your view as the following: You think it’s a low risk that this will seriously affect our trade relationship with the U.S. and Mexico through CUSMA, and you are willing to take that risk with Bill C-282? Is that fair?
Mr. Eyking: Yes, and I’m also looking to the future — to make one more point. Governments change up here, so all of a sudden you have another government in power that says, “There aren’t that many votes for us in Quebec. Maybe we won’t fight for it as much.”
This is a Canadian system we have. It’s a very good system of supply management. If we don’t have a Canadian view of it and protect it, it will get “piecemealed” away, unless somebody knows it is protected.
Senator Woo: You’re willing to take the risk in perpetuity, then. Okay, that’s very helpful. Thank you.
The Chair: We’re out of time, so on behalf of the committee, I’d like to thank our witnesses today. We’ve had a good discussion. The Honourable Mark Eyking, are you going to run again, sir? Here’s a chance to announce it.
Mr. Eyking: Yes, I am, sir. I’m running with my grandchildren around for Halloween tomorrow night.
The Chair: Thank you. I’d also like to thank Jason Leblond, George Gilvesy and, joining us virtually, Mark Walker and Grant McLellan. Thank you for your time. We appreciate it a great deal.
For our second panel, we’re pleased to welcome, as individuals, Jonathan Fried, former Canadian Ambassador to Japan, from 2008 to 2012, and to the World Trade Organization, from 2012 to 2017, and former foreign policy adviser to the Prime Minister; Roland Paris, Full Professor and Director, Graduate School of Public and International Affairs at the University of Ottawa, and former foreign policy adviser in the Prime Minister’s Office; and Sylvain Charlebois, Professor and Director, Agri-Food Analytics Lab, Dalhousie University. Gentlemen, thank you for being with us today.
We’re ready to hear your opening remarks. As with the last panel, we’re looking at three minutes. Please keep it to that, or you’ll face the challenge of being cut off by me.
Mr. Fried, you have the floor.
Jonathan Fried, Former Canadian Ambassador to Japan and to the World Trade Organization, as an individual: Thank you so much. I’m honoured to have been invited to appear. I respect the careful consideration you and your colleagues are giving to all of the testimony presented to you.
I’m going to share some reflections, drawing upon my prior government experience in trade and economic law and policy. I’ll certainly do my best to stay within three minutes. I have submitted to the clerk the written text of my opening remarks, which I’m happy to see shared with the members of the committee, if that would be helpful, especially if I get cut off.
To be clear, I take no position at all on the merits of Canada’s supply management regime; rather, for me, the concerns I have revolve around something the administrative law experts call “instrument choice.” Are the tools you’re seeking to use to fulfill an objective best suited to achieve that objective?
In my view, there are three issues raised by Bill C-282 that pose that question. First, you’ve heard from other witnesses that treaty making engages the Royal Prerogative. Put simply, and as I’ve learned in my legal studies, the negotiation, right through to the signature, of an international treaty belongs to the executive branch, whereas Parliament and, where necessary, provincial legislatures are responsible for implementing legislation.
Why is that an issue of instrument choice? Let me give you an illustration from the World Trade Organization, or WTO.
At the 2015 ministerial meeting, there was already huge momentum internationally to reduce distortions in agricultural trade. The membership pushed very hard for the elimination of all agricultural export subsidies. Canada, at that time, was among the very few that still had remaining programs, including for dairy exports. Negotiations took place on the ground, with ministers among the key countries continuing throughout the meeting, right through to the very last night, with heated discussions. At the end of the night, agreement was reached. Our minister of the day was in constant contact, almost hourly, with the relevant stakeholders, including the dairy industry. In agreeing to the settlement, she was confident that supply‑managed sectors were onside.
Play this out: If market access had been what was at issue as opposed to export subsidies, Bill C-282 would have prohibited the minister from joining that last-minute global deal. She would have had to return to Parliament, holding up the world pending parliamentary views. That’s a completely impractical approach in the real world of urgent and time-sensitive negotiations.
Second — and this has been referred to by several other witnesses, and in my experience, going back to the original Canada-U.S. free trade agreement, the NAFTA, where I was chief counsel, and subsequent negotiations — the response from our negotiating partners to take off the table a sector of interest to Canada is inevitable. It masked, by having very general language, the fact that what may be at issue is also the ingredients and further processed products that may potentially be affected at home and abroad, which would compromise the national interest.
