AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, February 5, 1998

• 0905

[English]

The Chairman (Mr. Joe McGuire (Egmont, Lib.)): Good morning, everyone. Today we would like to welcome Mr. John Klassen, director general in the Department of Foreign Affairs and International Trade, on the EU ban on beef importation.

You'll see, members, you have a general discussion paper on WTO situations here, then another on the particular item we'll be discussing this morning. The WTO is a topic we as a committee have decided to pay very close attention to during the next couple of years. In reference to that, we thought we might start off this morning with the European ban, just to get us broken into the topic and to see where everything sits with trade under the WTO as far as Europe is concerned.

Welcome, Mr. Klassen. I think you're going to be the spokesperson this morning and the rest of your entourage are going to be your back-up. Is that the way you have it organized?

Mr. John Klassen (Director General, General Trade Policy Bureau, Department of Foreign Affairs and International Trade): Yes, Mr. Chairman.

The Chairman: We'll begin your presentation.

Mr. John Klassen: Thank you, Mr. Chairman. What I propose to do is to make a brief opening statement summarizing where we're at on this case. Before I do that, with your permission, Mr. Chairman, I would ask the people who are here at the table with me to introduce themselves and the departments they represent so the members know who is here in support.

Mr. Peter Pauker (Manager, International Liaison and Science Policy, Department of Health): Peter Pauker, Health Canada.

Mr. Michele Brenning (Senior Trade Policy Analyst, Eastern Hemisphere Division, Department of Agriculture and Agri-Food): Michele Brenning, Agriculture and Agri-Food Canada.

Mr. James Stringham (Counsel, Trade Law Division, Department of Foreign Affairs and International Trade): James Stringham, Trade Law Division, Department of Foreign Affairs and International Trade.

Mr. Charles Craddock (Director, Eastern Hemisphere Division, Department of Agriculture and Agri-Food): Charles Craddock, Agriculture and Agri-Food Canada.

Mr. Blair Coomber (Associate Director, Policy and International Affairs, Canadian Food Inspection Agency): Blair Coomber, with the Canadian Food Inspection Agency.

Mr. John Klassen: And we have more support in the back, Mr. Chairman, so we can try to anticipate any question the members might pose to us.

First let me summarize where we're at following the panel, and more importantly the decision from the appellate body that came out recently.

To back up just for the information of those who haven't been following this too closely, perhaps, it was in 1989 that the European Union banned the use of growth-promoting hormones in livestock and imposed a ban on importation of meat derived from cattle treated with those hormones. Both Canada and the United States consistently opposed the import ban on the grounds that it was not based on scientific evidence and therefore constituted an unjustified barrier to trade.

The conclusion of the Uruguay Round, which occurred in 1995, gave us the opportunity to challenge the consistency of the EU ban under a new agreement known as the Agreement on the Application of Sanitary and Phytosanitary Measures, or the SPS agreement, as we call it for short. During the Uruguay Round countries including Canada and the European Union negotiated the SPS agreement, whose aim is to ensure that while countries have the right to provide the level of health protection they deem appropriate, they should not be permitted to misuse sanitary measures as a disguised restriction on trade.

The safety of five of six of the growth-promoting hormones at issue was endorsed in June 1995 by the Codex Alimentarius, an international body established to set and harmonize food safety standards. The Codex Alimentarius determined that these hormones did not present a risk when used according to good veterinary practices. In addition, Canada conducted its own review of growth-promoting hormones and found them to be safe when used in accordance with good veterinary practices.

About the hormone MGA, for which there is no international standard, we, Canada, again conducted a review on the safety of MGA in livestock production and approved its use in 1998. The United States also permits the use of MGA.

• 0910

In July 1996 we held formal WTO consultations with the European Union regarding their ban on imports. The consultations were unsuccessful in resolving the dispute and we requested the establishment of a WTO dispute settlement panel. The panel was established in October 1996. The U.S. had requested the establishment of a WTO dispute panel earlier to examine the same issue.

The panel released its report in August 1997 and it was favourable to Canada. The panel found that the European Union had violated some provisions of the SPS agreement—the sanitary and phytosanitary measures. More specifically, the provisions related to risk assessment, international standards, and consistency of SPS measures.

The European Union exercised its right under the new dispute settlement understanding that came out of the Uruguay Round to appeal the panel report to the appellate body, and this was done last September. The appellate body released its report on January 16, 1998, and it modified the original panel findings but still concluded that the European Union had not based its measure on a risk assessment. As a result, the appellate body also found that the European Union did not meet the conditions for deviating from international standards as set by Codex Alimentarius. The appellate body did, however, open more widely the possible definition of risk assessment. In so doing, it went back a bit on what the panel itself had decided. This is the source of the debate, or one of the points of debate, that we will be having with the European Union.

The next step in this process is for the dispute settlement body, the WTO, to adopt the appellate body report, and this will be done next week in a meeting in Geneva on February 13. After the report is adopted, the next move will be for the European Union to tell us what are its intentions with respect to implementing the conclusions of the report. They will have thirty days to do so.

The first issue that will come up is one of timing. Under the WTO rules the European Union has what is called a reasonable period of time to comply with the ruling. Looking at past practice in the WTO, a reasonable period of time should not exceed 15 months. Canada expects—we expect—that within a reasonable period of time the European Union will take appropriate action to bring its measures into compliance with the ruling and to lift its ban.

I would say, Mr. Chairman, that throughout this long issue the Canadian industry and the provinces have been fully consulted and have been kept fully apprised of the developments of the case. I think it is fair to say that they have been very supportive of the work we have been doing and that they understand the complexity of this case, which is indeed a very complex one and the first one to come out of the new WTO procedures dealing with the SPS agreement.

I'll stop there, Mr. Chairman. I think the members were also given some background information, with some questions and answers and further information. We're quite happy to answer questions.

The Chairman: What part of Canada do most of our beef exports to Europe, or that would have gone to Europe, originate from?

Mr. John Klassen: They would come mostly from western Canada, I believe, Mr. Chairman, but Chuck may have some more detail.

Mr. Charles Craddock: They would have probably come from western Canada. We were exporting a small amount, and we are still exporting some, but it would be mainly Alberta—but the western provinces, with some from Ontario as well.

The Chairman: We'll go right to questions.

Mr. Hill.

Mr. Jay Hill (Prince George—Peace River, Ref.): Thank you, Mr. Chairman. I thank the delegation for appearing this morning and trying to enlighten us.

First of all, I guess I should say congratulations. I think it's a pretty important win.

In layman's terms, could you explain to me...? You talked about the five different hormones. Four were together and then you mentioned MGA. What sets it apart from the other four?

• 0915

Mr. John Klassen: As I understand it—and I will bow to the experts that I have here with me—four have standards that are set by Codex Alimentarius, the international standards-setting body for food additives, that sort of product. The MGA does not have a Codex Alimentarius standard, but it has been tested by Canada and by the United States and is approved for use in Canada and the United States. That's the difference between—

Mr. Jay Hill: So that's why it was easier for the four to clear the hurdle and the other not to?

Mr. John Klassen: I don't think they particularly cleared a hurdle. I think in terms of the panel treatment, or even the appellate body treatment, they were treated more or less in the same way.

There is a question in the panel finding of whether or not the union is respecting international standards. There are those four that have an international standard. The fifth does not, but our argument was that, even though it hasn't yet got an international standard, it is perfectly safe based on the testing that we and the United States have done.

Would my experts care to elaborate on that? No? Okay.

