HEAL Committee Meeting

37th PARLIAMENT, 1st SESSION

Standing Committee on Health

COMMITTEE EVIDENCE

CONTENTS

Tuesday, February 19, 2002

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1105

The Chair (Ms. Bonnie Brown (Oakville))

Mr. Claude Carrière (Director General, Trade Policy Bureau I, Chief Negotiator, Free Trade Area of the Americas (FTAA), Department of Foreign Affairs and International Trade)

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1110

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1115

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1120

The Chair

Mr. Gagnon (Champlain)

Mr. Claude Carrière

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1125

Mr. Gagnon (Champlain)

Mr. Claude Carrière

Mr. Gagnon (Champlain)

Mr. Claude Carrière

Mr. Gagnon (Champlain)

Mr. Claude Carrière

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1130

The Chair

Mr. Stan Dromisky (Thunder Bay--Atikokan)

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1135

Mr. Claude Carrière

The Chair

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1140

Ms. Hélène Scherrer (Louis-Hébert, Lib.)

Mr. Claude Carrière

Mr. Claudio Valle (Director, Technical Barriers and Regulations, Department of Foreign Affairs and International Trade)

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1145

The Chair

Mr. Gagnon (Champlain)

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1150

Mr. Claude Carrière

Mr. Gagnon (Champlain)

Mr. Claude Carrière

Mr. Gagnon (Champlain)

Mr. Claude Carrière

The Chair

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1155

Mrs. Brenda Chamberlain (Guelph--Wellington, Lib.)

Mr. Claude Carrière

Mrs. Brenda Chamberlain

The Chair

Mrs. Brenda Chamberlain

The Chair

Mr. Claude Carrière

Mrs. Brenda Chamberlain

Â

1200

Mr. Claude Carrière

Mrs. Brenda Chamberlain

Mr. Claude Carrière

Mrs. Brenda Chamberlain

Mr. Claude Carrière

Mrs. Brenda Chamberlain

The Chair

Mr. Claude Carrière

The Chair

Mr. Claude Carrière

Â

1205

The Chair

Mr. Claude Carrière

The Chair

Mr. Claude Carrière

The Chair

Mrs. Brenda Chamberlain

The Chair

Ms. Yolande Thibeault (Saint-Lambert, Lib.)

Mr. Claude Carrière

Ms. Yolande Thibeault

Â

1210

Mr. Claude Carrière

Ms. Yolande Thibeault

Mr. Claude Carrière

Ms. Yolande Thibault

The Chair

Mr. Claude Carrière

Â

1215

The Chair

Mr. Stan Dromisky

Mr. Claude Carrière

Â

1220

The Chair

Mr. Gagnon (Champlain)

The Chair

Mr. Gagnon (Champlain)

The Chair

Mr. Gagnon (Champlain)

Â

1225

The Chair

Mr. Gagnon (Champlain)

The Chair

Mrs. Brenda Chamberlain

The Chair

Ms. Hélène Scherrer

Mr. Claude Carrière

Ms. Hélène Scherrer

Mr. Claude Carrière

Â

1230

Ms. Hélène Scherrer

Mr. Claude Carrière

Ms. Hélène Scherrer

Mr. Claude Carrière

Ms. Hélène Scherrer

Mr. Claude Carrière

Â

1235

The Chair

Mr. Claudio Valle

The Chair

Mr. Claudio Valle

The Chair

Mr. Claude Carrière

The Chair

Mr. Claude Carrière

The Chair

Â

1240

Mr. Claude Carrière

The Chair

Mr. Claude Carrière

The Chair

Mr. Claude Carrière

The Chair

Mr. Claude Carrière

The Chair

Mr. Claudio Valle

The Chair

Mr. Claude Carrière

The Chair

Mr. Claudio Valle

The Chair

Mr. Claudio Valle

The Chair

Mr. Claudio Valle

The Chair

Mr. Claudio Valle

The Chair

Mr. Claudio Valle

Â

1245

The Chair

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CANADA

Standing Committee on Health

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NUMBER 057

l

1st SESSION

l

37th PARLIAMENT

---

COMMITTEE EVIDENCE

Tuesday, February 19, 2002

[Recorded by Electronic Apparatus]

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[English]

    The Chair (Ms. Bonnie Brown (Oakville)): I think the hour being what it is, we should probably begin.

    I would like to introduce representatives from the Department of Foreign Affairs and International Trade in the persons of Mr. Claude Carrière, director general of the trade policy bureau, and chief negotiator for the free trade area of the Americas; Claudio Valle, director, technical barriers and regulations; and Victor Bradley, deputy director, technical barriers and regulations.

    Gentlemen, I supposed you have decided who's going to speak first, so please go ahead.

    Mr. Carrière.

[Translation]

    Mr. Claude Carrière (Director General, Trade Policy Bureau I, Chief Negotiator, Free Trade Area of the Americas (FTAA), Department of Foreign Affairs and International Trade): Thank you, Madam Chair, for inviting us to make our presentation to the Standing Committee on Health this morning. I will be providing some brief opening remarks, after which we will be pleased to answer the committee's questions. I should also note that the department is preparing a more detailed written submission to further assist the committee in its deliberations.

    Our testimony will focus on Canada's trade policy and international obligations, the overall implications of mandatory GM food labelling and the labelling approaches of our major trading partners.

    Clearly, in the debate around GM foods, domestic considerations, such as economic, social, health and safety issues are very important. However, I am here to highlight the international trade considerations that must be taken into account as well.

    The effects on international trade, and the associated impacts on the Canadian economy, are particularly important when we are talking about labelling of GM foods, particularly when the objective of this labelling measure is not health or safety-related.

    It is true that labels are necessary to provide information, but they can also be misused or used to provide misinformation, or to distort markets. And when governments require mandatory labelling as a condition of market access, there are international rules to be followed—not only to protect our exports, but also to protect our imports and the welfare of Canadian citizens.

    I do not want to wade into the debate on whether or not GM foods should be labelled even if they are proven safe to consume just because there “may be” some long-term effects we do not yet know about. However, I would like to note that attempting to justify mandatory labelling outside of the scope of health and safety based on some concept of precaution is inconsistent with our science-based approach for invoking precaution. We continue to be assured by regulators that these products are safe.

    As an optimist, I would like to say a few words about the importance of agricultural biotechnology worldwide, particularly in the developing world.

    Many observers feel that biotechnology could be a major productivity driver throughout the world, raising incomes and reducing poverty. The United Nations Human Development Report 2001 concluded that many developing countries might reap great benefits in reducing malnutrition through the use of GM techniques to produce foods and crops. Farmers can realize the benefits of biotech crops through genetically modified seeds, without having to introduce additional agricultural inputs, such as large-scale irrigation or chemicals. Biotechnology techniques have the potential to reduce crop production costs associated with pesticide use, increase crop resistance to droughts, floods and high levels of salt and minerals, to plant viruses, and to reduce losses due to spoilage and disease.

    Consumers in developing countries will also benefit from food products with increased nutritional value, such as strains of rice that are being developed with more iron and beta carotene. While you may hear from environmentalists who will tell you their concerns and fears about what they believe are the detrimental impacts of biotechnology on the environment, I would ask you to keep in mind that there are environmental benefits of genetically modified crops that are also critical, as they will allow farmers to grow more food on less land and use less chemical herbicides and pesticides, thereby reducing toxic contamination of surface and ground water.

    While recognizing the potential worldwide benefits of agricultural technology, we understand that this committee's primary focus is on the appropriate regulation of these products in Canada. Previous witnesses have testified that food safety and consumer protection are the first priority for the Government of Canada.

    We are proud to note that Canada's regulatory system for food is respected worldwide for its thoroughness and its focus on safety. As far as we are aware, Canada is the only jurisdiction which requires the assessment and approval of all novel foods, including food derived through biotechnology. Novel foods include products which have never been used as a food, foods which result from a process which has never been used for food, and foods that have been modified through genetic manipulation.

