AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 13, 2001

• 0908

[English]

The Chair (Mr. Charles Hubbard (Miramichi, Lib.)): Pursuant to Standing Order 108(2), we'll call the meeting to order.

Just before we begin with our witnesses, I have a couple of points of information. With the planning that was done by the clerk last week for future meetings, we have a tentative schedule. I don't want to debate that before we hear witnesses. If you want to debate it, then we'll do it at the conclusion of our witnesses this morning.

A second point of information is that we have had a letter from a member of Parliament from Prince Edward Island asking our committee to look at the situation concerning the potato wart. As you can see from the schedule, Thursday is open. Maybe you could just reflect on that for a minute.

The other point is that we have attempted to accommodate a mission from the Canadian Agricultural Lifetime Leadership program called CALL. They will be visiting with us this morning during our discussion on the matter before the committee. They've asked some of us to meet with them following that for discussions on the work we do here on the Hill and have invited us to a luncheon at noon. If members are available and could come, we certainly would like to accommodate the group. It is a group with people from most provinces in Canada who are involved with agriculture leadership.

• 0910

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): What time would that be?

The Chair: That would be immediately following this, with a luncheon at 12 p.m. in the room behind us.

With our meeting with the Auditor General and the CFIA, we will also give some consideration as to how that meeting will happen. It is a longer than usual presentation and questioning than we maybe would want to have in a two-hour period. We may want to extend that for more than two hours. We should also give some directions as to how you would like that to happen. I would certainly appreciate that at the conclusion of the hearing this morning.

In other words, would both groups come together, both the Auditor General and the CFIA, or will they come separately with the division of time? Of course, they have confirmed they will be here on March 20. I know many of you are very much interested in that meeting. If it's both together, do we want an extended session? How would we like to hear from them? Are both groups before committee in the room at the same time or do we want to divide it into two halves?

With those brief points for reflection, this morning we would like to welcome to our committee representatives from the Department of Agriculture and Agri-Food. Mr. Terry Norman is the leader of our group this morning, the director for the Western Hemisphere Trade Policy Division. Welcome, Mr. Norman.

For those on the committee, I would like to briefly outline the extensive background Mr. Norman has had with agriculture. If you'll bear with me, when I read some of the resumes I sometimes feel it gets to be.... It's certainly a pleasure to have you here this morning, somebody with your background and experience.

A graduate from the University of Guelph with a Bachelor of Science and Agriculture, he was employed as an agriculture analyst by the office of the agricultural attache for the United States embassy in Ottawa from 1967 to 1972. Later he worked in Ottawa as a trade policy officer in Agriculture Canada for three years, participating in the negotiations of compensation for Canada arising from the expansion of the European Community to include the United Kingdom, Denmark, and Ireland.

As economic affairs officer in the agriculture division of GATT in Geneva from 1975 to 1978, he participated in a Tokyo round of GATT multilateral trade negotiations. Then he was a trade policy officer in the chief of trade policy section of Agriculture Canada in Ottawa from 1978 to 1986. He was the deputy negotiator for the agriculture trade negotiation office in Ottawa from 1986 to 1988, participating in negotiations for the Canada-U.S. Free Trade Agreement. Later he was deputy coordinator and MTN negotiator for Agriculture Canada, the office of the multilateral trade negotiations, and Foreign Affairs and International Trade Canada.

From 1988 to 1993, he participated in the Uruguay Round of multilateral trade negotiations to create the World Trade Organization and agreements in agriculture—sanitary and phytosanitary measures. Then he was first secretary for the WTO-GATT agriculture current mission of Canada and Geneva from 1993 to 1995, which included the completion of the Uruguay Round of multilateral trade negotiations and implementation of the results. Now he is director of the Western Hemisphere Trade Policy Division of Agriculture Canada and Agri-Food Canada, dealing with NAFTA, the Canada-Chile free trade agreement implementation, the bilateral trade issues with all the western hemispheric countries, and he is a lead negotiator for agriculture in negotiations to create a free trade area of the Americas.

Very impressive, Mr. Norman. We welcome you to our meeting here this morning. If you would briefly introduce your co-workers, we would welcome you. We look forward to a presentation of approximately fifteen minutes. Then I'm sure members in their seven-minute rounds and five-minute rounds would want to ask you a good number of questions.

Welcome, and you may begin your presentation.

Mr. Terry Norman (Director, Western Hemisphere Trade Policy Division, International Trade Policy Directorate, Market and Industry Services Branch, Department of Agriculture and Agri-Food Canada): Thank you very much, Mr. Chairman. Yes, I would like to introduce my colleagues who are here with me.

• 0915

I am here with Mr. Glyn Chancey, who's a deputy director in my division of Agriculture and Agri-Food Canada, dealing with the free trade area of the Americas negotiations.

Also with me are Billy Hewett and Ray Rush from the Canadian Food Inspection Agency. They are both dealing with the treatment of sanitary and phytosanitary measures in the free trade area of the Americas discussions, which occur in the negotiating group on agriculture.

With that brief introduction, if you like, I would like to make a short statement just on the negotiating process for the creation of the free trade area of the Americas and then where we are on that process and what Canadian objectives and positions are so far as agriculture in that agreement. I would then be happy to participate in a discussion or questions, or however you would like to proceed from there.

The process to try to create this free trade area of the Americas—I'll keep calling it the FTAA for brevity—began at the Miami summit in 1994. The leaders of the 34 democratically elected governments of the western hemisphere, which is all of the countries of the western hemisphere except for Cuba, met at Miami, and one of the decisions they made was that we should try to negotiate a free trade area of the Americas by 2005.

Subsequent to that decision and declaration, there was a series of meetings of trade ministers of hemisphere countries, in particular during the initial phases in Denver, in Cartagena in Colombia, in Belo Horizonte in Brazil, and finally in San Jose in Costa Rica in 1998. The result of those preparatory meetings was the creation of 12 working groups to look at various kinds of issues that could be dealt with in the negotiations and make recommendations to the trade ministers on how we should try to proceed to negotiate the agreement. The San Jose ministerial meeting in 1998 then received the reports of those 12 working groups and decided, on the basis of their work, official negotiations should be launched, and that did happen at the next summit of the Americas, which was in Santiago, Chile, in April 1998.

So the official launch of the negotiations was then in 1998. The negotiating structure is nine negotiating groups. The negotiations are overseen by the trade ministers from the 34 countries. Reporting to the trade ministers is what's called the trade negotiations committee, or TNC, which has overall day-to-day, week-to-week management of the negotiations and reports to the trade ministers. Reporting to the trade negotiations committee are nine negotiating groups dealing with specific areas of the negotiations and also one consolidated group to look after the interests of the smaller economies in the hemisphere.

The nine negotiating groups deal with agriculture; market access; investment; services; government procurement; dispute settlement; intellectual property rights; subsidies, anti-dumping, and countervailing duties; and competition policy. As I mentioned, the agriculture negotiating group also covers sanitary and phytosanitary measures.

As you can imagine, there is some overlap and a close relationship between several of the negotiating groups. Some of the other groups that are important for agriculture in particular are the market access group, the subsidy, countervail, and anti-dumping group, and also the competition policy group. They all deal with some issues that have some importance for agriculture as well as the work in the agriculture negotiating group itself.