Let me give you a simple example.
The Chair: Mr. Fried, I’m going to interrupt. You’re closing in on four minutes. I’ve been generous.
Mr. Fried: Yes, I’m sorry. I’m just going to tell you about frozen pizza.
The Chair: That’s too bad. We will have to wait in suspense for the question period. I can see there might even be a question on that, so we’ll see.
Professor Paris, please go ahead.
Roland Paris, Full Professor and Director, Graduate School of Public and International Affairs, University of Ottawa, as an individual: Thank you. I’ll pick up on the frozen pizza. No, I’m grateful for the invitation to speak with you today.
I should say at the outset that I’m not an agricultural economist. My expertise is in foreign policy and international affairs. It’s from those perspectives that I am pleased to offer some thoughts on this bill.
I have three points to make.
The first is about the context. We have entered a period of great and growing uncertainty in international affairs, including in our trade relations. The postwar era of rules-based globalization is not over, but it has certainly peaked, as we witness a process of deglobalization gathering speed in the form of new tariffs, a variety of new trade restrictions and the rise of economic nationalism, which poses a serious challenge to a country like Canada, whose economy depends so much on open international trade, especially with our closest trading partners.
But now, even those relations are more uncertain than they were before, so Canada is going to have to work exceptionally hard in the coming years just to hold on to the market access we have secured for our exports to date. That’s certainly true for Canada-U.S. trade and for the vitally important review of the CUSMA coming up next year, but it’s also true for our trade with other countries. If, say, the European Union introduces new protectionist trade or new economic measures in response to what other countries are doing, where will that leave Canada? We’re not, as you know, a member.
The bottom line is that we’ll have to work harder than ever before to secure our own national interests in a much more unpredictable and less stable world, which leads to the second point that I’d like to make.
In this new environment, Canadian trade representatives will have to be adaptable, flexible and ready to deal with challenges, some of which may place Canada’s most fundamental economic interests at risk. The review of the CUSMA is already on the calendar, looming very large for the well-being of our economy and for the livelihood of countless Canadians across the country. That’s serious enough in itself, but what’s not on the calendar and what we don’t know is how the rapid rise in economic nationalism may impact Canada’s other trade relationships.
Given all of this uncertainty and risk, now is arguably the worst possible time to be advancing legislation that would weaken our negotiating leverage by effectively tying the hands of Canadian negotiators, making it even harder to secure concessions from our trading partners or to respond to situations in which Canada’s larger economic interests are at stake.
That leads to my final point, which is the precedent this bill would set. Unlike Mr. Fried, I am not a lawyer, and I don’t understand the Royal Prerogative and executive power in detail, but I would say there is a common-sense question raised by this proposal, and it is an important one: If this sector deserves to have its interests written into the Department of Foreign Affairs, Trade and Development Act, then why shouldn’t many others?
I think what most Canadians expect is that the Government of Canada and the Parliament will consider the interests of any given sector within the context of the larger national interest to ensure the well-being of all Canadians. I don’t think that’s what is happening here. To say that Canadian negotiators should be legally prohibited from ever addressing the quotas and tariffs of our existing supply management system, even in the face of potentially serious economic challenges to Canada, is the equivalent of saying that the arrangement itself stands above the interests of our economy and of Canada as a whole.
The Chair: Thank you.
Sylvain Charlebois, Professor and Director, Agri-Food Analytics Lab, Dalhousie University, As an Individual: Thank you, honourable senators, for the opportunity to address this critical issue for Canada’s future. Our nation’s wealth and prosperity are deeply tied to global trade, and Bill C-282 poses a significant risk, potentially locking Canada out of major global opportunities that could otherwise enhance our contribution to global food security. While you’ve heard many advocates for this bill over the past few weeks, my testimony today focuses on the detrimental impact Bill C-282 could have on Canada’s supply management system itself, particularly for Canadian consumers.
From an economic perspective, reduced competition typically leads to weaker, less innovative sectors, and this has been evident within Canada’s supply-managed industries. My primary concern lies not with the egg or poultry sectors, which have embraced vertical integration and innovation, but rather with the dairy industry, in particular, which is by far the largest component of Canada’s supply management system in terms of cash receipts.
