CIIT Committee Meeting

    We will come to order. This is the twenty-ninth meeting of the Standing Committee on International Trade.

    We welcome today the Minister of International Trade, the Honourable Stockwell Day. Due to motions in the House, of course, we're beginning the meeting 35 minutes late. Unfortunately, that will restrict the minister's time before us. He had been scheduled from eleven to twelve, and he has a plane to catch shortly after twelve, so we're going to change our format in a small way to fit within the time available.

    If I could ask the minister to maybe give some brief opening remarks, then we will go to questions from the committee, and I think we're going to have to keep it to one question each. We'll just do the first round, which is seven minutes for questions and answers. We'll go with the Liberals, then the Bloc, and then the NDP, so we'll have just the three question and answer sessions today, in each case within the seven-minute time limit.

    With that, Mr. Minister, thank you for coming. I'm sorry for the change in the schedule, but we're grateful for your appearance, and I'd like to ask if you could open with brief comments.

    Thank you, Mr. Chairman. I was prepared to be here for an hour, but, as you know, there was a vote. We live in a democracy and it's very important to be there for votes. I'm going to take your advice and shorten my comments to two or three minutes.

    I want to point out that we are very concerned by the negotiations with the European Union. Of course, we are focusing on the most important work, that with the WTO. However, as you can understand, there are 154 countries and progress at times is not very quick.

    That's why we're going to continue entering into agreements, where that's possible, or bilateral trade with other countries or regions of countries. We're going to continue doing all we can to promote the capitalization of business opportunities, particularly in view of the climate created by the global recession at a time when some countries are unfortunately adopting protectionist measures. We are opposed to that approach, and we're going to continue studying the possibility of extending free trade agreements. We've started discussions and negotiations with European Union officials. I hope they will continue.

    I will point out to committee members that the Europeans said three months ago they hoped the negotiations would take less than two years. That's ambitious, but I appreciate their approach.

    I am now ready to answer your questions. I assure you we are very committed to Canadian industries, and we have told the provinces that we want them to be with us during the negotiations. Representatives from certain provinces have told me they are now involved at an unprecedented level. We're going to continue that process.

    Thank you, Mr. Minister.

    We're going to proceed immediately. I want to keep it tightly on track, so we're going to keep it to seven minutes for questions and answers.

    We'll begin with Mr. Cannis.

    Thank you, Mr. Chairman.

    I'll just make a brief comment and then I'll turn it over to my colleague Wayne Easter.

    Minister, first of all, on behalf of the Liberals, I'd like to thank you again for coming before our committee.

    I'll begin, sir, with the comments you closed on: “very committed to Canadian industries”. I thank you very much for that comment, only because as good as we are as a nation in producing quality goods and services, they're no good unless we are proactive out there on the international scene. So all I have to say to you, sir--and I know you are, but I just want to repeat it and put it on the record--is that we need you and we need this government to be very proactive on the international scene to make sure Canada gets its fair share of the pie.

    With respect to the EU, which you talked about, I think it's a market, it's stable, it's solid, it's got the funds, it's got the need, and we should be in there as well as in other areas.

    With that, I'll turn over to my colleague Wayne Easter, unless you want to comment on that in any way.

    I appreciate the comments, Chairman, because it helps us to maintain the momentum. When I'm able to say that the committee is in agreement with the approach we're taking, it just helps us keep the momentum up. Thank you for your advice on that.

    Thank you, Chair and Minister.

    I have two questions, really, if there's time, Minister, one on country-of-origin labelling and the other relative to the trade action; and two, on the Canadian Wheat Board as a state trading enterprise at the WTO.

    First, I think it goes without saying that the official opposition is extremely disappointed with the government's inaction on challenging the United States' country-of-origin labelling in a comprehensive way. The consequences are very severe. I don't know if Canadians really realize this, but our hog exports to the United States are now down 60%, our slaughter cattle exports are down 20%, and our feeder cattle are down 50%. We're losing the hog industry in this country. They're going broke.

    It's a blatant trade restriction on the part of the Americans, and yesterday the minister asked for a panel. While we're the boy scouts in terms of international trade, abiding by the rules, the Americans are increasing their exports into our marketplace. So every day that goes by means that we have producers in more financial difficulty.

    My question to you is, on this dispute panel, which we respect, what is the timeframe within which the process will move forward? My concern is that if it's a long timeframe, then the Americans have really been rewarded for violating the trade action. We all know around this table that even when a trade panel does rule, the Americans seldom abide by the international rules.

    First of all, it's at the behest of industry itself, and the pork industry specifically, that we have done this. You've probably seen remarks from their representatives over the last 24 hours; they're very pleased with the approach we're taking. The Minister of Agriculture is in constant and close discussion and communication with them at all times.

    We had hoped to see this resolved. As you know, we pushed hard to get some clarification on the country-of-origin labelling rules, and when that came out, it looked like the clarification we had asked for was going to be there. Then, as you know, there was a subsequent letter attached to that suggesting some areas of voluntary compliance. That threw the whole matter into confusion, especially on the U.S. side, even at the production level and the processing level. We actually had processors starting to even decline Canadian product because of the uncertainty.

    This was all taking place at the time of a new administration in the United States. They were finding their way on a number of issues. They were starting to appoint their key people. The timing was most unfortunate. We had to give them a bit of time to get settled and get on the issue. It's something that I had raised with the new U.S. trade representative as soon as he came into play, and the Minister of Agriculture did the same with his counterpart, and the Prime Minister has raised it with the President. We were hitting it at every level.

    When it appeared that there was not going to be clarification, especially with the questions raised by that letter, we gave it as much time as we thought we possibly could, because as you know, Wayne, if we'd been able to resolve it at the informal discussion level, that would have been best. Once you start into a formal process, as your question about timing is indicative, once you start going down that road—which is an important road if you have go down it—everything has the potential of really slowing down.

    It's not like it's the last resort, but it's getting pretty close to it, and that's why we made the decision and we finally said we couldn't wait any longer. The consultation phase is a 90-day phase; we'll get the people in place right away.