Mr. Jay Hill: My understanding is that this is an important win, at least at this point, for Canada. Can you maybe enlighten us as to how much this amounts to in dollar terms? What was our traditional trade before this ban was put in place?

Mr. John Klassen: I believe that before the ban was put in place we were exporting in the order of $9 million a year. Then, with the ban, trade had dropped off to, I think, a little bit over $1 million a year in exports.

Mr. Leon E. Benoit (Lakeland, Ref.): Is the precedent that is set the most important part of what this ruling means, that the panels really will rule based on evidence and say that in fact countries that are denying access have to show good scientific evidence that the product shouldn't be allowed in?

Mr. John Klassen: Yes. Both the panel and the appellate body said that you have to have a good scientific risk assessment done in order to justify the measures that you take. What the appellate body did, in going a bit beyond what the panel said, was expand a bit the definition of risk assessment. So, for instance, risk assessment could now concern not just the level of residue, say, of a hormone in the beef in this instance but also whether or not there are good veterinary practices.

For instance, you might agree that at so many parts per million, or however it's measured, a hormone is safe, but you might say, “Can we rely upon your exporting country? Do you have adequate veterinary controls, practices, those sorts of things? Can we rely upon you to guarantee to us that this is what the levels will be?”

Mr. Leon Benoit: Was part of their argument, then, that Canada has non-veterinarians administering these products to livestock?

Mr. John Klassen: I don't know how much that was a part of the arguments. Since he was engaged in presenting that, I would ask Mr. Stringham to reply to that.

Mr. Leon Benoit: Or did they show concern about the possibility that it wouldn't be administered according to the label, for example?

Mr. James Stringham: I think it's fair to say the EC raised a number of questions initially before the panel. Questions of control and testing were amongst those. As Mr. Klassen has elaborated, the appellate body disagreed with the finding of the panel that those issues weren't to be dealt with in a risk assessment. The appellate body found that they should be, but then went on to find that, having said so, the Europeans had not provided any evidence before the panel to the effect that there were problems along those lines. Therefore the risk assessments that they had provided did not show any problem in those areas.

Mr. Leon Benoit: So they now give at least 15 months to the Europeans to come up with a plan for dealing with this. Is that it, or what's the time for?

Mr. John Klassen: They have to tell us within about six months what they intend to do. The 15-month period, which is adjustable—it's not a hard and fast rule, but it is becoming sort of the standard—is the period within which they should implement what they plan to do. But it is within six months, and clearly there would be discussions on this through the dispute settlement body in Geneva. They have to confirm to us what it is they plan to do, and they have a bit more time actually to implement the measures.

Mr. Leon Benoit: In the meantime, can Canada take any retaliatory actions?

Mr. John Klassen: Not under the rules of the dispute settlement understanding. Not until we will have run through this process.

• 0920

If at the end of the process there is severe disagreement or if we feel they have not taken the measures that they have to in order to bring their measures into conformity in accordance with their obligations, then there is a procedure to obtain authority to retaliate. But you have to exercise—

Mr. Leon Benoit: How long would that complete process last? Would it last from the time one country first applies for a panel hearing to the time a country can use retaliatory action, until the country that has been ruled against, let's say, actually must comply? What is the total time period?

Mr. John Klassen: James, what would it be?

Mr. James Stringham: The time lines set out in the dispute settlement understanding, which is the agreement that governs how disputes are to proceed in the WTO, anticipate that from the time a panel is established to the time the appellate body, which is the second level of court, if you will, renders a decision should be no more than one year.

That's the stage we're at now. The appellate body report will be adopted by the WTO as a whole at a meeting on February 13. The EC then has one month to tell us how long they intend to take to meet the recommendations of the panel and the appellate body, and then, as Mr. Klassen elaborated, there's a reasonable period of time for them to implement their changes.

So you have one year on average, let's say, for the dispute to run the course of the courts and then another 15 months plus 1 or 2 months for the reasonable period of time to have expired. At that point the country is supposed to have brought its measures into compliance if in fact it's been found through the panel process that it wasn't in compliance.

Mr. Leon Benoit: Is that time line compressed if, let's say, a panel feels the ruling on one product can be applied to a related product? For example, would this have any impact at all on the ban—I don't know if it's really a ban—the Europeans have put on genetically altered canola? Would it have none whatsoever? You can't relate the two in any way? First of all, can the results of one hearing be applied to similar products? And how closely related would the products have to be?

Mr. John Klassen: First, sir, with respect to the genetically modified organisms, there is no ban. They simply haven't been approved yet for use. It may be semantics, but it's not formally banned.

Mr. Leon Benoit: Yes.

Mr. John Klassen: On the question of retaliation, our whole focus now—and our expectation—is that the European Union will bring its measure into conformity with its obligations. We are not building towards retaliation at this point, and I think—I can be corrected if I'm wrong—that in all the panels that have come out and in appellate body decisions since the end of the Uruguay Round, offending members have brought their measures into conformity with their obligations. Nobody has had to go to the extent of seeking authority for retaliation.

So that option is there in the process, but it is very much our expectation that—and we'll be working very hard through the bodies in Geneva for this—we will have the European Union bring their measures into conformity and allow the trade to resume.

Mr. Leon Benoit: Trade in meat between Europe and Canada is quite small relative to our market. Are the results of the panel and then the appeal expected to have any impact on any other trade at all?

Mr. John Klassen: Not directly. I think there will be a precedent value or an impact in the sense that this is the first panel to adjudicate or to look at the questions relating to the SPS agreements, the sanitary and phytosanitary agreements.

This is an area of trade where there are an increasing number of, shall we say, difficulties. We are engaged in a panel against Australia on the export of salmon, for instance. I think in that instance this report will have an important effect on how we interpret the SPS agreement, but I don't see any direct effect on our other export interests to the European Union at this time.

Mr. Leon Benoit: I guess you get a few of these panel hearings dealt with and countries trading will get a pretty good idea of how they're going to be handled.

Mr. John Klassen: That's right. You start to get a sense of how the agreement is being interpreted and of just what sort of leeway you have.

Mr. Leon Benoit: Thank you.

[Translation]

Mr. Jean-Guy Chrétien (Frontenac—Mégantic, BQ): Like my colleague Jay Hill, I would also like to express my great satisfaction with this victory, which should be decisive and final, against the European Union regarding our beef exports.

• 0925

However, I am always surprised when people talk about growth hormones. If you were to survey our own consumers in Canada, I don't think that more than 5% of them would answer that they know Canadians consume beef produced with the aid of hormones. Would you agree or disagree with that?

[English]

Mr. John Klassen: If I may, sir, I would ask Mr. Coomber from the Canadian Food Inspection Agency to respond to that question.

Mr. Blair Coomber: I'm sorry, sir, but I missed the first part of your question.

Mr. John Klassen: Are Canadians aware that—

[Translation]

Mr. Jean-Guy Chrétien: Very few Canadian consumers know that we eat beef produced with growth hormones. Would you agree with me?

[English]

Mr. Blair Coomber: Yes, I'd probably agree that Canadian consumers don't have a high awareness of the hormones in food. I think the fundamental difference between the Canadian system and probably what's going on in Europe now is that Canadians still have fairly significant confidence in our regulatory system, in our ability to manage food safety and to ensure that the foods going to consumers are safe. I think that confidence level may be somewhat less in the European Union as a result of things like BSE over the past number of years.

[Translation]

Mr. Jean-Guy Chrétien: BSTr exactly.