While supply management has been a stabilizing force for Canadian agriculture, it is far from a flawless policy. Over the years, the dairy industry has demonstrated a reluctance to evolve in ways that better serve Canadian consumers through specific research and innovation. I will provide two key examples to illustrate this point.
For the first example, we published a paper in 2022 on the issue that was better known as “buttergate.” The use of palmitate — a palm oil derivative — in cattle feed affects the quality of butter. No tests had been made until we had done one at the University of Guelph. We published the paper in a scientific journal; it is now available to all.
The second example pertains to milk waste. A recent study published in Ecological Economics, co-authored by myself and two non-Canadian authors, revealed that between 6.8 billion and 10 billion litres of milk has been wasted on Canadian farms over the past decade, representing almost $15 billion worth of food retail. The environmental cost of this waste is staggering, equivalent to adding 350,000 cars to Canada’s roads in terms of carbon emissions.
In conclusion, Bill C-282 would not only prevent Canada’s broader agri-food sector from seizing global opportunities and achieving economies of scale that could help lower food costs domestically, but it would also further entrench the inefficiencies in our own supply-managed sectors, particularly dairy. The system, as it stands, needs reform, and enshrining Bill C-282 into law will only exacerbate the shortcomings of the current framework.
Both studies were given to the clerk earlier, before my testimony. Thank you for your time and consideration.
The Chair: Thank you, professor.
Colleagues, we will move right into questions and answers. You know the drill. Four minutes each. Please keep your comments and questions concise.
Senator Klyne: Welcome to our panel and thank you for your presentations. My first question is for Mr. Charlebois.
Thank you for your presentation and the papers you continue to put out. You mentioned in an article in Troy Media in February this year that Bill C-282 “. . . risks holding all other economic sectors hostage solely to safeguard the interests of a small, privileged group of farmers.” We know that supply management it has been a point of contention in trade negotiation; notably, the United Kingdom walked away from the negotiations with Canada due to disagreements over access to our dairy market.
Can you expand on the potential losses to all sectors should more trade negotiations fall through due to the protectionist nature of this bill? Does this bill have the ability to negatively affect trading sectors beyond those in agri-food that this committee has primarily heard from?
Mr. Charlebois: Thank you for your question, senator. It has been argued before this committee many times that Bill C-282 is trying to protect or safeguard 1% of the economy. I would argue that it is trying to sacrifice 100% of the economy. That’s the point I am making tonight, basically. The 99% would lose, and that message has been conveyed by many sectors — pork, cattle, grains — but the 1% needs to improve. I have always argued that supply management is a great policy if optimized, but right now, it is not. It is politicized, and Bill C-282 is a product of that politicization.
Senator Klyne: Mr. Paris, it is not about frozen pizzas, but I might get that back to Mr. Fried. We know that the Republican presidential nominee is turning toward increased tariffs across the board, despite CUSMA being negotiated during his tenure, and we know that the Democratic presidential nominee, when a senator, was 1 of 10 to vote against CUSMA. How does this affect the work we are doing on this bill?
Mr. Paris: Many people who have testified before this committee have made the point that this has the potential to provoke a response from the American administration and negotiators. I heard it described during the last session as potentially putting a bull’s eye on this sector. It really leads me to wonder if, on one hand, it’s just symbolic, as some people have argued, to legislate this policy into the act, then why would we do so for pure symbolism and take the risk of provoking our principal trading partner or, less dramatically, weakening the negotiating position of our trade negotiators?
And if it’s meant as a really significant constraint, then, as I said in my testimony, it comes at a very bad time. We know that we are in for a rough ride with the United States with difficult negotiations coming up. It may be more or less difficult, depending on which presidential candidate is elected, but it’s going to be challenging.
We don’t know what other challenges might arise, and this is part of the context that we are living in right now. It’s not just in trade; it’s across the board, as you know in this committee. Whether it is in relation to our national security, our international security policies and practices or any other area, we’re facing a period of much greater uncertainty. Canada has to be ready to advance and defend its own interests in this world.
The Chair: Thank you, Professor Paris.
