:
I call the meeting to order.
Today we want to welcome our witnesses to the health committee. From Action on Smoking and Health, we have Les Hagen, the executive director. Welcome, Les.
We have, from Casa Cubana, Glen Stewart, the director. Welcome. You're the director of marketing and product development, I believe. We also welcome Luc Martial, government affairs, Casa Cubana.
We have with us Distribution GVA Inc., with Vincent Albanese, president and chief executive officer, and Luc Dumulong, the vice-president. Welcome.
We also have with us Imperial Tobacco Canada Limited, with Tamara Gitto, associate general counsel, and Gaëtan Duplessis, director of research and development. Welcome.
We'll give each of you a chance to present for seven minutes. After that, we'll have questions and answers. We'll start with Action on Smoking and Health.
Mr. Hagen.
:
Thank you, Madam Chair.
Action on Smoking and Health is western Canada's leading tobacco control organization. ASH has contributed to the tobacco control movement for 30 years, and I have served as its executive director since 1989.
I thank the committee for recognizing the regional disparities in tobacco use by allowing me to participate in these important hearings. I would also like to thank my national colleagues for calling for amendments that will help to reduce health inequities in Bill C-32.
We congratulate the federal government and Parliament for taking concerted action to crack down on flavoured tobacco products and print advertising. These are important measures that will help to prevent tobacco use among young people. However, we have grave concerns about the current exemption for smokeless tobacco in Bill C-32.
“Smokeless“ is certainly not harmless. Smokeless tobacco contains over 3,000 chemicals and 28 known carcinogens. It is highly addictive and it has no safe level of consumption. The product contains a lethal mixture of tobacco, nicotine, sweeteners, abrasives, salts, flavourings, and various chemicals. In 1986, the U.S. Surgeon General declared that oral use of smokeless tobacco represents a significant health risk, and that it is not a safe substitute for smoking.
Young people are particularly at risk of nicotine addiction from smokeless tobacco, as they are often lacking the cognitive ability to fully appreciate the consequences and strength of the addiction until it's too late.
Unfortunately, Alberta is the epicentre of smokeless tobacco in Canada, and it represents about 40% of the total smokeless market. Over the years, the smokeless tobacco companies have aligned their products with Alberta's cowboy image of independence, risk-taking, and hard living. Prior to the sponsorship ban in 2004, smokeless tobacco products were promoted widely at rodeos throughout western Canada. The smokeless tobacco companies now have a limited presence at some of these events, in adult-only venues.
However, these companies have found other creative ways to target young people. Over the past two decades, the smokeless tobacco companies have steadily increased their product offerings to include a wide array of flavourings. Their sales have steadily increased with the introduction of flavourings, like peach, apple, wintergreen, cherry, mint, and vanilla. These fruit and candy flavourings are virtually identical to those that have contributed to the dramatic rise in cigarillo sales in recent years and they deserve equal concern.
It is therefore not surprising that significant numbers of teenagers in Alberta and other regions are attracted to flavoured, smokeless tobacco. According to the Canadian tobacco use monitoring survey, teens are three times as likely to have tried smokeless tobacco in the past 30 days compared with adults age 25 and over. The same survey also revealed that 15-year-old to 19-year-old teenagers represent 25% of total users, although this population is only 7% of the general population.
The Alberta numbers are even worse. The rate of smokeless tobacco among Alberta teens is almost double the national average. In fact, there are almost as many Alberta male teens using smokeless tobacco as there are using cigarettes. There's no question that teenagers in Alberta and Canada are using smokeless tobacco products at a disproportionate rate. As you heard from Sam McKibbon earlier this week, teens are attracted to fruit and candy-flavoured, smokeless tobacco products in the same way they are attracted to flavoured cigarillos.
I grew up in a farming and ranching community in southern Alberta, where smokeless tobacco was not uncommon. However, I've never seen a rancher or a cowboy use peach, or berry, or cherry chew. As the industry's own internal documents show, these flavoured products are intended to help graduate adolescents into harsher products like Copenhagen or like cigarettes, once they become adults.
Here's a direct quote from an internal industry document:
New users of smokeless tobacco--attracted to the [product] for a variety of reasons--are most likely to begin with products that are milder tasting, more flavoured and/or easier to control in the mouth. After a period of time, there is a natural progression of product switching to brands that are more full-bodied, less flavoured, have more concentrated“tobacco taste” than the entry brand.
We cannot overlook the contribution of smokeless tobacco to cigarette addiction among young people, as they graduate from one harmful product to another. Recently, Philip Morris, the world's largest cigarette company, purchased the U.S. Smokeless Tobacco Company, which produces Skoal and Copenhagen. This telling marketing strategy should not be lost on committee members.