During the initial 18-month period after the official launch of negotiations at the Santiago summit, each of the negotiating groups was asked to produce a report to trade ministers on their initial discussions. That happened in November 1999 at the Toronto ministerial conference. That conference received the initial report of each of the negotiating groups on the nature of the discussions they'd had during the first 18-month period of the negotiations. The Toronto ministerial meeting then directed the negotiating groups, during the current period, which is just now coming to a close—the second 18-month period of the negotiations—to attempt to draft bracketed texts of various chapters of an FTAA agreement.

• 0920

The agriculture group has been trying to draft an agriculture chapter for a free trade area of the Americas agreement, and, similarly, the other negotiating groups have been trying to do the same thing. We're now at the point where those negotiating groups have produced their first drafts of draft chapters—bracketed very heavily, which I'll come to in a minute—and the trade negotiations committee is now looking at those draft chapters and is trying to put them together to report to the trade ministers.

The trade ministers will be meeting the first week of April in Buenos Aires and at that point will have this draft bracketed text before them. Then they'll make decisions there on how they want to proceed during the next 18-month period of the negotiations and presumably give some further guidance and instructions to the negotiating groups on how they want them to proceed.

I mentioned these draft texts are bracketed. In the case of the agriculture chapter, the entire text is bracketed. There is nothing in it that's agreed, and in fact the text is really nothing more than a compilation of the proposals made by various countries. The chairman simply took the proposals made by Canada, the United States, MERCOSUR countries, and the others, put them all together one after the other, and put square brackets around them. That is what the text is so far. It's just various negotiating positions stated with no attempt to find any compromises or even to come together where in fact different countries have proposed essentially the same thing but in slightly different wording. There has been no attempt to reconcile and agree on one set of common wording.

The trade ministers then, depending on what they decide at their meeting in Buenos Aires, will report to the Summit of the Americas, which will be in Quebec City the third week of April this year, on what the progress is to date. We're not quite sure what the summit leaders may decide or what opinions they may venture on the status of the negotiations and how they think they should proceed. Presumably they'll take note of the situation as reported by the trade ministers and provide whatever guidance or advice the summit leaders decide they will want to provide.

There are a couple of process issues that are being discussed that I'll mention to you. One is the timing of the negotiations. I mentioned at the beginning that the original summit decision in Miami was to try to conclude an agreement by 2005. That has been interpreted by different participants to mean different things. Some people think that means conclude the negotiations by 2005. Some people think that means implement an agreement by 2005. Chile has recently made a proposal to clarify this timing, and the clarification they have proposed is that there should be an agreement to conclude the negotiations by the end of 2003, which would provide the year 2004 for the countries to take whatever domestic measures they would need to implement the agreement, and then implement the agreement January 1, 2005. That Chilean proposal for a clarification is now being discussed by the trade negotiations committee and will be by the trade ministers and, presumably, at the summit as well.

There are some countries that support that and some that oppose it, so it's far from clear at the moment whether that clarification of the timing will be agreed to or not. That's one issue that presumably will feature in the summit discussions.

Another important process issue is that of transparency in the negotiations. As you are aware, there is a lot of public pressure to make the draft text available. The negotiating procedures that have been adopted for this negotiation require that decisions be made by consensus. Therefore, in the absence of a consensus to release the text, individual participants are prevented from releasing the text until such time as there is a consensus decision to release it. Canada is supporting a decision to release the text to be made by the trade ministers when they meet the first week of April.

Canada is proposing that the trade ministers should decide to make the text public at that time, but again, there are some people who support that and then some countries don't want the text to be made public, so it's far from clear whether that decision will be made or not. It has to be by consensus if it is going to be made, and until such a decision is made by consensus we are technically prohibited from making the text publicly available.

• 0925

What we have done in the interests of transparency is make Canada's negotiating positions publicly available. These were posted on the Department of Foreign Affairs and International Trade website in December, and those positions that Canada has taken in each of the negotiating groups are available there to the public.

Similarly, the United States, in January, also released a public summary of the positions they've taken so far in the negotiations. So they are also supportive of more transparency in the negotiating process.

With those comments on the process, I'll now turn to some of the substance of what we've been talking about as it relates to agriculture in the negotiations so far.

The main areas we've been looking at can be grouped into market access, export subsidies, domestic support, and sanitary and phytosanitary measures. I'll talk about each of those, and then at the end I'll invite my colleagues from the Canadian Food Inspection Agency to talk for a minute about the sanitary and phytosanitary measures proposals we're making.

On market access, the starting point for our negotiating position is that it must be consistent with the World Trade Organization initial negotiating position that the government announced publicly back in August 1999. You'll recall that position was arrived at after a comprehensive two-year consultation process, with all the interested sectors of agriculture and agrifood in Canada having a chance to have their input into it. It was decided with the support of all the Canadian agrifood sectors.

In the FTAA negotiations, our overall market access objective for agriculture is to achieve access to the other countries of the hemisphere with which we don't already have free trade agreements, on terms more favourable than is likely to be achievable in the WTO negotiations, because what we're talking about here is a free trade area where, in principle, most tariffs would be reduced to zero over a phased-in period, whereas in the WTO there would probably be some significant reductions in tariffs, but probably not elimination as the final result.

In the market access discussions so far, we're not yet to the point of discussing exactly what concessions would be made for specific products. The discussions so far are on what we call “methods and modalities” for tariff negotiations. These are such things as the base tariff rate from which you would start your reductions, what time period you would look at for the relevant statistics to discuss the value of different reductions, what should the phase-out period be, what methods should there be for determining the concession. It's these kinds of technical negotiating framework issues for market access that are being discussed so far.

My guess is it would be at least another year, or perhaps longer, before we get to the point where we have to start discussing what we're prepared to do, or not prepared to do, for specific products in the negotiations.

Of course, in all these issues dealing with market access, there has to be close cooperation between the negotiating group on agriculture and the negotiating group on market access, which is looking at all the same issues across the board for all products other than the agricultural products being dealt with by the agriculture negotiating group.

Another basic tenet of our positions on market access is that consistent with our WTO position, we will maintain Canada's ability to choose how to market our products, including through the orderly marketing system, such as supply management and the Canadian Wheat Board. But as I said, we probably won't have to address that issue for another year or so until we get to deciding what we can or can't do for specific products.

There are also non-tariff measures, which are very important and can have an important trade limiting effect, such as sanitary and phytosanitary measures I mentioned, and also other kinds of technical barriers to trade. So the agriculture negotiating group, in cooperation with the market access group, is also looking at those technical barriers to trade issues.

Other issues of a general nature are being dealt with in the negotiating group on market access, which also have importance for the agricultural trade. Some of those issues are rules of origin—which products get beneficial benefit from preferential access—customs procedures, and safeguard procedures and mechanisms. Those are general issues being looked at in the market access group but would have significance for agriculture as well.

• 0930

Turning to export subsidies, one of the objectives the ministers agreed to when they decided we should launch negotiations was that we should pursue the elimination of export subsidies in this hemisphere. We certainly regard this as an important step toward the eventual goal of multilateral elimination of export subsidies. We're agreed on that.

What we're discussing in the group now is how to do that—presumably before it happens multilaterally in the WTO.

On domestic support, some of the other FTAA participants have proposed that an agreement should contain disciplines for domestic support. Some even suggest it should require the elimination of domestic support for agricultural products in the participating countries.

Canada, and also the United States, is of the view that the issue of rules and disciplines for domestic support could be dealt with better in the multilateral negotiations on agriculture, rather than in a regional free trade agreement such as the FTAA. That basic difference in point of view is still being discussed in the agriculture group.

What we propose on domestic support is that the FTAA countries should agree to work together in the WTO to try to negotiate the kind of result we want.