Senator Dean: Thank you for joining us and for your great presentations. Before you came into the room, we heard from the Fruit and Vegetable Growers of Canada, who told us that supply management is a privilege, not a right. Others talked about the bill representing pre-emptive protectionism, worsening competitive balance, trade irritants, bad trade policy, introducing rigidities in sectors where we should be seeking flexibility and so on.
You have echoed many of those thoughts in a more academic and research-based context, I would say. Essentially, everything we’ve heard today is boiling down to the same thing, which is that this is a bad bill; it’s bad policy, and it should be rejected. I am simply saying: Is that your advice?
Mr. Paris: I think I made my position on this bill abundantly clear. Since Mr. Fried has not had a chance to respond to questions, I will pass it straight to him.
Mr. Fried: Going back to what you are trying to achieve, which is to ensure that future negotiations take due regard of the importance of the supply management sector, if that’s the chosen policy — aside from who is responsible, the executive or the legislature — it is in many ways superfluous because there is standing practice, as you professionals would know better than me, in the other chamber that the government, before starting any negotiation, has to give notice to Parliament 90 days in advance and then 30 days in advance to say, “What are my objectives?” That means Parliament has its say right before and can lay down a marker that this is sensitive, this is important. To some extent, it’s unnecessary.
Second, as my illustration earlier tried to demonstrate, in the real world of negotiations, it’s going to potentially cost a deal that affects many other sectors.
I will still save frozen pizza for later.
Mr. Charlebois: Regardless of the outcome, there will be a very important legacy to this bill, and it is how it is dividing agriculture in Canada right now. This is the first time in history that I’ve seen — as an academic observing agriculture in Canada — it being so divided openly. That’s going to create victims. It is sad to see this piece of legislation come to the upper chamber right now because you see a lot of people behind me who disagree and who are forced to disagree openly, out in the public. That is not helping at all.
[Translation]
Senator Verner: Welcome to the three of you. Mr. Charlebois, you’re a well-known expert in Quebec, particularly in the Quebec City area, where I live. A few days ago, on X, you stated your opposition to the bill, because in your opinion, it’s a weak policy. You also said you’re concerned about the impact it would have on 99% of the rest of our economy. Are you able to identify other sectors, specifically in agriculture, where the impact could be even greater?
Mr. Charlebois: Last year, I had the opportunity to work with Minister Champagne on food affordability in Canada. We have to recognize that we trade with the rest of the world specifically so food can be affordable for Canadians. This is mainly how we keep things affordable. The more open Canada is to the world, the more attractive it becomes as a place to invest.
When I support start-ups in well-established sectors, the case for investing in those sectors is easier to make when we have beneficial agreements with our trading partners abroad. Whether it be small or large businesses in your province, senator, many small businesses depend on these agreements to grow. There are only 41 million of us in one of the world’s largest countries. It would be wrong to limit the hopes of these companies. It would be unfortunate.
Senator Verner: In agriculture, I’m thinking of the beef sector. You mentioned recently that Canadian and American herds were in decline for a number of reasons. Is it possible the industry could face repercussions if our partners were to have negative reactions?
Mr. Charlebois: Here are the biggest risks: grains and animal proteins, such as beef and pork. This is the group that is likely to be most affected by Bill C-282.
Senator Verner: I have 30 seconds to discuss the milk waste you mentioned. Many Canadians were shocked by the billions of dollars lost in litres of milk. Do you think a bill like this would protect us from these losses? Could this kind of problem worsen? Could it stay the same?
Mr. Charlebois: The main message of our study was the lack of transparency. We should know the answer. Canada’s dairy farmers refute our results, but won’t share their figures. These are government-sanctioned quotas. Canadians have a right to know.
[English]
Senator M. Deacon: Thank you for being here and for the important work that you are doing. It is certainly an interesting time. A quick question first, yes or no. The House had about four meetings related to this bill. Were you consulted in those meetings? No?
Mr. Charlebois: By groups yes, but not by the politicians in the committee.
Senator M. Deacon: Thank you very much. Taking us back to the House, we heard time and time again that this bill received votes from every party in the other place, that it passed with an overwhelming majority. We have been told that the Senate could be thwarting, of all things, the will of the elected people and, by virtue of that, of Canadians if we were to vote against this or amend this legislation, because it received such overwhelming support in the House.