    We currently have mandatory labelling requirements for all foods, including novel foods that differ significantly from traditional foods or that carry a health or safety risk, such as allergenicity, that may be mitigated through labelling. The current debate is over whether to extend mandatory labelling requirements to those genetically modified foods for which there is no evidence of health or safety risk.

    Madam Chair, from our department's perspective, we have a number of serious concerns related to the mandatory labelling for GM foods. For example, if mandatory requirements are not necessary for health or safety reasons, this would have an impact not only on international trade, but also on our domestic ability to effectively regulate. Scarce government resources could always be better allocated to develop our capacity and understanding of health and safety effects of GM products. In addition, an overly burdensome regulatory system in Canada on mandatory labelling requirements for GM foods could discourage foreign investment in this sector and could further stifle innovation.

    Most importantly, Madam Chair, we believe GM labelling in many cases, amounts to labelling on the basis of a process and production method (PPM). Generally speaking, it has been our position that mandatory PPM labels are potential barriers to trade that under specific factual circumstances are likely to contravene international trade obligations. We have argued that these measures could be misused or abused by other countries for protectionist purposes. Indeed we believe this is already happening.

    Canada's concerns with this type of labelling extend far beyond agricultural biotechnology into such areas as agrifood, forestry, mining, fisheries and manufacturing. As well, it could be expanded to include pharmaceuticals and other products of biotechnology. If Canada were to adopt mandatory labelling for all GMOs, it would be a reversal of the position that Canada has consistently supported internationally and would undermine our position as an opponent of this type of labelling for our other industries.

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    Additionally, Canada could be vulnerable to a successful challenge under the WTO agreements or the NAFTA, on the basis that mandatory labelling of GM foods for reasons other than health or safety, may be inconsistent with the provisions of these agreements.

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[English]

    Madam Chair, Canada could face a number of negative implications if a mandatory labelling system for non-health or safety reasons for GMOs is adopted. One major concern is the cost of mandatory labelling, which could put Canadian industry at a tremendous disadvantage. For example, to cite one study, mandatory labelling could increase production costs by 35% to 41% and domestic retail costs by approximately 10%. While the exact magnitude of the costs is unknown, this is not inconsistent with a similar study done in Australia.

    Beyond the expense of mandatory labelling, the negative perception some consumers hold regarding biotechnology-derived food could mean that mandatory labels would be wrongly perceived as government health and safety warnings. This would further harm Canada's ability to compete in both domestic and international food markets. In addition, these misperceptions could contribute to misinformation and confusion in the marketplace instead of providing useful information to the consumer.

    As I will explain in a moment, the most significant negative implication of mandatory labelling would be to damage our trade relationship with the United States, our largest agricultural trading partner, thereby jeopardizing $25 billion in annual bilateral agrifood trade.

    Canada's major trading partners have taken different approaches to labelling. Proponents of mandatory labelling have pointed to actions by the EU, Japan, and China as evidence that our major trading partners are adopting GM labelling requirements, and argue that Canada should follow suit. While these are certainly important markets--and we will discuss them in a moment--it is important to emphasize that two-thirds of Canada's agrifood exports are to trading partners that have not adopted mandatory labelling, notably the United States and Mexico.

    Much like Canada's approach, the United States currently requires the labelling of GM foods and ingredients where there is a health or a safety concern. To provide non-health and safety-related information, the U.S. has a voluntary guideline for labelling other GM and non-GM foods. The U.S. and Canada have typically approached agricultural biotechnology from a similar perspective. We have employed the same science-based regulatory principles and have exhibited allied interests when GMOs have been discussed in multilateral fora. If Canada wavers on this issue, we will put at risk a trading relationship that accounts for $25 billion in annual bilateral agrifood trade.

    Madam Chair, it is also important to remember that much of our agrifood trade with the U.S. is in processed foods. In fact, over 78% of our total processed food exports are to the United States. These foods will be most vulnerable to GM labelling because so many contain ingredients derived from GM crops, such as corn, soy, and canola. This, combined with the sheer volume of cross-border trade, means that any discussion about the trade implications of labelling must include serious consideration of how proposed policies will affect Canada's agrifood trade with the United States.

    That being said, we understand that Canadians are concerned about how GM labelling policies being adopted in other jurisdictions are affecting Canadian farmers and food processors.

    As of April 2001, Japan requires labelling for ingredients that contain recombinant DNA only if the ingredient is one of the top three food ingredients by weight and represents at least 5% of the weight of the final product. Market access difficulties have been encountered by Canadian producers in Japan. This difficulty was due to delays in the approval of certain GM events in Japan, rather than the labelling requirements themselves.

    The European Union introduced a mandatory labelling system in 1998 that currently applies to all foods that contain or consist of detectable genetically modified DNA or proteins above a threshold of 1%. In addition to mandatory labelling, the EU put a moratorium on GM approvals. These measures have stopped Canada's exports of canola to the EU.

    Recently the EU proposed to extend these already unacceptable mandatory labelling rules to cover foods produced from GMOs regardless of DNA or protein presence in the final product. For example, oils produced from genetically modified products that do not contain DNA or proteins would be covered for the first time. This will have major implications for Canadian agrifood products derived from or containing canola, corn, or soy.

    Canada responded to the proposed changes, indicating we believed the changes would be discriminatory, very costly, unworkable, and unenforceable. In fact, the United Kingdom's Food Standards Agency has argued that the proposed EU regulations are “unworkable, unscientific and highly costly”. We agree with this assessment.

    In addition, one of the EU's own recent studies of GM foods found “no new risk to human health or the environment, beyond the usual uncertainties of conventional plant breeding”. The report concluded that “the use of more precise technology and greater regulatory scrutiny probably make them”--novel foods--“safer than conventional plants and foods”.

    Another problematic market for Canadian agrifood exports is China. China promulgated its regulation on agricultural GMOs in May 2001. The implementing regulations were released on January 7, 2002. These regulations include a mandatory labelling scheme and are a barrier to Canada's agrifood exports, putting at risk $560 million in annual canola exports.

    These are just a few examples of the approaches our trading partners are taking to GMO labelling. It is clear from these examples that mandatory labelling policies are detrimental to Canadian agrifood exporters. Furthermore, it is our belief that many of these policies may be inconsistent with international trade agreements.

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[Translation]

    In conclusion, Madam Chair, the Government of Canada understands that the provision of information to consumers is an important market reality. However, we must be responsible and provide this information in a manner that is meaningful, enforceable and consistent with our international rights and obligations. The best way to do this is through a voluntary, science-based and market-based labelling scheme that is consistent with our international rights and obligations.

    We believe the labelling standard currently being developed through the Canadian General Standards Board is a credible standard developed through a credible process that will stand as a model internationally. A successful CGSB standard that incorporates both positive and negative labelling for GMO and non-GMO foods will demonstrate that government-imposed regulations are neither necessary, nor the least trade-restrictive approach to meeting market-based consumer demands or interests.

    Thank you, Madam Chair. My colleagues and I are now ready to answer your questions.

[English]

    The Chair: Thank you, Mr. Carrière.

    Mr. Gagnon, welcome to our committee. You may go first.

[Translation]

    Mr. Marcel Gagnon (Champlain, BQ) Thank you, Madam Chair.

    I want to welcome our guests, who have given us specific information on what the government wants in terms of labelling for genetically modified products. Allow me, however, to disagree with the points of view expressed in this document.

    In fact, according to this document and the information you have given us, the public does not have the right to know. However, I think that we are moving to a time when more and more consumers want to know. In my opinion, the consumer's strictest right is to know what he is buying and what he is eating. I see this as a type of dictatorship that is less and less acceptable—and we are currently seeing this in European countries—where people are being told that products are good for them and that they should simply eat them.

