FAIT Committee Meeting

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37th PARLIAMENT, 2nd SESSION

Standing Committee on Foreign Affairs and International Trade

EVIDENCE

CONTENTS

Thursday, June 12, 2003

0910

The Chair (Mr. Bernard Patry (Pierrefonds—Dollard, Lib.))

Mr. Paul Haddow (Executive Director, International Affairs, Canadian Food Inspection Agency)

0915

0920

The Acting Chair (Hon. Art Eggleton (York Centre, Lib.))

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

0925

0930

0935

The Acting Chair (Hon. Art Eggleton)

Mr. Andrew Marsland (Director General, International Markets Bureau, Department of Agriculture and Agri-Food)

The Acting Chair (Hon. Art Eggleton)

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance)

Mr. Paul Haddow

Mr. Howard Hilstrom

Mr. Paul Haddow

Mr. Howard Hilstrom

Mr. Paul Haddow

0940

Mr. Howard Hilstrom

Mr. Paul Haddow

Mr. Howard Hilstrom

The Acting Chair (Hon. Art Eggleton)

Mr. Howard Hilstrom

The Acting Chair (Hon. Art Eggleton)

Mr. Paul Haddow

Mr. Howard Hilstrom

The Acting Chair (Hon. Art Eggleton)

Mr. Paul Haddow

The Acting Chair (Hon. Art Eggleton)

Mr. Stéphane Bergeron (Verchères—Les-Patriotes, BQ)

0945

The Acting Chair (Hon. Art Eggleton)

Mr. Paul Haddow

The Acting Chair (Hon. Art Eggleton)

Mr. Andrew Marsland

The Acting Chair (Hon. Art Eggleton)

Mr. Mark Eyking (Sydney—Victoria, Lib.)

0950

Mr. Claudio Valle

Mr. Mark Eyking

Mr. Claudio Valle

The Acting Chair (Hon. Art Eggleton)

Mr. Paul Haddow

The Acting Chair (Hon. Art Eggleton)

Mr. Dick Proctor (Palliser, NDP)

Mr. Paul Haddow

0955

Mr. Dick Proctor

Mr. Paul Haddow

Mr. Dick Proctor

Mr. Paul Haddow

Mr. Dick Proctor

Mr. Paul Haddow

Mr. Dick Proctor

Mr. Paul Haddow

1000

Mr. Dick Proctor

The Acting Chair (Hon. Art Eggleton)

Mrs. Karen Redman (Kitchener Centre, Lib.)

The Acting Chair (Hon. Art Eggleton)

Mr. Paul Haddow

Mrs. Karen Redman

Mr. Paul Haddow

1005

Mrs. Karen Redman

Mr. Paul Haddow

The Acting Chair (Hon. Art Eggleton)

Mr. John Duncan (Vancouver Island North, Canadian Alliance)

Mr. Paul Haddow

Mr. John Duncan

Mr. Paul Haddow

Mr. John Duncan

Mr. Paul Haddow

Mr. John Duncan

Mr. Paul Haddow

Mr. John Duncan

Mr. Paul Haddow

Mr. John Duncan

Mr. Paul Haddow

The Acting Chair (Hon. Art Eggleton)

Mr. Andrew Marsland

Mr. John Duncan

Mr. Andrew Marsland

Mr. John Duncan

Mr. Andrew Marsland

Mr. John Duncan

Mr. Paul Haddow

The Acting Chair (Hon. Art Eggleton)

Mr. John Duncan

1010

The Acting Chair (Hon. Art Eggleton)

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.)

Mr. Paul Haddow

Mr. Murray Calder

Mr. Paul Haddow

Mr. Murray Calder

Mr. Paul Haddow

The Acting Chair (Hon. Art Eggleton)

Mr. Andrew Marsland

Mr. Murray Calder

Mr. Andrew Marsland

1015

Mr. Murray Calder

Mr. Andrew Marsland

The Acting Chair (Hon. Art Eggleton)

Ms. Pauline Picard (Drummond, BQ)

Mr. Paul Haddow

Ms. Pauline Picard

Mr. Claudio Valle

Ms. Pauline Picard

The Chair

Ms. Pauline Picard

1020

The Chair

Mr. Paul Haddow

The Chair

Mr. Howard Hilstrom

The Chair

Mr. Claudio Valle

1025

Mr. Howard Hilstrom

The Acting Chair (Hon. Art Eggleton)

Mr. Claudio Valle

Mr. Howard Hilstrom

Mr. Claudio Valle

The Chair

Mr. Dick Proctor

Mr. Paul Haddow

Mr. Dick Proctor

1030

Mr. Paul Haddow

Mr. Dick Proctor

Mr. Paul Haddow

Mr. Dick Proctor

Mr. Andrew Marsland

The Chair

1035

Mr. Dick Proctor

The Chair

Mr. Dick Proctor

Mr. Claudio Valle

Mr. Dick Proctor

Mr. Claudio Valle

The Chair

Mr. John Duncan

The Chair

Mr. Paul Haddow

Mr. John Duncan

Mr. Paul Haddow

Mr. John Duncan

Mr. Paul Haddow

Mr. John Duncan

1040

Mr. Paul Haddow

The Chair

Ms. Pauline Picard

Mr. Paul Haddow

Ms. Pauline Picard

Mr. Paul Haddow

Ms. Pauline Picard

The Chair

1045

CANADA

Standing Committee on Foreign Affairs and International Trade

NUMBER 043

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, June 12, 2003

[Recorded by Electronic Apparatus]

¿ (0910)

[English]

The Chair (Mr. Bernard Patry (Pierrefonds—Dollard, Lib.)): Our order of the day, pursuant to Standing Order 108(2), is consideration of the issue of restrictions by certain countries on beef imports from Canada.

Our witnesses today are: from the Department of Foreign Affairs and International Trade, Mr. Claudio Valle, director, technical barriers and regulations; Department of Agriculture and Agri-Food, Mr. Andrew Marsland, director general, International Markets Bureau; and the Canadian Food Inspection Agency, Mr. Paul Haddow, executive director, international affairs.

Welcome, gentlemen. It's a real pleasure to have you here this morning.

If you have introductory remarks, Mr. Haddow, the floor is yours.

Mr. Paul Haddow (Executive Director, International Affairs, Canadian Food Inspection Agency): Thank you, Mr. Chairman.

I'm not a veterinarian, but I thought it would be useful, as background to our discussion of the international markets aspect of this issue, to quickly highlight some of the elements of our investigation and where it stands at this point. Since Tuesday, May 20, when we received confirmation that a case of BSE had been found in a cow in Alberta, the CFIA has been conducting a thorough investigation, along with officials from Health Canada. During this investigation we undertook a thorough and systematic analysis along three lines. These included a trace back, looking at where the cow had been in its life; a trace forward, looking at where its offspring went; and a feed investigation, looking at where the rendered products of the cow may have been consumed and what feed sources the cow may have been exposed to over the course of its life. At the height of our investigation we reached a total of 18 farms placed under quarantine. We have now lifted 10 of those quarantines. Therefore, the total number of farms now under quarantine stands at eight. We have completed the rapid diagnostic testing on all animal samples from all three lines of investigation. These test results, over 2,000, were all negative. With the completion of testing and the verification that no other animals are at risk, more quarantines will be lifted in the coming days. As I said, Mr. Chairman, with the exception of the original cow, all test results have come back negative for BSE, and thus this means that the incidence of BSE in Canada currently remains confined to one cow. Our active investigation into this incident is now wrapping up.

The CFIA has worked closely with Health Canada; other government departments, including the departments represented here today, Foreign Affairs and International Trade and Agriculture and Agri-Food Canada; provincial governments; industry; our trading partners; and the media to ensure that our stakeholders and all Canadians were informed of our progress every step of the way.