To all three of you, Mr. Paris first, in your opinion, why did the bill at that moment receive such overwhelming support in the other place if it is so flawed?
Mr. Paris: Let me just say it is entirely within the rights of the House of Commons to pass this bill, within Parliament’s rights to enact this bill. If it becomes law, it will be legitimate. It still won’t be good policy, but it is entirely within the rights of legislators to do so.
The simple answer to your question is that we have in this case a classic instance of a concentrated, narrow interest prevailing over a generalized, more diffuse interest. It is related to a concept in the fields of economics and political science referred to as “regulatory capture,” or a situation where a particular interest exercises a commanding influence over the regulatory arrangements governing the sector. Often in those cases, like this one, the principal benefits of the regulation go to the particular interest, whereas the costs are borne by a large group of people, in this case taxpayers.
What I have been suggesting is that the costs of passing this bill are potentially greater in the sense that we are facing rising challenges to our trade relations. This is an increasingly challenging time for Canada, and tying of the hands of our negotiators, which is seemingly a consequence and an overreach of this regulatory capture, could make it harder for Canada to sustain market access with key trading partners going forward.
Mr. Fried: I have very little to add to what Professor Paris said. One respects the will of Parliament. One still has to ask whether what is reflected — given the voices heard and not heard, consulted and not consulted were truly taken into account. Others have said, with varying degrees, that there was not the fullest consultation or assessment of the upstream and downstream consequences.
Mr. Charlebois: Politically, it is a genius bill. Economically, it’s an awful idea.
Senator M. Deacon: Thank you.
Senator Woo: Thank you to the witnesses. My question is for Mr. Fried.
There is a view offered by some of our previous witnesses that this bill, despite appearances, doesn’t do what it intends to do; it does not, in fact, bind the Crown because of a number of arcane legal arguments that we don’t have to go into here. If that’s the case — that it either doesn’t do what it intends to do or is, at best, very ambiguous about it — how would it change your view, if at all, about the merits of this bill?
Mr. Fried: I tried to say earlier in my remarks, senator, that the practical constraint that is imposed does have the real impact of preventing a minister from making a deal, whatever the right balance of interests between the special concentrated interests and the national interest is, if this is an element. If it is a 0.001% increase in a tariff rate quota, he or she would have to say, “Oops, hold on. I have to consult.”
Senator Woo: Yes, but even insofar as the parliamentary process is concerned, you’ve reminded us that the government has to present a plan for information with parliamentarians and so on before negotiations start. If this bill is ambiguous about whether it actually binds the Crown, and the Crown interprets it to be binding and presents a plan that says, “Dairy is off; we will not discuss it at all,” parliamentarians could say, “Actually, it is our interpretation that it doesn’t bind the Crown. Why are you taking supply management off? Why are you depriving Canadians of the right to have a better deal by binding yourself when you have not been bound?”
Is that a crazy scenario?
Mr. Fried: Senator, you have posed a hypothetical scenario. We don’t know. We have never had a piece of legislation like this, to my knowledge, that constrains what would otherwise, historically, have been within the realm of the sovereign through the Royal Prerogative for executive action. So I can’t really answer.
Senator Woo: And would the possible ambiguity, in itself, be a reason to be very wary of the legislation?
Mr. Fried: The ambiguity, on the one hand, and the bluntness of the language on the other, as many other witnesses have said, are a red flag, a bull’s eye, a target, et cetera, which will invite a response, in my view.
Senator Woo: Thank you.
[Translation]
Senator Gerba: Welcome to our witnesses. You’re all experts in international trade, so I’d imagine you know that the WTO allows trade exceptions for certain key sectors.
Is that right? Are you aware of that?
[English]
Mr. Fried: I am not sure what you mean by sectors. There are two categories of major exceptions —
Senator Gerba: I’m sorry. I’m talking about exceptions.
Mr. Fried: As I say, the WTO sets out exceptions for public health, public safety, public morals and for national security.
[Translation]
Senator Gerba: Mr. Fried, you were ambassador to Japan. You know Japan passed legislation to protect its rice sector and producers. This legislation aims to manage the production, distribution and consumption of rice, while guaranteeing the quality of Japanese rice. Japan has a strong rice-growing tradition, and this law protects its domestic market by limiting imports of foreign rice, ensuring that Japanese producers can sell their product.