    Chairman, we'll know more by the end of the week in terms of the placement of the panel itself. If it's going to be a substantial addition to the 90-day consultation process, we'll let this committee know about that right away. We should know by the end of the week.

    I know the leadership has come out. I talked to four producers on the ground this morning, and I'll quote what one of those producers told me about the leadership, which seems to be in agreement with your position. He said, “I'm going broke on my farm. The leadership is wimping out” in terms of agreeing with this, “and we need a plan that puts money in producer's pockets, not more loans.” That's what the farmers on the ground are saying, I'll tell you that specifically.

    On the Canadian Wheat Board, what is the position of the government on the modalities document now at WTO that would undermine the Canadian Wheat Board as a state trading enterprise? Are you asking that this modality be removed from the text?

    First, to finish up your conversation on the hog producers, we hear from individual producers. We have to deal with the leadership. We have not heard, in any kind of significant way, that there is large concern by the members about their own leadership. If there is on the part of individual members, I suggest they take that up with them, because we have to go on their guidance.

    As you're aware also, the Minister of Agriculture is aggressively moving on plans, has moved, and continues to, for hog producers. At the risk of sounding partisan, we think the plans are going to be more effective than ones formerly in place. Now, we can debate that one all day, but the Minister of Agriculture has been very aggressive in terms of programs, and programs to assist producers who, just by virtue of where the market cycle is and where it looks like it's going to be for the next few years, can get out of production if they want to. So there's been a large part of programming there in play, and that's going to be helping producers.

    In the area of any issues or discussions related to the Wheat Board, we've made it very plain that we will decide in Canada what's going to happen and how we handle the Wheat Board. We are not going to be forced, pressured, or pushed by exterior forces on that. We've made that very clear. That's our position; we're sticking with it.

    Thank you, Mr. Minister and Mr. Easter.

    Monsieur Cardin, seven minutes; we have to hold it very tight to seven minutes.

    Yes, Mr. Chairman. I'm going to share my time with my colleague André Bellavance, who is the Bloc Québécois agriculture and agri-food critic.

    This past Tuesday, we heard from Mr. Gauthier and Mr. Stephenson. In talking about supply management, Mr. Gauthier told us the following:

    However, people know we didn't want to make any concessions. Moreover, in Canada's International Market Access Report of 2009, the Minister of Foreign Affairs and the Minister of International Trade stated that Canada would press to achieve its objectives:

    Canada undertook at that time not to reduce over-quota tariffs or the size of quotas. However, in recent bilateral negotiations, Canada has made concessions on in-quota tariffs on products subject to supply management. We're told that Canada has offered preferential access to its market in the context of its commitments on in-quota tariffs, but that has nevertheless left the very essence of the supply management system intact. There was nevertheless an opening at that time.

    In his conclusion, our colleague Mr. Keddy told us that Canada had adopted a firm position on sensitive products and supply management and that it had defended it at the WTO and in the other bilateral negotiations around the world. However, he noted that no one could say what the future holds for us. In a Cabinet document prepared by the ministers of Finance, International Trade and Industry in 2002, it was noted that the decision to protect supply management at whatever cost was not an obvious one. That suggested that, at some point, it would be an item for negotiation.

    I would like you to tell me today whether you are going to protect supply management and make no concessions on that point.

    I can't answer you with regard to the 2002 document because that was a Liberal government document.

    As Mr. Keddy said, our position is very clear. We agree on the very clear, very firm direction the Parliament of Canada took in 2005: we have to protect our supply management system. That's our position, and we're going to continue to maintain it.

    One of the difficulties now lies in the fact that the process is ongoing. As you know, negotiations are now underway and may perhaps last another year or two, but I hope it won't be that long. That's why it's hard to make a comment every time, on every position, because it's the final position that's very important. And that's why I agree with you, sir.

    Our position on our supply management system is very clear, and we're going to maintain it. We've received comments, to the effect that there might be a 23% reduction, which is unacceptable. There was another suggestion: the percentage of tariff lines that we can protect should be neither more nor less than 4%, but that's not our position. In our view, it should stay at 6%. And there's no reduction with regard to the 23%.

    Sometimes we have suggestions, positions and possibilities, and you're right to ask questions. However, I can assure you that we are in a process, but we are going to maintain our position very firmly.

    Thank you for being here, minister.

    In your comment, you talked about the agreement currently being discussed with the European Union, and I would like to ask you some questions on that subject.

    I have a very specific question. I had some research done by the Library of Parliament, which I asked whether, historically, when Canada begins this kind of discussion with a view to free trade agreements, it specifically states in a preliminary text that certain things are excluded. For example, I'm told that, historically, we exclude the supply management system from certain types of agreements.

    Unfortunately, we see from the second paragraph in section 3.1 of what's called the Joint Report on the EU-Canada Scoping Exercise that everything is on the table, including supply management. In fact, supply management was not excluded. Was that an oversight? Was that deliberate?

    I'd like to hear you say—and no doubt agricultural producers under supply management in both Quebec and Canada would also like to hear you say—whether, as Minister of International Trade, you indeed intend to ensure that supply management is not part of those discussions for the agreement currently being negotiated with the European Union.

    With all due respect, my answer to your colleague's question was very clear: we'll continue to defend our supply management system. We haven't accepted the recommendations on changing the percentages.

    As to whether everything was on the table, the answer is yes, absolutely. As for maintaining our position, we want to have the opportunity to explain to the 27 countries why the supply management system is so important to us. If it weren't discussed right now, it would be as though there was an elephant in the room and no one wanted to talk about it.

    We want to discuss it and to clearly explain our position. We're negotiating with the European Union at the same time as with other countries that do not belong to the European Union with a view to entering into bilateral agreements. They can also know our position. The Canadian position is very clear for everyone, and we will uphold it. We're proud of it and we want to discuss it.

     Thank you, Mr. Minister.

    Mr. Julian.

    Thank you, Mr. Chair.