There are a few other issues I'll mention briefly before—

The Chair: Thank you, Mr. Norman. We've gone a little beyond the 15 minutes. I know most of the members are interested in these topics you brought up, but unless the members would like to extend the presentation, I think we should probably start with the questioning.

Are we prepared to extend?

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): We could give him just a couple of minutes to wind up his remarks and make a last couple of points.

The Chair: All right.

Mr. Terry Norman: I'll just mention two or three other issues that are also important for agriculture and that don't fall under the headings I've talked about so far. Then we'd be happy to proceed.

Some countries have proposed that the agreement should contain disciplines for export credit, export credit guarantees, and export market promotion and development activities. Again, we feel that these are multilateral issues and they should be dealt with multilaterally rather than in a regional trade agreement.

On most issues in this negotiation, Canada and the U.S. have quite similar views. But we have quite different views on one issue, and that is state-trading enterprises. The United States is concerned about the activities of state-trading enterprises in general and the Canadian Wheat Board in particular. They're proposing that this agreement should contain disciplines for those kinds of entities. Our view is that this is also a multilateral issue. There are already rules governing state-trading enterprises in the WTO, and that's the proper place to discuss them.

I think I'll stop there. But I would just like to ask my colleague from the Canadian Food Inspection Agency to say a couple of words about our attempts to deal with sanitary measures in the negotiations. Then we'd be happy to answer questions or participate in your discussion.

The Chair: Thank you.

Mr. Hewett.

Mr. Billy Hewett (Director, Policy, International Affairs, Canadian Food Inspection Agency): Thanks. This will just take a minute.

Essentially, Canada has a very simple proposal on SPS in the FTAA negotiations: to encourage the full and effective implementation of existing WTO rules in this area. We're doing that in two ways. One is simply proposing that countries reaffirm their commitment to the WTO SPS agreement for trade within the hemisphere. The other is establishing a permanent SPS committee, to provide a regular forum for consultation and cooperation.

In order to kick-start that last element of our proposal, Canada has suggested that we should have an interim consultative group to try to address practical problems in regulating trade in agricultural products. We're not looking at new obligations in this area.

The Chair: Thank you. I know it's not a rush, Mr. Rush, is it, this trade negotiation business? But thank you for your brief synopsis of what's happening.

I turn now to Mr. Hilstrom for his first round of questions. Seven minutes, Howard.

• 0935

Mr. Howard Hilstrom: Thank you, Mr. Chairman.

In view of the way question period is set up here, I think I may refer a question to my colleague—during that seven minutes, of course, so he can be ready.

In regard to the process, the transparency you've mentioned is of utmost importance. I appreciate that negotiations have to be done in secret to a certain extent. But is there a written description of the process and timing of negotiations, after which information is released to members of Parliament? At a certain set of meetings and by a certain date, for instance?

In the past, we've seen that a lot of NGOs get information before MPs do. I just wonder where Parliament fits into these negotiations. Can you enlighten us on that? Is there a hard-and-fast written description of when parliamentarians, such as the opposition parties, will be brought into this?

Mr. Terry Norman: I don't think there is any firm date. I'm talking about negotiations on agriculture as part of an overall process. Our chief negotiator is from the Department of Foreign Affairs and International Trade, under Mr. Pettigrew, so it would really be Minister Pettigrew's decision to establish such a date—if he was willing to do it. I don't think I can comment any further.

Mr. Howard Hilstrom: Okay.

In our briefing here, we've got the Library of Parliament...it has your names on the front, but I don't think you actually made this up.

Here's a sentence they wrote: “The truth is that Canada has little to gain directly in terms of agriculture from the FTAA negotiations”. Do you agree with that statement? Or could you comment on it?

Mr. Terry Norman: No, I don't think I would agree. I think there are considerable gains to be made from the free trade area of the Americas. Brazil, in particular, is a very large potential market for Canadian agrifood products, as are several other countries of south and central America. Then there's the Caribbean, where niche markets could be developed for Canadian agriculture and agrifood products.

I think there are considerable potential gains there for the Canadian agrifood sector.

Mr. Howard Hilstrom: That's really good to hear, because that's exactly what our position should be.

We've got a little problem, though, with the government's position on the Wheat Board and state-trading enterprises. I'll tell you exactly what the problem is: the organic farmers of this country want to be able to establish their markets themselves. They can't afford to do it through the Canadian Wheat Board.

Now free trade of the Americas should be designed to open up these markets to our producers, but if our government's going to stand in the way of our own producers—that seems strange to me. What justification do you see for maintaining a state-trading enterprise like the Wheat Board when there's lots of evidence to indicate that in fact it's hampering the ability of our farmers to trade?

Mr. Terry Norman: Well, there's both an international and a domestic aspect to that question.

The international aspect is that the WTO rules do allow for state-trading enterprises to operate in the manner of the Wheat Board. Those rules have been internationally agreed upon and the Wheat Board conforms with them.

On the domestic side, the policy of the Government of Canada is that growers of wheat and barley in western Canada can market through the Wheat Board, as long as that's what they want to do. So far that does appear to be what the majority wants. But that's a domestic Canadian government policy decision on whether to maintain the Wheat Board in its current status or do something different.

Mr. Howard Hilstrom: Do you believe there's going to be any confusion from having the WTO talks on the go at the same time as the free trade of the Americas talks? It looks to me as if there's a very high likelihood of people working at cross-purposes. It seems as if you almost need two teams working in these different venues. Just dealing with agriculture—is that the way it's set up?

Mr. Terry Norman: Yes, essentially that is the way it's set up, as two teams. But it's basically two different divisions of the international trade policy directorate at Agriculture and Agri-Food Canada dealing with the two negotiations. We cooperate very closely together and make sure we're not cutting across each other's bows. We're trying to make sure we're well coordinated and consistent.

• 0940

Mr. Howard Hilstrom: Trade with the United States and Mexico has just been really good; it's a free trade, North American market type of thing. It seems like we could take the exact same position on the WTO as we would with the free trade area of the Americas. If we aren't willing to move a little bit on some of our positions, I think we're going to be throwing away a great opportunity to expand trade in the Americas by trying to fight France over there in Europe.

Do you see any way that we can move ahead and liberalize trade in this free trade area of the Americas and really contradict what we're trying to do on the whole world situation—with Europe especially—or are they going to be the same?

Mr. Terry Norman: Well, I think our objectives are the same in both negotiations. We want better access to foreign markets for our products.

Really, what you do when you negotiate a free trade area is you go farther and faster towards free trade than what the WTO rules require. So they're both moving in the same direction, but one presumably will go farther and faster than the other and achieve more free trade or freer trade.

The Chair: One last question.

Mr. Howard Hilstrom: My last question is: under the WTO right now, in regard to supply and management, the U.S. and New Zealand are still challenging our exports in that. What impact is that going to have on these negotiations with the free trade area of the Americas? Do we have to sit and wait until those WTO challenges are over, or can we move ahead with the free trade area of the Americas negotiations?

Mr. Terry Norman: I don't think that panel process in the WTO should have any effect on the FTAA. Really what that panel process in the WTO is all about is defining what is or is not an export subsidy. We want to prohibit export subsidies under the WTO definition, but that panel process will provide some clarification of exactly what is covered or isn't covered. I don't think it should have any adverse effect on the FTAA negotiations.

Mr. Howard Hilstrom: Thanks, Mr. Chair.

The Chair: Thanks, Howard.

Murray.

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

Terry, you made the statement, “We want to go farther and faster in free trade”. Let's just take a look at the situation we have right now with the FTAA.