    It is being said more and more often that eating is voting. I do not know why we would prevent people from knowing what they are eating. Whether we like it or not, in my opinion, we are moving in that direction. Just look at the small producers who are currently organizing. These people are returning to nature as much as they can. It stems from concerns people have when buying products without knowing what all of the ingredients are. I have some trouble accepting the statements that you have made. Moreover, you say that it will cost a fortune to inform people. You said that labelling food products so that people can know what they are eating could lead to a 30 to 41% cost increase.

    I do not know how much past experiments have cost. Rather dramatic situations have occurred, because people have not been informed of potential costs in terms of human health. I refuse to believe that in the future, the only thing that will count is money. I am convinced, or at least I hope, that we will move towards a more transparent system for consumers. I think that is a basic right.

    I would like you to explain to me how you have determined that labelling food products will cost an extra 30 to 41%.

    Mr. Claude Carrière: Before talking about the study, I simply want to say that for matters of health and safety, government policy requires mandatory labelling. We are talking about matters other than health and safety-related ones.

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    Mr. Marcel Gagnon (Champlain, BQ): We are talking about productivity and improvements so that less fertilizer, insecticides and pesticides are needed.

    Mr. Claude Carrière: There are two things. If a genetically modified product poses certain problems for health and safety, it must be labelled.

    For matters not related to health or safety, we feel that mandatory labelling is not the best way of informing consumers and that it will have negative consequences in a host of areas, as I mentioned in my presentation. We feel that the best way of informing consumers of these other matters is through voluntary labelling, which is currently available on the market for organic products, and we soon hope to see the results of the work being done by the Canadian General Standards Board.

    To go back to your specific question, the study is from the University of Guelph, and we can make it available to the committee later on.

    Mr. Marcel Gagnon: I understand when you talk about health and safety, allergies and everything that may involve a risk. That is already done; the products are already identified. However, who is to say that wheat or corn that is genetically modified today will be as safe in 15 or 20 years?

    Do we have enough long-term proof to guarantee that there are no risks for consumers? At some point, you said “we feel that...”. That is not a guarantee. I do not know where I saw that, but when will we be able to tell consumers that they can buy genetically modified products without any second thoughts, as we can guarantee that the products do not pose any risks?

    Have we been studying genetically modified products long enough to be able to say that our past experience proves that they do not present a risk?

    Mr. Claude Carrière: I think that the committee has already heard from the regulatory agencies like Health Canada and the Canadian Food Inspection Agency, which are responsible for implementing Canadian regulations in this area. They assure us that the products authorized for sale on the market are safe in terms of health and public safety. We have their scientific opinion, we accept that as a department. We work in the area of international trade, Mr. Gagnon, and we rely on this expertise.

    Mr. Marcel Gagnon: I hope that your role is not to try and do these experiments yourself, but to sell the products being produced. We need a competitive edge.

    However, when you say that labelling is mandatory only for products that present a risk for health and safety and not for genetically modified products that do not present any risks, people are questioning that more and more. I personally have some doubt on that part of your statement. I think that people are more inclined to look at profits, money coming in, but that eventually, like many consumers, we will perhaps regret having moved too quickly in certain areas.

    But I think that at the very least, the consumer who wants to have a choice must be given one. In my opinion, the most basic consumer right is the power to choose foods that are not genetically modified if he so desires.

    Mr. Claude Carrière: Mr. Gagnon, the consumer can make that choice. He can buy organic products that are available on the market. These products do not contain any genetically modified substances. That already exists. It is already available to consumers.

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[English]

    The Chair: Thank you, Mr. Gagnon.

    Mr. Dromisky.

    Mr. Stan Dromisky (Thunder Bay--Atikokan): I'd like to follow through with the kind of question that came from a member of the opposition, Mr. Gagnon.

    You quote a production cost of 35% to 41%, and you talk about labelling. Let's look at what labelling means from a very simplistic viewpoint. As I understand it, we're talking about processed foods basically. I don't care whether you're talking about mayonnaise or peanut butter.

    Let's use mayonnaise as an example. The company that is going to be producing that mayonnaise, whether it's in a small, medium, or whatever kind of container, could easily determine what percentage of the total volume--I think they could, with their scientists--contains genetically modified components. Right? So if it's 1%, 2%, or 2.5%, that could easily be determined.

    Once that's done, and they know exactly what to put on the label, from that point on they could produce hundreds of millions of that mayonnaise or peanut butter in the various sizes with the same label all the time, and there would be no additional costs. It's done already. They know exactly what's in there, providing they follow the same recipe for mixing the ingredients, processing the food, and putting it in the jars--the recipe never changes.

    So I can't understand this cost increase of 35% to 41%. I would love to see the study, because I'm very suspicious of studies of this nature. Any company, any firm, any institution, any government that wants to give a certain message to the public can play around with figures, can include variables in the study that normally would not be included to alter the outcome in one direction or the other, depending upon what they really want--if that's their goal, to frighten us, to say to the politicians and everyone else in the country that it's going to be too costly.

    And this factor of 10% in the retail, the way I perceive it, the 10% increase in costs in the retail level is another reason for increased profit margin, nothing else. I just don't understand those kinds of figures.

    I would love to see copies of the studies that have been done by the University of Guelph that you indicated.

    Another factor is when you take a look at the countries that are opposed to genetically modified foods being introduced into their societies--I know the market plays a very important role here--many of the countries are in Asia. Australia is just south of that. Australia produces canola, wheat, and so forth. Now, they can't compete with the United States and Canada, but they will be able to compete if they're going to be introducing these grains that are free and not modified to a market that is demanding it. So I can understand why canola is becoming very important in the Australian farmers' fields, because the market is right there, next door to them. I think that is a very important factor. The big market we have, as you indicated in your report, is just south of the border in Mexico and the United States.

    The question I have is, how far do we go? This is something for the committee to decide. What is most important--those kinds of factors that drive the market, or the health of each and every individual in our country? Are we going to give choice to individuals regarding the kinds of foods they consume, the kinds of foods they purchase off the shelves in the supermarkets? Or are we going to control to the point where we have these ulterior motives, where the profit margin is far more important than the health of the Canadian citizens and others who consume these products?

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    I know it's a very difficult problem. You're presenting a position that's not really yours. It's just a position of a policy, a government, what's in existence, and so forth. Maybe this is not a fair question to ask, but what is your personal opinion regarding this?

    Mr. Claude Carrière: Madam Chairman, I have no personal opinion at this table, as you know.

    To go back to a number of comments you've made, Mr. Dromisky, first, I don't know if the committee has received views from the private sector. Perhaps the Grocery Products Manufacturers Association could address some of the considerations you made earlier about some of the processed foods.

    Since I make mayonnaise at home sometimes, I know the major ingredient is oil. There is no DNA or protein in oil. There is no way to test an oil to determine whether it has been produced from an oilseed that has been genetically modified or one that has not. There is no DNA and there's no protein, so there is no way to know. This is just for the oil part.

    I would recommend that if you wish to deepen the study of some of the implications at the processing end of further processed products, the Grocery Products Manufacturers Association, for example, could be interested in a discussion with you. We will provide to the committee the study we referred to from the University of Guelph, to use as basic raw material for your continuing study.

    As I said earlier, Mr. Dromisky, when it comes to safety and health, the Canadian regulatory requirements apply to GM products as well as any other product. There is mandatory labelling and there are mandatory approvals of the product. A GM food is also mandatorily inspected and approved by Canadian regulatory agencies. So what we are talking about is mandatory labelling for non-health or safety requirements, because the current requirements already apply to that.

    Our view as a department is that the voluntary guidelines that the market applies already provide consumers with the information they seek, if they choose to purchase a product where they have an assurance that it does not contain or come from genetically modified organisms. That is through the organic labelling requirements.

    For some, that may be somewhat restrictive, which is why the government has sponsored the process of the Canadian General Standards Board to develop a voluntary standard for GMOs, both positive and negative, using the usual standard-making process, which involves stakeholders from a reflection of society: consumers, farmers, producers, industries, individuals, and groups, a wide range. Hopefully this standard will be successful and will demonstrate that a voluntary standard other than an organic standard, which has different kinds of requirements and is perhaps even more restrictive, is possible. We believe it is, and we belive that would allow consumers to make informed decisions as to what they purchase.