Mr. Fried, given your experience as a negotiator, do you think Japan is on the wrong track here in the same way Canada would be with supply management? Also, could you clarify whether our trade agreement with Japan has led to any concessions on supply management?
[English]
Mr. Fried: Thank you, senator. You’ve asked two questions to someone who is not a domestic expert on Japanese laws and regulations.
It is clear that Japan has a very restricted market for imports of rice and a very high tariff on it that is somewhere in the neighbourhood of 600% to 800%. It is even higher than our dairy and poultry tariffs in Canada. To my knowledge, it is not, however, an absolute prohibition, just as we have very small tariff rate quotas.
Japan is re-examining its policies because the average age of their farmers is over 70. They are not being replaced by a younger generation. They realize they are depriving themselves, given the high cost of potential export markets with very high‑priced rice that competes with India, Thailand and so on in their own regions.
It is not for me to say whether it is a mistake. It is a domestic policy choice. There are parallels, as you yourself suggested, between their high-tariff policy and our supply-managed high‑tariff policy.
[Translation]
Senator Gerba: Are the three of you also aware of the U.S. Farm Bill policy that protects sugar? Yes or no?
[English]
The Chair: Be very quick, please, because we are over the four minutes.
[Translation]
Mr. Charlebois: The Farm Bill is actually being renegotiated right now. I believe the negotiations were put on hold because of the election. That’s my understanding at the moment.
Mr. Paris: Respectfully, I don’t think the key question is about the internal policies of other countries. Rather, the question is whether the bill is in the best interest of our country’s economy. As several witnesses have testified, it is unlikely to be.
Senator Gerba: If I may, I’d say the key question is this: If other countries are raising red flags, should we be doing the same?
The Chair: Senator Gerba, you’re almost at five minutes.
[English]
Senator Ravalia: Thank you for your testimony here today.
Ambassador Fried, we have heard several witnesses allude to a global rules-based vulnerability and a potential shift away from multilateralism. In your experience from your various portfolios, do you think there are any diplomatic strategies or private discussions that Canada could pursue to address the concerns of both the supply-managed sector as well as our more global export-focused sectors?
Mr. Fried: Thank you, senator. There are really two parts to the answer, both of which your question suggests.
One is that bilateral, regional, plurilateral and multilateral agreements can and should coexist. That has been true for the entire postwar period. It is reflected in our original free trade agreement and our expanding network of free trade agreements, which sit alongside the WTO system; they don’t undermine the system. Sometimes, among like-minded countries, you take the rules, the disciplines and the market opening further and faster than waiting for the now 166 countries at the WTO.
Second, thanks to my predecessors and successors, Canada has long invested in thinking through the longer term. The WTO, by most admissions, is not doing a bad job on the matters that it covers today, but there are gaps in the rules. Agricultural disciplines have long been too much of a free ride for countries to subsidize, whether it be the EU, the United States or China.
Canada has long tried to be a catalyst — along with other major agricultural producers in something called the Cairns Group, informal caucusing — to develop and nurture a broader international consensus on reducing subsidies globally so that we don’t face the distortions. We can’t get at the Wisconsin subsidies today because they’re domestic and the WTO rules kick in at the border, so you can’t countervail because there’s nothing coming in. We need better global rules on agricultural subsidies. That’s discussed in the Cairns Group, the Organisation for Economic Co-operation and Development, Asia-Pacific Economic Cooperation and others, all in the interest of trying to develop a consensus.
Canada has been doing the right thing in looking for opportunities regionally and plurilaterally where it can and in trying to nurture better, stronger international rules.
The final example is something called the Ottawa Group, which is an informal gathering — a caucus of like-minded middle powers that care about the rules-based system. Without waiting for the U.S. and China to agree, we, along with the European Union and Japan, try to get together to figure out how to move the system.
Senator Ravalia: The other key point of curiosity was the frozen pizza.
Mr. Fried: It’s a simple example building on what my two colleagues here have said, which is to take account of the upstream and downstream consequences.