We've watched the United States in grains, for instance, increase their subsidies since 1996 to the point now that a U.S. farmer is benefiting $63 Canadian an acre more than what the Canadian farmer is. We've also seen in P.E.I., for instance, an old garden that had potato wart in it. That ground has been cleared away, there have been tests done in the fields, it's been fenced off, and yet we still have a problem with the United States.

We're negotiating or in negotiations right now to get a better deal than what we have at the present time, and I would say that's admirable because we obviously need a better deal than what we've got right now. How are we going to bring the United States to terms, because we haven't been too doggone successful since 1996? How are we going to be more successful now?

Mr. Terry Norman: Well, dealing with a big neighbour is always a bit of a problem, and you've outlined a couple of the current issues we have with them. But I guess the best answer is that internationally negotiated rules and discipline are the best way to create a more equal situation between smaller countries and bigger countries. One of the main benefits of a trade agreement is that it does bind everyone to the same rules no matter what the size of the country is or the size of their economy.

Mr. Murray Calder: But we follow these rules right now, and they're not working.

Mr. Terry Norman: Well, they don't always work to everyone's satisfaction. There are sanitary and phytosanitary provisions in the NAFTA agreement. We think the United States is in violation of those provisions with the current situation on potato wart. However, it would take several months or a year or so to have a NAFTA panel ruling on that. We don't want to wait that long for a solution. We're trying to get a quicker solution by having the technicians discuss the issue. That's our preferred result. But we will pursue a NAFTA panel if we have to, if we can't persuade them to proceed on the basis of the sound science that we think is there now.

• 0945

Mr. Murray Calder: How long do you see that process taking?

Mr. Terry Norman: There was a group of U.S. scientific experts in Europe last week consulting with European experts on potato wart. Our understanding is that what they discovered there tended to support our view of the science of the situation. We hope that's the case, though scientists are reporting back to the USDA Animal and Plant Health Inspection Service this week, and Canadian and U.S. technical experts are scheduled to meet on Friday this week, so we're hopeful there will be a quick resolution after that meeting.

Mr. Murray Calder: One other thing you talked about was more market access. In my other life, I'm a chicken farmer and I'm very much involved in supply management. Are you insinuating that we're taking a look at renegotiating TRQs with the United States pertaining to supply management? If so, then I'd like your comment about the United States' compacts, for instance.

Mr. Terry Norman: Certainly within the free trade area of the Americas, as I mentioned, and also consistent with our WTO position, our intention is to maintain the ability to operate the existing Canadian supply management systems and the orderly marketing systems such as supply management and the Canadian Wheat Board. I'm not sure I can say much more than that, because we're not to the point in either negotiation where we would have to make decisions on what we specifically would or would not do.

Mr. Murray Calder: We wouldn't want to negotiate any farther on access, given the fact that, for instance with poultry, we already have over 7% access; we allow the United States into our market while they're not anywhere close in terms of access to their market. Would we not wait until they bring their access up at least equal to ours before we start negotiating further access?

Mr. Terry Norman: In the case of chicken and turkey, I'm not aware that the United States has any restriction on imports, so I think we can export both chicken and turkey freely to the United States. Certainly in the dairy sector, they do have some fairly significant import restrictions.

Mr. Murray Calder: in the situation of dairy then, would we wait until we have equal access before we start negotiating past that?

Mr. Terry Norman: Certainly one of our objectives in the WTO negotiations is to level the playing field, and that's one of the issues that would contribute to a level playing field.

Mr. Murray Calder: Mr. Chairman, how much time do I have left?

The Chair: Two minutes.

Mr. Murray Calder: I'm going to pass to my colleague, Mrs. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): I guess Murray has taken basically my thoughts on supply management.

You made the point, which I find a little disturbing, or maybe I just heard wrong...you stated in your presentation “the FTAA elimination of domestic support”.... The red flags go up for me in regard to supply management. The fact of the matter is you say we've not reached that point of decision on what to do. I hope your decision is that you're going to be certainly there supporting supply management and not making the decision on what's going to be presented before you, because this is the stance of the government.

I had a meeting on the FTAA in my riding on Saturday where the transparency, the openness, and the secrecy of it were all hammered out. So this meeting will certainly be excellent information to hand back. But when you say you're going to make presentations as to the elimination of subsidies and all the rest, how do you foresee doing that under FTAA where that can't be accomplished under WTO? Is it because you're working with smaller numbers? How do you propose to do that?

Mr. Terry Norman: On the domestic support question, what I said was some other participants want to eliminate or reduce domestic support in the free trade area of the Americas negotiations. We don't want to do that. We think that's an issue that should be dealt with multilaterally in the WTO, not in a regional trade agreement. So how we propose to deal with it in the FTAA is to say we'll work on that in the WTO.

On the question of supply management, it's well known that the position of the Government of Canada is that producers should have the ability to organize their marketing system the way they want, including through supply management, so we're not about to do anything that would undermine this position of the government.

The Chair: Thank you, Mr. Norman.

[Translation]

Mr. Gagnon, the floor is yours.

Mr. Marcel Gagnon (Champlain, BQ): Thank you, Mr. Chairman.

I will let Mr. Paquette, who is replacing Ms. Tremblay, have the floor.

Mr. Pierre Paquette (Joliette, BQ): Thank you for your presentation.

I have three questions. Here is the first.

• 0950

You told us something of the negotiation process associated with the FTAA. I would like you to describe the process in place to develop the Canadian position, with the provinces. What I mean by that is, what kind of relationship is there between the Minister of Agriculture and the Minister of International Trade, and what sort of relationship is there between the federal government and provincial governments as they seek to establish the Canadian position?

[English]

Mr. Terry Norman: We have very close cooperation with all of the provinces. We have what is called a federal-provincial agricultural trade policy committee that meets once a month by teleconference and two or three times a year face to face where we discuss trade policy issues of various kinds with the provincial governments, including whatever negotiations we're involved in, including this one. We also have ongoing consultations with the SAGIT, the Sectoral Advisory Group for International Trade, which is made up of representatives of various agrifood sectors in Canada. We consult closely with them and get their advice on what positions we should be taking or should not be taking.

Also, for the free trade area of the Americas in particular there was a public consultation process carried out mainly through the Standing Committee on Foreign Affairs and International Trade, which held public hearings and received briefs from a number of interested sectors, including several representatives from the agrifood sector. Those things all contributed to the development of Canada's positions.

[Translation]

Mr. Pierre Paquette: In the event that the provinces' positions were contradictory, would we seek to establish a consensus, or would the federal government act as arbitrator?

[English]

Mr. Terry Norman: That's actually quite a complicated question because trade is a federal responsibility and agriculture is a joint federal-provincial responsibility. So when you're talking about agricultural trade, it's complicated. It's one of the reasons we cooperate as closely as we do with the provincial governments on agricultural trade issues. In the final analysis, it's the federal government that has to decide what position to take in the interests of all Canadians, in all provinces. That's where the ball stops.

[Translation]

Mr. Pierre Paquette: The issue of supply management has already been raised. I would like further details. In your opinion, can anyone guarantee that when negotiations on milk, poultry and eggs are completed, Quebec will be able to maintain its current supply management system?

[English]

Mr. Terry Norman: All I can tell you is what Canada's position is. I can't guarantee any result. If I could predict the future, I would be famous and rich, but all I can tell you is that the position Canada is taking is that we will maintain the ability to have those systems. I can't predict what the result of a negotiation might be. We won't know until we get there.