This leads me to my second question. More and more is being imported into Canada under a tariff number different from the one I would like to see being used, with the result that increasingly large quantities of butter oil are being imported in the country. At the present time in Canada, BSTr is prohibited because there are still some small doubt about its effect on human or animals. If a country were using BSTr and exporting butter oil to Canada, on the basis of this judgement, such a practice could not be challenged or the country in question prevented from exporting butter oil to Canada because BSTr is used in the production process. Am I right in saying that, yes or no?

[English]

Mr. John Klassen: Peter, do you have a view on that?

Mr. Peter Pauker: At this moment, the question of rBST is a bit of a moot one because rBST has not been approved in one way or the other. We have not pronounced ourselves on its safety or lack thereof.

With respect to trade, once we have done so, once we have either approved it or not approved it, then the question the member has posed would come into play. But I'm not a trade expert, so I would defer to someone else to deal with the trade aspects of it.

Mr. John Klassen: One thing I would add, sir, is that in the final analysis it is the importing country that sets the standards it is prepared to accept in terms of health risk. Paying respect to international standards as they are set—I mean, there's not total leeway in this—if, for instance, we were to determine that rBST, or whatever this additive is, is not safe for human consumption, if we banned it in Canada, and if it were then agreed that this is not a safe additive, we would be within our rights to ban imports that contain such a product.

[Translation]

Mr. Jean-Guy Chrétien: I raised both cows and calves. Obviously, in my region growth hormones are not used at all. It may be that beef production in Quebec is not profitable precisely because growth hormones are not used on a large scale.

I would like to make an analogy here. When I had an animal suffering from an infection, I obviously used antibiotics, and when in doubt I doubled the dosage. I did that on my own initiative, and I don't know hardly any farmer who wouldn't do likewise in the same circumstances.

• 0930

Might a beef producer not be tempted, in order to speed up the animal growth, to double the dosage, thus contaminating the meat?

[English]

Mr. John Klassen: I will ask my experts if they have anything to contribute on this, but I think, sir, you touch on an essential point which concerns the European Union and which has come out of this appellate body report; that is, can one rely on veterinary practices in the country that is using these kinds of hormones? As I said earlier, even if it is accepted that at certain levels these hormones, or any other additives, do not endanger human health, can you rely on the veterinary controls being such that you will not exceed those levels? I think we would say that certainly in Canada we have sufficient controls—we have a very good control system here—and we would be able to guarantee that sort of thing. But you do touch on the nub of the question.

[Translation]

Mr. Jean-Guy Chrétien: You referred to veterinary services. You know as well as I that a veterinarian is not on the farm 24 hours a day, seven days a week, when the hormone in question is being injected behind the ear of the animal or elsewhere. Therefore, you have to trust the farmer or the people working for him, who use the hormone. After slaughter, is there a fast and inexpensive way of checking whether the carcass is contaminated by growth hormones?

[English]

Mr. Peter Pauker: We can provide you with a general answer, and then we have with us an expert from the CFIA, the Canadian Food Inspection Agency, and an expert from the Bureau of Veterinary Drugs, who can deal with it on a more technical level, if you wish. In general it can be said that the way the hormones are designed to be used, even if they are abused they would not pose a threat to the consuming public.

That's the general answer. I cannot really go further than that. If you wish to have a more technical answer, I would defer to Dr. Yong or Mr. Trotman.

[Translation]

Mr. Jean-Guy Chrétien: I will conclude on this point, Mr. Chairman. So you guarantee to us that in Canada and Europe there would be no danger if a farmer or producer were to double or triple the normal dosage. That would not poison anyone in the medium or long term. I take that as being accepted. You will of course correct me if I am mistaken.

I have one last short question, Mr. Chairman. Could the European Community find a pretext, even a trivial one, for banning our exports to Europe?

[English]

Mr. James Stringham: I think at this point it would be premature to anticipate what the response of the EC would be. Of course all countries have the right to take measures, and we can't anticipate whether those would be legitimate or not. If they were illegitimate, presumably one would go ahead with taking them on on that. At this point we expect them to implement it, consistent with the recommendations of the appellate body, as Mr. Klassen has stated.

The Chairman: Just to follow up briefly, is there any way to test the animal or to test the meat before it's exported, in case these farmer vets do triple or quadruple dosages? Is there a test that can say there is too much hormone in this meat? Or is it impossible?

Mr. Blair Coomber: Mr. Chairman, if you'll allow me, I'll ask Ray Trotman, from our meat and poultry products division, to give a brief explanation of our residue monitoring system.

The Chairman: Okay.

• 0935

Mr. Raymond Trotman (Meat and Poultry Products Division, Canadian Food Inspection Agency): Thank you, Mr. Chairman.

In Canada, we have a national residue monitoring and control program that measures agricultural chemicals and veterinary drugs used in either crop production or animal husbandry. The national monitoring and control program looks at every chemical used in any way, shape or fashion in, as indicated before, either crop production or animal husbandry, one group of which is the three natural hormones that have been approved for use, as well as the three synthetic hormones that have been approved for use. After the animals are slaughtered, samples are taken, they're administered, and are reported back to us in a central fashion.

The Chairman: Is there a way to tell?

Mr. Ray Trotman: Yes, there is a way to tell.

The Chairman: If the residue test shows that there was too much hormone used, then you wouldn't export it, you wouldn't approve it?

Mr. Ray Trotman: If the residue analysis indicates that the amount of hormone that has been used has resulted in a residue level above what the Department of Health has established as safe and acceptable for use, we condemn the carcass. It's not just not exported, we do not retain it for the use of our own public either.

The Chairman: Mrs. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you, Mr. Chair.

I'm not fully versed on this, so some of my questions may sound ridiculous. I certainly am interested, though.

What triggered this challenge, firstly?

Mr. John Klassen: It was a ban by the European Union on the importation of meats containing growth stimulant hormones.

Mrs. Rose-Marie Ur: They don't use any growth hormones in their production of beef?

Mr. John Klassen: I don't believe so. They are banned internally inside the European Union, therefore they have also banned importations.

Mrs. Rose-Marie Ur: Before I leave the subject, would we allow that product to be sold in Canada if it showed a higher level?

Mr. Ray Trotman: No, we would not allow it to enter the food chain by any means whatsoever.

Mrs. Rose-Marie Ur: Is there a mechanism in place, a timeframe that says that this ban, should it be removed, can be reapplied and can start the whole process again?

Mr. John Klassen: No, if we come to an acceptable conclusion, if, as we expect, the European Union brings its measures into conformity with its obligations under the WTO, then we would certainly not expect them to reimpose the ban through other means. If they were to do so, then we would again have our right to challenge that under the WTO process. I think what we will work towards with the European Union, though, is to find an acceptable solution that will satisfy both sides.

Mrs. Rose-Marie Ur: Regarding the six hormones that are approved in Canada, are they all accepted on the same level?

Mr. Ray Trotman: Are you referring to level of application or level of residual?

Mrs. Rose-Marie Ur: Residual.

Mr. Ray Trotman: No, they're not. As indicated by Mr. Klassen, the three natural hormones have been assessed by the international body of Codex, which is JECFA, and the determination was that there is no reason to establish any residue level for them. They are safe at whatever application.

Mrs. Rose-Marie Ur: Can you differentiate amongst the six as to what's being injected into the cattle?

Mr. Ray Trotman: We can differentiate amongst the synthetic hormones, and we can also differentiate amongst the natural hormones as well.

Mrs. Rose-Marie Ur: But not of the three natural or the three synthetic?