Last week, Mr. Chairman, we invited an international team of experts to review our BSE investigation and our overall response to the finding of a single case of BSE. Members included Dr. Ulrich Kihm from Switzerland, Dr. William Hueston from the United States, Dr. Stuart MacDiarmid from New Zealand, and Dr. Dagmar Heim from the European Union. We were fortunate to obtain the advice of such experts from the public health and animal health community, and we were, I might say, gratified by their solid endorsement of the scope, quality, rigour, and thoroughness of our investigation. Some might have said, why are we waiting for the approbation of this international group? We felt--and this has been confirmed by other major governments in the world, which have been very impressed with how the Canadian investigation has proceeded--that with the independent confirmation of an international blue ribbon panel, this would serve in the end to facilitate the renormalization of Canadian exports.

Mr. Chairman, the international team agrees that the active phase of our investigation is now complete. They will be recommending--we have received an oral report from them--that we now focus our efforts on finalizing amendments to the regulatory system in Canada to further strengthen it in light of this incident. Once we receive the report, we will be sharing the findings with Canadians, of course, but also with our trading partners. We're confident that the panel's report will assist in expediting the international acceptance of the conclusions of our recommendation and the reopening of foreign markets to our beef.

As you know, Mr. Chairman, several of our trading partners have instituted restrictions on specific products from Canada as the result of this incident. My colleague Claudio Valle from Foreign Affairs will talk more about these in a moment. The important thing to note here in terms of background is that under the WTO rules governments are completely free, of course, to impose measures for sanitary and phytosanitary reasons, such as in the case of BSE. Certainly, Canada has a very rigorous policy in terms of importing products from countries, and should countries have BSE, we act quite quickly and vigorously on imports from those countries. So, Mr. Chairman, it was not unexpected that countries would place restrictions on Canadian exports once we reported our discovery on May 20. The important priority for us since the beginning from an international perspective, Mr. Chairman, has been to ensure that any measures placed on Canadian exports are based on science and do not overrestrict Canadian exports. For example, there were rumours that in Japan they might be putting restrictions on pork. Of course, this would have been unreasonable and unscientific. There is nothing wrong with people putting measures in place, but they have to be appropriate and science based.

Throughout our investigation we at the agency, and the government more broadly, have worked hard to ensure that all available information on our investigation has been shared with foreign governments on a regular basis. This has been done through our website and, more importantly, Mr. Chairman, through our embassies abroad, which have played a very important role in getting our message out very quickly. We in the agency have put out factual bulletins on our regulatory system, on BSE, and on the international rules of what is and is not appropriate in terms of restrictions, and our embassies abroad have been very effective in getting that message out to foreign governments. Two days after the discovery our chief veterinary officer was in Paris at the annual meeting of the Office international des épizooties and made a report there. Last week we held a briefing for all foreign embassies here in Ottawa.

While we have been focused on making sure that all our trading partners treat this incident on a scientific basis, it's natural to assume that our priority has been the United States, given the highly integrated nature of the North American beef industry. There has been a high level of engagement with the United States from the very beginning, both the Department of Agriculture and the Food and Drug Administration. Minister Vanclief has talked regularly with his counterpart, Secretary Veneman, in the United States, and he has also spoken with the American ambassador here, His Excellency Paul Celluci.

The American regulatory authorities have offered assistance to us in the investigation, as have other governments. We took up the offer of some scientific specialists from the United States Department of Agriculture and the Food and Drug Administration, who have been present and assisting us in the investigation from the beginning. We have also benefited, I must point out, Mr. Chairman, from the assistance of the United Kingdom authorities both in discovering and confirming the one case and in subsequent testing at their reference laboratory for such diseases in Weybridge. Several other countries have offered to assist us, and, quite frankly, Mr. Chairman, we have had to turn them down. There is only so much assistance you can take, and in the investigation our priority has been to get it completed. We thought that with the help we were getting from the Americans and the British, we had enough assistance. As we move into the next phase, we will be receiving senior technical regulatory officials from a number of our trading partners. But we have avoided doing that to date, given the priority of completing the investigation.

¿ (0915)

In late May, Mr. Chairman, we received a delegation of senior regulatory officials, not to assist in the investigation, but to start to arrive at a common understanding of how we would manage this process once the investigation was over. We completed those discussions on Tuesday in Washington.

A delegation of CFIA, Health Canada, and Agriculture Canada officials met with senior U.S. regulators to brief them on our investigation, to inform them that it was complete, and to start to talk to them about some of the regulatory changes we foresaw and also, equally important, how we would work together to reopen the border based on the successful completion of our investigation. It's fair to say, Mr. Chairman, that the border will not reopen as quickly as it shut. It has been agreed that we will proceed to reopen the border with the United States and other countries based on science. That has been confirmed up to the ministerial level in both governments. Science requires that you would deal with lower risk material first, and then you would move on. So there will be a staged re-entry, in our mind, into the U.S. market. The trick will be that while based on science, it must be expeditious and not leisurely. In this regard, Mr. Chairman, with the completion of our investigation, we will be sending a letter today to the United States authorities requesting the reopening of the border for products that from a scientific perspective present minimal or low risk.

Although the parties recognize that economically this is a very significant issue for both of us, there are implications for the United States market with regard to their exports to Japan. If they are seen to be moving too expeditiously vis-à-vis Canadian imports, that may undermine their access to Asian markets. However, we pointed out, and they agreed, that the best way for the United States to allay concerns in Asian markets about its products is for those countries to accept that Canadian beef is safe. The Americans have accepted this, and we have agreed to work together to renormalize the situation in Asian markets.

In terms of the reaction from the United States, they confirm that they will proceed based on science. The upside, of course, of basing things on science is that you're going to get a fairly honest outcome. The downside is that it's very difficult to apply strict timetables to a science-based process. We have commitments to the rules, but we don't have, and we don't think that we could have, a guarantee that next Tuesday this will happen and next Thursday something else will happen. If the shoe were on the other foot, Mr. Chairman, we would understand that.

Moving on to our other trading partners, Japan, as I mentioned, was one of those that approached us very early to come over and assist. We declined their offer. However, now is the time they should be here. Minister Vanclief has extended an invitation for them to come over. We will take them through our investigation and answer any questions they may have. The Japanese have accepted to come. No date has been set. We will be making similar invitations to the regulatory authorities of other major trading partners in the days ahead. I should also note that we have invited Mexican officials to visit Canada, and they will be arriving on June 23.

¿ (0920)

Finally, Mr. Chairman, looking ahead ever so slightly, once these scientific visits to Canada have been completed, we will be sending out teams of officials from a variety of departments around town, including the departments and agencies at this table, to start the process of renormalizing Canadian exports.

I could go into more detail about the things we've done and when we've done them and to whom we wrote letters, but I thought that just as introductory remarks, Mr. Chairman, that would suffice.

Thank you.

The Acting Chair (Hon. Art Eggleton (York Centre, Lib.)): Thank you very much, Mr. Haddow.

Mr. Valle.

Mr. Claudio Valle (Director, Technical Barriers and Regulations, Department of Foreign Affairs and International Trade): Thank you very much, Mr. Chairman.

I'd like to provide the DFAIT perspective on the efforts to advance Canadian export interests in light of the BSE crisis.

I'd like to start off by noting that all the government departments and agencies--CFIA, Agriculture and Agri-Food Canada, Health Canada, and our department--have worked very closely throughout this difficult situation.

As you are aware, Canada has established itself as one of the most important beef and cattle exporters in the world. In 2002 beef and cattle exports were approximately $4 billion, beef valued at $2 billion and cattle at another $2 billion. This made us the fourth most important exporter of beef, behind only Australia, the United States, and Brazil. We are also a leading exporter of bovine genetics, valued at $37 million in 2002. Therefore, there is no question about our important role in the world market and the need to take every step to protect it. Canada's major export markets for beef and cattle are the United States, Mexico, Japan, South Korea, and Taiwan. Other important markets include China, Cuba, Saudi Arabia, and Russia.