    We think that from a market standpoint, a voluntary scheme is the better approach. I know others may disagree with that assessment, but that is our view.

    The Chair: Thank you, Mr. Carrière.

    Do you need more time?

    Mr. Stan Dromisky: No.

    The Chair: I'm willing to give you more time, but I wish we could ask our trade officials questions about trade implications as opposed to anything to do with health or safety. They don't know anything about that. It's the trade implications.

    I notice, for example, that their last statement is “It is our belief that many of these policies may be inconsistent with international trade agreements”. Well, to me, that's the whole purpose of them being here. Which trade agreements, which policies, which clauses in those agreements, etc.? That's what I want you to talk about, not your opinions about health and safety.

    Madam Scherrer.

Á  (1140)  

[Translation]

    Ms. Hélène Scherrer (Louis-Hébert, Lib.) I wanted to ask you a very specific question about international trade, but also go back to an argument that may have an impact on international trade.

    Along the same lines as the two people who spoke before me, I would say that the debate on GMOs is really a debate that gives rise to very strong arguments by everyone, both on one side and the other. We are always under the impression that we are being manipulated to some extent in the debate when presented with arguments whereby underdeveloped countries would not have quicker access to products if, for example, mandatory labelling were imposed on the other side.

    I have always felt that the problem is one of communication. I must tell you that personally, as a consumer, if I buy a product with a label that says “may contain genetically modified products”, I am obviously going to be concerned, because I do not know what that means nor do I know what the implications are. We have talked about this often around the table, and we always come back to the same questions. We are having trouble making a distinction between a genetically modified product, a transgenic product, an organic product and a product with hormones. From the documents you brought, I got the impression that we were not sufficiently addressing the argument whereby the problem, at the trade level, is a concern, not with respect to costs, but the impact that a label with “genetically modified” on it could have on a product. This product could make consumers afraid of buying it or putting it on the market. I have some trouble believing the arguments about the costs linked to labelling.

    First of all, are you dealing with this, or is there a communication campaign underway to explain to people what this really means?

    I would buy a product labelled “genetically modified” if someone could tell me that it presented no long-term health risk. I would buy the product.

    So, is it because that is impossible to do? Are there any countries that do that? Seeing “may contain” makes me afraid. But the day that the label includes “does not present any short or long-term risk”, I will buy the product, because I will no longer have a problem with it at that point.

    So to my mind, there is a problem with communication, and having a guarantee. We do not have that guarantee, and no one can guarantee that the product won't, in the short or long term, be harmful to health or consumers. The day we can put that on the label, I think the problems will disappear.

    Mr. Claude Carrière: Again, Madam Chair, this is not a matter of international trade. I would very much like to discuss it, but it is not really our area of expertise.

    I hope that you have had an opportunity to hear from Health Canada and the Canadian Food Inspection Agency, because that is their job. It is not ours. But we can talk to you about costs.

    Mr. Claudio Valle.

    Mr. Claudio Valle (Director, Technical Barriers and Regulations, Department of Foreign Affairs and International Trade): If we really want to know if a product contains genetically modified ingredients, we must put a traceability system in place. From the time the seed is put in the ground, to the developed product, to how it has been harvested. How can we have a different segregation system from the current one?

    For grains in Canada, we have a bulk shipment system that does not require segregation. If we have to build different elevators, railways, hopper cars, we have to account for all of these aspects right up to the time the consumer eats the product. We will have to set up a system that will increase costs, because people will have to take all of these effects into account.

[English]

     All these different costs associated with treating this product in a different way are simply because it's made in a different fashion. But in the end it's the same product.

    If you're using an oil to produce your mayonnaise, whether it's GM or non-GM, you can't test the effect. Yet you are seeking to label it because you want to know that it has come all the way back to when it was seeded. To keep that tracking is going to cost you money. The producer who has to take on this responsibility of providing the information will have to trace it back to where it was put into the ground. The added costs are reflected in this way, because you're treating the same products in a different manner.

    If you go toward a voluntary system that allows you.... Somebody wants to provide information to the consumer, and he believes that it's in his interest, let's say, to designate that this product doesn't contain any GMOs. He will do it in some way. But the costs are borne by him to find out whether in fact what he's saying is truthful, and he has to go back.

    By allowing a voluntary system, you allow the marketer to impose the costs in whatever message he wants to provide to consumers. By forcing it, you're only forcing the costs on those elements for which you think there is something problematic. That's where the international problem comes in. We're dealing with a like product that has the same DNA. You can't tell the difference. Yet you're forcing a country to label it one way, and the similar product is not labelled. So you're increasing costs and you're forcing a discrimination on that product. That's why international rules say you're providing a level of discrimination that is not allowed.

    The trading system is based on consideration of like products. Treating products differently simply because they've been produced in a different way is a form of discrimination.

Á  (1145)  

    The Chair: Mr. Gagnon, then Mrs. Chamberlain.

    You were startled, Mr. Gagnon. You're the only member of the opposition side. It's your big moment.

[Translation]

    Mr. Marcel Gagnon: Thank you, Madam Chair. I also want to thank you for having welcomed me to the committee. Are you welcoming me here because I am a member of the opposition?

    I am having more and more trouble reconciling myself with what I am hearing here today. I am somewhat distressed to hear that we must not discriminate for reasons of international trade, although that is another topic. But I want to go back to security. You are telling me that is not your responsibility. But your document is full of remarks stating that we must move towards genetically modified organisms, and that is why I am inclined to go back to the matter of security.

    For consumers who do not believe that we have reached the point of being able to guarantee adequate security, we are discriminating. We are forced to tell that consumer to pay for the healthy foods that he wants. For the level of security he wants, the consumer is required to pay more. I'm a bit bothered by that.

    Nor do I believe that the costs stemming from labelling products containing GMOs would be that high. I understand that you have the information and that you did not do the research, and I am not criticizing you for that.

    I remember a case forty years ago; a gentleman came to Quebec and told us that we should eat organic products. Everyone laughed at him, and told him that that was crazy, that he would never be able to produce organic products at a reasonable cost. This gentleman's name is Jean Richard, and today, he is being honoured for everything he has done to promote organic products in Quebec. He is pointed to as an example and the Quebec Department of Agriculture consults him.

    When I hear, as was mentioned earlier, that food safety cannot be confirmed, that we cannot give consumers confidence by saying that we will put the contents of a product on the label and that it might hinder trade, it may well have a negative impact in the short term, but in the medium and long term, we will congratulate ourselves.

    I have another point. I have even more trouble when people use the United States as an example in terms of consumption. In fact, I have seen reports on the future of Americans as regards, for example, the percentage of people who are becoming handicapped by obesity. It will not help sell our products to say that people are eating that in the United States.

    I know that is not your problem. I am perhaps a little bit behind. I should have come earlier. But I have trouble with the idea of sacrificing security for profit. I am going back to the question of costs again, because personally I have trouble accepting your response with respect to the cost of labelling.

Á  (1150)  

    Mr. Claude Carrière: I am going to go back to that. First of all I want to tell you that the products are safe. They have been approved by the Department of Health and they are monitored by the Canadian Food Inspection Agency.

    You were talking about labelling for reasons other than health and safety. Do not get things mixed up.

    Mr. Marcel Gagnon: Yes, but we don't know.

    Mr. Claude Carrière: Yes, the labelling provides for that.

    With respect to the mechanisms to be put in place in order to trace a product from the time of its planting to its arrival on the shelf, to ensure that a product is in fact what it is said to be, that requires a separate distribution system.

    Producers currently choose whether or not to go into organic farming, and there is a distribution network for them. You say it is more expensive, but since there is a separate distribution network, it is more expensive. Those who choose to buy those products have to pay for a separate network.

    If there were a general requirement for all products to be traced, that would increase costs. Overlapping systems would have to be set up. That would require investment, and would obviously entail costs.