Mr. Ray Trotman: Could you rephrase your question, please? I don't quite follow you.

Mrs. Rose-Marie Ur: Do you assess the three natural products as one and the three synthetic as one?

Mr. Ray Trotman: No, they're all assessed separately by the different tests because of the nature of the chemicals themselves. We can distinguish each of the chemicals as a distinct, separate entity.

Mrs. Rose-Marie Ur: What is the necessity of growth hormones? Why are we using them?

Mr. Charles Craddock: Growth hormones are used—

Mrs. Rose-Marie Ur: I may not have many friends after this.

An hon. member: You've got a lot of friends, Rose-Marie.

Mr. Charles Craddock: It's an economic benefit. It's a growth stimulant. It puts on weight in a faster and more economical method of using the feeds for the cattle that are using it. They put on weight at a more economical rate than if they weren't using them.

Mrs. Rose-Marie Ur: Is that really necessary? Why can't we just raise more animals? I can't understand why it's—

Mr. Charles Craddock: It's an rBST story.

Mrs. Rose-Marie Ur: It is really an rBST story. Don't get me started on that one. Mr. Chrétien and I have have a bit of a problem with that.

• 0940

Mr. Charles Craddock: It's an economic decision by producers. Basically, it's the cost of production. The margin of production is very slim normally, and if they can reduce their costs or increase their revenue, then they're free to do that, certainly, and it's in their own economic interests.

Mrs. Rose-Marie Ur: Do you think that overturning the hormone ban will weaken our food standards? I address this to Mr. Coomber.

Mr. Blair Coomber: Will it weaken our food standards? In what respect?

Mrs. Rose-Marie Ur: Well, in respect of importation, export.

Mr. Blair Coomber: No. I think our food standards will continue to be as strong as they have been.

The trade of food products is going to continue to be governed by the rules of the SPS agreement. So if there are any difficulties with trade and our food standards, we can still use the SPS agreement to strengthen.

Mrs. Rose-Marie Ur: Are hormones used in great capacity amongst our producers in Canada? For instance, does every farmer use this hormone?

Mr. Blair Coomber: Do you know the rate?

Mr. Ray Trotman: Not every farmer uses it. There is a certain cost to the utilization of these particular growth promotants. They're used as ear implants and they come with a cost. So it depends on the particular farmer.

Actually, to reiterate what Mr. Craddock said with respect to your previous question, why use them, they're mainly used to replace hormones that the animals themselves do not have. We have a pastoral form of animal husbandry in North America in which animals are moved from pasture to pasture and then into a feedlot. In order to facilitate peaceful co-existence of the males and the females, obviously the males are castrated. This then necessitates the use of hormones to replace the ones they don't have. With respect to females, they have zeranol, one of the hormones, administered to them, because it suppresses estrus as they go to slaughter.

Mrs. Rose-Marie Ur: Mr. Pauker has stated.... I guess I'm looking at it from the nursing field, which I was in prior to getting into politics. I find it hard to understand your statement that you really can't see any effect of overdosing on hormones, that it's not going to hurt the animal. I guess I'm equating it to human beings.

Mr. Peter Pauker: Let me be perfectly frank here. I wasn't speaking about the health of the animal. When we assess safety, we assess it from a human safety point of view. We also assess it from an animal health and safety point of view, but it's somewhat secondary. So if I can go back to what I said, we're looking at it so that, even if the hormone use is doubled, as Mr. Chrétien suggested, the residue level would still be within the acceptable range, both for the animal and certainly for human consumption.

Does that answer your question?

Mrs. Rose-Marie Ur: I'm not totally satisfied. You answered the question, but I can't exactly buy it.

Mr. Charles Craddock: I think the other part of the answer, though, is that a producer, a farmer, would not want to use more than the recommended amount because it doesn't make any economic sense. It doesn't put weight on any faster. It doesn't do any benefit for it, and it does cost a significant amount to use it. So there would be no reason to put in more than the recommended amount. If they tried it, it wouldn't be of any benefit.

Mrs. Rose-Marie Ur: So there isn't a real abuse of this? You don't see it a lot, then?

Mr. Charles Craddock: Not that I'm aware of, no. There isn't a reason to use more than is necessary.

Mrs. Rose-Marie Ur: I have the same concerns as Mr. Chrétien. I know you're not dealing with the rBST here, but with the challenge that the veterinarian is there. I'm dubious as to, if it should come into production, where that may just be added benefit to the veterinarians, with probable mastitis or whatever.

So I'm just wondering whether one situation is aiding the other. I'm very cautious when they speak of its being under the guidance of veterinarians when you have the veterinarians working closely with the farmers; cautious about just how arm's length this is going to be, and about making sure that, first, our product is safe for Canadians as well as for our export markets.

• 0945

Mr. John Klassen: Does anyone wish to comment? This is far outside my area.

Mrs. Rose-Marie Ur: If no one wants to touch that, obviously it was a good question.

Mr. Blair Coomber: All we can really say is that we believe we have the best control and residue monitoring systems in place that we can have to protect the Canadian public. There's no perfect system, but we believe we have systems in place that do adequately protect the Canadian consuming public, if that's your concern.

Mrs. Rose-Marie Ur: I will be watching this quite diligently.

The Chairman: Is every animal tested, or is it spasmodic or sporadic?

Mr. Ray Trotman: Our residue monitoring program has been established along the internationally accepted lines of statistically random sampling. In other words, in order to detect with 95% probability an animal that has a violating level of residues, we utilize what is referred to as a binomial equation. But the sampling is random and it is meant to be a snapshot of the population of animals we have.

The Chairman: Mr. Borotsik.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman. I must say the conversation has been very, very enlightening. The first thing I should tell you is that if Jean-Guy invites me to a barbecue of beef at his house, I don't think I'll go. His farming practices seem to be suspect.

That's not true. I'll come, Jean-Guy.

First of all, Mr. Klassen, I apologize for not being here. It's not that I wasn't working. I had a previous meeting and I did miss your presentation.

I'm going to try to get back on track a bit with the WTO, which you handled recently. Then I would like to walk into an area Rose-Marie has cultivated for me, that being biotech and genetics in general.

First of all on the WTO, you mentioned that the EU must comply with the decision of the WTO. I agree, and I believe that in fact would happen, but could other trade barriers be put into place, perhaps somewhat clandestinely, which would not allow those hormone-induced animals to be shipped into the EC market?

Mr. John Klassen: As I said, this will be a discussion between us and the European Union, along with the United States: what sort of measures are they proposing to put in place in order to bring themselves into conformity with their obligations under the WTO? We'll be looking very closely at those.

Mr. Rick Borotsik: You don't anticipate any, but it could happen.

Mr. John Klassen: I think we're clever enough to spot it if they are trying to sneak it in the back door. We would not accept that. We won't accept a ban under some other name.

They have been found in contravention of certain obligations. They do have to bring their measure into conformity. We believe they will. We will be watching it very closely, and we will be examining their proposals very closely.

Mr. Rick Borotsik: You had mentioned in your background information that there is an approval now for the six hormones: the three synthetic, the three natural. With biotech the way it is right now, I would assume additional hormones will be produced, or other genetics or biotech—biotech particularly—will be produced. Should that happen, and should a reasonable growth hormone be developed in the next numbers of years, would we have to go through the same old process again to get that one particularly approved, above and beyond the six that are already approved?