    Thank you for coming, Minister Day. I like a minister who comes forward without an entourage; it shows more confidence. But there may be some questions we ask you that you may not be able to answer, and we hope we can follow up with your ministry.

    I have three questions to start with on supply management--four, actually--following up on the questions by Monsieur Cardin and Monsieur Bellavance, because it has not been clear to us that Canada is saying no to any deal that does not fully protect supply management. In fact, a negotiator from your ministry, Mr. Stephenson, likened the negotiations at the WTO to sumo wrestling. Our concern, of course, is that at the end of the game, at the end of the negotiations, it's quite possible that supply management and single-desk marketing could be squashed unless Canada takes a very firm stand.

    So my question to you is this: are you saying to us that Canada will not sign on to agricultural provisions that do not fully protect supply management? And are you saying to us that Canada will not sign on to agricultural provisions that do not fully protect single-desk marketing?

    My third question is, with the negotiations—

    I'm sorry, but I thought those two questions were one. The first one is, will we not sign on to.... And the second one was...?

    I was referring to the Canadian Wheat Board, that an agreement might not fully protect the Canadian Wheat Board.

    And then, third, in the negotiations with the European Union, is the position of the Canadian government that we will not sign an agreement with the European Union that does not fully protect these agricultural sectors?

    And you said there were four questions?

    Those are the first three—and I'll come back to sock you in a moment.

    I'll take a bit of issue with you on Mr. Stephenson's remarks, because I did review them, and in my view, he could not have been clearer. When he was asked the question, will there be a diminution, a dilution, or some kind of moving away from protection of the supply-managed area, it was a one word answer: no. I think he has learned what we in politics could probably also learn: just make your answer very straightforward and then you won't get into other stuff. He was very clear about saying no. His history is very clear in defending that point.

    I appreciate your suspicion about strong commitments, because maybe you had to deal with the former government. I don't know where you're getting your paranoia. But all I can say is that we are very clear on this.

    The government will not sign agricultural provisions that do not fully protect supply management?

    Absolutely. We've been clear on that.

    You compared it to sumo wrestling. I've had the opportunity to be at a live sumo training session--not for me, of course--and one thing that was explained to me was that at any time the sumo wrestler can step out of the ring, and the match is over. If it came to that.... I hate to think we would get to a place where we would not be able to negotiate around this, but I've been involved in a number of discussions related to supply management in other countries and in other multilateral situations, and when the topic comes up everybody kind of shrugs, sometimes reluctantly, and they say, “Well, we know Canada's position on that one.” So the discussion is usually two to three seconds. We've been very clear on this.

    We've been equally clear in relation to the Wheat Board. We've said we respect what might be tabled or might be suggested in Geneva, but we make decisions on the Canadian Wheat Board. We'll make decisions around this table. We'll make decisions in Parliament. And we've been very clear on that.

    That's two, but on your third one, I'm still not clear. It was supply management, Wheat Board, and--

    The Canada-EU negotiations. We were talking about the WTO, but with Canada and the EU, it's not clear--

    It was Canada-EU I was referring to. That would carry over, of course, to the WTO.

    So for the WTO negotiations, Canada will not sign on to agricultural provisions.

    We've been very strong on that.

    Okay. I'd like to go on to softwood lumber. As you know, we have tens of millions of dollars now that are going to be--

    An hon member: [Inaudible--Editor]

    Mr. Peter Julian: Thank you.

    I appreciate those spontaneous efforts there.

    We'll be quoting these back in the House in a few weeks' time, so I'm not sure you should be applauding this early.

    On softwood lumber, we have the penalties that have been forced on the border in what the NDP called an appallingly bad deal. I'd like you to share with the committee two things.

    On the case that starts this month that attacks the so-called subventions going into the Ontario and Quebec forestry industry, how much are we likely to lose there?

    This is the question that you may not be able to answer, understandably: how much have Canadian taxpayers paid in legal fees since the softwood lumber agreement, or sellout, was implemented?

    First you went with “agreement”, then you went with “sellout”.

    I can't be predictive on the Ontario-Quebec question. Obviously we're in there fighting hard. We're going to have to see how that works out.

    Let's keep in mind, on the softwood lumber situation—I know there will be debate on this, agreement or disagreement--virtually in the entire industry, whenever we come into part of the dispute process, one thing I hear across the country, in all provinces, and it happened with this particular ruling too, is to abide by the ruling; do not give the Americans the chance to lobby to break out of the deal; we want the softwood lumber agreement in place. It may not be perfect. The industry is in very tough times with the market having collapsed, especially in the U.S., and we hear in a resounding way that the deal is good; we want it; we want it kept. That's right across the board, in all provinces.

    Just on the legal fees, though--

    On the legal fees, I don't have the number, Peter. I'll get that to you, whatever it is to date.

    Keep in mind, on this particular dispute, back in 2007 we received some advice from the industry in regard to this reallocation formula, which everybody agreed to; everybody agreed this tax would be paid. The industry and others suggested the tax didn't have to be collected until July 1, 2007. We had officials saying they thought it was January 1. It was a grey area. Anyway, we went with the considered opinion, which was to start collecting those taxes in July. The Americans challenged that. They won the ruling. The ruling said, sorry, you should have started collecting in January. So it was really six months of back taxes that were owed--$68 million or $70 million.

    We didn't like the ruling. We appealed it. We even offered a lesser amount, as you know. We said that if there was harm to the U.S. industry, they quoted a particular figure, and that's what we were going to offer to cure the breach. We said to the panel, tell us if you accept the appeal. As you know, just recently the panel came back. They could not have been clearer, that they did not accept that appeal and they didn't accept our down payment. They said the full amount had to be paid, those back taxes, as if it were from January 1. They said to pay up. They even told us how it would be paid--this was the panel, not the Americans. They said it would be done on those who were first shipping across the border until they got the $68 million. They have collected about $12 million, because as you know, while we were in the process of appeal, the Americans went ahead and started collecting. It's somewhere in the neighbourhood of $12 million. We're just in the process of negotiating. Does that come back to us in the form of a cheque, a rebate? Do we deduct it from the $68 million? We're in that process of negotiation right now.