I've submitted two detailed backgrounders on smokeless tobacco use in Alberta, which were prepared by Alberta Health Services and its affiliates. The documents reveal that smokeless tobacco companies have been targeting teens as young as age 15 by adding flavourings and sweeteners to make their products more palatable. These backgrounders confirm the problems associated with flavoured, smokeless tobacco use in Alberta and beyond.
In closing, we urge the federal government and Parliament to take regional disparities into account when considering Bill C-32.
Health Canada advocates publicly for the reduction of health inequities, and the current smokeless exemption is one such inequity. Flavoured, smokeless tobacco is having a disproportionate impact on youth, especially those living in rural Canada, northern Canada, and the prairie provinces. We encourage the committee to support an amendment to remove this exemption and to give these kids a greater chance to remain tobacco-free.
:
As for me, I actually have been doing government affairs for Casa Cubana for the last six or seven years now. I'm not a lawyer. Interestingly enough, I'm actually a tobacco control advocate. I've been on this file for the last 18 years.
Perhaps unlike any other tobacco control advocate in this room, I've actually sat at every side of the policy table in tobacco and tobacco control. I worked as a policy analyst with the Non-Smokers' Rights Association of Canada, as a data specialist and media relations manager with the Canadian Council on Smoking and Health, and as director of the National Clearinghouse on Tobacco and Health. I worked in Health Canada's tobacco control program, in research, surveillance, evaluation, and policy and planning. I'm here to say that Bill C-32 is basically the perfect example of everything that's wrong with the tobacco control movement in Canada. This committee cannot allow this bill to become law in any form for two reasons.
Number one, there's absolutely no relevant research that supports in the least banning flavours in tobacco products, let alone banning singles, for example.
Number two, as much as people may hate the industry or people in the industry, the reality is that if you pass this into law, you will cause much greater harm to society. It is a fact that if you ban these products, you're essentially giving exclusive market rights for these products to a growing and existing illicit trade in tobacco, which includes flavoured products, according to the RCMP. You will be putting much more tobacco, much cheaper tobacco--
:
Absolutely. That documentation has already been forwarded to Monsieur Etoka, and it basically contains all that information.
We do know for a fact that if you ban these products, many more, much cheaper, and completely unregulated products, both flavoured and unflavoured, will find their way into the hands of Canadians who are already breaking the law, and especially kids as well. You will be putting tens of millions of dollars into the hands of criminal networks, which, according to the RCMP, are also involved in drugs and weapons trafficking. You'll be putting thousands of people out of work. You will be throwing tens of millions of dollars, if not hundreds of millions of dollars, in government revenue right out the window. You will be providing absolutely no benefit to public health.
Now, in terms of how I justify saying there's absolutely no relevant research, this is not a new issue. Anti-tobacco groups have been going around from province to province, trying to find any unsuspecting government or politician who would propose a government bill or a private member's bill to ban these products. Effectively, I've had the occasion to actually meet with politicians and government departments on this issue. On this issue alone, I have contacted Health Canada a number of times with regard to the lack of relevant research, and we've been requesting that they actually do research.
Quite interestingly enough--
Most recently, May 21, after having written to every member of Parliament asking for their support in getting Health Canada to actually do research on this, after having sent in submissions, after having written to the department asking them to do research on these products, I finally got a meeting with Dr. Murray Kaiserman.
I actually took the time to read the research, from the youth smoking survey to the Canadian tobacco use monitoring survey. I looked at all of that; that's what I've done all my life. So I met with Murray and I said, “Listen, Murray, I don't understand this. From everything I see, this is a non-issue. The vast majority of people who consume these products are of legal age to do so. The majority are over the age of 25. Does Health Canada have any relevant research that in the least tells us who's consuming exactly which products, in what quantities they're consuming it, the frequency of their consumption, the origin of the product they're consuming—is it contraband, is it legal, is it native?—the source of this product, where they are getting it from, and/or how flavours impact the decision for anyone, let alone kids, to decide to start smoking or continue smoking?” Murray says to me, “No, Luc, we don't have that type of research.” Obviously, they had research with regard to emissions testing and so forth. I said, “Well, are you planning on undertaking any research?” He said, “No, and I'll tell you why, and it's for two reasons, Luc. Number one, the market is too small.” I said, “What are you talking about?” He said, “Well, the market is too small, so that whatever research we could do through CTUMS would be unreliable, in terms of data. We'd have to do specific research. And number two, we're not going to be doing any research. The reality is, if we don't do research, we don't have to release findings to the public.”