[Translation]

Mr. Pierre Paquette: With respect to supply management, this means that the Canadian government would be ready to compromise and in some sectors to drop the system, which Quebec producers, in particular, are happy with.

[English]

Mr. Terry Norman: No, I would not interpret it that way. The Canadian government position is what it is, that we will maintain the ability to have that kind of system.

You asked me to predict the result of a negotiation, which is a different question, and that I can't do.

The Chair: Thank you, Mr. Norman.

Rose-Marie, do you have more questions? You have about three minutes left. You took two of Murray's but there's another five minutes for the Liberal side.

Mrs. Rose-Marie Ur: I'll let Bob ask a question.

The Chair: I think Larry was ahead of you.

Mrs. Rose-Marie Ur: I want to allow him one question and then get back to me.

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): I didn't understand what you said on TRQs. Did you say they would be reopened for negotiation in these negotiations? I thought they were all bilateral agreements. They're at the end of the WTO, but you weren't suggesting that these agreements would be renegotiated, were you?

Mr. Terry Norman: The tariff rate quotas that Canada currently has are a result of the WTO Uruguay Round negotiations. They are multilateral tariff rate quotas.

• 0955

Mr. Bob Speller: But bilateral agreements on them, like with the United States.

Mr. Terry Norman: Some of them are allocated partly to certain countries to supply them, but they are technically multilateral most favoured nation tariff rate quotas with the potential for the supplies to come from any WTO member.

I think that's the answer to the question.

The Chair: Rose-Marie.

Mrs. Rose-Marie Ur: What do you feel in these discussions that are forthcoming will be the main achievements for agriculture, agrifood products, here in Canada? What can our farmers see that's positive from this, or anticipate?

Mr. Terry Norman: I think the main thing they should anticipate and hopefully see at the end of the negotiation would be better access to some of the markets, in particular some of the larger countries in South America, and better access to those markets for Canadian agrifood products.

Mrs. Rose-Marie Ur: I think it's all well and good to bat our chest about better access, but as long as the primary producer has more dollars in their pocket...that is what we're looking at too. I hope in these negotiations we factor that in as well.

That being said, does Canada still keep maintaining the same position of being the good boy scout and marching forward and doing everything we're supposed to? That seems to be the Canadian way to do things, but no one else seems to live up to their way of signing into an agreement. Are we going to be the leaders all the time and our producers will be left behind because we're being the conscientious, good people we are? I think there has to be a bit of leveraging, a bit of a heavy hand. We're not the elephant; we may be the mouse, but the mouse can squeak. I think it's really important that we have that kind of aggressiveness at these meetings, which I may not have seen in past.

Mr. Terry Norman: In international terms, multilateral terms, Canada is what I would call a medium-sized country. Compared to the United States...obviously we're not nearly as big as they are. I already mentioned the importance of having agreed rules that level the playing field and have all big countries and small countries subject to the same rules. Canada has not been reticent about enforcing those rules and initiating NAFTA panels or WTO panels to try to enforce the rules and ensure that the United States in particular, and also others—Brazil, for example, recently in the aircraft dispute—comply with the rules.

I don't think Canada is at all reticent in trying to ensure that others comply with the rules to the same extent we do. Obviously we think it's in our interest to comply with the rules because the rules do put us on a more equal footing with the bigger players.

Mrs. Rose-Marie Ur: But how beneficial has it been to be the good soldier?

Mr. Terry Norman: I'm sure you'll get varying opinions on that, but I think our agrifood trade figures speak for themselves. We've been exporting more and more every year and having a larger trade surplus in agrifood products every year, so it seems to me that it's working.

Mrs. Rose-Marie Ur: If you talk to a grain farmer in Lambton—Kent—Middlesex—

The Chair: Sorry, your time is up.

Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): I'm going to yield to my colleague on my left because of the time constraint. That's left, physically speaking.

Mr. Rick Borotsik (Brandon—Souris, PC): If I can, Mr. Chairman, Mr. Proctor, in the true spirit of cooperation, has allowed me to give my question, and it'll be a very brief question. Then if there's any time of mine left over I have suggested Mr. Proctor could use it. I have to go to the procedure and House affairs committee, so thank you very much, Mr. Proctor and committee.

I have two very quick questions. Number one, you talked about the potential of the marketplace in Brazil. Can you very briefly just touch on how you think the CFIA's decision to ban Brazilian beef just recently has impacted on your ability to negotiate with that particular country in the upcoming negotiations?

My second question is on the SPS, the sanitary and phytosanitary. Mr. Calder dealt with it; however, I don't think the answers were given. We want to deal with existing WTO regulations; we have them in place now. We've had impacts by the Americans on P.E.I. potatoes right now. You want to deal with that from the technician's side of it, not go through the panel. We've been impacted, or P.E.I. has been impacted. Was any consideration ever given to a counterattack, if you will, to American imports of potatoes into Canada? That may well have been an opportunity for us to put our position forward a little bit more forcibly than just simply allowing a potato industry in P.E.I. to be destroyed.

• 1000

So please answer those two very innocuous, very quick questions. First of all, with Brazil, how does CFIA's decision affect our negotiations? Second, why didn't we go after the United States as they went after us in SPS?

Mr. Terry Norman: It's obvious that Brazil is upset with Canada because of the decision—

Mr. Rick Borotsik: I have one other comment.

In here also it said “The truth is that Canada has little to gain directly”. Is agriculture on the table with respect to aerospace? Would we give in on agriculture in order to get some better negotiated trade agreements with the aerospace sector? Is that a possibility?

Sorry. That's it.

Mr. Terry Norman: On the BSE issue, unfortunately that decision has caused a lot of anguish in Brazil and public reaction there against Canada, which we're trying to alleviate and get past, now the decision has been made to once again allow the imports of these products from Brazil. The decision was made strictly on the basis of science and the best available information, and now better information is available, which has allowed the new decision.

On the potato wart question, consideration was given to what action we might be able to take against the United States, in view of their reluctance to remove their ban. This was discussed with Canadian industry representatives at the time it was under consideration, and the view we came to was that it would not be in Canada's interest to take any retaliatory action, because it would most likely hurt us more than it would hurt them.

Mr. Dick Proctor: Can you just elaborate on that last statement you made, Mr. Norman, about why it would have more impact on us than it would on the Americans?

Mr. Terry Norman: It's a technical issue. But when imports come into Canada, they tend to be owned by the Canadian importer at the time they cross the border. Exports to the United States tend to be owned by the Canadian exporter at the time they cross the border. So it's a question of who would pay the penalty and who would be adversely affected by any penalty imposed on the imports.

Mr. Dick Proctor: Thank you.

I want to pick up where Mr. Calder, Ms. Ur, and Mr. Borotsik were. You said—I think it was in your answer to Rose-Marie—that Canada has not been reticent about enforcing those rules. You identified the aerospace industry as an example. What about agriculture, which is the topic under discussion with the Americans? Have we, in your opinion, been reticent about enforcing the rules when it comes to the United States?

Mr. Terry Norman: I don't think so.

Mr. Dick Proctor: Could you give me some examples?

Mr. Terry Norman: We have instituted dispute settlement procedures with them on several occasions, but in most cases we come to an agreement before we actually get to the stage of having a panel established. For example, there are some North Dakota technical measures they are threatening to impose that we're opposed to. We've asked for and conducted NAFTA consultations with the United States on those measures—that's still in process. We don't know yet whether we'll eventually go to a NAFTA panel on that issue or not.