Mr. John Klassen: I think once we settle the question, assuming we settle this question with the European Union, the introduction of new hormones should not upset the balance. We will establish a process under which hormones will be allowed, we expect, in beef at certain levels—

Mr. Rick Borotsik: So if they are approved for Canadian consumption you think there would be a normal—

Mr. John Klassen: There would still have to continue to be a discussion. There's the question of Codex Alimentarius; is it accepted internationally? There's all that sort of thing. But no, I don't think the development of a new synthetic hormone is going to put us back on square one with this sort of issue.

• 0950

Mr. Rick Borotsik: Okay.

First of all, I would also like to say publicly that I do come from an area that produces an awful lot of livestock, beef in particular. I have complete faith in the Canadian Food Inspection Agency. It's an excellent agency. I know it wouldn't do anything that would impact any of the consumers in Canada or in Manitoba in particular, so I have a lot of faith in it. And I eat a lot of red meat, okay? I want everybody to know. I want it on the record.

Some hon. members: Oh, oh.

An hon. member: Obviously.

Some hon. members: Oh, oh.

Mr. Rick Borotsik: Thanks, Paul.

Let's now get to gazing into the crystal ball. This is an area that is absolutely mind-boggling. I had the opportunity recently to go through the innovation centre in Saskatoon and talk to some of the biotech people. They're dealing with issues right now with respect to genetics and biotech that I'm sure nobody up there or here realizes will be happening within the next three to four years.

Is your agency prepared for that? How do you see what's happening now in the genetic and biotech industries affecting trade in the not-too-distant future?

Mr. John Klassen: What I can say in reply to that, sir, is that there is very intensive work under way interdepartmentally amongst a number of departments to develop a biotech strategy for Canada, and this is one of the aspects it is looking at very closely, what—

Mr. Rick Borotsik: Industry has already developed that strategy.

Mr. John Klassen: Yes, that's right, but we have to look at this whole question of how it will affect trade and what kinds of controls one has to have in place and that sort of thing. It is an issue that we are very much seized with.

Mr. Rick Borotsik: I guess that's why I asked the question. Are we being reactive to what's happening in the marketplace or are we being proactive? That's the only question I have, Mr. Klassen.

Mr. John Klassen: I think we're being proactive. I think we do foresee the difficulties already. We have problems with genetically modified organisms now. There are things we have developed that we think are quite safe, but we don't yet have approval to sell some of them to the European Union and Japan.

Mr. Rick Borotsik: Perfect.

My last question, Mr. Chairman, will be one that was touched on earlier, about the genetically developed canola that will not be or is not accepted into the European markets. Is it your department's responsibility to walk that one through the system as well? Are you involved in it at all?

Mr. John Klassen: We are involved in terms of our discussions with the European Union in trying to push it through their process in order to get it approved.

Mr. Rick Borotsik: Can you just give me a thumbnail sketch of how successful you've been to this point and what the status is?

Mr. John Klassen: They have a rather complicated process whereby you first make a request to a member state. If the member state approves the use of this genetically modified organism—GMO—it then has to go to the European Commission. So it has to be approved at the community level and then it comes back to the member state to issue the specific authorization.

We have in fact had two products approved at that union level, but they have not yet come back through the national process. I think part of the reason is that there is an increasing concern about GMOs. It's not just the science. We do have to start to deal with a lot of public perception—sometimes public misperception and misunderstanding—as to what these things involve.

So the European Union has now set up a new scientific committee dedicated to looking at this question of the GMOs and how they're going to handle it domestically and in terms of the trade impact. So we continue to work very closely with the commission and with the member states to push our case and to argue for allowance for GMOs.

Mr. Rick Borotsik: Thank you.

The Chairman: Thank you, Mr. Borotsik.

Mr. McCormick.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, Mr. Chair, and I'm glad to celebrate the fact that we certainly do enjoy the highest quality and the safest and the best-tasting food supply in the world, and I admit that I also have consumed more than my share.

Some hon. members: Hear, hear.

Mr. Larry McCormick: There's one court higher than the WTO that we need to recognize, a much higher court. I don't think anything is hypothetical in this. This issue has just started. The highest court...now it's after the fact, and I'm not quite up with daytime television because we've had a thing called an “ice storm” in eastern Canada, which I've been very involved with, but an individual by the name of Oprah.... That case is already finished before it starts, because we're not using that product in United States or Canada at the moment...and I do realize that we are importing rBST into Canada today.

I have no interest in taking this to the media—like an Oprah would—but I want to drop this in again because I don't know if anyone is interested and I think we should keep our ears very open. The fact that the day 120 countries signed the landmines agreement; the fact that Ben & Jerry's tractor-trailer sat opposite the Château, in front of the Conference Centre, or whatever it is now—we hope soon it will be the sports hall of fame—giving out ice cream; the fact that Ben & Jerry's have said they are going to take the rBST to Bay Street this year.... That higher court of people will decide the future of what we're going to do about many of these products.

• 0955

But I would like to get the approximate cost per animal for using this growth hormone.

You've told me the European Union does not allow the domestic use of this growth hormone. But now people in Canada as well as the United States are slamming us from another angle, which you can't control. We're going to hear more about how beef uses so much of our valuable water. It is very valuable. They don't quite realize that some of that water is returned to Mother Earth, who can recycle very well.

In California, Tony Robbins is a personal friend of mine, but another man by the name of Robbins, no relation, has scared a few million people. He has whipped them all up into a frenzy about anti-beef because of the water they are drinking.

This higher court of the public will decide many of these things. That's why it is going to be most important as we look at the rBST that's coming into this country today.

I would be glad to make it clear that only a very few ice cream companies are using that product. But it is all related.

The Chairman: Can someone answer that question about the relative cost of hormones?

Mr. John Klassen: We will have to get that information for you, sir, on the specific question you asked about the approximate cost of hormone treatment.

Mr. Larry McCormick: Thank you very much.

There's nothing personal about you gentlemen. We need you. You are doing a great job. But do you think there is any connection to the fact that rBST is coming in with the butter oils, and where we've been and where we're going with all this, and that it is being used here today in ice cream?

Mr. John Klassen: I'm afraid I'm not an expert on rBST, sir.

Mr. Larry McCormick: Well, who is? Do we have anyone here who is an expert on rBST?

Mr. John Klassen: I think we would like to avoid speculation.

Mr. Larry McCormick: Mr. Chairman, on a point of order, how can we avoid speculation when the rBST is coming into Canada every month and being used? I don't want to pursue this, but we have to accept that fact and then go from there and talk about what we're going to do about this.

I don't want to see Oprah take it. The last time I went through Amarillo there was a great restaurant that offered a free 72-ounce steak dinner any day you consumed it all. Oprah may move into here, and we don't really need her.

I've nothing against Oprah. She's a very smart person.

Mr. Peter Pauker: About rBST, I would rather defer to an expert from my department, Dr. Man Sen Yong. I will confer with him and allow him to answer that question.

Dr. Man Sen Yong (Chief, Human Safety Division, Bureau of Veterinary Drugs, Health Protection Branch, Department of Health): Mr. Chairman, I would like the honourable member to repeat the question, please.

Mr. Larry McCormick: Someone says the time is up, and I don't doubt that. It's almost as good as the line Svend used the other day, when he said he was sure the Prime Minister and his leader from Halifax wished they would put a permanent sewing....

Mr. Chair, to the gentleman who has just offered his thoughts, the fact that rBST is entering Canada now, in whatever small proportions, through the butter oils blend and in ice cream.... I just want you to share your thoughts on whether there is any correlation here to do between that and the fact that we're exporting beef with a growth hormone, which is very safe today, and where this rBST is going to lead us if we are not allowing it to be used and yet we're importing it.