Then he also said something interesting to me. He said, “You know, Luc, it's not only an issue that minors are getting access”, and he conceded that the vast majority of people who consume flavoured little cigars and cigarillos are of legal age to do so, as mandated by the Government of Canada. He said, “The problem, Luc, is that the products look good, and it's against the spirit of what we're doing here to allow any product to be appealing to any-age smoker.”
I took that, basically, to be Health Canada breaching its mandate of education information, basically forcing lifestyle choices on people whom they've given the right to make that choice.
I know you're talking to Health Canada later on today. Ask them the very specific question: Do you have any data that tells us in what packaging format people are consuming these? We're talking about banning singles because they're so affordable for kids. How do you know that kids are actually purchasing these singles? Health Canada has absolutely no research.
Not long ago, the Government of Ontario would have passed the law; it's still not enacted. I had the exact same discussion with ministry officials and departmental officials, who basically said, we don't have research, we're not going to do research, we're not going to monitor it because it's too expensive, we've had no discussions with the RCMP and the OPP to find out how this will impact contraband, and we have no specific health objectives. They had no expectations about what would happen if you ban these products. Do you think these products will actually cease to exist? Do you think kids will not be consuming these products? Do you Canadian will not be consuming these products?
It's the same situation we have here with Health Canada. There is absolutely no research that supports in any way banning singles or banning any flavour. We actually have a government that has no specific health objectives or expectations, and my sense is that it's so we can't hold them accountable for it.
The reality is that largely everything that's been publicly promoted about the products, the market and the industry, is tantamount to an outright lie. It's not a new product. Cigarillos are not a new product to the marketplace. It's not big tobacco that's behind these things. It's not big cigarette companies who are manufacturing these things. We don't have candy and ice cream flavours in these little cigars and cigarillos. These flavours exist in blunt wraps, which aren't meant for smoking tobacco, as everybody knows. And in terms of it being price-affordable, Murray actually was nice enough to agree with me that it's actually cost-prohibitive to have a unit sale of $1.25. The cheapest cigarillo on the market is still ten times more expensive than a contraband cigarette.
:
On behalf of our 11,000 Canadian customers and retailers and our employees, thank you for having us here today and for allowing us this opportunity to share with you our concerns about Bill .
Distribution G.V.A. is a small business established in 1997 which employs approximately 80 Canadians in Ontario, Quebec, Nova Scotia, New Brunswick and Newfoundland and Labrador. We distribute more than 1,000 different tobacco products, including high quality cigars like the Davidoff brand, as well as cigarillos and pipes and accessories to more than 10,000 retail outlets.
We are an important importer and distributor for convenience stores, tobacco shops and duty-free boutiques. Over 10,000 retail outlets in Canada are serviced by our organization and we remit in excess of $20 million a year in tobacco taxes.
[English]
Distribution GVA Inc. is a responsible corporate citizen and a major importer and distributor of cigars. It is essential that the Canadian government is aware that Distribution GVA has never, ever promoted any of its flavoured tobacco products to minors.
We are aware of the fact that tobacco products are health risks and that these products are not destined to be consumed by individuals who are not old enough to buy the products legally. The consumers of our products are adults, and we are opposed to the fact that minors are able to obtain access thereto.
[Translation]
The has announced that her government intends to establish a prohibition regime on all flavoured tobacco products through Bill . If the said bill is adopted in its present version, this will result in the layoff of the majority of our employees and may even force the closure of our company.
[English]
Bill C-32, while perhaps well-intentioned, is needlessly too wide in its scope in its present version, due to Health Canada's elemental lack of knowledge with respect to cigar products. Bill C-32 will prohibit products that have been on the market for decades.
I have brought some products to show you what kinds of products will be banned with this bill. They are clearly not kids' products. These have been on the market for about 25 years. Some of these are little cigarillos made in Europe, and they have also been on the market for the longest time. They have flavours and they're enjoyed by adults. These will all be banned if the bill is passed as is. I have more. I can show you more.
Anyway, I'll continue. I think you have pictures of these products in annex 1.
The latest statistics demonstrate clearly that flavoured cigarillos are products that are destined for adults and consumed by adults. According to the results of the latest Canadian tobacco use monitoring survey, cycle 1, which Mr. Martial was talking about earlier, conducted by Health Canada and Statistics Canada, 91% of the flavoured cigarillo consumers are adults or are of age for buying the product. Sixty per cent of those people are over 25 years old. So saying that these are kids' products is not very true.
[Translation]
These findings raise an important question. Before passing this legislation and imposing a prohibition on an entire legitimate category of tobacco products, it is important to discover the manner in which the remaining 8 or 9% of consumers who are not adults obtain access to these products.