    Chairman, I thank you for allowing me to go a bit over time. I do have to leave. As we indicated before, I can be here until noon.

    I look forward to coming back to this committee at the will of the committee, and I do sincerely thank the committee. I know there are times, quite rightly, when things get partisan, but there is good advice and direction that comes from members. We listen to it all and we even try to implement a significant part of it, and we thank committee members for the good work.

    Thank you, Mr. Minister.

    Some hon. members: Hear, hear!

    The Chair: We appreciate your time. Thank you for being here.

    We're going to take about a three-minute break while we switch over and welcome our witnesses.

    Up next is the National Farmers Union.

    I would ask that you take a place at the witness end of the table. Thank you.

    We'll resume. Thank you.

    We're going to continue our discussion of supply management at the World Trade Organization.

    We have, as our next witness, Stewart Wells, who is the president of the National Farmers Union.

    We're a little late starting this round because of earlier complications. If it's okay with everybody, I'm going to ask that we finish by 12:55 p.m. We have a Liaison Committee in the Centre Block, and there are three of us who have to be at that meeting.

    I think we'll get all the questions in, but we will again stick to our timeline.

    Mr. Wells, could I ask you to begin with an opening statement to set the course? Give us your point of view, and then we'll go to questions.

    Thank you, Mr. Chair, and thanks to the entire committee for the invitation to be here today on behalf of the National Farmers Union. I would like to start by thanking all members of the House of Commons for the support they have shown for supply management. It has been very important.

    I think a copy of our brief has been distributed to all members, and that's the template that I want to stick to for the opening presentation. We have the summary at the bottom of the first page with the five points. I won't be able to cover all of them, of course, but I would like to focus on the first two.

    I did have a meeting this morning with Mr. Gauthier, going over the important pieces here. We feel that one of the most important pieces in defending supply management is knowing the underlying reasons why we want to support supply management.

    A little while ago the term “the elephant in the room” was used here, and the first graph we have in this short brief does show the agrifood exports out of the country versus farmers' incomes. This is the context that Canadian farmers are in; this is the context that the WTO negotiations and European negotiations are being held in.

    What we can see, what the data shows, is that as our exports of agrifood products have increased out of the country, farmers' incomes have declined. The realized net farm incomes of farmers have declined—that's the red line on the bottom. The next line up includes the government payments and government transfers, the transfers of taxpayers' dollars. Those taxpayer transfers more or less bring farmers, on average, up to zero, after all the work has been done. Farm family labour and management, of course, is not included in this in any shape or form as an expense item.

    We have a graph here that shows that as we increase agrifood exports out of the country, farmers' net incomes in this country are going down. I suggest that if you want to look at this another way, if that bottom line represented salaries of people on Parliament Hill versus agrifood exports, you would start to feel the tension that farmers feel when they look at this graph. We are, of course, looking for ways to increase the net income of farmers.

    Looking at the next two graphs, which both pertain to this item number one, about why the National Farmers Union so strongly supports supply management and orderly marketing of all kinds, what you see is that when you look specifically at agriculture, sector by sector, it's the supply-managed industries that are doing the best in terms of realized net farm income. This is followed by, on that second graph, grains and oilseeds, where the Canadian Wheat Board does play a major role.

    The third graph brings this even more closely into focus because it just deals with livestock issues. When you compare livestock to livestock, the supply-managed livestock producers are the ones in the top two lines who at least have a positive realized net income. The two livestock sectors that have been the most supportive and the most vocal advocates of the international trade agreements are down at the bottom. Hogs and beef have really been struggling.

    So we can see this complete dichotomy; they are not connected whatsoever. It's the supply-managed industries that are, of course, faring better.

    There's a lot more, of course, that can be said about these incomes and the graphs, but that's the underlying context that the National Farmers Union comes from. These numbers are not in dispute. These are Agriculture Canada numbers.

    On the second piece, examine the legislated marketing tools in general. We spend only one-half page talking about this, but all of the marketing systems—the hog marketing boards, tobacco marketing boards, Canadian Wheat Board, supply management—all fit into the category that we call legislated marketing tools. Politicians have sat down in Canada, developed these rules, passed these laws, and they have worked for farmers by helping farmers extract the most they can from the marketplace. These are the quid pro quo for this.

    The analogy, the exact parallel, is copyright and patent protection. These two pieces are exactly parallel, but at the WTO process we don't see other countries lining up to weaken or negotiate away copyright and patent protection. So we feel there's a huge discrepancy here, that Canadian farmers especially are being held to a double standard whereby our legislated marketing tools are constantly under attack,but other people's, other sectors' legislated marketing tools, are not.

    I think I'll stop there for an opening comment, but that really gives the underlying position the National Farmers Union is coming from.

    I would like to say as well that the National Farmers Union members played a hugely significant role in the development of orderly marketing systems in Canada, and the National Farmers Union feels a proprietary interest in both supply management and the Canadian Wheat Board systems, because many of our members actually worked on these plans and marketing systems and got them off the ground to start with.

    Thank you.

    Thank you, Mr. Wells.

    We'll begin the first round of questions. The questions and answers will be seven minutes.

    We'll begin with Mr. Easter.

    Thank you, Mr. Chair.

    Thank you, Stewart.

    The charts you outline tell a heck of a story of financial tragedy. Growing the Island Way, the report of the Commission on the Future of Agriculture and Agri-food on Prince Edward Island, looked at realized net farm income on Prince Edward Island in gross dollars from 1929 to now—and I think you've seen that, Stewart—but the chart in here is in decline and now it's in negative territory.

    You go to some length in your brief...and I'd like you to comment on that. When I look at the situation across the country, with debt increasing now at $58 billion to $60 billion, farmers are in a position where, even with low interest rates, I don't know how we're ever going to get out of that debt. But when you look at the supply management industry, you know where you're going to be in terms of pricing, you can meet with your banker, you can cashflow your operation, and you can clearly show that you can manage your debt, pay your bills, and provide for your family and your community.