• 1000

Dr. Man Sen Yong: It is easy to say. We have to see whether rBST is safe for human consumption.

Mr. Larry McCormick: But we're allowing it to be imported at the moment in this product for ice cream. Certainly 30% of the product that is being imported in the butter blends is coming from Mexico. I have a lot of Mexican friends, but the cows are certainly along the U.S.-Rio Grande border. New Zealand? Fine. But there is rBST coming into the country.

I think we should mention it in this room before Ben & Jerry's takes it to Toronto—even though the world will be concentrated on silver for the next few days, not rBST.

Dr. Man Sen Yong: The comment I have would be that Health Canada is still looking at the rBST file as such. Up to now we haven't issued any notice of compliance to the product. We continue to look at it and also take into account that the international body, the JECFA, is going to revisit the human safety of rBST.

The Chairman: You have used up Mr. Bonwick's time already, Larry, so we'll have to go to Mr. Hoeppner.

Mr. Jake E. Hoeppner (Portage—Lisgar, Ref.): I'd like to go back to the matter of the trade panel.

It took two and a half years to get compliance. Who pays all these costs? There must be a tremendous cost going through the whole process. Is there any deterrent for countries that don't comply and just use it as a political move to bar some of these products? I foresee that happening quite regularly. Are there any deterrents to that?

Mr. John Klassen: In terms of the costs of the litigation and preparing the case, arguing the case, going to Geneva and those sorts of things, those are pretty well borne by the government departments involved. A large part of it falls on my department, but I think some other departments help us out with some of those costs. It is something that we budget for each year. We have a contingency fund.

The dispute settlement system has become much more legalistic than it was under the old GATT, so we set aside sufficient funding to make sure we have proper legal support. So it is absorbed by the government through the various departments.

Mr. Jake Hoeppner: So you pay regardless of whether you are guilty or you launched the complaint. It is not a matter of putting the costs on the guy that doesn't comply.

Mr. John Klassen: No. Each side bears its own costs. It is not like a court where costs can be awarded to one side or the other.

If you are charged with an infraction and somebody takes you to a panel, then you bear the costs of preparing your defence. If you are taking an offensive action, as we did in this case, then you bear the costs of developing and presenting the arguments.

Mr. Jake Hoeppner: Are we then setting ourselves up for a continuous round of panels and negotiations that in the end will probably be detrimental to us instead of creating freer trade?

Mr. John Klassen: In fact, since the end of the Uruguay Round and the new dispute settlement understanding, there has been a considerable growth in the use of panels across the board, and of appeals to the appellate body. We didn't have an appeal procedure before, under the old GATT.

Yes, this an increasing burden and an increasing cost for us, but we would certainly argue that it is to our benefit. As a country that depends enormously on trade but is really a middling power in many senses, it is to our benefit to have the rule of law in trade matters. Therefore we think the dispute settlement system, although it is expensive and slow to many people's points of view, is better than it was, because before we didn't have any deadlines and things could drag on forever. At least now there are deadlines and time lines in the process that force people to meet certain requirements as they go along. We think as we go along it really benefits Canada to have the kind of rule of law in trade that enables us to keep markets open for our exporters.

• 1005

Mr. Jake Hoeppner: Well, I'm looking at another side of this issue. When we look at trade surpluses and negative trade, the U.S. is the only one we really have a trade surplus with. With a lot of the European countries, we have a negative trade balance. Wouldn't it be a lot simpler to instigate some trade sanctions against these countries if they don't want to comply? When we did that before, it used to work without any cost, and it smartened up some countries pretty quickly. Now we're going to go the negotiating route. I agree with it, but if there's no deterrent, if it's just a political game that we're playing on the world scene, to me that spells disaster at the end.

Mr. John Klassen: I don't think it is a political game. As I said earlier, in all the panels that have happened since the end of the Uruguay Round—and there have been quite a few—in all instances, the country that was found in contravention of its obligations has brought its measures into conformity with its trade obligations. The system has worked very well in that regard. Otherwise, you had no lever except perhaps some kind of unilateral retaliation, which is not a philosophy or policy that we espouse. If you don't have that kind of lever, it's the rule of law through the WTO that continues to guarantee us this access. And as I say, member countries of the WTO respect their obligations. If they are found in the wrong, there are discussions, and they change their procedures so that the trade can move.

Mr. Jake Hoeppner: Is there some kind of accounting system being done to notify Parliament if the costs of these trade panels all of a sudden become exorbitant, so that we can modify them, change them, make them more effective? I would like to see something of that sort being presented to us in order to see whether we're really getting our dollar's worth for what we are spending.

Mr. John Klassen: I would have to double-check, but in the main estimates submission from, say, the Department of Foreign Affairs, I think there is probably some indication of how much we're spending on this sort of thing. Frankly, I think it's money well spent. We're either defending ourselves against measures that people are taking against us—where we are defending Canadian policies—or we are opening doors for Canadian exporters.

Sometimes the process doesn't even have to go all the way to a panel. We had an issue with France on scallops. They had changed a law that we thought infringed our obligations and was going to wipe out our trade, so we initiated the process that leads to a panel. Through those discussions, through those consultations, they agreed to change their law and to go back to what they had before so that trade could continue. That was money well spent. We didn't have to go the distance to the panel, but it enabled us to restore the trade access that we had. And there are other examples like that.

The Chairman: Mr. Calder.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you very much, Mr. Chairman.

Ladies and gentlemen, welcome. I have a question for Ray right off the bat. You said in some of your statements that you could differentiate between a natural hormone and a synthetic hormone. How?

Mr. Ray Trotman: No, I said we can differentiate between the three natural hormones. We can certainly identify those. We can also identify the three synthetic ones. However, if one were to look at the synthetic ones—those being zeranol, trenbolone acetate, and melengestrol acetate—we can differentiate among those, yes.

Mr. Murray Calder: Okay, because that's one of the issues right now, that when we dealt with the issue of rBST.... Of course, we still haven't got to the bottom of prenatal primate testing, which is going to be the big issue with this, as far as I'm concerned. We were told you couldn't differentiate between the natural protein and a synthetic protein, and I disagree with that because I know the amino acid base would be different.

Mr. Ray Trotman: To the best of my knowledge, you cannot differentiate between a natural and a synthetic form of the same molecule—

Mr. Murray Calder: Well, that'll be an argument that—

Mr. Ray Trotman: —at least not to the extent of our technology.

Mr. Murray Calder: I want to shift gears here into the issue of the 15-month period. John, maybe what I'm looking for first is when the clock starts running on these 15 months. Is it running now, or does it start 30 days from now? When does it start?

• 1010

Mr. John Klassen: It is from the adoption of the panel report of the appellate body, which is on February 13.

Mr. Murray Calder: Okay.

Now, we know we're going to be going into negotiations with WTO in 1999, so the clock obviously could still be running by the time the negotiations start. Is that a probability?

Mr. John Klassen: A probability. I think we will see the agricultural negotiations beginning in late 1999, or preliminarily in late 1999 and then running into 2000.

Mr. Murray Calder: Okay. So there is a probability of the clock still running.

Mr. John Klassen: I suppose 15 months would.... Yes, you would start to get closer to it.

Mr. Murray Calder: Yes. Okay. We would obviously be—or I hope we would be—running by the old rules, but would there be any way the EU could drag this into the new negotiations?