Take a frozen pizza. Virtually every one of them has shredded cheese sprinkled on top. What does a Canadian pizza maker do? He has to buy expensive Canadian cheese. What that means is he or she, McCain or a start-up, is going to have pizza that’s going to be way too expensive to sell abroad. The higher cost of the finished product deprives that subsector of foreign export opportunities. The same would be true for chicken nuggets or processed food. After all, we usually talk about an agri-food industry in Canada.
The Chair: Thank you, Mr. Fried. I see we’re moving beyond pizza now, and we’re also out of time.
Senator Coyle: I’m going to start with Professor Charlebois. You’ve mainly focused in your testimony here on the detrimental impact this law would have on all sectors, supply-managed and others. I’m curious; you’ve been mostly talking about producers, which is important, but we also have consumers in Canada. One of the arguments we have heard from the supply-managed sector is that it gives Canadians better prices, particularly on eggs and things like that. You, I believe, have done some work on consumer pricing and this bill.
Could you speak to that aspect of your arguments?
Mr. Charlebois: Absolutely. So there are benefits to supply management. It provides our economy stable prices, not necessarily better prices. That’s something that needs to be clarified here. When you look at prices, say, in the U.S., sometimes some of the commodities are cheaper, but not always. The benefit of supply management is to stabilize supply and demand. Canadians have actually benefited from more stable prices over several decades.
Senator Coyle: Could this bill have an impact on consumer pricing in a variety of sectors?
Mr. Charlebois: I don’t believe so. Supply management has survived three trade agreements.
Senator Coyle: How about in other sectors?
Mr. Charlebois: I don’t believe so. If anything, it could make our agri-food sector more competitive as a result. You build economy of scales internationally to benefit your domestic market.
Senator Coyle: So it could improve the situation for our consumers?
Mr. Charlebois: Absolutely. Right now, we talk often about retail prices. Wholesale prices in Canada are slowly falling behind compared to the U.S. We’re less competitive than we were 10 years ago. The last thing you want to do is to adopt a bill like Bill C-282, which likely could make the agri-food sector less competitive.
Senator Coyle: Professor Paris, this is for you. I think your last point was around precedent setting. Could you expand a little further on that?
Mr. Paris: As I said, in principle, this bill raises the question of if this sector should have its arrangement essentially legislated into this act, then why shouldn’t other sectors? The common-sense answer most Canadians would give is they would want the policies and regulations in relation to one sector to be developed and implemented with an eye to the overall economic interests of the country.
So this seems like a difficult-to-sustain initiative, and for all the reasons I’ve mentioned, for those who say it’s just symbolic, why risk it? It does seem to place constraints that might not otherwise exist on our negotiators. It’s worth noting that in the few instances where additional market access was provided, it was done in the context of only being able to secure and conclude an agreement that was considered to be in the national economic interest, with due compensation, I should add. Why would we want to remove that possibility, which is precisely what this bill is aiming to do?
Senator Gold: First of all, welcome. In an earlier life as an academic, I did an international conference in anticipation of the first free trade agreement, gathering experts from all domains. One of the things that emerged there was that underneath the different positions folks were taking — trade versus protectionism, free trade versus regulation — there were some underpinning, often not articulated ideological assumptions, whether we’re looking for the aggregate good or the distributional equity, et cetera. There are winners and losers in capitalism regulated to one degree or another.
I’m wondering if you would share with us your understanding of that. The testimony we heard as recently as today but also before is that certain sectors are easier targets in negotiations and that there are real social consequences to the smaller farms, notwithstanding that we are a trading nation and require an overall access to markets given our size. There are two sides to that coin. I’m wondering if you would share your own points of view on this and how visions, economic or ideological, inform this debate and, indeed, the positions you’ve taken. That’s not brief. I’m sorry.
The Chair: All three witnesses?
Senator Gold: Anyone who wants to contribute.
Mr. Charlebois: I’ll be brief to allow my colleagues to respond.
Bill C-282 prevents us from having that exact debate. What do we do with agriculture? How do we support it? Right now, we’re making the assumption that supply management is the perfect policy. Let’s protect that and see what happens.
Mr. Walker in the other panel said that trades are not a zero‑sum game. I kind of disagree with that because I actually do believe that it is a zero-sum game for many politicians and governments around the world. Mr. Paris just mentioned it. We’re likely to face a more protectionist regime around the world, so we need to be careful with the signals we send to the rest of the world as a result.