For example, according to Health Canada, access to cigarettes through the contraband tobacco market is much greater than access to flavoured cigarillos. Unfortunately, we fear that because of the speed with which the Government intends to adopt the present law, this important question will remain unanswered and will unnecessarily penalize the thousands of individuals who are employed in the legal tobacco trade.
[English]
What the Statistics Canada survey demonstrates is that the flavoured category did not actually create more smokers per se, but actual smokers switched from cigarettes to flavoured cigarillos. We have also noted that a large majority of flavoured cigarillo consumers were originally cigarette smokers who have switched to our products, for multiple reasons.
From conversations with some of these consumers, we have learned that they prefer our product to the cigarettes they used to smoke. In many instances, these consumers were in the process of reducing their tobacco consumption with the use of our products. They told us they smoked less when they smoked flavoured cigarillos than they did when they smoked cigarettes. Some have also told us that they were trying to quite smoking, and that since they smoked less of these, it was a way to reduce their consumption and eventually quit smoking. I am not the one saying this; the consumers of our products are saying this.
We cannot understand, then, the urgency to adopt Bill C-32 in its present form and why the government is finding it okay to create such an emergency to proceed on something that represents one-half of 1% of the total tobacco market in Canada, while at the same time making an exception for menthol cigarettes. According to the health minister, they're marginal, and this is why they're making an exception, but they're at 2%. So one-half of 1% is not okay, but 2% is okay?
[Translation]
One can easily deduce that the 400 million cigarillos market will be claimed by the big tobacco manufacturers. Are the big tobacco multinationals behind this bad piece of legislation? Have the anti-tobacco lobbyists been shamelessly manipulated by big tobacco?
[English]
Health Canada has mentioned to a representative--and Mr. Martial talked about it earlier--that they have no intention of undertaking any unnecessary research. That supports the desire to introduce a complete prohibition on a whole category of tobacco products that, in some cases, have been on the market for 25 years, as I've said. At the present time, the government is essentially asking Canadians to allow it to prohibit a complete category of products without supporting such a measure with the proper research.
However, such legislation will have direct and wide-ranging consequences on the financial security of thousands of Canadians and will ensure an increase in tobacco contraband for these products. Accessibility to minors will also be increased through the tobacco contraband channel, because they are never asked for proof of age.
[Translation]
Furthermore, in its present format, Bill C-32 will come to unquestionably cause, not solve, problems of criminality already well documented in our society. In effect, once we put aside the emotion associated with the debate concerning minors, flavoured tobacco products, and the issue of tobacco consumption, the prohibitions proposed by the Government will not address the problems associated with minors' access to tobacco products. The illicit contraband trade in tobacco presently offers—
Let me show you what you can now find on the market, in schoolyards and just about everywhere: plastic Ziplock bags containing 200 flavoured cigarillos.
:
Thank you, Madam Chair.
Before I begin, I would just like to ensure that our submission has been received by the committee, both French and English versions. Thank you.
My name is Tamara Gitto. I'm associate general counsel at Imperial Tobacco Canada Limited. I am accompanied by my colleague, Mr. Gaëtan Duplessis, who is division head of research and development at Imperial.
We appreciate this opportunity to speak to Bill C-32. We've prepared a formal submission, and I hope you'll take the time to review it if you've not had the chance to do so already.
I think it's important to begin by clarifying the scope of our business. You've heard a lot about the tobacco industry and the tobacco business in the last few minutes. We do not manufacture or sell little cigars. We do not manufacture or sell flavoured cigarettes, except for menthol. We do not manufacture chewing tobacco.
Ordinarily, I would go on to tell you that Imperial is Canada's leading tobacco company. But I can't make that claim anymore. The manufacturers in Ontario and Quebec, the leading manufacturers in those provinces, are illegal manufacturers. Almost 50% of all tobacco purchased in Ontario is illicit, and this number reaches 40% in Quebec. Certain members have raised this issue in the debates on this bill, and rightly so.
Imperial Tobacco is here today to state its support for the original intent of this bill. We support the regulation of little cigars and we believe they should be regulated in the same manner as cigarettes. We also support reasonable regulation of overtly flavoured tobacco products.
We do have some reservations about the drafting of the bill, which has led to many unintended consequences, and these issues will be detailed by my colleague.
We also believe that the listed additives should be permitted in research and development, especially in the area of harm reduction. We believe that the development and commercialization of potentially risk-reduced products containing these additives should be allowed under appropriate government supervision.
We must unfortunately voice our disagreement with the proposal to ban print advertising, as it's currently outlined in the bill, in publications with at least 85% adult readership. The current legislation is sufficient and needs only to be enforced if Health Canada believes that an ad or any ad placement is inappropriate. Further legislation is unnecessary.