    So that's certainly one of the benefits of the system, the stability that's there, and we strongly support it.

    You opened by saying the most important reason, in terms of our discussion on maintaining supply management in Canada, is understanding the underlying reason we have it. Can you expand on that? Is it a question of income security for farmers? Is it a question of food security and food safety for the country? What's the bottom line here? What do we need to be arguing internationally?

    I think one of our failings internationally is that we've failed to tell other countries or get other countries to implement a similar system to ours so they do gain a better understanding of the system.

    Thank you.

    The short answer is yes to the two things you mentioned, income security and food security. There is a growing recognition worldwide around the food sovereignty movement. Food sovereignty is a term that people are going to be hearing more and more in the future. The National Farmers Union works through an international organization called La Via Campesina, which represents millions of farmers worldwide. We have the best working definition of food sovereignty that there is.

     I think one of the examples that highlight this discussion was the absolutely absurd situation we had 18 months ago in the spring of 2008, when there were food riots happening on the streets of some 30 countries around the world, and the IMF--based in the United States but representing countries like Canada--was issuing directives in public telling these countries that they needed to keep exporting food out of their own countries, even though their own citizens were rioting in the streets because they had no food. There is no situation that I can think of that more quickly destabilizes any federal government than a situation like that, where you are advocating shipping food out of your country while your own people are starving. That's just a ridiculous notion.

    You mentioned farm debt. In the Doha round there's a lot of talk about development; it's a development round. The notion is that farmers in developing countries should have some special considerations that farmers in other countries like Canada don't have. Of course there's no firm definition of what a developing country is. According to the trade negotiators, they are self-identifying. You can make the argument that all farmers worldwide, including Canadian farmers, are developing world farmers, because the thing that separates us from other farmers in the world--whether it's Africa or some other place where we would think of the farmers as being in a different situation--is $60 billion worth of debt. Canadian farmers are operating on $60 billion worth of debt. That means, in very round figures, interest payments of $3.5 billion a year.

    In Canada the long-term average net farm income from the markets is $125 million. So farmers have to pay down the principal on that $60 billion worth of debt out of that $125 million per year. Using today's numbers, it would take 500 years for farmers to use their farm income to pay down that debt. It's a bubble. Lenders are still lending into the agricultural market because they think these transfers from government, the taxpayers, are going to increase over time and they think they can maintain their position even if they just get the interest back, not necessarily the principal.

    We're consistently told that we have to look at farming as a business, that it's not somehow different; it's just a business. If you look at the business of farming, we're trying to pay down $60 billion worth of debt on a net income of $125 million per year. It does not work.

    How is my time, Mr. Chair?

    You have 30 seconds.

    Just a quick one then. One of the areas of critique against supply management is that it leads to higher food prices. I certainly don't agree with that. But what's your argument on that?

    Absolutely not. It leads to stable prices, where the farmers are getting a consistent and fair share from the marketplace.

    When we look at the share of the food dollar, the farmer's share of the food dollar has been going down and down and down over time. That's noticed less in the supply-managed sectors. There have been lots of studies and numbers generated that show Canadian consumers enjoy great benefits from Canada's supply-managed systems. We see the pain internationally now with the pictures in the papers of dairy producers in other countries out dumping milk. It's very painful to watch that happen. We have to thank our lucky stars that Canadians were smarter.

    The G8 and G20 countries congratulated Canada on the international stage for developing in a different way so our banking sector is more stable. It's exactly the same with the supply management and orderly marketing systems and the Canadian Wheat Board. It's more stable and recognized as something that other countries envy. It's not something we should give up.

    Thank you.

    Monsieur Bellavance.

    Thank you, Mr. Chairman. Thank you for your testimony, Mr. Wells.

    Like me, you heard the testimony of the Minister of International Trade a little earlier. Perhaps we could be satisfied with what he tells us about supply management. He is saying that the government intends to comply with the motion of November 22, 2005 to the letter. I could be satisfied with that since I introduced that motion.

    However, you should take nothing for granted in politics. It's not because someone takes a certain position at some point that you shouldn't check to see what action the government has taken on this matter. As I mentioned to the minister earlier, I am concerned about the WTO negotiations and the bilateral negotiations with the European Union because sometimes we can hear the government's ministers state contradictory positions.

    For example, an agreement was almost reached at the WTO last July. The texts simply provided for a drop in over-quota tariffs and a decline in tariffs protecting products subject to supply management. Fortunately, there was a disagreement among the seven countries that had begun to negotiate, but Canada's Minister of Agriculture and Agri-Food, Mr. Ritz, and the former Minister of International Trade, Mr. Michael Fortier, both stated publicly that they were disappointed that there had been a misunderstanding and that there was no agreement at the WTO on agriculture.

    In the same breath, they told us they wanted, at all costs, to protect supply management come hell or high water. That's contradictory. Moreover, another former minister, Mr. Chuck Strahl, told the Standing Committee on Agriculture and Agri-Food that, if all the other countries made a decision and reached an agreement at the WTO, Canada did not want to be isolated and alone.

    Do you think that, for the good of Canadian and Quebec agriculture, in which the vast majority of producers are subject to supply management, it would be legitimate for Canada to withdraw from the bargaining table if ever an agreement was reached that did not protect gains with regard to the supply management system?

    Thank you very much for the question, Mr. Bellavance.

    First of all, I think you're right to stay vigilant in all of these matters, because they change from day to day and minute to minute, and sometimes in the middle of the night.

    When the minister spoke earlier, I think the language he used was “finding a way to negotiate around these issues when they're still included”. That's a pretty iffy proposition. You have to be very solid and have political will, frankly, because it changes so quickly and can change overnight or in the middle of the night. That type of political will is hard to maintain through a lengthy, all-night, week-long negotiation. It would be better if people were to come out and say, point-blank, yes, we will walk away from the table if detrimental changes are made in the text to supply management and orderly marketing in the Canadian Wheat Board.