    We are not saying you have to do one thing or the other. Those are the consequences of a policy that would entail additional costs. As far as health is concerned, it has already been done. The requirements are there. It is not a question of profit at the expense of health. We are talking about labelling for non-health or safety reasons.

    Thank you.

    Mr. Marcel Gagnon: Speaking of advertising, might not the costs be offset by increased demand in Canada for well-labelled foods? Wouldn't that increase the demand? Has any research been done on that? Wouldn't that in fact increase our visibility and sales?

    Mr. Claude Carrière: I do not know the answer to that question. Some think it would; others think it would not. For now, the market will decide, and the answer is no because the market for organic products is limited.

[English]

    The Chair: I'm really getting frustrated. We have the trade officials here. They state in their document that mandatory labelling could break trade agreements. I have not yet heard the words NAFTA, WTO, TRIPs, or biodiversity protocol--all the things we've signed.

    You also have talked about voluntary labelling as if that's okay. Why doesn't that have the same impact on the world markets we ship to that you seem to think mandatory labelling will have? You haven't clearly described why mandatory labelling vis-à-vis voluntary labelling is different in the trade experience, in particular exporting, and you have never yet mentioned any of these things we've signed.

    The reason we have you here is not to tell us about health and safety, consumers' feelings, any of those things, but about Canada's trade agreements and why you have taken a position that mandatory labelling is bad, which is very clear throughout your paper. So no matter what question you get, I wish you would come through with some of the trade issues that have to do with your expertise.

    Ms. Chamberlain.

Á  (1155)  

    Mrs. Brenda Chamberlain (Guelph--Wellington, Lib.): Is there any country that puts mandatory labels on these right now?

    Mr. Claude Carrière: As I indicated in the presentation, there are mandatory labelling requirements in Japan, China, and in the EU. All these requirements are different and they apply to different types of products or commoditiies. They generally focus on the bulk commodity in Europe as well.

    The result has been that our canola oilseed exports to Europe went from $400 million to zero when they implemented the requirements, because the distribution system in Canada cannot segregate a non-GMO from a GMO canola seed. Therefore it cannot provide an assurance that a particular shipment of canola is GMO-free to a 1% tolerance level, as is required.

    Mrs. Brenda Chamberlain: Do I understand this correctly then that we are actually at a disadvantage because we aren't labelling with these other countries? That's correct, is it not?

    The Chair: Right, that's what he's saying. We just lost $400 million worth of sales because we didn't have it labelled.

    Mrs. Brenda Chamberlain: That's what I thought. That's what I'm trying to clarify.

    The Chair: Good. Thank you, Ms. Chamberlain.

    Mr. Claude Carrière: It's not because we don't have a label; it's because we cannot produce to this tolerance level as required in Europe, because we would have to develop a completely separate storage, shipment, and distribution system and it would be too costly for $400 million. We would have to do that for the whole of the production, and the cost of the distribution system would be several times larger than the amount exported to Europe. The producers have decided simply not to export.

    Mrs. Brenda Chamberlain: But if this were to grow...? For instance, in Canada now there seems to be a push by consumers--not everyone--and a heightened awareness among consumers to have this labelled. That is a pretty broad statement, but in my area of Guelph, where your study has come from.... I have a great deal of respect for the people who did this study. They did it well and to the best of their ability. But I represent the University of Guelph, and a lot of professors and other people are writing me and coming into my office, saying please label. So I have one group saying don't label, and another group from the University of Guelph saying please label. It is most confusing to me as a member of Parliament and a lay person, listening to all these different opinions from the University of Guelph. I'm not sure what the right answer is.

    I also become more confused when I hear you say we can't label because it's too expensive, yet we're missing out on some trade because we don't label. Now, granted that isn't the amount of other trade.

    This is a general comment, but I'm not very happy with the trade we've had with the United States. I know it's huge, but I think what's happening with our lumber right now is nothing short of a huge travesty. I don't think we've fought hard enough, as Canada. I don't think we've held our ground. That's another issue. But it is trade, and it's your area, and I put that on the table.

    We have a lot of people unemployed now because of the poor stance we've taken--I guess a trust, a trust with all of these agreements, but a trust, quite frankly, that we're getting it right where it hurts.

    The family farm, particularly on the prairies, is another example of our good trade, with our wheat. Our people are leaving farms they've had for 20, 30, 50, 100 years, walking away because they can't compete in trade.

    When I hear you talk about all these sanctions and things that are in place to protect us if we don't label, I don't have a lot of real faith in them any more, when I look at some of the concrete things that are happening.

    We are political servants and political leaders, but there is a huge voice out there right now across Canada saying we want to know more about the food we're eating when it is GMO. In fairness, I understand what you said at the beginning about having to trace and where the money comes from. None of us want to put consumers at a disadvantage or Canada at a disadvantage. But there is another component there that is questioning and wants to know what it's eating.

    If we don't move in the direction to label, other than this voluntary.... Correct me if I'm wrong, but the voluntary labelling is going in the direction of saying "this may contain” or “this does contain.” Can you clarify that for me?

  (1200)  

    Mr. Claude Carrière: The standard is to look at both formulations and to potentially allow for either formulation in the market. It would have norms that would allow the statement to be made, whether positively or negatively, as was chosen. The producers of the product would choose whether they wished to say “this does not contain” or “this may or does contain”. The market would determine which was best preferred by consumers. But a norm would apply to the statement being made, and there would be a certification system that would ensure that what was claimed was correct.

    Mrs. Brenda Chamberlain: What the heck does the possible designation “this may contain” mean?

    Mr. Claude Carrière: You already find that on labels today about various allergens, in particular nuts, to provide a warning to consumers that they consume this at their own risk. Many who are allergic to nuts choose not to purchase the product.

    These requirements apply to GMO foods as well. So if a GMO food contained an allergen there would be a requirement, in Canadian regulations today, for the labelling to be on the product. In some cases, products in the pipeline today remove allergens. But at this point GMO products are not on the market.

    Mrs. Brenda Chamberlain: So your stance as a department at the moment, then, is that it is better to lose the little bit in trade we're losing because we don't label than the whole lot we might have to go up against the States and lose. Is that correct?

    Mr. Claude Carrière: It's perhaps an implication I might not have made, but it's as good as any.

    Mrs. Brenda Chamberlain: Well, I like things simple.

    The Chair: May I ask a question to clarify the point Mrs. Chamberlain has raised?

    Are you saying if we did label, the Americans would reject our food? Would they stop importing it because they didn't want it labelled? That doesn't seem to make any sense to me. Isn't it more the other way, that they don't want us competing with them in other parts of the world, with their being at a disadvantage because they're not labelling? Would they reject our labelled food is what I'm asking you.

    Mr. Claude Carrière: This is a very broad question you asked. If you'll permit me, the first thing is that the large majority of the food products we export to the United States are processed foods, some of which may have American ingredients. Most of them have American ingredients, so there would be a creation of much uncertainty about the trade in ingredients that takes place already.

    Secondly, processed foods that are imported from the United States would have to be labelled as required in Canada, as is currently the case. And what could happen, again, is a chilling effect in the level of trade.

    More importantly, because we are the United States' major trading partner--their biggest client, as they are our biggest client--it is possible the United States could challenge a mandatory labelling requirement, if they felt it was inconsistent with our NAFTA or WTO obligations, as discriminatory with a like product. I mentioned earlier the question of oils, where it is impossible to tell the difference between oil that comes from GMO canola and oil that comes from non-GMO canola. The same thing is true for corn or soya.

    In the technical barriers to trade agreement, or in chapter 9 of the NAFTA concerning standards-related measures, we have an obligation to take the least trade-restrictive measure and to take only measures that are necessary for the protection of various legitimate objectives mentioned in the agreement. A legitimate objective that is mentioned is the protection of safety and health, and there has been no challenge by the United States to our labelling requirements that are mandatory in relation to safety and health. We don't know how they would see it if there were to be a mandatory requirement put in place for reasons of consumer information, especially as we know that there are already available alternatives that provide such information to consumers through the voluntary systems--in particular, the organic labelling regimes that apply today, and the voluntary regimes that some grocery producers have put in place in Canada and elsewhere, and hopefully the Canadian General Standards Board standards.