As a result of the BSE case, nearly all our trading partners have suspended imports of beef and cattle from Canada. A paper outlining the responses from our trading partners has been circulated to members of this committee. I can assure you that the government will spare no effort to ensure that our markets reopen as early as possible once the scientific issues have been addressed. The reality, as Mr. Haddow outlined, is that we need to be able to satisfy our trading partners that the scientific issues have been addressed.

Another key part of the strategy has been to ensure that our trading partners are being kept fully informed of the process of the investigations. This is essential in ensuring and maintaining good bilateral relationships, which we hope will facilitate subsequent discussions to reopen the markets. Right from the beginning we were informing our trading partners, and we have been keeping them informed ever since. On the first day, May 20, Minister Vanclief spoke to U.S. Secretary of Agriculture Veneman, and my minister, Minister Pettigrew, spoke to U.S. trade representative Zolick. Also on that day we contacted the Japanese and Korean embassies here and informed them directly. We sent instructions to all missions around the world asking them to inform foreign governments. By the end of the day on May 21 virtually all of our missions had followed up and made representations. As Paul indicated, on the same date our chief veterinary officer, Brian Evans, informed the Office international des épizooties, the OIE, which is the international standard-setting body for animal health issues. This meeting was taking place in Paris.

This process of notification, information, and consultation has been ongoing. Ministers Vanclief and Pettigrew have remained in close contact with their U.S. counterparts. My minister will be using the occasion of the Free Trade Area of the Americas ministerial today in Maryland to raise it again with U.S. trade representative Zolick. The Prime Minister confirmed yesterday in the House that he raised the issue with U.S. President Bush on the margins of the G-8 summit last week in France. Our missions abroad are being provided the latest information on a daily basis and are keeping governments fully informed. Indeed, our deputy minister has instructed all our heads of missions to give this issue the highest priority. As Paul indicated, we have also briefed all the local missions here in Ottawa. In the United States, our largest market, in addition to raising the issue with the U.S. administration, we have been very proactive with our congressional contacts, and our consulates have raised this with state-level authorities

¿ (0925)

I think these efforts are paying dividends. Without exception foreign governments have responded positively to our timeliness and openness in providing complete information. We are hopeful that the goodwill that has been generated in building this position will help us subsequently in restoring our markets.

At the same time we're monitoring closely the measures imposed by our trading partners to ensure that they're science based and no more restrictive than necessary. It's important to keep in mind that the WTO and NAFTA give members the right to maintain sanitary and phytosanitary measures necessary for the protection of human, animal, and plant health. This is a fundamental right of all WTO and NAFTA members. Canada itself takes very seriously the right to impose SPS measures necessary for the protection of human, animal, and plant health. We therefore do not in any way question the right of our trading partners to impose measures on Canadian products based on legitimate health and safety concerns.

Both the WTO and NAFTA recognize that the OIE is the international standard-setting organization for animal health. Members therefore have the right to maintain these measures and to prevent the introduction of BSE in accordance with OIE standards. This is a policy that we ourselves have used. However, we are very vigilant in monitoring the measures taken by our trading partners to ensure that they're in accordance with OIE and that they're based on science and not more restrictive than necessary. The OIE is very clear on some products that should not be subject to BSE-related measures. These include milk and milk products, semen and embryos, protein-free tallow and derivatives of tallow, and hides and skins.

Our missions are providing full details of the measures being imposed by our trading partners, and we're studying them closely to ensure that they're science based. In those cases where our trading partners have imposed measures on products contrary to OIE, we have made substantive representations to foreign governments about these measures. In this regard our missions are in the process of presenting letters from our chief veterinary officer, Brian Evans, to several governments, including Korea, Taiwan, China, Russia, Argentina, Brazil, and several others. We recognize that these are not major issues, but these affect the interests of a number of Canadian exporters nonetheless.

But to deal with the most important trade issue affecting our beef and cattle and other products, we need to satisfy our trading partners that we have addressed the BSE situation in Canada on the basis of sound science. Mr. Chairman, we feel that the comprehensive strategy we have developed in dealing with our trading partners is the best we could have undertaken toward early restoration of market access once we have dealt with the scientific issues.

Lastly, as you are aware, on June 4 Minister Pettigrew announced some changes in the administration of Canada's supplementary import policy under the beef and veal tariff quota, TRQ, for non-NAFTA imports, affecting applications received on or after May 21. These adjustments reflect the government's commitment to supporting the Canadian industry in facing the challenges and uncertainty brought on by the recent case of BSE. Companies wishing to apply for beef and veal supplementary imports of non-NAFTA beef will be required to first offer the opportunity to at least five Canadian suppliers to supply their needs. If less than five domestic suppliers have available domestic products, then the applicant is required to contact all domestic suppliers. The previous policy required companies to check with only two domestic suppliers. Supplementary imports will not normally be allowed if a Canadian supplier is able to meet the applicant's needs at prices that are competitive with those of similar products imported into the U.S.A. from other countries. Companies will still be able to apply for supplementary imports, but they will need to justify why they have not accepted offers made by Canadian suppliers at competitive prices before their request will be considered. The other existing policy conditions remain unchanged, including the condition that supplementary imports will not normally be permitted if the price of offshore beef entering Canada is less than the price of similar goods entering the United States.

¿ (0930)

I must emphasize that these changes in the policy were developed through close consultation with the industry stakeholders and reflect the advice and recommendation of the Beef and Veal Tariff Rate Quota Advisory Committee, which includes the Canadian Meat Council and the Canadian Cattlemen's Association. These changes, Mr. Chairman, to our supplementary import policy have been made to support our industry while we focus our main efforts on regaining market access to our export products.

Thank you, Mr. Chairman.

¿ (0935)

The Acting Chair (Hon. Art Eggleton): Thank you very much.

We are running a bit behind time, so perhaps we could tighten up a little bit.

Mr. Marsland.

Mr. Andrew Marsland (Director General, International Markets Bureau, Department of Agriculture and Agri-Food): Thank you, Mr. Chairman.

I'd briefly like to supplement the comments of my colleagues in relation to our discussions with industry and the provinces about rebuilding markets once we have reopened the borders for our Canadian beef and cattle. We recognize that while the first priority is to reopen those borders, we will need to work hard with industry to regain the confidence of our markets once that happens.

At the National Beef Industry Value Chain Roundtable on May 28 and 29, a round table that brings together all parts of the beef supply chain with the federal government and the provinces, it was recognized that there will be a need to develop strategies to reopen high priority markets for Canadian industry and that intensive efforts will be required to regain those markets. A joint industry/government working group was struck to develop strategies to do that. We anticipate that those strategies will involve coordinated industry/government approaches to understand the challenges arising in those markets, to support industry-led efforts to promote Canadian beef and beef products, and to communicate to our customers the quality and safety of Canadian beef and beef products.

The federal government has supported the beef industry's export marketing efforts in the past through the agrifood trade program. Last year the program provided almost $1.9 million to the Canadian Beef Export Federation, including almost $500,000 to support branding activities in Japan in response to the discovery of BSE in that country. Support was also provided to the Canadian Beef Breeds Council and the Canadian Livestock Genetics Association. This year the department has approved around $2.2 million in matching funding for the Canadian Beef Export Federation under the successor program, the Canadian agriculture and food international program. We expect to work with industry to see how we can use those funds and other methods to regain customer confidence in international markets.

I'll finish there, Mr. Chairman.

The Acting Chair (Hon. Art Eggleton): Thank you very much, Mr. Marsland.