On top of that, illegal tobacco is openly advertised and available at pocket-change prices to whoever chooses to buy it. Banning print ads with severely restricted content in adult publications is not the true problem here, which leads me to my last point.
We are concerned about uniform enforcement of this bill and of all tobacco control measures. If the government enforcement policy does not change, flavoured products will simply appear on the black market and will defeat the objective of this bill.
These concerns have been detailed in
[Translation]
our submission at considerable length.
[English]
I would invite you to read it.
My colleague, Mr. Duplessis, will now address the technical issues that arise due to the unintended drafting issues in the bill.
:
Thank you, Madam Chair, for this opportunity.
As mentioned already, we support the broad objective of elimination of overtly fruity or confectionery style of flavours in all tobacco products. So in that sense we don't have any complaint about the concept of coming up with a list of prohibited additives in relation to tobacco products.
We do have some difficulties, however. We believe these are unintended impacts of the wording used in the legislation. And all of this, of course, is related to technical interpretation of the language in the bill and more specifically in schedule 1.
Because of the way it's drafted, it de facto prevents us from using a large number of ingredients that truly have nothing to do with flavouring. So far, we have identified more than 20 ingredients that are used by our suppliers and are required in the making of our products. If the bill were to be adopted as it is currently written, in fact it would prevent us from continuing to manufacture cigarettes.
I'll give you a few examples. In relation to item 1 of the schedule, the FEMA list covers not only flavourants but all types of ingredients without flavour that are used by flavour manufacturers in making up their formulations.
Item 1 in the schedule does provide for some exemptions, but it doesn't capture everything. One example of that is a very simple one; it's a product called potassium sorbate. Potassium sorbate is a very well-known preservative used very widely in the food industry. It's used within the cigarette industry as an additive to adhesives, or glues if you prefer, just to keep mould from growing on the adhesive when it's stored in tanks.
Elsewhere in the schedule we see words like “sugars” being used. Well, sugars are not just sweetening agents. In technical parlance, “sugars” often refers to complex sugars. One of the most common complex sugars is starch, and as we well know, starch is not a sweet substance; it's also extracted from vegetables and fruits, of course the most common form of starch being cornstarch. This is again not exactly a problem from a flavouring standpoint. Starch, I should point out, is also used as one of the principal ingredients by several manufacturers of cigarette papers to create what we refer to as the “speed bumps” on the cigarette papers that are used to meet the low ignition propensity regulations in Canada.
Yet another example is the expression “vitamins and minerals”. We understand that was meant to refer to vitamins and minerals from the standpoint of nutrition. However, unfortunately—and we have to interpret this from a technical, scientific standpoint—the word “mineral” also encompasses calcium carbonate, or, if you prefer, chalk. Chalk, again, has nothing to do with nutrition, but chalk is used in cigarette papers to control the flow of air through the paper, and it plays a really important role, again, in our ability to meet the low ignition propensity regulations.
Furthermore, linseed oil and soybean oil are used in ink formulations as diluents in the ink, much in the same way as these products are used in inks and in the paint industry. But linseed oil and soybean oil are not there for any nutritional value. In fact, it would be ludicrous to make such a claim. They're simply there as a diluent, but they do contain essential fatty acids.
I don't believe it was the intent of the legislation, but the fact remains that this is the wording that is used currently, and we feel it certainly needs to be corrected. I won't go any further with examples. There are many more.
Our suggestion would be to create a list of additives that impart these fruity confectionery flavours, and let's have a ban on those additives. Alternatively, let's come up with a list of products that are permitted on the basis of functionality, provided these do not provide these overt flavours.
:
The reason is that some of the information is gleaned from the Youth Smoking Survey which was conducted in Quebec, and also from the Canadian Tobacco Use Monitoring Survey. However, all of the reports about this type of product are based on very general information.
I'm saying that Health Canada does not have any specific information because the products consumed are not specified. The aim of the Canadian Tobacco Use Monitoring Survey was to find out if people had smoked a cigar or cigarillo, either flavoured or unflavoured, in the past 30 days. It is impossible to tell from the survey whether the product consumed was flavoured or unflavoured, how often the product was smoked, the quantity consumed or where the product originated.
Mention was made of the contraband trade. An illicit market also exists for flavoured products. The RCMP reports that over the past six months, approximately 800,000 flavoured little cigars have been seized. The Akwesasne Mohawks have started to make their own little flavoured cigars known as Tomahawks on their reserve. I have provided pertinent information about this development to all parliamentarians.