    So there are implications to our exports, but there are implications vis-à-vis imports from the United States and an action that could have the result of de-integrating the North American marketplace. We have, I know, in some sectors, significant problems: softwood, steel, and wheat, although it's not as--

    The Chair: Sugar?

    Mr. Claude Carrière: Yes, sugar. I'm unfortunately well aware of that one as well. We could talk about these things.

    Sugar is not, I guess, the favourite product of the health committee, Madam Chair.

  (1205)  

    The Chair: Maybe not with the committee, but certainly with the chair.

    Some hon. members: Oh, oh!

    Mr. Claude Carrière: So there would be many implications here.

    The Chair: Could I just summarize what you're saying?

    You're saying one of the reasons your entire paper comes out so strongly against mandatory labelling is essentially because of the department's fear of a chilling effect or some kind of trade initiative--a challenge, or something--from the Americans. Is that the bottom line?

    Mr. Claude Carrière: It is a significant consideration to us, yes.

    The Chair: Thank you.

    I think Madame Thibeault is next.

    Oh, sorry, Mrs. Chamberlain, go ahead.

    Mrs. Brenda Chamberlain: So that is just to say, really, again, we can't hold our own with the U.S. in trade.

    The Chair: Well, it's always that way, I think, that whatever they....

    The interesting thing, to me, is that if we did it, it would inhibit their sending food products to us, and then they would cool it with us because they couldn't get their products in that weren't labelled and then try to stop our products that were labelled. Unfortunately, we have other considerations here, such as the health and safety of the Canadian population. We're not responsible for the American population. So there are all these trade-offs.

    In the meantime, it's Madame Thibeault, followed by Mr. Dromisky.

[Translation]

    Ms. Yolande Thibeault (Saint-Lambert, Lib.): Mr. Carrière, I apologize for arriving late.

    I see at a glance here that you are the head negotiator for the FTAA. In that capacity, can you tell us whether the counties of South America, which make up a huge population, have labelling policies or are still in the early stages? Are they going to do like the United States?

    Mr. Claude Carrière: The lay of the land in Latin America varies. Argentina, in particular, has very similar positions to Canada's. As you may know, Argentina was part of the Miami group in connection with the Biodiversity Protocol.

    Chile, on the other hand, has concerns and is working toward mandatory labelling.

    So it is a bit of a mixed bag.

    Ms. Yolande Thibeault: What about Brazil? That is probably the most heavily populated country.

  (1210)  

    Mr. Claude Carrière: Attempts have been made in the Senate to impose mandatory labelling, but they have gone nowhere, and no measures have been taken to date.

    Ms. Yolande Thibeault: Hopefully, then, in the negotiations with all those countries, if we all get together, we might be able to bring the United States on side, because we are talking about huge populations. We are talking about highly attractive markets.

    You are talking about the Asian market, but the South American market is going to become increasingly important to us.

    Mr. Claude Carrière: I would like to come back to some of the comments the chair and you yourself have made.

    Latin America is a potentially important market, but for the time being, it represents less than 2% of our exports. In general, our exports to the United States are on the order of 85 to 87%, and we have a surplus of $90 billion with the United States in terms of goods. This surplus finances many of the deficits we have with other countries. That is why we attach a great deal of importance to the American market, in terms of exports but also in terms of imports.

    Finally, as I already said, we are still talking about mandatory labelling for non-health or safety reasons. That is the way things stand for the time being. The government of Canada has policies that apply and that require labelling when a genetically modified product is unsafe or does not meet our health requirements. So, for products that pose a threat to health and safety, it is done, and we are talking about mandatory labelling for other reasons. Thank you.

    Ms. Yolande Thibault: You are talking about non-health reasons. I would like to make a brief comment on that while we are at it. There has been some discussion of the costs of mandatory labelling. I will never forget the debate about bilingual labelling in Canada. At that time, people said everyone would go bankrupt. The years have passed, and everyone is still around. All of our companies like General Foods and so on are doing very well. You will have to excuse me if I am a bit skeptical. Thank you.

[English]

    The Chair: Did you want to respond to that, the comparison with the bilingual labelling, which also had dire predictions attached to it?

[Translation]

    Mr. Claude Carrière: As a matter of fact, things have changed. When you go to some retailers, you will even find trilingual labels, and that is great.

    But mandatory labelling of GMOs is different from bilingual or trilingual labelling because it would require the makers of a product to assure consumers of the origin of the raw materials. In Mr. Dromisky's mayonnaise example, the mayonnaise producer would have to be able to certify to the consumer whether or not the oil used came from genetically modified oilseeds. We know that this is physically impossible to ascertain. Throughout the entire production process, there has to be segregation. We are not saying not to do this. We are saying that there are tremendous consequences both in terms of distribution and cost.

    Finally, if the product cannot be marketed because of this type of labelling, where it is impossible to distinguish between this and other products, we have to also ensure that there are no obligations under international trade agreements that prohibit discrimination among similar products. The products are similar. They are physically indistinguishable. In studying this issue, therefore, the international economic and legal consequences must be taken into account.

  (1215)  

[English]

    The Chair: Thank you, Madame Thibeault.

    We'll go to Dr. Dromisky, followed by Mr. Gagnon and Madam Scherrer.

    Mr. Stan Dromisky: Thank you very much.

    First of all, I'd like to make a general statement.

    Over the years of observing what's happening in our relationship with the United States and the relationship of the United States with other countries in the world, in my mind there has emerged a general principle. Now, as a member of Parliament, I can say that principle has become an absolute. The principle is basically a very simple one. Any international agreement that the Government of the United States of America signs with whatever country--and how many countries doesn't really matter--they will adhere to if it's to the benefit of their society. If any signatory breaks it, they will scream blue murder because it affects their society. However, if it comes to the point where there will be adverse effects on their society, they themselves will ignore that treaty completely. In other words, they will only adhere to those international agreements they sign that are to the benefit of their own people, period. I would keep that in mind.

    Now I'm going to make a general observation. Where in the world are we going? We're talking about a situation as it exists right now. We know what the restrictions are in Europe, which is a fantastic market, but I would like to take a look at Asia. I thnk what's happening in Asia right now is something we have to carefully observe and take into consideration. We have two major economies there, Japan and China. They in turn are doing a tremendous amount of trade with their neighbours--Indonesia, Vietnam, Thailand, and so forth--and those trade relationships are growing on a daily basis. The reason is simply because a strong middle class is emerging in Asia, and more and more shifts are taking place in the daily diets of hundreds of millions of people there, including India. In other words, they don't have to depend on a rice-centred diet once they reach the point where they can start purchasing processed foods, bread, and so forth. That's what's happening.

    Considering what's happening in the European market and what's going to happen in the future in the whole Asian market and with competitors all over the world becoming more efficient, more productive, and so forth, where are we putting ourselves in the long run when we only have...? We seem to be squeezing ourselves into a position where we're going to have to rely completely on our trade relationships with and the markets of the United States and Mexico. That's really a frightening scenario.

    Mr. Claude Carrière: Well, actually we are quite proud of our trade relationship with the United States. As I said earlier, we had a $90-billion surplus last year. But we do see a lot of potential in other markets.

    We are very active in the Americas. We would like our 2% market share in exports to the Americas to grow as we contribute to the development of the hemisphere.

    We're very active in the Chinese market. We were very active in the Chinese accession to the WTO negotiations and are monitoring very closely implementation by China of its new obligations as it has joined the WTO. We are particularly concerned about recent activity in restricting our access to that market.

    We are also very interested in activities in Japan, in sub-regional negotiations with Southeast Asia. In particular, they have concluded recently a free trade agreement with Singapore. You may be aware that we are in the middle of negotiating a similar agreement with Singapore, as much to demonstrate our interest in the region generally and to signal to Canadian businesses not to look only to the U.S. market but also to the Asian market.