Thank you, gentlemen.

We'll now have questions and answers, with a five-minute period of time for both questions and answers. We'll start with Mr. Hilstrom.

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): What scientific issues have we not satisfied with the United States? I'm only going to talk about the United States for the simple reason that it will simplify your answers. What are they specifically? Maybe there aren't any.

Mr. Paul Haddow: First of all, I think you have to put this into some perspective. We completed our investigation over the weekend. We brought in these international experts. They said, as far as we're concerned, this is a thorough investigation. You need not go further. They haven't even written up that report yet. We have given a verbal briefing, with our epidemiologists and veterinarians, to U.S. officials. They've asked questions, and we've provided them with answers. We are now sending a written version of our investigation and conclusions. They will look at that. There are--

Mr. Howard Hilstrom: Sorry, we only have five minutes. That's a full answer, as far as I need it.

Mr. Kihm from Switzerland said that it could take up to a year to consider Canada BSE free. Is he basing that on science? I don't think so.

Mr. Paul Haddow: You'd have to ask him.

Mr. Howard Hilstrom: That was reported in the newspapers.

Are there any provisions under NAFTA whereby the non-tariff trade barriers could cause resistance to opening the border after all the science is there and it has been proven? Are there any provisions that Canada can use to have Mexico and that...? At what point would they be used if things didn't move along in an expeditious manner in opening the borders?

Mr. Paul Haddow: When it was clear that people weren't basing their decisions on science.

¿ (0940)

Mr. Howard Hilstrom: That would be an argument over phytosanitary.

Mr. Paul Haddow: Sanitary.

Mr. Howard Hilstrom: It seems to me that we're coming down to good, old-fashioned customer relations and delivering to the customer what they want. This is where some major concerns are going to come up, and I hope that the border opens up without these issues arising any further. Canada has not had a good record on BSE, and I refer specifically to the issue with Brazil. There we did not work in lockstep with the United States. They did not ban Brazil beef and we did. At the time it seemed as if we did it because it was an economic issue dealing with Bombardier in Quebec and not with the BSE. What I'm referring to here on customer relations is the simple fact that the relationship between the Canadian government and our NAFTA partners would be tremendously important in getting that border open if we had that good relationship. I don't think we do.

The Acting Chair (Hon. Art Eggleton): Let's go to the answer. We're running out of time.

Mr. Howard Hilstrom: We're running out of time. These gentlemen can't even give an answer to this problem we have with relations with the United States. You've answered the question that there's no science we're going to be stumbling on. It's going to be a straight relationship between the United States and Canada. Is that not what it's going to boil down to in opening up that U.S. border?

The Acting Chair (Hon. Art Eggleton): Mr. Haddow. The other gentlemen can also jump in and answer it as well.

Mr. Paul Haddow: I'll take a crack at it, Mr. Chairman. I was involved in the Brazil decision. I think it's important to understand that was taken for strictly health reasons. It had nothing to do with Bombardier's fight with Brazil.

Mr. Howard Hilstrom: Why did we drop it so fast, then? We didn't keep on it for a year.

The Acting Chair (Hon. Art Eggleton): Order.

Mr. Paul Haddow: If I may just answer the first question, the relationship with the United States was difficult at that time because they were in an interregnum situation where one government had left and the other government hadn't shown up yet. So that was a unique situation.

I've been at most, if not all, of the meetings, and I think it's fair to say that in this situation the relationship is excellent. They have confidence in how we regulate. They know our regulatory system. They trust it. We have good customer relations on this file with the United States. I think that's the best way to put it, Mr. Chairman.

The Acting Chair (Hon. Art Eggleton): Monsieur Bergeron.

[Translation]

Mr. Stéphane Bergeron (Verchères—Les-Patriotes, BQ): Thank you, Mr. Chairman.

At first sight, I have the strange feeling that this is a situation which, in a sense, is very alike the softwood lumber conflict. As a matter of fact, on one hand we have to get to the heart of the conflict. In the present case, it is a matter of carrying through the scientific studies and research which will demonstrate that Canada has completely eradicated the disease, to reopen the borders and let our beef reach export markets. On the other hand, it is necessary in the meantime to support farm producers who are affected by the crisis. I will ask two questions, one being for Mr. Haddow, and the other for Mr. Marsland.

My first question is as follows. Perhaps I'm a bit of a neophyte in this area, but you told us that, at the beginning, we received offers of support and of cooperation from a number of countries, but that we turned them down, because it is, according to you, impossible to accept everybody's help and there are limits to the number of foreign stakeholders who can put a lot of effort in such a matter. You also told us that the studies were going well, that Canada had almost certainly eradicated the disease and that we were now inviting foreign delegations to come and see how events are unfolding.

Allow me to make a comparison which can seem clumsy and even odious in some regards. I have the impression that this situation could remind us of the events in Djenine, in Palestine. After the so-called massacre of Djenine, it took a lot of time to the Israelis to allow foreign observers to come and see what was going on there, to the point that the international community started to think that there was something in the wind. Now, several days later, the Israelis suddenly delivered the authority.

Aren't you concerned that the polite refusal of the offered support, an offer for help which perhaps was finally an excuse to come and see what was going on, followed, a few weeks later, by an invitation to cooperate, confirm those people in the idea that we had something to hide?

My second question is what are we doing in the meantime to help producers and processors? Up to now, the government showed itself rather reluctant to the idea to help financially the producers and the processors who are terribly affected by this crisis.

¿ (0945)

[English]

The Acting Chair (Hon. Art Eggleton): Mr. Haddow and then Mr. Marsland.

Mr. Paul Haddow: We have nothing to hide. We never had anything to hide, Mr. Chairman. During the last few weeks people have been working 18-hour days seven days a week to try to get to the bottom of this. We've been very open with Canadians and our trading partners. We have a very sophisticated array of scientific expertise in Canada. We could use some experience in one or two small places. We were offered that experience, and we took it. But you can't conduct a complex scientific investigation and a logistically complex process of going to farms, identifying cows, slaughtering those cows, taking those brains, putting them on planes, etc., with all kinds of foreign visitors looking around, etc. People said, if you need us, we'll be there. If you don't need us, we understand. We selected those that we truly needed. We've been very open throughout. We're going to continue to be open, and we're going to invite people to come. They can look at all our statistics. We've had the international panel. They have been very complimentary to Canada in terms of our transparency and thoroughness. So, Mr. Chairman, that's not the reason we refused the aid, but simply to get on with the job at hand in the most efficient manner.

The Acting Chair (Hon. Art Eggleton): Mr. Marsland on the second question.

Mr. Andrew Marsland: Thank you, Mr. Chairman.

As the minister has indicated, I believe, he is in continual discussions with both the industry and his provincial colleagues on the application of current business risk management programs, proposed programs under the APF, and other options. I understand that he is meeting with his colleagues tomorrow. I am sure that at the appropriate time he will indicate any other measures the government proposes to take.

The Acting Chair (Hon. Art Eggleton): Thank you very much.

Mr. Eyking, five minutes.

Mr. Mark Eyking (Sydney—Victoria, Lib.): Thank you, Mr. Chairman.

In the area of trade between us and the United States, with various issues such as potatoes, softwood lumber, mussels, and now beef, it seems that no matter what due diligence we do or proof we submit on our fair trade practices, the U.S. for a lot of reasons, such as lobby groups and internal pressures, seems to be able to unfairly impair our trade a lot of times through their government. This question is for Mr. Valle. With the U.S. being such a big customer and a close neighbour, should we be looking at setting up a bilateral trade dispute mechanism between just us and the United States so that when these things come up, we can deal with them internally instead of going all the way to the WTO? We have friction all the time between the two industries back and forth and parliamentarians. That's one question.

