Department of Foreign Affairs, Trade and Development Act
Bill to Amend--Second Reading--Debate Continued
November 30, 2023
Honourable senators, one of my earliest memories from my first few months as a senator — back in 2018 — was a briefing that we received from senior members of the Canadian diplomatic team involved in the negotiation of the Canada-United States-Mexico Agreement, known on this side of the border as CUSMA. The briefing drove home to me how extraordinarily difficult it had been for Canada’s trade negotiators to obtain any kind of workable deal with the Trump government, given the unpredictable, obstructionist and protectionist nature of the Trump regime.
CUSMA was signed on November 30, 2018 — five years ago today — and came into force in 2020. The deal is subject to review every six years, which means that our negotiators will soon be immersed in the difficult task of trying to obtain and keep the best possible outcome for Canadians, with no way to predict the outcome of the contentious and fateful 2024 American presidential election.
What we can say is this: It would be a grave tactical error to send out Canadian trade negotiators to deal with this historic moment with one hand tied behind their backs. Our negotiators are going to need every bargaining chip and every tool at their disposal to protect the economic and political interests of this country.
That is just one of the reasons I rise in the chamber today to oppose Bill C-282, An Act to amend the Department of Foreign Affairs, Trade and Development Act (supply management). This protectionist legislation would send Canada to the bargaining table at a distinct disadvantage by making three sectors of Canada’s agricultural economy off limits, denying the government its prerogative to get the best possible deal by making supply-managed goods sacrosanct.
Under the terms of Bill C-282, the Minister of Export Promotion, International Trade and Economic Development would be forbidden to make any commitment on behalf of the Government of Canada by international trade treaty or agreement that would have the effect of increasing the tariff rate quota applicable to dairy products, poultry or eggs or reducing the tariff applicable to those goods when they are imported in excess of the quota. The effect of this would be to make our dairy, poultry and egg sectors untouchable and supply management inalienable. It would not only hamstring and hamper the ability of our negotiators to get the best possible deal for Canadian exporters and importers at CUSMA, but it would undercut Canada’s position as an international champion of free trade around the world and undermine our ability to fight protectionist policies that discriminate against us. This will hurt us not just in trade negotiations with the United States and Mexico, but with all our future negotiations and trade deals with Europe, Asia, Latin America and the Indo-Pacific.
In the words of the Canadian Agri-Food Trade Alliance:
Tying the hands of trade negotiators before negotiations even begin will result in less ambitious outcomes across the board as other countries will follow suit and exclude products or sectors from discussions where Canada has offensive interests. . . .
Then there is the issue of the precedent this sets within Canada. How long will it be until other economic sectors also ask to be excluded from trade talks, undermining the ability of this government or any future Canadian government to bargain holistically for the good of the whole nation and not to play favourites or court regional interests? If we send out this loud signal that protectionism isn’t just acceptable but is desirable, we could erode the national and global consensus around free trade, which would be uniquely self-destructive for Canada.
Canada is a country with a huge export economy and a small population — 67.5% of our gross domestic product is reliant on trade. Free trade matters to us and to our future prosperity in the way it does to few other nations. We are the world’s largest exporter of wood, aluminum, potassium fertilizer and canola seed and oil. Our top exports, meanwhile, are petroleum, cars, gold and wood, sold primarily to the United States, China, Japan, the United Kingdom and Mexico. In 2022, we exported about $93 billion in agriculture and food products around the world.
In order to survive and thrive in a hard-nose international trade system, we need to be a clarion stalwart voice in favour of free trade, because if the world’s economy becomes bogged down with a morass of tariff and non-tariff trade barriers, it will be particularly devastating for us as a trading nation. We frankly aren’t a big enough economy or a big enough population to win a global game of tit-for-tat. If we adopt protectionist policy in this part of our agricultural economy, we can expect retaliation and pushback in turn.
How can we fight, economically or politically, once we cede the moral high ground? It would be impossible for us to demand that others reduce their tariff barriers without looking either like hypocrites or like the most naive of neophytes. Adopting this bill could, in the short term, prompt many of our trading partners to respond with threats to refuse to extend or modernize existing trade agreements. In the long term, it would erode our international respect on the world stage. If we want to be leaders in places such as the World Trade Organization, we have to have clean hands when we are advocating for a free and rules-based trade system.
Allowing the creation of these bespoke exemptions for particular sectors, and via a private member’s bill no less, would unalterably undermine our credibility on the world stage and the credibility of the government, too. Who, after all, is writing Canadian trade policy? Is it the elected government or a third-place political party which only cares about the interests of one province and not the interests of the country as a whole?