    It's no secret that we have also had long-term interest in Europe. It is the single largest market in the world. We have a chronic trade deficit with them, which demonstrates that we can do much better on both trade and investment. We have a Team Canada mission in Germany right now seeking to attract further investment.

    So in our trade policy, yes, Canada-U.S. is very high as a priority, but we are also seeking to open markets throughout the world, in the Americas, in Asia, and in Europe, using bilateral instruments, but also the WTO, with the new round of negotiations that was launched last fall.

    So yes, we are aware of both sides of the Canada-U.S. trade relationship, and we do wish to encourage Canadian entrepreneurs, exporters of goods and services and investors, to look to other markets as well as to further develop the U.S. market.

    Sorry about that, Madam Chair.

  (1220)  

    The Chair: Mr. Gagnon, and then Madame Scherrer.

[Translation]

    Mr. Marcel Gagnon: Thank you.

[English]

    The Chair: Go a little bit faster this time, Mr. Gagnon. I gave you ten minutes the first time because you were the lead opposition critic, but usually we restrict it to five minutes.

[Translation]

    Mr. Marcel Gagnon: Thank you. It took a bit of time, but now I understand what you are saying.

    Mr. Carrière, I have great respect for your talents as a salesman. Indeed, that is why you are in charge of the negotiations, but as we heard from comments made around the table, there is near unanimity with regard to certain concerns. I have also been a salesman, but not in your league, and as regards the current issue, which is the future of the food supply, I have a problem with us putting all of our eggs in the same basket as the Americans just to make them happy, but not Canadians and Europeans. I think this is a growing trend.

    You are not very convincing when you say on page 2:

I do not want to wade into the debate on whether or not GM foods should be labelled even if they are proven safe to consume just because there "may be" some long-term effects we do not yet know about.

    You say: "some long-term effects we do not yet know about." That's where the problem currently lies with regard to our commitment. What worries consumers here and in Europe is what will happen in the long term? I know you want to promote international trade, but we need to address this concern, because one day we may be glad that we were a little more cautious with respect to food labelling, even if it caused temporary problems with our trade relations with the United States. I feel that ultimately consumers will win out and that the trend is too strong to be reversed. Consumers want long-term security. I feel that we will have to study the matter very seriously. That's all.

[English]

    The Chair: That was really a statement, not a question, so I don't think they have to answer.

[Translation]

    Mr. Marcel Gagnon: Mr. Carrière may want to respond to what I said.

  (1225)  

[English]

    The Chair: I didn't hear anything about trade. I heard about long-term health and safety, and these people are not experts in that field. So I don't think it's a good use of time to have them respond.

[Translation]

    Mr. Marcel Gagnon: Madam Chair, there was no way we could avoid the issue.

[English]

    The Chair: I thought consumers--

    Mrs. Brenda Chamberlain: Well let's get the health and safety people in here and grind them up.

    The Chair: Well, we've had health officials. We've had two groups now. But the question is, which department is controlling the agenda? That's one of the things we're trying to sort out here. Or which outside source is?

    Madam Scherrer.

[Translation]

    Ms. Hélène Scherrer: Thank you, Madam Chair.

    I have a brief, easy question. Since it has been clearly determined that one of the reasons the issue of mandatory labelling is moving ahead so slowly is because there would be repercussions on exports, especially onto the American market, what will happen to the products which are voluntarily labelled? Will they be boycotted?

    Second, how can we boost or console ourselves with the fact that we already have voluntary labelling and that people will just have to accept it, when we know full well that, ultimately, it will be very difficult for them to export their products?

    Mr. Claude Carrière: Under the market system and international agreements, voluntary labelling or standards already exist, generally speaking. Under the WTO and NAFTA, consumers, be they individuals, businesses or even governments, may, in choosing to buy or consume such and such a product, determine what they want to buy and establish standards. This applies especially to the private sector. That's where you find the voluntary system where processes have been established to ensure that standards are upheld.

    The system exists and it has been integrated into both international agreements and the markets. Therefore, if there is a voluntary standard, businesses, if they wish to sell a certain product, must meet the standards. Otherwise, they will have to sell their products elsewhere, in markets with different standards. So, the Department of International Trade is pleased to see that voluntary standards were developed in an open process and reflect the interests of all the parties to the deal. There is no problem at the trade policy level.

    As for labelling, we feel that a good system of voluntary labelling can meet the needs of consumers which your committee discussed and about which you had concerns with regard to information and other issues.

    Ms. Hélène Scherrer: Mr. Carrière, I would like to know what is happening with products which carry the label: “contains or may contain GMOs...”. Have these products been boycotted? Can you tell me whether these products are being boycotted?

    Mr. Claude Carrière: To our knowledge, the volume of products voluntarily labelled, "this product may contain GMOs", is, for the moment, very small for the reason you mentioned earlier: people who see this type of label simply choose not to buy the product, either out of suspicion or for any other reason. This is what happens with voluntary labelling.

    One of the reasons we believe mandatory labelling would have repercussions is because when the government requires that a certain amount of information be included on the label, it is for health and safety reasons. But if you add another type of information, the consumer may still believe that it is related to health and safety. People may become confused with the fact that there are two different types of information. That's why we feel voluntary labelling is the better option.

  (1230)  

    Ms. Hélène Scherrer: Can you think of a product which carries a voluntary label?

    Mr. Claude Carrière: No.

    Ms. Hélène Scherrer: I would like to know of a specific product which carries a voluntary label indicating that it may contain... Would the manufacturer still be able to export the product or would it be boycotted?

    Mr. Claude Carrière: I can't think of one. You can try to find a product, but I can tell you that, for instance, a huge proportion of canola production is genetically modified. Part of it is not, but given the distribution system, generally speaking, you cannot separate both products.

    So, whether the product is labelled or not, Canadian canola or canola oil buyers, who are generally processors, know that the product they are buying is genetically modified or chances are that it is. As a result, our producers sell their product on certain markets but not elsewhere anymore.

    In Europe, the issue is not one of labelling; the issue is that, given the nature of the system, it has become virtually impossible to demonstrate whether a product has been genetically modified or not. As a consequence, exporters choose not to export anymore.

    It's sort of a reverse example, but it addresses your question.

    Ms. Hélène Scherrer: I would like to conclude on that point. People often invoke the argument that the reason we are not going towards mandatory labelling is because we already have voluntary labelling and that companies which choose to voluntarily label their products may reap the benefits of informing consumers that their product may contain GMOs. This argument represented a softer approach to the fact that people or companies in favour of voluntary labelling were addressing safety concerns.

    However, if you say that those who voluntary label their products are automatically excluded from the American market, then the issue is not one of voluntary labelling anymore, because it is obvious that no one will want to label their products anymore. It wouldn't even be a matter of informing consumers, since a company would be taking its fate into its own hands if it did decide to voluntarily label its products. So, you couldn't invoke the voluntary labelling argument anymore if, at that point, those who wish to use it know that any export market would be automatically cut off to them. People will stop using that argument, because it does not hold water. The consolation will lie in mandatory labelling.

    Mr. Claude Carrière: There are two types of labelling. First, there is “may contain or contains” and, second, “does not contain”. As it now stands, in the area of organic labelling, I don't know if those products have labels which say “does not contain”, but it is understood that a product labelled organic does not contain GMOs, chemical products, fertilizers, pesticides or other such products. That's one way.

    We don't have any other examples. We can try to find out, and we can report our findings before the committee again, if there exists, in Canada or elsewhere, consumer products which carry a label indicating that “this product contains or may contain GMOs”. We will look into it.

    What I'm saying is that people working in the wholesale business, the buyers of canola oil, those who process canola, are aware of the origin of the product. They also understand that once the grain has been pressed, it is impossible to determine its genetic origin. For some products this is impossible. For others, for technical or physical reasons, the problem lies in the distribution system, but we can still try to find an example.