Mr. John Klassen: I think it's a good question, and as I've said, this is the first panel report of an appellate body to deal with the SPS agreement. It's a fairly complex issue in the way the appellate body has looked at the panel report.

I think it does raise some questions about the SPS agreement itself that we're going to have to look at in terms of engaging in new negotiations. What is our experience with the SPS agreement? Should we be looking at trying to strengthen it? Are there some ways that we can work on it? This is very much part of our experience with it now, the outcome of this panel report. So I think, yes, it will have an impact on how we look ahead in terms of the negotiations.

Mr. Murray Calder: Obviously the EU is going to be looking at it from the same point, because this will be a trade irritant for them. Negotiations are starting, and they're going to try to correct that trade irritant. It will be very similar with us and NAFTA in the yogurt and ice cream issue. That was struck off the import control list in 1989 and then put back on with the new negotiations, and of course we were successful on the dispute panel.

They might take the same track, then. Would I be right in assuming that?

Mr. John Klassen: Looking at their interpretation of the panel and how they would like to continue to justify their actions, I think they will be looking at, if we were to reopen the SPS agreement and renegotiate it, what sorts of objectives they would have. So yes, certainly it's going to affect their negotiating approach to something like looking again at the SPS agreement, as it will affect ours.

Mr. Charles Craddock: But I think the rules still apply over the next period, until a new negotiation comes up, and who knows when that might be? The existing rules still apply.

One point on this as well is that it's not just Canada against the European Union on this one; it was a joint panel with the U.S. as well. There were two separate panels that were joined together at the appellate level later on.

Mr. Murray Calder: Okay. I just wanted to flag the issue, Mr. Chairman, because I was curious to see whether or not this could get dragged into the next set of negotiations.

The Chairman: Thank you. We'll take time for two more questions, one from Mr. Hill and one from Mr. Bonwick.

Mr. Jay Hill: Just one question? I have about four here.

The Chairman: Unless you want to continue to 10.30 a.m.

Mr. John Klassen: We're in your hands, Mr. Chairman.

Mr. Jay Hill: That's fine with me.

The Chairman: Okay. We'll go to 10.30 a.m., then.

Mr. Jay Hill: I have about three or four real quickies here.

On the issue of safety, getting back to that for a moment, and Mr. Chrétien's enlightened statement there about the overuse of.... I'm assuming that was antibiotics, not hormones. Can you explain to the group here if there's a difference between how antibiotics are injected into the animal and hormones?

Mr. Ray Trotman: Antibiotics, most of them for prophylactic use, which is feed efficiency and weight gain, are administered through the feed as a feed additive.

As for the hormones that have been improved for use, five of them have been approved for use as ear implants, which are then excised as the animals go to slaughter and never become part of the food chain. One of the hormonal growth promotants has been approved by Health Canada as a feed additive, so that is similar in its vehicle of introduction to the antibiotics that are used for feed efficiency and weight gain. Other than that, antibiotics are used for therapeutic reasons, which are directed to a particular disease state, and those would probably be injected.

Mr. Jay Hill: Okay. In all the testing—and you admitted to random testing—to get to Mrs. Ur's concern about safety, have you ever had to condemn a carcass because of an accumulation of hormonal residue? Has there ever been a case?

• 1015

Mr. Ray Trotman: Yes. There have been cases where a particular producer has been penalized, if you will, for the abuse or inappropriate use of hormonal growth promotants. In cases where the residue level is above the established maximum residue limit, which is the safe limit, then the carcass is or will be condemned.

Mr. Jay Hill: And destroyed?

Mr. Ray Trotman: And destroyed.

Mr. Jay Hill: How many cases have there been since you've begun testing? Just give me a ballpark figure.

Mr. Ray Trotman: Since 1991, to the best of my recollection, we have not found any of what we call “violations” of the hormonal growth promotants in bovines. Last year, however, we found 17 violations. Compared to the number of samples that were taken and analysed going all the way back to 1991, I think that's a very small amount.

Mr. Jay Hill: To further follow up on what Mr. McCormick was saying—jumping in, as he put it—about the rBST issue, my understanding is that there is no evidence of human health risk with rBST. Yes or no? True or false? My understanding is that the concern is about the health of the animal, not about any risk to human health.

Mr. Peter Pauker: Yes. That is my understanding as well.

Mr. Jay Hill: One last question, Mr. Chairman. This follows up on Mr. Hoeppner's concern about the costs of this litigation to the Canadian taxpayer. Would it be possible, as we enter the next round of negotiations, to perhaps put forward a position that the loser pays a reasonable cost? This might cut down on nuisance bans or restrictions, or whatever, that might be put forward for political reasons rather than being based on any scientific evidence.

Mr. John Klassen: It's an interesting thought, sir. It has not, as far as I know, ever even been discussed in the WTO context.

Mr. Jay Hill: Similar to a court case.

Mr. John Klassen: Yes.

Mr. Jay Hill: Do you think that would be something worth while to pursue as we enter this next round of negotiations? Should the loser pick up a reasonable cost?

Mr. John Klassen: Frankly, sir, I can't see getting agreement on something like that. I think it would be very difficult to determine what the costs are. The costs would vary considerably from country to country. Some people hire batteries of lawyers. The United States, for instance, shows up at panel reports or sessions—

Mr. Jay Hill: But the concern is that we're dealing here with something that is very small in the big scope of things. It's been ongoing since 1989. I don't know whether you would hazard a guess as to what it has cost your department to pursue this for $9 million in sales. There are probably producers out there, farmers, who have more than $9 million in sales, one farmer in a year, or the larger corporate farms.

Mr. John Klassen: You may be right in that instance, but there is the precedent effect here. There is the question of dealing with a much larger question of food safety additives and how this relates to the SPS agreement. So in this case, while we are pursuing a very specific trade interest at the behest of Canadian industry...the government doesn't take cases just because the government wants to take cases. We only take a case when there is strong support from a domestic industry that feels it is being harmed by an external measure and when the case is in consultation with the provinces. It's not something that we take on at all lightly.

In a case like this, there is a broader systemic interest here. We have an interest as a major exporter of food products in having a good SPS system, and as we move into things like GMOs and all sorts of growth hormones and all the other things that are happening in terms of biotechnology, these kinds of problems are going to increase in international trade. It's in our interest in the longer term to try to have, as much as we can, clear rules that will govern this kind of trade.

I wouldn't hazard a guess as to what it has cost us since 1989, but in the overall scope of things it's not a lot, and in terms of our specific and our general trade interests we think it's money well spent.

• 1020

The Chairman: Mr. Bonwick.

Mr. Paul Bonwick (Simcoe—Grey, Lib.): Thank you.

Mr. Hill and Mr. Hoeppner bring up a point about cost recovery. I could never imagine it working, because it would also be a deterrent for countries like ours to challenge the U.S., where we might get into a lengthy form of litigation where we get into millions of dollars and if we lose the U.S. would come back on us, a much smaller trading partner, for cost recovery. In future the political side of it might say, I don't know if we should pursue that, because it could cost us millions of dollars. So it would have a plus and a minus, I think, on both sides. I could never imagine some of the smaller partners ever agreeing to cost recovery or getting any kind of consent on that.

On Mr. Klassen's point about establishing a clear set of rules, I think the only disaster would be if we don't establish clear rules in trading, because we're such a small trader in such a large market that if we do not have clear rules in it our trade, and in turn our economy, would be the only thing that would experience a disaster. You have to have those clear trading rules, whether on this or whatever the particular product is.