The problem is that no one has any idea of how often people consume this product. The government wants to restrict unit sales to limit the product's accessibility to minors.Yet, it is not known whether young people are purchasing cigars in single units. For example, the nephew of a friend of mine purchases Honey Time cigars manufactured by Distribution GVA in packages of 20 units. I'd also just like to say that Distribution GVA has found a retailer willing to sell its products. The retailer in question also sells single cigars for $1 each. What purpose does it serve to ban unit sales when young people are already purchasing the product in packages of 20 units?
All I am asking, since I am concerned about tobacco control, is that some research be conducted. I've been requesting this for a year now. The kind of research I have in mind would take only two months, not two years. Right now, the government is moving blindly to bring in regulations, without having a clear picture of the situation.
One thing is clear—and I have provided all committee members with information from the RCMP— and that is if the sale of these legal flavoured products is banned, the products will continue to find their way onto the market. Furthermore, these products will certainly continue to be sold on the contraband market and to be available to young people, not to mention that they will be more affordable as well.
:
Thank you for the question.
When I worked for Health Canada, I was assigned to the Strategic Planning and Policy Office. I was Health Canada's representative on the interdepartmental working group on tobacco taxation and smuggling, which had been set up by Allan Rock, the then Minister of Health. Also represented were Justice Canada, Revenue Canada, Finance Canada and Health Canada. Everyone was represented. At the time, I was in charge of coordinating the Treasury Board submission pursuant to which $480 million was allocated between 2001 and 2006 for tobacco control.
I recall asking RCMP officials how much money their organization needed to fight smuggling. They told me that it was not a matter of money and that smuggling could not be controlled. That was nine years ago, and today they are still saying the same things in their press releases. At most, they can seize 5% of known contraband products. They know that about 105 criminal groups are involved in the contraband trade of tobacco and other products. They are unable to stop or control the contraband trade.
As I mentioned, only one study has been done and it found that these products are being consumed by people who are of legal age. Some people became offended and decided that they no longer wanted to see flavoured products on store shelves. However, there is no reason to ban these products, because that would only add to the contraband problems we already have and which we know cannot be controlled. RCMP officials have been telling us for the past nine years that they will never get the upper hand on the contraband trade.
:
I'm sorry. Thank you so much. Our time is up. I gave you a little extra, Mr. Uppal.
I just want to suspend the committee for a moment and ask about doing clause-by-clause today. Do I have the will of the committee to bring more witnesses up today rather than doing clause-by-clause?
Some hon. members: Agreed.
The Chair: Okay.
We will bring more witnesses up. I will just suspend for a minute to ask the officials to come forward. I understand there's another group, SGTG, Small Guys Tobacco Group, who may join as well if there's one representative who would like to choose to do that.
I should ask the will of the committee first. There's the Small Guys Tobacco Group. They're here today. They did want to witness, so I will ask the present witnesses to leave their seats so the officials can come up.
Is it the will of the committee that we also call up Small Guys Tobacco Group?
Some hon. members: Agreed.
The Chair: All right. I'll call one representative from the Small Guys Tobacco Group, if they're in the room.
I'll give it a minute so the witnesses can take their seats.
:
I'd like to call the committee to order, please.
We're now going to go into our second round of witnesses. We have a new group. We have the Department of Health, with Mr. Paul Glover, assistant deputy minister, healthy environments and consumer safety branch; Cathy Sabiston, the director general, controlled substances and tobacco directorate; Denis Choinière, director, office of regulations and compliance, tobacco control program; and of course we have Diane Labelle, general counsel for the legal services unit.
From the Small Guys Tobacco Group, we have, I believe, Colm Kennedy O'Shea.
Now that's a little bit of an Irish name, isn't it, sir?
:
Thank you, Madam Chair.
I do not actually have a prepared statement. I thought we were coming with respect to clause-by-clause today.
We're happy to take the committee's questions, as we move through this.
Given some of the statements that you have heard, I would like to just follow up with a number of brief remarks to once again reiterate that the department believes that the intention of this bill is still an appropriate way to deal with the problems we see emerging with respect to youth and youth tobacco issues.
The department and the Government of Canada do have a broad tobacco demand reduction strategy and we do want to make sure we are using a multi-pronged approach. You've heard a lot about contraband in some of the previous testimony. There are other departments directly involved in attempting to address and deal with the issue of contraband. The government is aware of that as a problem and is working to take action.
We work with our colleagues in all of the other departments—Canada Revenue Agency, the RCMP, Canada Border Services, Public Safety—to try to make sure that those issues are addressed as we move forward.
With respect to the intent of the bill before you today, our intention is to deal with what we see as an emerging problem, and that is the introduction of these new, novel products, the introduction of flavours, the singles that are attractive to youth.