I speak today both as an Albertan and as Deputy Chair of the Standing Senate Committee on Agriculture and Forestry. For my own region of the country, we export not just petroleum but canola, wheat, pulses, beef, pork, oats and barley, among others. In 2022, according to provincial data, Alberta exported $206 billion worth of goods to market. While energy exports were the largest proportion, we also exported $16.2 billion worth of agricultural products. Alberta’s four largest markets were the United States, Japan, China and South Korea, and Alberta exports were way up last year in all four markets, by 50% in the United States and by 343% in South Korea.
Tit-for-tat reprisal tariffs against agricultural products such as canola, wheat, beef or pork could be a body blow to the economy of Alberta and the entire Prairie West. We need to ask: Do we really want to pit agricultural sectors in this country against one another or regions and provinces against one another? We must not feed into the toxic discourse of Western alienation and Western separatism by creating the impression that we are sacrificing the interests of one half of the country to protect the other.
Honourable senators, at heart, this isn’t an agricultural bill. It’s a trade bill. It’s not only agricultural products from my home province that might get caught in the crossfire. What might be the consequences of this bill on exports of automobiles from Ontario or seafood from Atlantic Canada or lentils from Saskatchewan or wood and wood pulp from British Columbia? Then consider this: What would be the long-term impacts for Quebec, which exports everything from aluminum and platinum to aircraft, turbojets and flight simulators? I’d argue it would be a poor bet for Quebec’s economic future to put a sanitary cordon around three agricultural products, thus putting at risk the future of Quebec’s other exports.
Let’s not forget the value of the export market to our supply‑managed goods. According to Statistics Canada, in 2022, Canada’s dairy sector exported products ranging from milk to cheese to ice cream to whey protein worth $506 million. About 60% of that went to the United States, with another 17% being exported to African markets. And we’re on track for even better numbers this year. Between January and September of 2023, Canada exported some $366 million worth of dairy products around the world, to everywhere from Australia to the Netherlands to Malaysia. This is good news, not bad news, for Canada’s dairy producers. It would be wildly counterintuitive to risk losing access to those export markets by adopting a protectionist policy that might well make others retaliate in kind.
We export our poultry, too. According to data from the Observatory of Economic Complexity, or OEC, Canada exported $226 million worth of poultry products in 2021. In August 2023 alone, Canada exported $22 million worth of poultry products, and more than half of that was poultry produced in Quebec. The main export markets for Canadian poultry were the United States, Gabon, the Philippines, Mozambique and Guinea, with the Philippines being the fastest-growing market for Canadian poultry exports.
We should be fighting for access to those markets, not slamming the door on future trade opportunities. At a certain point, we have to trust in our expert, proven trade negotiators to get the best possible deal for Canada at every trade talk and have confidence that they won’t sell out our poultry, egg and dairy producers.
Let’s go back to CUSMA, which did create a few concessions in the dairy sector, but which largely protected Canadian production. Just last Friday, November 24, a three-person CUSMA trade tribunal rejected an American complaint that Canada was improperly limiting access to its dairy market. In a two-to-one decision, the panel denied the United States four different allegations against Canada. In other words, far from selling out Canada’s dairy sector, the strategic concessions with CUSMA negotiators used as leverage have still largely protected supply management. But if we pass Bill C-282, we deny our negotiators the strategic agency to make such limited concessions and to leverage the best possible deal.
Finally, we come to the somewhat fraught issue of whether we have the right to oppose, amend or defeat a private member’s bill. During the heated debate over Bill C-234, there were those who argued we had no right to defeat or even amend the bill because it had been passed by the majority of members of the House of Commons. That was and is a dangerous argument to make because, of course, some of the very same agricultural lobby groups and senators are now hoisted on their own petard for making that case. By the same token, some of the very same senators who tried to amend or defeat Bill C-234 will likely now argue that we cannot touch Bill C-282.
Well, my friends, while I do believe that a foolish consistency is the hobgoblin of little minds, I am proud to say that on this issue, at least, I am being wholly consistent.
Let me quote to you what I said in my speech about Bill C-234 a few weeks ago.
. . . it is not the job of the Senate to accept and pass private members’ bills without study and possible revision. If anything, private members’ bills require more thought and study, because they don’t always receive such scrutiny in the other place where partisan politics can play more of a factor than they sometimes do here. Just because a private member’s bill wins enough votes to pass in the other place doesn’t mean we should rubberstamp it here. We should hold it up to at least as much study and scrutiny as any government bill.
Those words were true about Bill C-234, and they’re every bit as true about Bill C-282. It is incumbent upon us as the upper house to hold bills like these up to strict scrutiny, precisely because we are appointed and not elected and thus freed of the need to do what is popular instead of what is right.
We are here on purpose to take the long view. We are here to consider the best interests of Canada: all of Canada. Now, we can certainly disagree sometimes about what those best interests are, but we can’t hide behind some excuse that private members’ bills are, themselves, sacrosanct.