The second question is more ambitious. Can you see a time when we're going to be like the European Union in that we have the same practices on both sides of the border? It wouldn't be a question of what you're doing here because everything is the same, similar to what you have now in France and Germany on how they treat their cattle and whatnot.

¿ (0950)

Mr. Claudio Valle: On the first point of your question, there are already a number of mechanisms where we do in fact engage before we agree to disagree in terms of advancing our respective interests. A number of parliamentary committees carry on a dialogue with U.S. committees. On the agricultural side we have an informal group that meets every six months. We go through the list of our bilateral irritants and make progress, and out of the public eye we're able to solve some problems. On some issues, such as softwood lumber, where the interests and policies are so divergent, it is difficult to make progress. But all in all I think there is the capacity to move forward. I think we have good dialogue with our U.S. counterparts. We are doing a proper job of advancing our interests on Capitol Hill and explaining the Canadian position. In some areas there is disagreement, and we are forced to go to dispute settlement, which is costly and lengthy and often does not provide a satisfactory outcome.

What was the second part of the question?

Mr. Mark Eyking: In your opinion, can you see a day when there would not be much difference between our countries in the way we do things?

Mr. Claudio Valle: A number of departments are trying to harmonize practices. I think that in some areas, such as pesticide management, our organizations have worked together extremely well to come up with common rules and so on. We're pushing to do more of that. The process we are engaging in now in government in terms of smart regulation will in fact force us to work more closely with our major trading partners where we have regulatory difficulties in terms of trying to harmonize regulatory practices. On the sanitary and phytosanitary side, as Mr. Haddow can outline, there is a lot of convergence in terms of views and interests as to how things can be managed. The practices in terms of dealing with a number of our internal and external problems are the same. We view science from the same sort of basis. So the problem is not there.

Do you want to add anything to that?

The Acting Chair (Hon. Art Eggleton): We're out of time for questions.

Is there anything you want to add to the answer?

Mr. Paul Haddow: From a purely regulatory perspective, Mr.Chairman, I think at this point it's unfair to lump the BSE issue in with other long-standing irritants. We haven't seen anything to date from the Americans that would indicate that they're not going to do anything but play this one straight. That may change, but so far, based on our sound regulatory cooperation with them, they understand that there but for the grace God go they, and they're going to deal with this on a scientific basis.

The Acting Chair (Hon. Art Eggleton): Thank you very much.

Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Thank you, Mr. Chair.

Mr. Haddow, last weekend Dr. Kihm said that Canada should eliminate the use of cows in all animal feed, and I'm interested to know what the CFIA response is to that.

Mr. Paul Haddow: Mr. Chairman, as part of their report, a written version of which we haven't received yet, the international panel is going to make some observations based on international experience as to what kind of regulatory changes Canada could entertain. One area they mentioned in passing is specified risk materials and whether or not they should be counted as meat and taken out of the feed chain. The ministers are looking at a variety of issues, the Minister of Health and the Minister of Agriculture, in terms of feeding practices, rendering, surveillance, etc. A whole range of regulatory options is being considered by the government for both immediate action, short-term action, and medium-term action. I would expect that things like the issue you've raised about feed and specified risk materials will be part of our government's response to this incident.

¿ (0955)

Mr. Dick Proctor: Mr. DeHaven, the U.S. gentleman who was here, said that all relevant information from the investigation needs to be presented before they could consider lifting any of the restrictions. You've said this morning that the active phase is now complete. Take us through what you think are the next steps.

Mr. Paul Haddow: As I mentioned before, we had met with them on Tuesday and taken them orally through our investigation. They were impressed. There were about 80 slides. Our specialists answered questions from their specialists. It was very much a technical meeting to make sure that they understood what we would be presenting. They do. We're presenting it to them today in a hard copy. At the same time we will be presenting to them, along with our scientific evidence, a request for the removal of the restrictions on a range of low-risk products. Internationally, whether it's the WHO or the OIE, there's a recognition in these situations that this particular group of products presents extremely low risk. So we will be looking for the immediate removal of those. Then, as they further reflect and ask questions on our analysis, we would see subsequent tranches of products being provided re-entry to the U.S. market.

Mr. Dick Proctor: In your presentation you said that the American border won't reopen as quickly as it could or should.

Mr. Paul Haddow: I said that the American border won't open as quickly as it closed.

Mr. Dick Proctor: As it closed, sorry.

What degree of probability does the CFIA believe there is that there may be BSE in the United States, either as a result of the five bulls that came from this cow and went into Montana or other sources? Do you have a sense of that?

Mr. Paul Haddow: I'm not a vet. We found an isolated incident of one cow in Canada. There could be a few more cows in Canada. Who knows? There could be a few in the United States. They have a surveillance program. We have a surveillance program. It's because of our surveillance program that we found it. We have an extremely integrated market. Cows go down and feed comes up. Feed goes down and cows come up. I think I'd leave it at that, if I may, in terms of speculation.

Mr. Dick Proctor: This gets back to the first question. You indicated in your response that various ministers are looking at it, but does that include testing more animals?

Mr. Paul Haddow: Absolutely, testing more animals both randomly and with a high-risk element. You would do, for example, comprehensive testing of all animals over a certain age. On the other hand, you could just randomly test animals of all ages. So there is a package of targeting versus random sampling, just to give Canadians the confidence they deserve that this was a very isolated case. And we need to ramp up that surveillance. If after an intensive period of heightened surveillance and much more extensive testing we don't find any more cases, then we would maybe let up a bit. But I think that in the short term we'll see more testing.

À (1000)

Mr. Dick Proctor: When you--

The Acting Chair (Hon. Art Eggleton): The next questioner is Ms. Redman.

Mrs. Karen Redman (Kitchener Centre, Lib.): Thank you, Mr. Chairman.

Thank you for coming. This obviously is a topic of an awful lot of Canadian conversations and one that has seen a lot of printer's ink.

My understanding anecdotally is that about five years ago a herd of cattle and a flock of sheep were destroyed under a suspicion, if not confirmation, of BSE, and at that time we did not close our borders. That was told to me by people when I was travelling out west. I haven't seen that documented anywhere.

I think that in one of the newspapers a senior vet from Manitoba was speculating that the Americans are going to want our border open as well because if it stays closed a year or more, that would then give us the provocation so that were it to happen in their herds, we could then close our border. So it seems to me that it's mutually beneficial to keep the border open.

I think you've answered this question partially. When these kinds of issues arise, is there a specific protocol internationally that everybody adheres to?

You have also referenced some of the changes that need to be made to the food inspection system. I'm wondering if it would have been possible to spot this and to have prevented this. I understand that when the federal government was notified that there was a suspected case of BSE, we found out on a Friday, I think it was, and by the Monday not only was it confirmed by our scientists that it was BSE, but we had sent it to Britain and had it confirmed there. So it seems to me that this system is finely tuned and highly responsive when it's called upon. But--and I don't mean that there was any intent--it sat somewhere in a provincial locker waiting to be tested because there had not been an indication that this might be the case. So it strikes me that this system can work when called upon. My question would be, how do we need to change it so that we can continue to export our goods and Canadians can continue to have confidence in this system?

If I can use the analogy of a municipality, the more police you get, sometimes the higher crime rate you have because you simply have more eyes on the street. Perhaps by being vigilant Canada will have to deal with the knowledge of exactly what's in our livestock, whereas the country that is less vigilant may have cases that have gone undiagnosed.

The Acting Chair (Hon. Art Eggleton): Gentlemen.

Mr. Paul Haddow: There was a lot in that.