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[English]

    The Chair: Thank you.

    I have a few questions. Since in your report most of the trade issues seem to arise on page 4 of the English, I wonder if you could look there. Thank you.

    In paragraph one, at the top of page 4, the third line says “mandatory labelling could discourage foreign investment in this sector“. I'm wondering if you have any proof, any economic analysis, that would show that to be true; or is it just crystal ball gazing by people in your department? If you have such proof, I wonder if you could put it on paper and send it to us.

    Second, the next paragraph says “It has been our position that mandatory labels are potential barriers to trade.“ I would like that explained in writing. Why do you think so? Do you have any proof for that position?

    In the sixth line it says “We have argued that these measures could be misused or abused by other countries for protectionist purposes.” I don't understand how it could be used, so I need it written out for me, in a paragraph giving me an example--preferably one you've identified, as opposed to one you're conjecturing, if you could do that.

    The next paragraph says “If Canada were to adopt mandatory labelling, it would be a reversal of the position that Canada has consistently supported internationally.” What I want to know is what is the source of that position? Is there a piece of legislation, or a policy paper that's been approved by cabinet, or is it a position that has evolved over time mainly not to make waves with the United States? What is the source of that position? Does it have any legislative authority, or is it just a position? In my view, this committee has been asked to examine that position, and I don't think it does have anything holding it up other than some sort of bureaucratic agreement over the years. So I want you to find out, and I'd like that on paper too.

    The last paragraph says “Canada could be vulnerable to a successful challenge under the WTO agreements or the NAFTA, on the basis that they may be inconsistent with provisions...”. I would like to know, chapter and verse, what you are suggesting there. That's what I expected to hear today: I expected a chart showing me NAFTA clauses where mandatory labelling would put us at risk of trade actions by the United States.

    I too was concerned about the 35% to 41% cost. I really don't understand it, when in fact you keep using as your example “the separation of GMO canola”. It was my understanding that almost 100% of the canola crop in Canada is GMO, so why would you have to separate it? You just know that.... Pardon?

    Mr. Claudio Valle: It's 70%.

    The Chair: It's 70%?

    Mr. Claudio Valle: It's not always commingled.

    The Chair: No, I know. But in other products we already separate organic foods and keep them separate and show them on different parts of the grocery shelves. If in fact 70% is GMO-altered or whatever you call it, then maybe the 30% should be kept apart, the way other organic crops are.

    Mr. Claude Carrière: This is done voluntarily by the producers already in organic foods.

    The Chair: Yes. And with organic canola? He's saying it's commingled.

    Mr. Claude Carrière: There is a choice. Of those producers that produce organic canola or non-GM canola with no fertilizer and pesticides, they have the choice to sell in the context of an organic label. But in terms of the bulk commodity, there is no capacity to segregate the non-organic--

    The Chair: Once it's commingled, then in fact it's sort of--I don't like to use this word--contaminated anyway, because you can't separate it. So why wouldn't you just label everything that comes out of those commingled...?

    As the basis for a 35% to 41% increase in cost, your main thrust was the distribution system--les wagons, etc.--all the way down from the field to the manufacturer of processed foods. Yet you're saying that 70% of it is genetically modified and the rest of it is commingled. Why wouldn't we just not bother separating it; just say everything is GMO-altered, because it gets commingled in the factories anyway?

  (1240)  

    Mr. Claude Carrière: That's in effect what is happening right now.

    The Chair: Then why would it raise the cost? It wouldn't raise the cost.

    Mr. Claude Carrière: I'm using canola as an example here.

    The Chair: Are our other seed oils not close? Our understanding is the only genetically modified organisms currently for sale in Canada are the seed oil crops. I think there's one potato or one tomato. I forget. But the major factor in the food industry that is genetically modified is seed oil. Is that not correct?

    Mr. Claude Carrière: Yes.

    The Chair: And the canola crop is the largest of those, is it not?

    Mr. Claude Carrière: That we produce in Canada, yes.

    The Chair: In Canada, exactly. And the canola crop is 70% genetically modified and commingled with the other 30% for transport. So why would you have to have a new transport system?

    Mr. Claudio Valle: Not in all instances. There are some who wanted to maintain the non-GM varieties.

    The Chair: Well then why wouldn't the onus be on them to have a separate system?

    Mr. Claude Carrière: That's exactly what the voluntary scheme would provide. It would put the onus on those producers of non-GM varieties to put in place a separate system and not put it on the users of the other GM varieties.

    The Chair: You just eroded your own argument. Why would the cost go up 35% to 41%, if in fact the GMO products could be transported to market and to the manufacturers in the system that already exists?

    Anyway, perhaps I'm interpreting it wrong. But if that's the case, I would like it clearly written out in a logical fashion so that we can understand it.

    The other thing I would like to object to is on page 7, where you have written: “Recently, the EU proposed to extend these already unacceptable mandatory labelling rules”. I find that surprising that any of our departments would describe other countries' rules about their own food as “already unacceptable”. That's what I call editorial licence, which we didn't ask for. We just asked for the facts.

    The other thing is on page 8, under China. You say that these regulations they're proposing “include a mandatory labelling scheme and are a barrier to Canada's agri-food exports, putting at risk $560 million in annual canola exports”. Well, back to the canola, which you use as the example, and you've now told me is 70% genetically modified, why couldn't we just slap everything that has canola in it with a label that says “this food has been genetically modified”, at which point it would get into China and we wouldn't lose the $560 million?

    It isn't their policies that are the barrier; it's our policy. We're causing the barrier for ourselves, if we can't get into that market, when we know particularly canola is so easy to identify and label.

    I'm seeing this as a reverse of reasoning on this paper.

    Mr. Claudio Valle: No, I'm sorry, but the Chinese have promulgated regulations that are unclear, not transparent, and don't allow us to determine how they want it to be labelled.

    The Chair: That's not what this says.

    Mr. Claudio Valle: The fact is that we can't ship into China right now because they're not telling us clearly what the requirement for labelling is.

    The Chair: But that's not what this paragraph says.

    Mr. Claudio Valle: They're not accepting the product approval system we've prepared, which tells them all that Health Canada and CFIA have done. They've simply put in place regulations that say stop, we want this information, but they're not clarifying what information they want.

    The Chair: So this barrier is not based on the requirement for GMO labelling but rather their general labelling requirements, which they're making unclear for us. Is that right?

    Mr. Claudio Valle: The purpose of GMO labelling.... But you have to go through the approval system of the product that you are trying to sell before you can label it.

    The Chinese have not put in place a transparent regulatory approval system that allows those canola varieties that we produce to be approved in their system. And it's not only us. The U.S is also having problems with soybeans and corn.

    The issue is an acceptance of--

    The Chair: Priority.

    Mr. Claudio Valle: --regulated products that we deem to be safe, which they are not willing to approve. Then, once you have the acceptance, there are the regulations to label them. They have not clarified clearly how they want it--who's to provide the certification, in what form, and so on.

    Clearly it's not a very transparent system. It's a trade barrier. We've made a number of representations, not only ourselves but also other trading partners. Those are the factors that are preventing the sales of our product.

    Before you can label it, they have to approve the product.

  (1245)  

    The Chair: Thank you very much. That's a much clearer explanation than that paragraph and, to me, the implication that it was strictly that they had some rules around GMO labelling, not that they had not evolved those rules to the point of being understandable to others. That seems to me a separate problem that we should be working on with our trade officials in China, trying to get that clarification, and I'm sure other countries are also.

    On behalf of the committee, I want to thank you for your visit to us, and remind you of the things we've asked for, including that study from the University of Guelph and the answers to those questions that I outlined at the end, and suggest to you that our researchers may need to call you for further information. Indeed, over the course of this study, we may invite you back.

    I want to thank my colleagues for their patience and their questioning. Tell Mr. Gagnon he can come back anytime, but I can't guarantee him ten minutes.

    This meeting is now adjourned.