For another example, a few years ago the United States instituted a countervailing duty on imports of pork from Canada that we successfully challenged under a NAFTA panel, getting the decision reversed.

So there are examples where we've pursued our rights and won.

Mr. Dick Proctor: I think what we're all trying to get at.... I'll use the example of grains and oilseeds, where the agreement, as I understand it, after 1993, from the WTO, was that all of the signatories would reduce their domestic subsidies, domestic support, by 20% over five years. Canada, as we know, went far in excess of that—the boy scout image Mrs. Ur talked about. The Americans are not doing that, as Mr. Calder points out. They have in fact increased their subsidies, their support payments, for grains and oilseeds.

Our farmers are experiencing, according to some, the worst two years, despite the fact that there have been generally good crops, since we started keeping records in 1926. We're getting hammered, frankly, and we can't compete. I think that's the frustration, regardless of what side of the table you're sitting on, a lot of us are feeling. I'd like you to comment on it.

• 1005

Mr. Terry Norman: Certainly the high-level support in the United States is a major concern, and this was mentioned most recently by Minister Vanclief last Friday, when he had his first face-to-face meeting with USDA Secretary Venamen. He raised a concern on this again—we've raised it many times with the United States.

The WTO commitment, as you mentioned, was to reduce domestic support by 20%, but it was a reduction of 20% from the relatively high levels of subsidy that existed in 1986-1988, which I believe was the base period. The United States is now back pretty close to the top of their commitment, but our understanding is that they're probably still within their WTO commitment. The problem is that the commitment was at a relative high level, and as you say, Canada took the decision to reduce more than was really required by the WTO. We think the best solution is still to try to convince others to reduce as much as we did, rather than to increase our support to the levels they have, which we think are trade-distorting, disruptive, and not, in the long term, good for their producers either.

The Chair: Thank you, Dick. I gave a little bit more, and I hope everyone....

Mr. Dick Proctor: Yes, thanks.

The Chair: That probably will finish both you and Rick.

Now we go to Larry, and Garry will be next.

Mr. Larry McCormick: Thank you very much, Mr. Chair, and to the witnesses for being here.

Mr. Borotsik referred to our ban on the Brazilian beef—Rick may not be here in the room, but his staff person is. I want to put it on the record that I understand Brazil has said publicly that they have decided it will be necessary to destroy the 6,000 head of cattle they brought in from Europe, following the breeding purposes. So for all these people who say it was only a trade—

Mr. David Anderson (Cyprus Hills—Grasslands, Canadian Alliance): No evidence, no evidence.

Mr. Larry McCormick: No evidence, except Brazil has said they will destroy the 6,000 head of cattle. I think that's some evidence.

But, Mr. Norman, following someone's comments, will agriculture be traded off for the sake of aerospace? We keep throwing out these little things—it's okay to do that from opposition—but I think we should give you the opportunity to make a comment on that statement.

Mr. Terry Norman: Yes, I'm sorry. I omitted to answer that part of the question. The answer really is, no. We try to deal with issues on their own merits. I would try to deal with the aerospace issue within that sector; we try to deal with agricultural issues within agriculture. If in the aerospace case we get to the point of actually implementing retaliation against Brazil, rather than reaching a settlement, then I don't know what products might be affected by the retaliation. But we do try to keep issues based on their own merits and not trade off one issue against another.

Mr. Larry McCormick: Mr. Norman, thank you.

It's difficult for you, as you say, to see the future and where the supply management will be at the end of the negotiations. But, Mr. Norman, I don't think—and probably no one here around this table sees—there's a situation, as far as our own domestic support is concerned, that does not interfere with their market at home. So what would affect the outcome of any negotiations on supply management if we didn't use some other commodity while we were discussing...? If we want to protect supply management, why won't we be able to, ultimately, completely?

Mr. Terry Norman: I'm not aware of any reason we shouldn't be able to.

Mr. Larry McCormick: Thank you.

One country, of course, that's such a great market, but is also such a great physically sized country, is Brazil—and I realize the last five years represent the first time in recorded history we've had bumper crops on each continent, especially in the grains and oilseeds. But again, I'd like to hear a little more about what products we might hope to export to countries in South America, especially when we think about Brazil being such a large producer.

Mr. Terry Norman: For Brazil, wheat would be the best example. Within the MERCOSUR countries of Argentina, Brazil, Paraguay, and Uruguay, they now have duty free trade among themselves, and Canadian wheat exports to Brazil face a 13% tariff, if I remember correctly. The result of that has been that Argentina has largely displaced Canadian sales of wheat in Brazil. If we can achieve free access to Brazil under the free trade area of the Americas agreement, then we'll be able to compete on an equal footing with Argentina for wheat sales in Brazil.

• 1010

Mr. Larry McCormick: This is my final question at this time, and I'm sure you answered it here earlier. When we open up this market—and the trade has been very successful between the borders of the United States and Canada—those large countries in South America are going to be marketing into the United States, of course. How do you feel this will affect our position with the U.S.?

Mr. Terry Norman: There's no doubt that the big prize in this negotiation for the countries of South and Central America is the access to the U.S. market. Basically, it is the biggest, most prosperous market in the world. That's what they want, the best possible access they can get to the United States.

Obviously they'll be competing with Canada in the United States' market then, and on an equal footing, once that happens. But I don't think the Canadian agrifood sector has much to be ashamed of. They're already competing in the U.S. market with U.S. producers on an equal footing and doing very well at it, so I don't think they'll have much trouble competing with products from South America either.

Of course, there are a number of products from South America that aren't produced in North America, so they're complementary. Also, the seasons are different, so for some products, that makes a big difference; they wouldn't be marketing at the same time as we would be marketing.

I think those are all relevant factors.

Mr. Larry McCormick: Thank you.

The Chair: Garry.

Mr. Garry Breitkreuz (Yorkton—Melville, Canadian Alliance): Thank you, Mr. Chairman. I have three questions.

Some of the discussion centred around the aerospace versus the agricultural conflicts. My first question is, within agriculture, are there conflicts arising because the government and negotiators are defending certain sectors of agriculture at the expense of others? Because countries are targeting certain areas, like the Canadian Wheat Board, do other areas that don't fall under this jurisdiction suffer, and are they in fact vulnerable in these negotiations?

Mr. Terry Norman: I don't really think so, but this is again one of the advantages of having general rules that apply to all equally. Then you don't get into rules for this sector and rules for that sector or differences between the sectors. You take a common approach that will work for all sectors.

Yes, there are varying interests within Canada. Some want access to foreign markets and some are more concerned about protecting the Canadian market, but that all gets factored into a Canadian position that deals equitably with all sectors.

Mr. Garry Breitkreuz: The three issues I'm raising are, of course, big issues in western Canada, and I'm making you aware of them, obviously, by my questions.

The next question I have is, how can we speed up the panel processes when problems or violations on agreements or dispute settlements arise and they're referred? It just seems to take too long, seemingly forever, to have these resolved. How can we speed these up, and how can we make the deterrence or the penalties more effective?

Mr. Terry Norman: There have been efforts already to speed up the processes, and that was one of the results of the WTO Uruguay Round: further clarification and a speeding up of the WTO dispute settlement process, with agreed time limits for the various stages of the process, which hadn't been there before. There is further discussion being given to both speeding up the process and making the process more public. That will require international agreement, but work is underway to try to do that.

Mr. Garry Breitkreuz: A third area I'd like to raise is that of transparency. I think transparency is going to be one of the biggest problems. You mentioned it in your introductory remarks. Most of the farmers I know are very apprehensive about this. Agreements that have been made previously have hurt grain farmers dramatically. Suddenly something is agreed to by Canada and the repercussions of this only become obvious later. Do you have any comments in regard to the transparency issue and what can be done about it?