I think that our system has worked well. We had a case of BSE in 1993, which was an imported cow. We acted very vigorously against that--some at the time thought too vigorously--and we've never had a case since. Yet we continued to monitor. We continued to do random tests and tests of high-risk animals. Because of that low-level monitoring, we have now found a case. We are now going to start doing more monitoring. But given the risk of us having BSE on May 10, the amount of surveillance we were doing was appropriate. We've now stumbled on a case. That's going to mean much more surveillance. When we have reconfirmed to our satisfaction and the satisfaction of Canadian consumers that's no longer warranted, it will come down again. So I do think the system worked. I don't think it was a matter that we didn't have enough people looking.

I think that now it's a matter of taking our findings, together with any improvements to our regulatory system that flow from that, and presenting them to Canadians and to our foreign trading partners and saying, here's what we found. Here is how it happened. Here's our system then, and here's our system now. We think that faced with that, we should be able to re-establish confidence very quickly both here in Canada and abroad.

Mrs. Karen Redman: Could this have been prevented?

Mr. Paul Haddow: I'm not the person to ask. It has astonished us all.

À (1005)

Mrs. Karen Redman: There is no movement or appetite for a protocol internationally to respond. There will be other issues. SARS is another good example. We don't know what's out there.

Mr. Paul Haddow: There is a protocol in a sense. It's a protocol that was designed in response to the European crisis. In Europe there wasn't one case, there were 180,000. It was not managed as well as it could have been. We've learned a lot from their experience. The international protocol is rather onerous. In fact, the Canadian experience may call for a revisiting of that protocol, which if strictly applied would not see Canadian exports for a long time. But what about a case where there is one animal? What about when it has been well managed? The protocol was designed for cases where it wasn't managed well and there was a pandemic. So in terms of international protocols, I think the Canadian experience will lead to a re-examination of them to make them more agile and relevant to the circumstances.

The Acting Chair (Hon. Art Eggleton): Next is Mr. Duncan.

Mr. John Duncan (Vancouver Island North, Canadian Alliance): Good morning.

I'll just ask some quick questions, because I have several. The first one is, if the shoes were reversed, what would Canada do now?

Mr. Paul Haddow: We'd be doing what we are asking the Americans to do. We would have closed the border. We would have asked for their scientific evidence, and we would have opened the border based on science.

Mr. John Duncan: So the border would be open now.

Mr. Paul Haddow: Not yet. We still would not have received our letter. Looking at this through that prism, I think it's fair to say that we'd be where we are today.

Mr. John Duncan: What is your best guess as to when the border will open on technical merit?

Mr. Paul Haddow: I think that with any luck at all we should start seeing certain products moving within a very short period of time. But I couldn't hazard a guess as to when everything will get back to normal.

Mr. John Duncan: Is the U.S. under any technical obligation to specify what's required for opening the border?

Mr. Paul Haddow: Borders can be opened in various ways--with certification, with this, with that, with a lot of paper, with a little paper. We're trying to open the border in as unregulated a way as possible. There could be scientific reasons for them to have certain certification requirements, and that's one of the issues we'll be dealing with in the next weeks.

Mr. John Duncan: I take that as a no. There's no technical obligation for them to specify.

Mr. Paul Haddow: They have a right to put measures in place in the face of risks. Our obligation is to demonstrate to them that the risk situation is not what they thought it was.

Mr. John Duncan: What level of BSE testing is done in the U.S.? How does it compare to our surveillance? Do you have any feel for that?

Mr. Paul Haddow: That's not my area of expertise, I'm sorry.

The Acting Chair (Hon. Art Eggleton): Mr. Marsland wants to respond.

Mr. Andrew Marsland: My understanding is that both Canada and the U.S. test beyond the recommendation coming out of the Office international des épizooties. Both countries are at about the same level beyond the minimum.

Mr. John Duncan: When we enhance our low-level surveillance, we will actually be at that point, at a higher--

Mr. Andrew Marsland: No, we already are.

Mr. John Duncan: We already are at a higher level than the U.S.

Mr. Andrew Marsland: About the same as the U.S.

Mr. John Duncan: That will soon change.

In terms of our feeding, slaughtering, and cattle-raising standards in Canada, would they be the same, higher, or lower in the U.S.?

Mr. Paul Haddow: In a broad-brush answer, Mr. Chairman, the farming practices in Canada and the United States aren't significantly different. On the regulatory regime there will be tweaks here and there where we do something up here a little differently than they do down there. But by and large they're rather similar. In Canada we're obviously going to make some changes to our regulatory system, which may place us in a situation where the historical similarities may change.

The Acting Chair (Hon. Art Eggleton): You have time for a very quick question and answer.

Mr. John Duncan: If Howard has a quick question, I'll let him ask it.

À (1010)

The Acting Chair (Hon. Art Eggleton): I'll come back to him.

Mr. Calder.

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

Would you gentlemen agree that the Canada-U.S. beef industry is a very integrated one?

How soon will this scientific report be available to the U.S.?

Mr. Paul Haddow: We are hoping to send a hard copy down today.

Mr. Murray Calder: We have a very integrated beef industry between the two countries. We have found BSE here. If it is that integrated, there is the possibility of it also being down in the United States.

You talked about staged re-entry, working with minor products up to priority products. Could you expand on exactly how that's going to work?

Mr. Paul Haddow: Mr. Chairman, I wasn't clear. I wasn't talking about minor products and priority products. In fact, we were talking about products that present low risk, moving out to those that present high risk; for example, embryos, gelatin caplets, processed food made from beef originating in Australia and the United States, muscle meat from animals less than two years old, and veal calves.You can go through the range of products that come out of that sector and you can say, this subset scientifically presents extremely low risk, so let's start with them and then move on to the next. The next may be a little trickier to sort out. You may need to certify or do this or that. We're saying that as scientists we can say that this stuff over here is very low risk, so let's get it moving, and we'll deal with the more difficult stuff later. So it's not a matter of priority or minor or major. It's a matter of risk.

Mr. Murray Calder: I think it was very shrewd on your part to have the Europeans come in and be part of the science testing, because they are definitely the experts. They've dealt with this problem the longest. I think it was also very shrewd to have the U.S. involved in this, because the industry is very integrated. If the United States plays around with this similar to what has been done with softwood lumber and other things, is there not a danger that the other countries of the world are going to come back to the U.S. and say, because it is such an integrated industry, aren't you putting a bit more focus on yourself than is necessary?

Mr. Paul Haddow: I've heard that said.

The Acting Chair (Hon. Art Eggleton): Does anybody else want to respond to that?

Mr. Andrew Marsland: There's no indication so far from the Americans that they will approach this on any other basis than a scientific basis. We're confident they will do that.

Mr. Murray Calder: What is the strategy with regard to regaining the markets and explaining to everybody we export to that in fact it was one cow and the product is safe?

Mr. Andrew Marsland: I mentioned that two weeks ago we met with the beef industry and struck a working group to do that. I think that, first of all, we need the borders open. I think the strategy will be a combination of measures, such as promotion by the beef industry supported by statements from the government and going into markets with experts to demonstrate that, a whole range of options. We worked with the beef industry in Japan last year where there were issues of consumer confidence with imported meat coming out of a domestic case of BSE. We did a whole range of activities, from in-store promotions underlining the safety and quality of Canadian beef, to promotional events in Japan, and so on. I think we would learn from that and expand that to other markets very much in concert with the beef industry.

À (1015)

Mr. Murray Calder: I have one final question. What do you gentlemen consider would be a reasonable timeframe for the borders to be opened up to where they were before the BSE issue?

Mr. Andrew Marsland: When we met with the Americans this week, they clearly understood the importance of timing on this. But I think, understandably, there's a sensitivity on their part that the science would be rushed. So I think it's very difficult to set a specific timeframe on it, other than to say that they fully understand the importance of this issue for both Canada and, as you say, the integrated North American beef industry.

The Acting Chair (Hon. Art Eggleton): Thank you very much.

Madam Picard.