Senator Gold: Professor, you’ve been clear in your writings about the criticisms you have of supply management. The methodology on your paper to which you referred was questioned by Jodey Nurse from McGill University, who studied supply management. We all come with our attitudes, myself included, so it’s not a criticism. But I think the debate has taken on a kind of flavour with some fundamental assumptions, philosophical and economical, that are simply not being put on the table.
Mr. Charlebois: Dangerous assumptions are made when there is no information and where there are information gaps. That’s what we’re facing right now, as far as I’m concerned.
Senator Gold: Thank you.
Senator MacDonald: Professor Charlebois, I’ve been reading of late your informed opinion on supply management with great interest. You and some others have suggested that our dairy supply management system incentivizes dairy farms to exceed their quota and discard excess milk rather than underproduce and lose revenue. What short-term measures would you advise that could make that system better without jeopardizing the stability of the system and of these farms and give the people who run the farms and in the dairy industry the comfort level they need?
Mr. Charlebois: That’s a very good question, senator. If you really want to make supply management work, reform the CDC, the Canadian Dairy Commission, first. Its governance needs to change. It’s a Crown corporation. It’s owned by Canadians. That needs to change.
Second, I would certainly look into how quotas are allocated around the country. Regions have actually lost as a result of supply management. When it was established in 1972 in dairy, the intent was to protect family farms in the country. In Nova Scotia, my home province, we had 800 dairy farms in 1980; we’re down to 150 and barely any processing left. We lost it all to Quebec. That’s why it has become such a political issue. It’s all concentrated in one or two provinces now. You want to serve the entire country equally with supply management, and it’s not being done right now.
Senator MacDonald: I have one quick follow-up. What would be your long-term approach to supply management then? You mentioned the CDC. It’s probably not the only Crown corporation that has to be looked at in this country.
Mr. Charlebois: That’s another discussion.
The Chair: It is another discussion. We’re looking for a quick response here.
Mr. Charlebois: Quickly, with the University of Guelph, we did produce an article called “Supply Management 2.0” to make supply management more competitive for dairy. It has been published for two years. I can submit it to the Senate.
Senator Busson: I’ll be quick. I have to thank all three experts; I’m in awe of the kind of information you’re bringing here. For a neophyte on trade issues, it has been incredibly informative. I think I’ve got it wrapped up in layman’s terms. It’s a very sophisticated issue around negotiations, but I hear words like “bull’s eye” and being “held hostage” and people having their “hands tied behind their back,” which are things that trigger another life that I lived another time. That’s another story.
Am I right in saying that the analogy to this, with Bill C-282, would be that we’re not only sending our negotiators there with their hands tied behind their back but also making an announcement of where all their soft spots are and what they can’t do? It’s a double whammy, this legislation. Not only are things off limits, but we’ve told everybody it’s off limits. There are two bits of damage being caused to our negotiating ability.
Mr. Fried: I think my mentor, former ambassador John Weekes put it well: You keep firm and you know what your limits are, but you play that out quietly and not in public view. You need that dynamism. I tried to complement that by saying, given the direction given by Parliament and by stakeholders at the start of negotiations, we already know at the table, and so do our partners. If anything, it is back to asking why put a spotlight on it.
Mr. Paris: I would come back to where I started, which was with this consideration of a national interest. The agricultural sector, farmers, ranchers and people working in the agricultural sector in this country are not just an important part of the Canadian economy; they’re part of our social fabric. They are our compatriots. In some cases, they are our neighbours. But we have other compatriots, other neighbours and people working in other sectors, including other parts of the agricultural sector. Their interests also need to be taken into account. I’m afraid that this bill aims — if you’ll excuse the expression — to trump that consideration in discussions that may be coming up very soon.
The Chair: Thank you very much. I’m glad you used that as a verb, Professor Paris.
On behalf of the committee, I would like to thank our witnesses — Sylvain Charlebois, Jonathan Fried and Roland Paris — for their testimony today.
[Translation]
I’d also like to thank the visitors in the room, Quebec farmers.
[English]
Colleagues, we will reconvene tomorrow at 11:30 in this room to complete hearing from witnesses on our study of Bill C-282.
(The committee adjourned.)