I'm just looking for a bit of clarity out of Mr. Pauker's comments. I don't know if I misunderstood or not. If I did, please correct me. I think when Mrs. Ur made a comment about safety, he stated that the safety aspect is related to human consumption, not necessarily the health of the animal. Is that correct about hormones?

Mr. Peter Pauker: What I was trying to say is that when Health Canada assesses a veterinary drug, a food additive, with any compound we then approve in one way, shape, or form, our aim is primarily to look at how it affects human health.

Mr. Paul Bonwick: Okay. Obviously as lay people, on this side anyway, we might be mistaken in thinking they equate to each other, that the health of the animal equates to the health of the human, if we're going to consume that beast.

Mr. Peter Pauker: You're quite right. If in the process—

Mr. Paul Bonwick: But that's not how it was stated—

Mr. Peter Pauker: Primarily we're looking at how it will affect human health.

Mr. Paul Bonwick: I have one last one and then I want to turn it over to Mr. Coderre for my last two minutes.

To the Canadian Food Inspection Agency, I think we do have an excellent service that's being provided to Canadians in general, but about possible abuse—and it has been brought up on a few different occasions by all parties—there seems to be concern over this possibility. I've experienced it in my riding with some beef producers. Is it safe to assume that producers in Canada do not want to—and I think the vast majority, in fact pretty much all of them, do not want to—compromise their herds in any way by abusing the system with extra growth hormone or whatever the case might be, because of the consequences? I think in turn they do an excellent job of policing themselves, with the cooperation of their veterinarians, because the consequences to the farm itself can be quite serious, with loss of the herd.

So from an economic standpoint...not to mention the fact that the perception in Canada, as was touched on, is that we have a very, very good-quality product coming through the Canadian Food Inspection Agency and they wouldn't want to do anything to damage that. Do they do a good job of policing themselves?

Mr. Blair Coomber: Yes, we do have an internationally recognized high-quality product we're selling internationally, and I believe we have an internationally recognized high-quality inspection and regulatory system. The combination of producer diligence in making sure high-quality product is maintained and the work that's done amongst the producer associations, along with our inspection system, works together to contribute towards that reputation.

The Chairman: Mr. Coderre.

[Translation]

Mr. Denis Coderre (Bourassa, Lib.): Good morning gentlemen.

• 1025

I have a problem. I would like to draw an analogy, but I don't know if it is relevant. In the 1960's, a drug known as thalidomide was developed. People were told that it was very good for pregnant women, that it combatted nausea. They were told: Don't worry, there is no danger. When you talk to me about hormones, about BSTr, I sometimes feel somewhat apprehensive.

Mr. Pauker, you told us today that you focus on the health of humans before the health of the animal. Do you eat red meat? First, do you eat red meat?

[English]

Mr. Peter Pauker: Yes, I do.

[Translation]

Mr. Denis Coderre: I see. I also have been eating less since I've been on a diet.

[English]

Mr. Peter Pauker: I'll tell you a secret. I even eat steak tartar, which is raw beef.

[Translation]

Mr. Denis Coderre: Steak tartar, I see. What are the risks involved? What is the difference between meat produced with hormones and meat produced without hormones?

[English]

Mr. Peter Pauker: Now you're asking me to....

Mr. Denis Coderre: No, no, go for it. I have another question.

Mr. Peter Pauker: There is really no difference as far as I'm concerned. Between meat produced with the use of growth-promoting hormones and meat produced without the use of growth-promoting hormones, there is no difference.

[Translation]

Mr. Denis Coderre: Therefore, all beef cattle are fed hormones at the present time. Hormones are used everywhere.

[English]

Mr. Peter Pauker: Do you mean for growth-promoting use?

Mr. Denis Coderre: Yes.

Mr. Peter Pauker: I defer to the rest of the experts with respect to the use of hormones in the rest of the world. I actually don't know.

I know that we have approved them here in Canada and they are approved in the United States, and that's basically what I can tell you. They are used in various ways, shapes and forms elsewhere as well.

[Translation]

Mr. Denis Coderre: Mr. Pauker, at the present time there are very many studies. There are some which argue the opposite, that it is good. I am not an expert, but I have a feeling that unfortunately hormones are used to compete with other countries without too much concern being given to human health. After seeing an American study on BSTr, I have the feeling that not everyone is doing their homework as much as they should and that in the final analysis productivity will be enhanced at the cost of human health. How can you reassure me about this?

[English]

Mr. Peter Pauker: All I can offer you is that the review processes that we use and the assessments that we do, we do to the best of our ability. We review all the scientific evidence. We go by the scientific reviews also done by international organizations. We look at what our trading partners have done in similar cases. If any new evidence comes up that suggests that the compound in question is not safe, we can take the proper steps to take it off the market. But in the absence of evidence of any harm—

Mr. Denis Coderre: You let it go.

Mr. Peter Pauker: —we approve it, provided we're satisfied that the evidence submitted is sufficient to give us confidence that the compound is safe.

The Chairman: Mr. Chrétien, we're going to conclude with you.

[Translation]

Mr. Jean-Guy Chrétien: Although I am a strong defender of farmers, I'm afraid that sometimes if we pull the elastic too far it might rebound in our face.

Let me give you an example. In Florida a few years ago there was a movement to promote consumption of eggs from free-range chickens. There were reports on T.V. showing three or four chickens in a small space measuring 12 by 12 by 18 inches. Consumers in Florida were ready to pay twice as much for a dozen eggs in a box market "free range chickens".

• 1030

My comments here are to the representative of the Food Inspection Agency. I dream of the day when we will be able to buy a beautiful steak at the supermarket marked “free from all hormones”.

When I had my farm, a number of people from the city came to buy their beef from me because they knew—Rick, you will like this—that my cattle had not been fed any hormones. They've been raised in freedom with their mother. Obviously, it is less profitable.

My colleague from Bourassa asked whether all animals in Canada were raised with growth hormones, and I indicated to him that was not the case. In Quebec, the majority of producers do not use growth hormones. But, as I said at the beginning, we are not making any money from beef because we produce it far less quickly.

When you buy a steak, would it be utopian to ask for the package to provide certain information, as is the case with other products where the percentage of sugar, salt and other ingredients is indicated?

[English]

Mr. Blair Coomber: Mr. Chairman, if I may, I'll briefly respond to that, and then I'd just like to provide a response to another question that was raised earlier.

When you get into the whole issue of labelling, you're getting into a whole other ball of wax and a much longer discussion. Generally, I think the difficulty that has come about over why a product is not labelled free of hormones is that, if it is, it implies that a product produced with hormones is unsafe, and the consumer then starts to make a distinction between the safety of one product over the safety of the other product.

Can it ever come about? Well, I think that is something that would have to be discussed quite broadly within the Canadian beef producing industry.

The Chairman: Okay, thank you very much.

Mr. Blair Coomber: I just wanted to add one question, because I believe there was a point raised over here about the health of the animals and hormones. I just wanted to point out that the Canadian Food Inspection Agency does regulate the health of animals and does have in place a number of standards applying to the health standards. I also wanted to point out that if a product is approved by the Bureau of Veterinary Drugs, then the agency has deemed it safe for the animals.

The Chairman: Maybe the EU could have used our help, since they lost the argument.

I imagine this topic will be revisited as we go along. It's something we could have spent the whole morning on here. On behalf of the committee, I want to thank you very much for coming, and we'll probably see you again down the road.

Mr. John Klassen: It's been a pleasure. Thank you, Mr. Chairman.

The Chairman: The meeting is adjourned. We'll reconvene in five minutes for an in camera session.