Mr. Terry Norman: As I've mentioned, it's a major concern and it's one the Canadian government is trying to address by achieving agreement to have more transparency in the process. I'm not sure there's much more I can say about that. It does require agreement to have more transparency in the process, and we're working at trying to do that.

• 1015

Mr. Garry Breitkreuz: My first question dealt with conflicts arising because one part of agriculture may be played off against another, not just by us but by those we're negotiating with. In my riding, organic farmers really can't access certain markets because of the way we are structured in Canada. This is a huge concern, and I don't think we should belittle it.

But there are other niche markets as well that farmers can't access because of our international agreements. How do you address these kinds of concerns when you are around the negotiating table?

Mr. Terry Norman: I'm not familiar with what particular problems the organic farmers are having, but in general, through consultation with the various industry groups and the SAGIT and the provincial governments, we try to discover these kinds of problems and find a way, then, to deal with them in the negotiation. But the first step is to be aware of the problem and the nature of the problem.

Mr. Garry Breitkreuz: If I could relate this to you.... Do I have time left, Mr. Chairman?

The Chair: Your time is nearly up.

Mr. Garry Breitkreuz: Okay.

At the present time, organic farmers can't export certain of their products because they have to go through certain agencies within Canada, and therefore, by the time all is said and done, the profit is gone because of the bureaucracy they have to deal with.

The Chair: Thanks, Garry.

Marcel, just a moment.

I'd like you to introduce very briefly who the members of your group are—and maybe they would just stand individually—and what sector and what area of Canada they're from, so that the members of this committee.... Also, I think it's a pretty good reflection of the fact that today we're looking at a very serious aspect of agriculture for the future of our country...for you to take note of our negotiators, who I think hold the success of the future of agriculture in this country in their hands. So after Mr. Gagnon asks his questions, I'd ask Ms. Bruce to do that.

[Translation]

Mr. Marcel Gagnon: You have just described the extent to which they hold the future of agriculture in their hands. This is a very serious matter, and that is why many agricultural producers are nervous about the negotiations.

Initially, you said that broad consultations were held among people who work and live off agriculture. Yet when we ask whether supply management will continue to be protected, I sense some hesitation. In my view, the loss of that system is what people fear most, at least in Quebec. Personally, since I worked on establishing the supply management system with UPA—the Union des producteurs agricoles du Québec—from the beginning, I know how things were before supply management was in place. If the system were scrapped, the repercussions on the future of agriculture would be dreadful. I know you said that scrapping it is out of the question, but we have a sense that it was part of the negotiations.

One thing we would like to know is this: consultations were carried out at the beginning of the process, but if there was any risk that the programs could be jeopardized during the negotiations, would producers be consulted again through their association, the UPA in Quebec, for example, or would we simply have no say in the matter?

[English]

Mr. Terry Norman: The first part of my answer is I don't sense any hesitation on the part of the government. It is government policy to allow producers to decide for themselves the kind of marketing system they want to have, including a supply managed kind of marketing system. In the negotiations, that's Canada's position.

If other countries want to take a different position and ask us to do something different, then yes, we would consult with the domestic industry sectors on what others are proposing and what the situation is, but that doesn't change the position of the Government of Canada. The position of the Government of Canada is that producers should have the option of the type of marketing system they want.

• 1020

[Translation]

Mr. Marcel Gagnon: That is somewhat reassuring. What it means is that the supply management system is not in any way under negotiation, because it is a domestic program, which applies only within Canada. I do know that many negotiations have taken place. You said that, between 1994 and 1998, many meetings on it were held. Obviously, it is essential to our future.

When the future of agriculture is being negotiated, are such areas as climate, which influences production costs within various countries, or genetically modified products, also part of the negotiations, or are they not?

[English]

Mr. Terry Norman: My colleague will answer the question as it relates to genetically modified organisms.

Mr. Billy Hewett: Essentially, the answer is no, GMOs per se are not under negotiation. One of the things we think the establishment of an SPS committee and consultative body could do between now and the time the negotiations conclude is to work on assisting countries to cooperate in making, for example, their domestic product approval processes work effectively. This is one area in which those processes related to GMOs could be a part of those discussions, just from a practical implementation perspective from the SPS world.

The Chair: Thank you, Marcel.

Rose-Marie, did you have a question?

Mrs. Rose-Marie Ur: I have a couple of quick questions.

Mr. Norman, are the topics of MAI or IMF topics of discussion at the FTAA?

Mr. Terry Norman: In a very simple answer, no.

Mrs. Rose-Marie Ur: Okay, the question's asked.

People in my riding have requested a draft of the text that will be a topic of discussion. Earlier in your presentation you indicated that Canada supports releasing said document, but the other countries feel it can be done at the end perhaps but not now. Are you saying the text could be available if all the other countries agreed, but because they don't, people can't get it?

Mr. Terry Norman: Canada is proposing that the trade ministers, when they meet the first week of April in Buenos Aires, should decide to release the text. We don't know whether the other trade ministers will agree to it or not, but that's the position Canada is advocating. But they'll make the decision at that time.

Mrs. Rose-Marie Ur: Thank you.

The Chair: Thank you, Rose-Marie.

Ms. Bruce, you're organizing something there. Is it ready?

Ms. Donna Bruce (Canadian Agriculture Lifetime Leadership Program Coordinator, Extension Division, University of Saskatchewan): I've asked one of the participants to respond to your request.

The Chair: With this, probably just to mention it, CALL is developing a program for effective leaders in the agricultural industry. It's a partnership between the Canadian Farm Business Management Council, the University of Saskatchewan, and the Université Laval. With that, it's my understanding, Ms. Bruce, that you have two people who will introduce the members. Is that correct?

Ms. Donna Bruce: I have one person who will do that, en deux langues.

The Chair: I would ask him to come to the table, because that way we have translation.

If you would, Monsieur....

Mr. Andrew Stairs (Canadian Agriculture Lifetime Leadership Program): My name is Andrew Stairs. I'm a farmer from southern Quebec, from Hemmingford, to be precise. It is a pleasure to be here and to see people working on issues that we find to be very important.

I'd like to introduce to you the group with which I've been working for six months, and with which I will continue to work for the next year and a half. They are a group of agricultural professionals from across Canada who are interested in moving our industry forward.

• 1025

As I think of the group we have here, we have people who have worked for provincial ministries, we have grain growers, we have private consultants, purebred livestock breeders, a farm equipment manufacturer, holistic and organic farmers, agritourism operators, seed suppliers, and an agricultural youth worker in the 4-H program. I'm sure it's their pleasure to be here as well. If you'd like them to introduce themselves, giving an indication of where they're from and what their specific sectors are, I'm sure they'd be happy to stand up and say hello.

The Chair: I thought it might be easier for you to do that. Sometimes memory is hard to recall. With that, you might start on one side of the room. Each person could stand up briefly.

Mr. Andrew Stairs: We'll start with Dave Carvell, from Regina, Saskatchewan. He is a seed dealer. We have Marc-André Gagnon, who is with la Régie des assurances agricoles du Québec. Jean-Sébastien Morin, who is not a participant, is one of our facilitators from Université Laval. Randee Halladay, from Rocky Mountain House, Alberta, runs a holistic farming consulting service and a beef ranch. Hermann Miehe, from Saint-Paul-de-l'Île-aux-Noix, Quebec, is a grain producer. Denis Riverin is from a cooperative in Métabetchouan, in Lac Saint-Jean, Quebec.