I don't think that as a department I've had the privilege to have one of our surveys quoted quite as often as we did in the last presentation.
It's important to note that by definition most people who will use tobacco products will be adults, because it is prohibited for youth to have them and for them to be sold to youth. That notwithstanding, from the research we have done, from the focus groups we have done, these are products that are attractive to youth. They are growing in terms of the numbers. Cigarillos went from a very small percentage of the overall market a few years ago to now being the fastest growing product category as we move forward.
As a country, we have made great strides in reducing the prevalence of smoking in this country; however, in the last few years we've stalled, and we've stalled at about 19%. If we want to reduce the prevalence of smoking in this country, we need to take different actions or we will continue to be at that rate. We believe that by focusing on this area we can effectively reduce the number of people who start smoking, and thereby reduce that over time.
Thank you very much.
:
Thank you, Madam Chair and members of the standing committee. I represent the Small Guys Tobacco Group, but allow me for a moment to describe what we do as a group.
We are one company of that group. I represent House of Horvath; it's a family business. My wife's family has been in this business in Toronto, Ontario, manufacturing cigars since 1932, and we carry it on today.
The Small Guys Tobacco Group, as a group, represents the interests of the small cigar and pipe tobacco importers of Canada. The Small Guys Tobacco Group represents less than one-half of 1% of the total Canadian tobacco market, a number you've heard earlier today. We are made up of a number of independent companies, many of which are family owned and operated, with some tracing their origins back over 75 years.
Now, the Small Guys Tobacco Group is not new to Health Canada. We first came into being in 1998, I believe, which was...the Tobacco Act. That was the first time we had an opportunity to meet with Health Canada. Obviously, we were aware that regulations were going to come through, and we worked closely with the members here of the tobacco control team, along with the ministers of health. I want to say that this relationship has been a rewarding one for both of us because we're the industry that you're regulating. We're honest enough to share information with you and expect the same courtesy back. A business that's been around for 75 years has seen a lot of regulation over these times. So that's who we are as the Small Guys Tobacco Group.
I have some slides here. This is a presentation that we actually submitted to the standing committee, and I think the committee will get these.
I will be speaking to our points.
On a review of the general bill, in spirit, we are in agreement with it insomuch as little cigars, as we refer to them--and we'd like to make that distinction because cigars are all different in terms of the names and nomenclature used in the industry--are an American-style product with an acetate filter. So in spirit, we're happy that it's headed in a direction that these should not be done singly. They should be done in packs of 20, and that is our first goal there.
With respect to the amendments we would propose, it refers to paragraph 2.(2)(d). Just for easy reference, paragraph 2.(2)(d) reads:
has a cigarette filter or weighs no more than 1.4 g, excluding the weight of any mouthpiece or tip.
We have two recommendations under that paragraph. On the first one, it is kind of odd that it would come from an industry member, but we're suggesting that the Standing Committee on Health substitute the word “cigarette filter”, which is ambiguous or arbitrary.... Actually, in one regard, if I had a filter on a product, yes, I would call it a cigar filter, not a cigarette filter. So we would ask that you tighten that up to say “cellulose acetate filter or other filtering device”.
We would also strongly recommend that you either omit or eliminate the weight characteristic. You capture products that have been traditional in European cigar culture for hundreds of years. Certainly, we have heard from the ECMA group, which is the European manufacturers' council or cigar association in Europe. They're very nervous about this because you're capturing a product that they sell widely and only to adult consumers. It's an expensive product to begin with, so it's not in any of the kiddy-pack formats that you're talking about. A 10-pack of these would cost somewhere between $14 and $20, and if you're talking about the Cuban format of the same product, it would be over $27 a pack.
The second amendment we were looking at refers to proposed subsection 5.1(1), which reads:
No person shall use an additive set out in column 1 of the schedule in the manufacture of a tobacco product set out in column 2.
I'll read my notes, and you can probably follow the gist of it.
On a review of schedule 17, column 1, it is clear that the list of prohibited additives represents a total ban on all additives. The restrictive additive list goes beyond limiting the use of additives that may be deemed to be candy-like and appealing to youth, and captures additives that may be deemed essential to making the product you're trying to ban or regulate, one of which is just the presence of sugar. It really requires you to understand the concept of air-cured and flue-cured tobacco, and we have members here who can speak to that.
One of the processes takes the sweetness out of the tobacco and one leaves it in—or leaves a portion thereof in. On the cigar side of things you have to add that back. Again, I'm not a manufacturer and I'm not on the technical side, but I would suggest that there's a level that you'd have to add back. It may not be super juicy sweet, but it is a level that is necessary to make the tobacco palatable to smoke.