    I would argue that you're right to stay vigilant. I worry about the statements that I heard from the minister earlier on, when he said that the rest of the world knows our position, that the negotiators know the position of Canada. I heard that this morning from our chief agriculture negotiator, Mr. Gauthier.

     I've participated on behalf of the National Farmers Union in the agriculture trade committee negotiating calls that we have from time to time with the trade negotiator, and we hear this line repeated: other countries know our position. Well, either they don't know our position or they don't respect it, because they keep on making detrimental changes to the text that will hurt Canadian farmers and that are not the position of the Government of Canada as stated to us inside the country.

     Just at the end of last year, we had the then chair, Mr. Falconer, removing brackets on text that would kill the advantages of the Canadian Wheat Board, yet the response from the Canadian government internationally seemed to be, well, okay, we'll restart negotiations on the basis of that text.

    Of course, the National Farmers Union is advocating that Canada right now should be sending letters to the WTO from the people politically responsible, the ministers and the Prime Minister, and saying no, we don't agree to the November text, the last text that came out from Mr. Falconer, and we want that changed, because the circle doesn't square: this line that other countries know our position does not square with the actions that other countries are taking in relation to these texts.

    That's why I poorly explained the government's position on the agreement being discussed with the European Union.

    The minister tells us he wants to leave supply management on the table because he wants to discuss it and prove to the European Union that it's a good thing. However, he isn't unaware that the European Union, the United States and other countries will still attack our collective marketing tools. Setting this precedent is the best way he has chosen to ensure the discussion turns around a subject we normally shouldn't even be discussing.

    The European Union, knowing that supply management is on the table, will no doubt say it wants to open its market and that we should open ours as well. It's on supply management and the Canada Wheat Board that it will attack us. Those are Canada's two collective marketing tools that are constantly questioned by other countries. That's why I find it hard to understand this precedent that we're setting by setting this to one side.

    Historically, in bilateral discussions on free trade agreements with other countries, we simply exclude what we don't want to talk about, in particular supply management. That's what we should have done. I'm afraid we're setting a precedent that will recur every time we discuss bilateral agreements.

    Were you surprised by the minister's statement? Is it the right attitude to adopt at the start of the negotiations, which may last two years, or even more, to say that we're ready to leave the supply management system on the table?

     I share your concerns, absolutely, and I think it should be taken off the table. The discussion is about what “no” means. Does “no” mean something different in Canada than outside of Canada, and how is that being interpreted? In this room we've heard that no means no, but internationally, no doesn't seem to mean no. No means let other countries change the text, let them take the brackets off the text. We don't complain. We don't go to those people and say no, Canada will not accept this and let's just move on.

    I'm absolutely convinced, without evidence that I can provide to the table, that other countries around the world would respect Canada for that position and say they actually support our position in a lot of these cases. But they need to hear it from us. They need to hear it from Canada. They are not going to get up on their own and advocate the retention of Canadian programs, because they represent other countries. The minute Canada actually shows some forcefulness on the international scene, I'm convinced these other countries will say yes, let's move on.

    Mr. Julian.

    Thank you, Mr. Chair.

    Thanks, Mr. Wells, for coming before us.

    I want to come back to this issue of supply management and protection by the government. I think the minister is on the record after this committee meeting today, and we will see whether his words are taken as gospel in the negotiations. We were very disturbed earlier this week with the negotiators, because they kept saying the position right now is to defend supply management, but we don't know what the future will bring.

    You've been participating in part of the consultations. Is it clear what the strategy of the government is to protect supply management, to protect the Canadian Wheat Board? Is that clear to you and the colleagues who have been consulted?

    The short answer is no. The trade negotiators, for their part, are very skilled individuals, but they have to do what they're told. They have to take their direction from the political leadership in Canada. In a sense, it's not fair to ask them to determine the political will in Canada. They have to do what they're told.

     Again, we are asking the Government of Canada to tell the negotiators to go to the WTO and say no, we will not accept changes to Canada's supply management system and we want the brackets taken off the text, or the text removed completely, on this Wheat Board change that was made at the end of the discussions in November.

     And you have no--

    I'll carry on a little further than that.

    Mr. Chair, you're losing control of your Conservative members here.

     I phoned Canada's trade negotiator, Mr. Gauthier, a couple of weeks ago and asked him what Canada was doing on the international scene to register our disapproval of the text and the negotiations that are happening. His standard response was that other countries clearly understand our position. That didn't answer my question.

     So you don't get a sense that Canada is being very clear and forthright and pushing back on what we've seen from the working group and what we have seen circulating from the WTO.

     We have no evidence from the negotiators or the political establishment in Canada that aggressive, clear action is being taken on the international stage.

    That gets us back to the whole issue around the metaphor of sumo wrestling. Right at the end is when supply management and the Canadian Wheat Board get squashed or crushed. Our role as a committee is to flag this as a serious danger, given the ambiguity between what instructions have been given to the negotiators and what the government is saying publicly.

     Interestingly enough, the minister talked earlier about sumo wrestlers being able to step outside the ring. If you look at the discussions in November when Mr. Falconer was still the chair, at the last minute he was creating new text. He created a new text that just happened to create an exemption for a single-desk exporter from New Zealand so they could be outside the new regulations. So the new regulations are only going to apply to the Canadian Wheat Board.

    On the surface, that absolutely looked like a conflict of interest, because the chair of the committee is from New Zealand. They used a sharp pencil and created some regulations that exempted their own export single-desk seller, but made sure the box that contained the Canadian Wheat Board was outside of that exemption.

    Now, that was done outside the ring. That was the sumo wrestler being outside the ring making that change.

    Yes. That's the referee letting the New Zealand sumo wrestler leave. The Canadian is still in there.

    What was the reaction of the government to very clear flagging that the Wheat Board is under attack?

    To my knowledge, there was no reaction from the government. All the news headlines said, “Doha talks collapse. No further negotiations scheduled.” That's where it ended.