It is our job to do our job: to study and debate this bill fully and fairly, to hear from witnesses, to bring our individual expertise to bear and to treat this as the serious foreign policy issue that it is.
Thank you, hiy hiy.
Would Senator Simons agree to a question?
Senator Simons, you said that Bill C-282 would tie our negotiators’ hands in terms of signing trade agreements. However, as I mentioned in my speech at second reading, many countries protect some of their key sectors. Our American neighbours are doing that with sugar, using their Farm Bill. In your opinion, is it fair to say that, because of that desire to protect sectors, certain powers such as India — which protects its sugar — Japan and the United States have not been able to negotiate decent trade agreements?
That would be my first question.
I understand your question, but it will be easier for me to answer in English.
This is precisely the problem that I’m talking about. Canada suffers tremendously from the protectionism of other countries, but the way to fight that is with trade liberalization.
If we play the same game, we are too small an economy to win any kind of tête-à-tête back and forth, if we want to come to world trade negotiations with clean hands and say we don’t like protectionism: protectionism is bad for the world economy; protectionism has been proven over the course of centuries to slow the progress of people’s lives. Free trade has been a great way to raise living standards around the world. The last thing we want to do is take part in bad public policy.
Senator Simons, I have two other senators who would like to ask questions. Are you asking for five more minutes?
If honourable senators would like me to ask for five more minutes, I will ask for five more minutes.
Is it agreed, honourable senators?
May I ask a question, Madam Speaker?
Senator Dagenais, leave was not granted for additional minutes.
Well, this seems like a new kind of democracy.
I won’t raise a question of privilege over it since we’ve already lost enough time. For once, I had a question to ask, which doesn’t happen very often, but I’m being prevented from asking it. I think that is a shame.
Honourable senators, I am not on the scroll to debate today, but I thought I would join the debate now, in part because I was originally going to speak on Bill C-234 at third reading. I had my speech ready, but the vote has been deferred and I can’t do it today. I can’t do it next Tuesday either. I’m hoping I can speak the following Thursday and would ask you for your indulgence and give me that chance.
To show that I have good faith in using my time in this chamber, I am going to do somewhat of an extemporaneous speech on Bill C-282.
I want to tee off from Senator Simons’s reportage on the CUSMA panel decision last week which she accurately described but, with respect to her, I’m going to give more colour to that decision.
You will recall from her speech that the three-person panel ruled in favour of Canada on the question of whether Canada is appropriately managing its tariff rate quotas, or TRQs. This is the system whereby, above a certain quantity of milk, cheese or poultry, a very high tariff kicks in.
Canada and the United States negotiated a way of managing TRQs that would allow for American suppliers of milk and cheese products within the quota to enter the country without paying very high tariffs. Canada did it in such a way that essentially allowed the processors in Canada to decide what could be brought in from the United States, excluding, in large part, the ability of retailers in Canada to make that decision.
You can see the strategic thinking behind that move, because it puts the processors — the supply managed farm sector — in control of what comes in, presumably so that there is less competition for them. That’s my interpretation of why they have done that.
The Americans lost that argument; this is the second time they’ve lost the argument. It would appear that the decision, this time around, is decisive.
Senator Simons is correct in saying that this is, on the one hand, proof that our negotiators are looking after our supply management industries. They engineered wording in CUSMA to allow them to give the privilege of importing TRQs — below quota product — to processors to the exclusion of retailers. Shame on the Americans for not picking it up.
But do you think they are oblivious to this sleight of hand after the decision? Do you think they don’t understand now that they were duped — that a fast one was pulled on them? Do you have any doubt that in 2025, when the mandatory review of CUSMA comes up, the first thing on the Americans’ agenda — or high on their priority list — will be that they are going to renegotiate this provision? “You duped us. Congratulations. You won the first two rounds, but you’re not going to win the third round.”
The way in which they’re going to do that, colleagues, is by referring to another deal that we signed which, in fact, doesn’t have that clever wording. In fact, it has different wording allowing retailers to have control over below-quota allocations: and that, of course, is the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA.
Many of us were here when we debated that legislation. There was fierce debate. I remember the processors arguing strongly against that clause, because they wanted to control the import of milk and cheese products from Europe.
However, in the end, in order to get CETA done — this is the key point — not in order to sell out supply-managed sectors, the government allowed for a limited number of retailers to bring in product directly.
In contrast, the other major deal we have negotiated in recent years, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, doesn’t have the provision for retailers to import directly, and that’s why we are in conflict with New Zealand over that very measure. Because CPTPP is an “open accession” agreement, in other words, any country can apply to join if they meet all of the conditions that other countries have signed onto, this is an ongoing process of negotiation both with potential new entrants as well as with the current membership of the CPTPP. Some of you will know that the United Kingdom is now a Pacific country because they joined CPTPP a few months ago, and we had to negotiate with them in order for that to happen.