We would strongly recommend that the standing committee and Health Canada expand the list of exclusions from the prohibitive list in order to include those items that are considered essential to the manufacturing set out in column 2, such as item 10.
I'll point out, because I heard the menthol conversation in the debate, that there are many of the traditional flavourings that have been used in the cigar market for years that predate the Second World War as well.
:
Thank you, Madam Chair, for the question.
Canada is a very large, diverse country. When we consult extensively there will always be somebody who can come forward and indicate that they weren't aware or we did not or were unable to reach out to them. I think in many respects, for me, as a senior bureaucrat, to say that we have, with all certainty, consulted to the full extent, to be able to reach everybody, the answer to that is, given the vastness of the country—for many reasons, we find that does occur.
We do acknowledge that with this bill, compared to normal processes, the level of involvement we have had with industry has been different. We do acknowledge that as we move forward.
:
Thank you, Madam Chair, for the member's question.
Before responding directly to that question, I'd like to add to comments you made about consultation. While I acknowledged that there were some differences, I had also intended to indicate that we did reach out to industry and we did hold a number of conference calls and other things to make sure that we were able to explain the intent of the bill and hold consultative processes.
So while it might have somewhat deviated in a minor way from our normal processes, we were reaching out to industry to engage them in this process. We acknowledge the difference, but it was different, as we move forward.
With respect to trade in the bill, we're aware of some of the posturing that is occurring as this moves forward. I'll turn to my colleague, Diane Labelle from Justice, to explain how that process works as we move forward.
Before she does that, I would also like to add that our objective in answering this question would be to not hypothesize about potential trade disputes that have not yet arisen, nor what would potentially be federal responses to such a trade dispute, as that would be strategy at that particular point.
:
Madam Chair, as committee members are fully aware, the Department of Justice does scrutinize all bills brought forward by the government on a number of issues, including Parliament's power to enact the legislation, the constitutionality of the legislation, and this also includes Canada's international obligations.
In its presentation before you today, the bill is not a protectionist measure nor a discriminatory measure. In answering your question, I would have to point out, too, some process issues. The allegations of trade or trade discrimination would need to be treated under the WTO Technical Barriers to Trade Agreement and NAFTA obligations.
Canada clearly has an obligation to ensure that technical regulations are not prepared, adopted, or applied with the view to or with the effect of creating unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade restrictive than necessary to fulfill a legitimate objective. And health measures are a legitimate objective.
What are some of the consequences here of violating Canada's obligation through WTO or TBT Agreement or NAFTA? It would engage one or both of the dispute settlement processes in the event of a challenge, the first one being state-to-state settlement procedures under which a party country challenges the measure it alleges is inconsistent with the applicable trade obligations.
Should the trade panel find that a violation has occurred, Canada would have to bring its laws and practices into conformity, or the other affected party, in other words an industry member, may ultimately suspend benefits provided to Canada by the applicable agreement. This, of course, may have serious and adverse consequences on the Canadian targeted industries. The second mechanism is the investor-state dispute settlement procedure under which an investor may claim damages resulting from the measure it alleges is inconsistent with the applicable trade obligations. Then a trade panel decision is binding, and it may award damages and applicable interest in restitution of property to an investor.
So given the importance of trade and trade agreements and Canada's obligations, the Department of Justice does scrutinize the bills for this reason.
:
The reason we looked at the weight...and we thought it was rather arbitrary. I appreciate the fact that the group is trying to target all the products. The trouble is that sometimes it catches products that weren't intended.
The weight is 1.4 grams. In Europe now I believe it's 2.5 grams. That's the weight they're using in ECMA, or in the European Union. We suggested that the weight wasn't the target. From the discussion that I'm hearing around the table, it was the presence of an acetate filter that distinguished our traditional cigar products from the product you're targeting.
We thought that by describing the product so specifically, by saying that this product has a natural leaf wrapper, it has a natural reconstituted binder, it has a natural reconstituted filler.... It's not the product that I've been seeing held up here. If you were to ask if we're missing one, then what I think is very important is.... If the people from Health Canada read what they wrote.... They put in two extra bullets in clause 2, the last sentence. And it's just kind of a dangling sentence, to the industry. We asked ourselves what it means.
It says:
It includes any tobacco product that is prescribed to be a little cigar.
If that's a product they don't like, Health Canada can just say they're going to call it a little cigar, even though it falls into the definition we've just proposed.
And if that wasn't good enough, Health Canada went further and said, under proposed subsection 2.1(1):
The Governor in Council may make regulations prescribing any tobacco product to be a little cigar.
That means “any” product--one that weighs more, one that weighs less, one that's yellow--