    We just went through the crucial piece here last month, when there were more meetings about trying to restart the talks. The question in front of all the countries and negotiators was on what text we should use to restart the talks. Some countries said we need to start all over again from scratch on a different text. Other countries, including Canada, said we should start where the text left off.

    It had the Wheat Board on the table. So our own government is saying one thing here. In the negotiations, when the discussion is being held around the text, they're saying, “No, let's put the Wheat Board on the table”.

    To the best of our knowledge, Canada supported starting up with the text that excludes the Canadian Wheat Board and takes away the marketing advantage of the Canadian Wheat Board. That is one of the places where it would have been very easy for the Canadian government to say, this is not the position of the Canadian government; we want to go back to the text that was on the table just before Falconer made his last changes and retired as chair.

    So you've seen no evidence of that. We'll need to have the minister back to respond to that, because it is a very flagrant contradiction between what he's said before this committee and what the government is actually doing around the negotiations.

    What do you think the government should be doing between now and the opening of negotiations next week? How should they be taking that clear stand that so far they have not taken, at least outside of Parliament?

    The government could write a letter to Canada's negotiators and table it publicly with the House of Commons, saying we will not agree to changes in the WTO text that weaken supply management or take away the marketing advantages of the Canadian Wheat Board. The negotiators could take that letter to Geneva, or wherever they hold the next round of meetings, and say this is the position of the Government of Canada.

    It gets back to your question. We will not sign a deal that weakens these legislated marketing tools used by Canadian farmers.

    Why do you think the government has not done that, since they're trying to say, at least in Parliament, that they are going to defend supply management? When that clear message has not been communicated, why have they not done that?

    Well, I can't know the mind of the government. We can all speculate about it. But I would think, if the government truly believes in its own rhetoric, it should take that step.

    Thank you, Mr. Julian.

    We're all dying to hear from Mr. Harris, but....

     Mr. Keddy.

    Thank you, Mr. Chairman.

    The interesting discussion with Mr. Julian had nothing to do with reality as I know it, so I'm assuming that maybe I'm wrong.

    To our witness--first, thank you for appearing--you said there's no clear evidence that aggressive action is being taken on the international stage. Have you been at the international negotiations as an intervenor?

    No. As I said before, I participate--

    So where are you getting your information? If you're not at the meeting--you heard what the minister said--where are you getting your information?

    From the direct questions that I have asked of Mr. Gauthier, both on the phone in the last couple of weeks, for the agriculture trade committee, and in the meeting that I had with him this morning.

    Well, that's interesting, because I've been at a few of the international meetings. And I actually thought that both Mr. Gauthier and Mr. Stephenson presented well at committee here. It's not quite fair to put all the onus on their shoulders. They absolutely do represent the government with very clear orders. And those clear orders are that we protect supply management and that any decisions about the Canadian Wheat Board--there has never been any doubt about it, we just heard the minister say--will be made by Canadians, not by international negotiations.

    You know, we don't establish the text. It's not a matter of intervening to establish the text that's set out. In any set of negotiations, generally your chair brings in an extreme text that I think even you might agree--I would like an answer on this question--that nobody at the table, except maybe a very extreme few, would agree to, because it wouldn't work for the developing countries. It wouldn't, quite frankly, work for most of the so-called developed countries because of the difference of opinion. Every country--every country--has sensitive products.

    Do you think any of the countries would agree with the text that's brought down? That's where you start negotiations. No one agrees to that. You begin your negotiations from this extreme point. The chair brings it in. Then they work for several years to whittle away at the excess and get down to something that actually works for everybody.

    Do you think any country, let alone Canada, would agree to that opening text? We don't agree to it; we start our negotiations from it.

    It's an ongoing negotiating document.

    Mr. Gerald Keddy: Absolutely.

    Mr. Stewart Wells: But the November text--before this last text--had brackets around the attack on the Canadian Wheat Board and was not agreed to. That was not agreed to by any of the countries, obviously. That bracketed text disappeared. And to my knowledge, on the international scene, Canada is not registering its objection.

    When the discussion was held--

    No, just stop for a second. How can you say, if you're not at the negotiations, when we've had our chief negotiator on agriculture, we've had our chief negotiator at the WTO, we've had the minister responsible for international trade here, all saying that we...? I've been at some of the negotiations myself. We very strenuously....

    I take great exception to what you're saying--that something “might” happen--because we defend very strenuously Canada's role in supply management. Any decisions that will be made on the Wheat Board will be made by Canadians, not by the international marketplace, not by the WTO.

    The question that prompts my statement is why, then, did Canada not object to restarting negotiations on the basis of this last text?

    In the words of our negotiator this morning--to me--now that those brackets are gone from that text, that is no longer an item that other countries intend to come back to. Canada may indeed want to come back to it, but the other countries feel now that it's a settled item, and it's not up on the short list of things to negotiate over this coming year.

    You're saying “Canada may”. What you're talking about is hypothetical. No one can answer a hypothetical question.

    It's not hypothetical that those brackets came off the text.

    It's hypothetical that we might or might not come back to it. You're assuming something, when everything that our government has said—everything, quite frankly, the previous government has said—is that we will defend supply management. We have defended it at the table every time, and I don't know how you can misconstrue that. I don't know how you can think that's unclear. I don't know how you can think that there's some shadow or cloud, unless it's a cloud of paranoia, because we have been very clear. And I tell you, it is very difficult in international negotiations to go in there from a set position that there's no room to negotiate on. Our negotiators know that, and they're very careful that they don't stray from their marching orders.

    I think that maybe what you and I have is just a difference in strategies. I'm trying to make the case that it would have been one of the very best times to register our complaints about the text that we have now, in restarting the process on the base of the text. We could have just put a mark beside this line that said, “We do not agree with the text that was produced at the end of the last talks in November”.

    I would say it's similar to buying a car. The easiest time to negotiate the price is before you pay for it. After you've paid for it and gone back to that dealer and said, “Gee, you know, I really wanted something different”—

    That's not what you're suggesting. Your suggestion is that Canada will not support the Wheat Board, and it will not support supply management, and I take exception to that. I have never seen one iota of evidence to suggest that from our trade negotiators or from our minister.