My point is simply that both in the case of CUSMA, which has a mandatory review mechanism, and in the case of CPTPP, it is certain that we’ll have to deal with this issue again of how we deal with TRQs on milk and dairy and other supply management issues in exchange for concessions that we seek in markets that we are negotiating with, such as the Philippines when it comes to milk or Indonesia when it comes to beef and so on and so forth.
Senator Simons’ point about maintaining flexibility for negotiators is not hypothetical. It is real, and the great irony of our victory a few weeks ago over the United States is that it actually makes it a sure thing that it will be an issue for us.
Colleagues, this bill is not principally about the merits of supply management. I don’t want to go too deeply into that question, but it is on public record that I don’t get Christmas cards from the Dairy Farmers of Canada, and it is because my reading of supply management sectors is that while they do look after farmers in those sectors, it is at the expense of consumers, particularly poorer consumers. Studies have shown that supply‑managed sectors lead to higher costs compared to international prices and that they are regressive. They hurt lower‑income people more than they hurt the wealthy.
Removing some of the protections for supply management, but not dismantling them — for example, through CUSMA, CPTPP, CETA and maybe other trade agreements — in a limited way does reduce the market share of supply management farmers because there will be import competition, but it doesn’t reduce the income because that is the nature of supply management. It doesn’t necessarily reduce the income because the whole logic of supply management is income maintenance, and you maintain income by reducing supply. It’s basic economics.
If you’re going to get more product in, you want to reduce supply of the product you can control so prices will go up and you can maintain the incomes of the farmers who produce those products.
That system can work and continue to help farmers to stay in the business as long as they want to, in part because the consumption of dairy products is on the decline. This has been a trend for a number of decades now. We can like it or not like it. That’s normative, but the fact is there are many younger people who are shifting away from dairy-based to plant-based milk-type products, and that will allow for some transition of certain dairy farmers to consider their options in terms of the long-term future of their industry.
I will make one more point to build on Senator Simons’ point on the question of exports. She is absolutely right that there are promising markets, particularly in Asia, for some of our supply-managed products. I’m thinking especially of eggs because we have a really fascinating diversity of egg products in our grocery stores. It’s confusing sometimes when you go to the fridge and you look at the five or six permutations of free-range and omega and omega plus and brown and white and so on, but these are highly desirable options in fast-growing, middle-income countries that want to upgrade their dietary choices. Exports are very low in supply management sectors precisely because of supply management, precisely because there isn’t enough supply to allow for exports. It, in fact, discourages the exports of those products, and there is really no reason to expect that the supply management industries themselves will seek to expand exports in a very major way unless some pressure, if I can put it that way, is placed on them.
We saw this in the wine industry after, first, the Canada-U.S. Free Trade Agreement in 1979 and then the NAFTA agreement in 1984. Some of you will remember infamous Canadian wine products like Baby Duck. Let’s say that sommeliers did not recommend Canadian wine products in the 1980s and even the early 1990s. There were predictions of the demise of the industry. Many people were genuinely worried that we would no longer have winemakers in Canada, and it’s true that many wineries did go under as a result of competition from American producers, but as we all know, that industry has turned around. Inefficient producers have gone out of business. More efficient producers have cropped up, literally, and we now have many wines to be proud of in my own province of B.C. and across the country as well.
I want to thank Senator Gerba for her passion in supporting this bill. She has worked extremely hard, and her heart is absolutely in the right place in supporting dairy farmers and others.
I cannot support this bill, even though I want us all to remember that this is not about dismantling supply management in any way. It is about encouraging a shift in competitiveness for our supply management sectors. It is about making sure we can support our other export industries in trade negotiations and providing the flexibility for our negotiators to do so.
Would Senator Woo take a question?
Thank you, Senator Woo.
Senator Simons said herself in her speech that a lot of other products have been exported. Supply management has been in place for 51 years, and it has never prohibited or prevented the export of products. What’s different is that supply-managed products aren’t always exportable. I don’t think it is entirely accurate to say that farmers can’t access the market. Eggs and milk can’t be frozen. Anyway, what do you think about the motions that were moved in the other place, seeking to protect certain products, and that were defeated every time?
Thank you for the question, Senator Gerba.
You’re right that there is not a lot of export, in part because the product we have is oriented to the domestic market, but that’s exactly what supply management seeks to do. It seeks to contain and cater to the domestic market by ensuring that supply meets domestic demand. To the extent that there is some surplus that can be exported, the very nature of the system mitigates and militates against exports.