[Translation]

Ms. Pauline Picard (Drummond, BQ): Good morning, gentlemen. I would like to ask you three questions.

There is in my constituency a company called IND Embryotech. It is a Chinese company, in fact a laboratory which produces embryos and whose main office is in Vancouver. You know it, I think. China banned embryo products produced by those laboratories. Now, according to your studies, there is no danger in exporting those embryos.

I would like to know if you have thought of measures to convince our Chinese partners that there is no danger in using those products.

Mr. Paul Haddow: We already wrote a letter to the Chinese government about this.

According to the OIE rules, there is little, if any, scientific basis for there to be a ban on embryos. So we are looking to the Chinese government to lift immediately any restrictions on embryos.

Ms. Pauline Picard: Mr. Valle, you said earlier that Minister Pettigrew announced some measures but that they are only for farmers whose cows were slaughtered. Have you thought of making farmers for whom it is impossible to sell their cows and feedlot managers benefit from such measures? At present, these people have very serious financial difficulties, without mentioning that beef prices are dropping.

In my constituency, which is in the middle of Quebec, some people are in this situation; they cannot send their cattle to the slaughterhouses because they are closing down. There are lay-offs and many are left jobless. Do you expect measures? You say that you do not know how long this situation will last. Now, the Canadian economy suffers a loss of $4 billion and in the constituencies where this type of cattle-rearing is done, the problem is extremely serious.

Mr. Claudio Valle: Mr. Marsland, in his presentation, indicated that Minister Vanclief was going, in the coming days, to announce a program for the whole industry: cattlemen, meat packers and renderers. I think this program will be announced once the minister has finished his consultations. I expect this to be soon.

Ms. Pauline Picard: I am delighted.

Do I have time for another question?

The Chair: Yes, Madam.

Ms. Pauline Picard: For just one case which has been identified, an embargo affecting Canada as a whole has been imposed.

As far as we are concerned, we are in favour of regionalization. Producer organizations are also in favour and I understand the Office international des epizooties is too.

What is obstructing regionalization? In such a context, I cannot imagine what would happen if this type of disease was detected in pork, for example.

À (1020)

The Chair: Mr. Haddow.

[English]

Mr. Paul Haddow: There are two parts to my answer, Mr. Chairman. There has never been an instance under the OIE for regionalization for BSE. There are protocols for diseases like la fièvre aphteuse or various poultry diseases, but for BSE there is no experience internationally. To proceed along that route would be time-consuming. Therefore, our priority right now, in terms of allocating our diplomatic resources and our regulatory scientific resources, is to open up all markets to all Canadian products. If in the future there were time to negotiate a protocol on how you would regionalize BSE if it ever happened again, we could look at it then. But we think it would be very time-consuming, and it would distract us from our priority of opening up all markets to all products.

The Chair: Mr. Hilstrom.

Mr. Howard Hilstrom: Thank you.

I have letters from the Chisholm company--they're international food merchants--and Centennial Foods with regard to the supplementary permits from Pierre Pettigrew, the trade minister.

It looks as if in a staged reopening of the borders, we're going to have to keep all of our cull cows here for the foreseeable future. Is that true? Can you answer? You can't answer if you don't know. But you just mentioned that it's a staged thing, and you're going to do the 30 months on others. A cull cow is an older cow that is out on the grass right now. Every rancher and farmer has them. The dairy farmers in Quebec have them, and we have them on our dairy farms and ranches out west. Those cull cows represent cashflow to those farmers in between their big sales of feeder cows. Do you understand that?

The problem right now is that these companies are asking for these supplementary permits when in fact there are an awful lot of grass cattle, cull cows, which is the very same meat that New Zealand and Australia are putting out, and that's going to be coming on to the market here once those auction-marts open up. Our farmers and ranchers need cashflow. Are you guys going to move away from having to ask five suppliers to saying, no, the industry in Canada is going to supply that grass-fed beef over and above our WTO quota commitments?

The Chair: Mr. Valle.

Mr. Claudio Valle: The changes we made to our supplementary imports TRQ policy were developed in conjunction with the Canadian Meat Council and the Canadian Cattlemen's Association. They recommended the ratcheting up to five plants. If in the future we have to deal with the cull cow situation and they are suggesting some changes to our policy in terms of supplementary imports, we will look at it.

Our obligation internationally to Australia, New Zealand, and other suppliers that can ship beef to Canada is within the quota. Supplementary imports are at the discretion of the Canadian government. We have authorized them because certain cuts are required by our processing industry. But if we want to take different measures, we are in a position to do so. There is no international obligation on us beyond the 76,000 tonnes that are mandated under our bilateral agreements with these countries.

À (1025)

Mr. Howard Hilstrom: I want the department to know that the future is here now. The future was here yesterday with regard to economic issues and cashflow for farmers, ranchers, and feedlot people. That is what's happening.

It's as much as two to three months down the road that these orders are put in for foreign manufacturing beef from Australia and New Zealand. As long as they have those orders made, that is going to continue to flow. So the permits you issue today are going to be for two months down the road. How long do you expect our farmers and ranchers to keep those cull cows on grass before you stop the flow of this type of manufacturing beef? With 13 million head in this country, I don't believe that we can't supply that amount of manufacturing beef if we can't export any of it. Are you telling me that the Chisholm company and these other companies can't supply that?

The Acting Chair (Hon. Art Eggleton): Mr. Valle.

Mr. Claudio Valle: There are some requirements by our processors calling for a certain type of beef, which sometimes we have not been able to meet, and that's why we've had this program for supplementary imports. But if there is a coming on the market of a large number of cull cows where there is this supply situation, then working with the Cattlemen's Association and the Meat Council, we will look at their recommendations on the issue. As I indicated, there is no obligation on Canada to take on more than the 76,000 tonne quota. I understand that people are putting orders in ahead, but they need to obtain authorizations for those permits.

Mr. Howard Hilstrom: I'm saying that the department should not be authorizing those permits over and above what has already been authorized, because we know that there are tens of thousands of cull cows coming down the market, including a lot of younger stock, which are going to be grass fed for the simple reason that there is no fat market for it. You guys have to be looking down the road on behalf of the producers.

The big exporters in this business are in western Canada. If this department and this government do not take care of things, this western alienation, about the very issue I am talking about right now of this grass-fed beef--and we have hundreds of thousands of these things out there on the Prairies--is going to become a major issue. Have you ever considered that this affects the west more than it does other parts of the country?

Mr. Claudio Valle: We work with the Canadian Cattlemen's Association, which basically represents cattlemen all over Canada, in particular the west. We listen to their views. The system was developed in full cooperation with them. We also take into account the processors' needs and come to a mutual understanding. So if they tell us that we need to put the breaks to supplementary imports, we will clearly listen to that.

The Chair: Thank you.

Mr. Proctor.

Mr. Dick Proctor: Thank you very much, Mr. Chair.

I'd like to go back to Mr. Haddow for a couple of quick questions. On these low-risk products for which you see the first possible reopening of the border with the United States, when do you think is the earliest that might happen?

Mr. Paul Haddow: I would say very soon. The moment we start putting timelines, the Americans get nervous and say, oh, oh, the Canadians.... All of a sudden there are expectations, and the scientists are told, stop. It's a tricky situation. It will move the fastest if people don't put deadlines on it. I know that's illogical, but it's the problem we're dealing with.

Mr. Dick Proctor: If the shoe were on the other foot and we were receiving this information today from the Americans, would you be recommending that the border reopen next week?

À (1030)

Mr. Paul Haddow: Yes. But I'm not a vet. If I were, I think there'd be....

Mr. Dick Proctor: What other country or countries ban the feeding of animals to animals? I believe the United Kingdom does. Are there other countries that you know of? I'm particularly interested in the European Union.