    Thank you.

    We'll try to do a quick round here, a couple of minutes each, if anybody has any more questions. I'm sure we can probably find something.

    On this discussion, Mr. Chair, on Gerald's point, it is an extremely serious matter, Gerald, that Canada didn't register an objection to that text. It may be a negotiation, but there should have been an objection registered to the text, which clearly compromises our supply management system. That's why I think we on this side of the table find it hard to really have confidence in what the minister is now saying. There was an opportunity for the Government of Canada to object to the text, and it didn't do it. That text clearly compromises the supply management system.

    My question is maybe not so much on supply management, Stewart—I know you're a grain producer, as well. One of the difficulties that I think we all have, in fairness to the government, is that the farm community is really split. You have one part of the farm community saying, oh my golly, we need this WTO agreement; we're going to be practically saying we'll be millionaires forever. Your charts certainly don't show that the open market goes that way. Then you have the supply management industry, which clearly has the evidence on our side, but some are saying it has to be compromised to get to a bottom line agreement.

    The Wheat Board is basically saying that the current text allows for a tariff reduction. The tariff reduction applies to bound tariffs, which are ceilings or limits and not applied rates. Therefore the change does not appreciably reduce the applied rates faced by grains, and on top of that. So the gains that are perceived to be there in terms of our exporting are not there. As well, the United States and other countries seem to protect themselves by protecting the fact that they can use export credits and food aid as exceptions. We're not allowing that.

    What's your comment on that?

    Well, on the first piece, I would argue with you about the farm voice being split. It certainly appears to be split, but that's a bit different. There's always this discussion about farmers needing to speak with a single voice; you can sum it up with that line. But as long as there is company money involved in farm organizations, or other outside interests' money involved in farm organizations, there will never be a single voice, because companies or governments can fund organizations to get the voice out there that they want to hear.

    On the other piece, I don't think it can be clearer that the Canadian farmers, time and time again, have lost from the outcomes of these international trade discussions. We have given up program after program after program and received nothing in return. Our farmers' net incomes in Canada show the result, and it's hard to imagine how anybody could promote these trade agreements, or these types of changes in trade agreements, as things that are actually going to help Canadian farmers.

     Our previous trade negotiator, Steve Verheul, for whom I had a lot of respect throughout the whole process, actually made the statement that we cannot call any of these trade agreements a success unless we start to see the incomes of Canadian farmers go up. That's not what we're seeing. If this text were implemented today, immediately the incomes of Canadian farmers would go down, not up, and we would lose our legislative marketing tools, such as supply management and the Canadian Wheat Board.

    Thank you.

    Monsieur Cardin.

    Thank you, Mr. Chairman.

    We've been drawing a lot of comparisons in the past few days. We've talked about sumo wrestlers and elephants. Why not draw a third comparison? If you put something on the table during a fight between sumo wrestlers, the only thing that can happen is that that thing will be completely squashed.

    According to what the minister and Mr. Keddy are saying, everyone, all the negotiators know Canada's position. Why put it back on the table every time and risk having to restart the discussion? If they still want to convince people of their position, they then run the risk of meeting with a certain degree of adversity and of coming up against a will to change Canada's supply management system.

    I have some serious questions on certain points, at the risk of being considered paranoid. That doesn't trouble me that much. We've learned over time that the confidence rate still isn't there. The members from the Conservative Party have clearly said that the negotiators receive instructions from the government. I'm not criticizing the negotiators because I believe they are competent people, but they are negotiating what they're told to negotiate. If one day they were told that we might perhaps make concessions on supply management, they would negotiate along those lines. They would use all their skills to negotiate in the direction requested by the government, as I am convinced they would make every effort to defend it and even say that's not part of the negotiations. That's obvious. From the start of the negotiations, people know what to expect, and if they don't have any other interests in other sectors, perhaps that can quickly put an end to the negotiations. However, I'm convinced that we have to be firm in the many potential trade areas. Those are my comments.

    In addition, we often tend to make certain compromises in bilateral negotiations or to do things that we perhaps might not do in a multilateral context—potentially. Aspects as important as sovereignty and food security should always be part of the negotiations. Negotiations are like riding a bicycle. If you stop peddling, you go backwards and fall down. It's the Doha Summit all over again. That's what's happening. The minister hopes to resolve this in 2010, but we know very well that people will have no other choice but to start over again on another basis.

    What position would agriculture have in another negotiation? After saying we were unsuccessful at the Doha Summit, we would be starting over again on another basis. What basis should then be established for agriculture?

    You have one minute.

    I absolutely share your concern about the bilateral negotiations. They are extremely important, because lots of things that are adopted in bilaterals are all of a sudden promoted at WTO as the direction in which WTO should go.

    On trade calls that the National Farmers Union has been on, Canadian authorities are telling us that this bilateral negotiation with Europe intends to go much further than the NAFTA already does. We don't know what that means exactly, but when they're talking about services and everything that might affect farmers, we're concerned about that.

    Anybody who gets into the ring with a sumo wrestler should be afraid of being crushed. If they are not afraid when they get into a ring with a sumo wrestler, I don't think I want them negotiating on my behalf, because I don't think they are acting responsibly. If you don't want something to get crushed in that ring, you should keep it outside the ring.

    Thank you, and thank you for your appearance today, Mr. Wells.

    That concludes today's session. We meet again in about 12 days. We're not quite sure where we're going to be on that Tuesday in terms of the agenda. We do have some potential witnesses to carry on for another day on this topic, but I'll be in touch with you over the break as to where we're going with it. At this point it is likely that we'll carry on with a further discussion of supply management on that Tuesday following the break.

    Chair, with all this talk about agriculture and turkey, happy thanksgiving.

    Thank you, Mr. Cannan.

    Keep an eye out that they come from supply-managed industries.

    An hon. member: Stand firm with the turkeys.

    The meeting is adjourned.