Mr. Paul Haddow: I'm not a veterinarian, and perhaps this answer will be incorrect. They have a mammalian-to-ruminant ban in Europe, which is that you can't feed any feed from any mammal to ruminants. But they did not have confidence in their system of regulation within 15 countries, soon to be 25, each with their own way of doing things. So as a transitional measure they essentially put in an animal feed ban, not because they thought the science warranted it, but because they thought they couldn't ensure compliance with a more modest ban. So the Europeans have come to us, as have the Japanese, and said, for God's sake, don't make the same mistake we did, in the sense that they over-regulated the solution, and then they were stuck with this overly cumbersome regulatory response. So yes, the European Union has such a ban, but it's only a transitional ban pending them sorting out their problems with cross-contamination.

Mr. Dick Proctor: Thank you.

I have a question for Mr. Marsland. You indicated that a working group has been established. I would assume that country-of-origin labelling would be on that agenda. Can you confirm it and perhaps elaborate on what impact you think the country-of-origin labelling is going to have in the United States in the wake of what we're dealing with here as of May 20?

Mr. Andrew Marsland: In fact, the National Beef Industry Value Chain Roundtable was established prior to the incidence of BSE. At the first meeting, of course, they spent a lot of time looking at the implications of country-of-origin labeling and developing a strategy to deal with it, particularly in terms of dealing with the interim period between now and the date when it's proposed that system would become mandatory. Right now it's implemented on a voluntary basis.

Given the complexity of the proposed rules for country-of-origin labelling in the U.S., which require identification of where the animal was born, where it was raised, where it was fed, where it was slaughtered, and so on, there are significant concerns in terms of the compliance burden that places on U.S. industry right through to the retail sector and the costs associated with that and the potential impacts that could have on trade. We were working through that with the round table and developing a strategy to make sure that our point of view in terms of those rules was known by the key players in the U.S. From where we stand today, obviously there are implications. As long as the border is closed, it ceases to be an issue. But assuming that the border opens soon, we would continue that effort to have those rules reconsidered, because we think they have implications for trade if only to the extent that they impose burdens on those who import fresh meats and other fresh products that are covered by the rules.

I don't see a potential problem in terms of consumer confidence with Canadian product. We certainly haven't seen a problem in Canada with that. Canadians remain convinced that the product here is safe, which it is, and we wouldn't expect to see a problem there.

But, as I say, the problem is more the compliance burden that those rules place on the U.S. industry, and I know that's the issue in the United States.

The Chair: Thank you.

À (1035)

Mr. Dick Proctor: I have a very short question.

The Chair: Please make it very short.

Mr. Dick Proctor: On the domestic side, Mr. Valle, can you give us an estimate of how many more beef cattle might be slaughtered in Canada as a result of the tightening of exports into the country and trying to use as many domestic animals as we can as a result of the changes you've made?

Mr. Claudio Valle: We found that the opposite has happened since we tightened up the rules. Because of the uncertainty, a lot of people are not sending their cattle to packing houses, and we're running into the problem of availability of product. So it's clear that people are holding on to their cattle given the uncertainty--

Mr. Dick Proctor: And the low prices.

Mr. Claudio Valle: And low prices. So we have not had a lot of success in terms of getting people to respond. The answer is we don't have any product. That has been somewhat puzzling to us. We would have thought that with the market closed, a lot more product would have come on the Canadian market. In fact, that hasn't happened in the first three weeks.

The Chair: Merci.

Mr. Duncan, please.

Mr. John Duncan: Thank you once again.

I want to talk about the U.S. federal registered notice of May 29. Your notes say that it's noteworthy that the interim rule this notice created can be adjusted or lifted in whole or in part prior to the release of any final rule. In the case of these kinds of federal registered notices, such as the May 29 change in disease status of Canada because of BSE, would it be considered normal, unusual, or rare for these notices to be adjusted or lifted in a historical context?

The Chair: Mr. Haddow.

Mr. Paul Haddow: Mr. Chairman, I'm not a historian. But we did meet with the people from Washington, as I mentioned, in late May, and we put the very same question to them. This was to the administrator, who is a senior official, the person responsible for the regulation. He made it clear, Mr. Chairman, that the reason they did that was because without doing that, they had no legal basis upon which to have those measures in place. The 60-day period is simply a comment period. It's a normal 60-day comment period. There's nothing magical about July 29. They indicated that there were several instances where the measure being notified was pulled before the end of the comment period because of changed circumstances. I wouldn't say it was normal. I'd say it's somewhere between rare and occasional. But they certainly left the impression that it would not be unreasonable if that happened in this case.

Mr. John Duncan: Surely, in our trade relationship with the U.S. we've had experience with these kinds of notices before. Do we not have an analysis of how that has gone in previous instances?

Mr. Paul Haddow: I don't have an analysis. As you imply, BSE is a little different. It's the first time. But they indicated to us that it would not be unusual if the measure were pulled before the end of the comment period. So that is providing us with a focus on trying to get the border renormalized before the end of July.

Mr. John Duncan: Did they indicate, or does your analysis indicate, that there's a higher burden of proof to lift the measure during the period the measure applies than to lift it at expiry?

Mr. Paul Haddow: I'm not sure I understand the question, Mr. Chairman, but let me try to answer. The notice of May 29--

Mr. John Duncan: Does the U.S. place a higher burden of proof on itself to lift something during the period it's in effect than they would on July 29? That's the question. It is during the comment period when they're receiving comments. Obviously, they wouldn't have had time to respond to those comments in the normal fashion. So would they not be inherently putting a higher burden of proof upon themselves? Have we not done this kind of analysis? Do we not have an opinion on these kinds of issues?

À (1040)

Mr. Paul Haddow: We have been conducting an investigation of the BSE, which is what we're here to talk about. They have indicated to us that there is nothing magical about the July 29 date. Therefore, it's our priority to try to get the situation resolved before the July 29 date, because if it goes after that, then you're into a formal regulatory situation, and to unravel that is more complicated. So the July 29 date is important in the sense that we need to do all we can to regularize the situation before they get into a final regulatory ruling situation, because then they have to go back to the regulatory ruling situation to remove the measures.

The Chair: Thank you, Mr. Haddow.

Now we'll pass to Madam Picard.

[Translation]

Ms. Pauline Picard: At present, the embargo concerns beef and veal. Are there other animals, such as lamb, bison or some other game animal, which are affected? Can you tell us exactly what happens in this area?

[English]

Mr. Paul Haddow: In a word, yes, several sectors. Wild Arctic muskox meat from Nunavut is affected and also lamb, sheep, pharmaceutical products made with caps with gelatin, processed foods, and muffin mixes. You would be surprised at the range of products that come from cows and ruminants. It's because of that wide range that we're trying to identify which of those are low risk and get those normalized immediately.

[Translation]

Ms. Pauline Picard: I read recently in a magazine the comments of a British scientist on the situation that country experienced itself. He said he wished that Canada would read the results in the reports published there after that epidemic and learn from them. Have you analyzed the case in Great-Britain in order not to make the same mistakes?

[English]

Mr. Paul Haddow: Yes, of course, in the design of our regulations before we found this one cow. The whole world has learned from the British experience both positive and negative lessons. We've learned from them in terms of using their laboratory facilities to help us in our testing. So yes, we've learned from them. The world will also learn from this incident, because this is very different, as I mentioned before. It's not 180,000 cows, it's one. Yes, we've learned, and we're continuing to learn. Our regulatory response will presumably help others as well.

[Translation]

Ms. Pauline Picard: Thank you.

[English]

The Chair: I want to thank all our witnesses for appearing in front of the committee this morning. I think it was very important to get an update regarding this situation.

À (1045)

[Translation]

Thank you very much, Mr. Marsland, Mr. Haddow and Mr. Valle.

[English]

The meeting is adjourned.