Honey Forbes is from Duncan, B.C., and she is a consumer advocate. Bev Connell is a private consultant from Nova Scotia. Elizabeth Dacombe is an organic farm certification inspector from Belfast, Prince Edward Island. Luke Schilder is from Goderich, Ontario, and he's a farm operator and buyer and seller. Gabriel Beauregard is a seed producer from St-Damase, Quebec. Pierrette Séguin is a dairy producer from Nöelville, Ontario.

Jason Dean, from Morse, Saskatchewan, is a cattle feeder and grain grower. Karen MacInnis is from Prince Edward Island, and she is a 4-H worker and coordinator. Bruno Soucy works for the Farm Credit Corporation out of Moncton. Kathy Weir runs an agritourism outfit in Hopewell Hill, New Brunswick. Gerard Caissie is a land developer and farm machinery developer from Cambridge-Narrows, New Brunswick. Jean Coté is from Leask, Saskatchewan, and he runs an animal nutrition consulting service and a large grain farm.

Linda Jabs is from Innisfail, Alberta, and she is an exotic farm animal breeder. Pierre Rivard, from Laverlochère, Quebec, in the Témiscamingue, is a farm engineering consultant. Ian McPhadden is a grain grower from western Saskatchewan. And last but not least is Donna Bruce, from the University of Saskatchewan, and she has most graciously trailed us around Washington, D.C., Montreal, and now Ottawa, giving us all these good contacts in agriculture.

Some hon. members: Hear, hear!

The Chair: Thank you for the introductions, and I can assure you she was most persistent in making sure this thing worked today. It has not been easy.

I'd like to thank the witnesses for bearing with us. It certainly shows the breadth of agriculture across this country. As a New Brunswicker, I have to note that the three from New Brunswick are very close people. They work together and sit together and are together. It's good to see them here from my own home province.

With that, we will now go back to the round of questioning. Rose-Marie, you've finished? Yes? Then I'll go next to David. Did you have a...?

Mr. David Anderson: It's just a quick question.

We often see local governments interfering with international agreements. One of the examples I'm familiar with is that of North Dakota, which is now taking some action to try to keep products from going through the state by insisting things are tested for chemicals as they come through. I'm just wondering how these agreements do or can address these issues of local government interfering with international trade.

• 1030

Mr. Terry Norman: Local governments are bound to abide by the international trading rules just as national governments are, but it's the responsibility of the national government in each country to ensure that sublevels of government comply with the international trade obligations. In the case of North Dakota, for example, we have made our views known directly to the government of North Dakota and also to the United States government, with the expectation that the United States government will ensure that North Dakota behaves in accordance with the NAFTA and WTO rules.

The proposed measures they're talking about implementing would, in our view, be a violation of the NAFTA and WTO rules. We're hopeful that we will be able to persuade them not to proceed, but if we can't, then we will institute dispute settlement procedures to try to enforce that.

Mr. David Anderson: We often seem to see people using issues of jurisdiction in order to interfere with this. Again, as Garry said, I think we need some kind of fast track for dealing with those complaints. When you come in at six, eight, or ten months later, the P.E.I. farmers have found out that it's too late. Either your product is already ruined or it's long gone to market, and we need to have some very quick way of dealing with those vexatious complaints that come up now and again.

That's all I have, Mr. Chair.

The Chair: Thanks, David.

Murray.

Mr. Murray Calder: Thanks very much, Mr. Chairman.

Terry, one of the things I've seen since we signed the agreement in 1994 is the fact that yes, Canada has increased its export trade, but as an exporting farmer, I'm just not making any money at it. I really wonder just how much weight the FTAA really carries. If we take a look at the WTO, why would the United States want to reduce their subsidies with Canada when they're already in a subsidy war with the EEC? How would the FTAA actually start superseding what's going on with the WTO?

Mr. Proctor brought up a very good point here, the fact that for Canada the agreement was 20% over five years. We went past that, yet with their 1996 farm bill the United States put an extra $15.25 billion into their agricultural sector in 1999.

So what's the answer for us? Do we tread water for now during these negotiations until the United States catches up with us with their subsidy reduction? Do we in turn say enough is enough, and do we turn around and move our subsidies back up so we're even with them? There's still a discrepancy, and our guys are going broke trying to produce a product for the international marketplace.

The Chair: For the benefit of our guests, we use a lot of terms like WTO and EEC. Maybe in our questions and answers we might try to avoid those little shortcuts and say what they are. It would better to explain things if we said the European Economic Community rather than the EEC or the World Trade—

Mr. Murray Calder: They're probably knowledgeable, Mr. Chairman.

The Chair: We tend to run on with all these.

Thanks, Mr. Norman. Then in our answer maybe....

Mr. Andrew Stairs: If I may, I'll just comment on that. I think we'd like to see you comfortable. We're all pretty well versed in these terms.

The Chair: Good. They get more complicated as we go on, too.

Mr. Murray Calder: So just to recap, Terry, how credible really are the FTAA negotiations, given that everybody considers that the WTO supersedes the FTAA? What's our position on the subsidy reduction if we can't get the United States to move?

Mr. Terry Norman: Mr. Chairman, I've learned that you should not underestimate the ability of Canadian farmers to understand trade issues.

The question.... I alluded to this when I talked about domestic support and how it's being discussed in the free trade area of the Americas discussions. Some participants want to develop disciplines or eliminate domestic support within the FTAA area. We want to deal with it multilaterally for the very reason that was just identified, because the main abusers of domestic support are the European Union and the United States.

• 1035

An agreement within the western hemisphere that might constrain the United States but not do anything for the European Union would not be very realistic, or terribly helpful, in our view. So that's why we're suggesting that should be dealt with multilaterally in the WTO.

Also, in our WTO proposals and positions, we're suggesting that there should be a reduction and an overall cap on all kinds of domestic support, including the non-trade-distorting so-called green box support that's in the WTO.

So we are trying to deal with it, but in the WTO. We don't really think a regional trade agreement is an effective way to deal with the problem.

Mr. Murray Calder: To follow up then, if you can't get any movement between the United States and the EEC, what's in it for the United States? Why would they want to reduce?

Mr. Terry Norman: I don't think the United States will want to reduce unless the European Union also does, which is a problem and why I think we have to deal with it multilaterally.

Mr. Murray Calder: So, in other words, then the FTAA in this situation is kind of redundant, isn't it?

Mr. Terry Norman: My guess is that there will not be effective discipline on domestic support in the FTAA. My guess is the farthest we will go on that issue in the FTAA is to agree to work together on it in the WTO for a multilateral solution.

Mr. Murray Calder: Thank you, Mr. Chairman.

The Chair: A little bit of a problem now identifying, but I think, Dick, I'll get back to you.

Mr. Dick Proctor: I just have one area I want to pursue a little bit, Mr. Chair.

Mr. Norman, what's your understanding under the WTO rules about targeting specific commodities? Just let me go back to the announcement that was made 12 days ago with the $500 million to farmers from Ottawa. Under the WTO rules, could that have been targeted directly to certain commodity areas of agriculture—grains and oilseeds, corn, soya—that everybody knows are hurting, especially at this point in time, or would that have been in contravention of the WTO rules?

Mr. Terry Norman: Under the WTO rules, there are two kinds of domestic support—the so-called amber and green boxes. The green box, non-trade-distorting support, doesn't have a limit. If you pay support that conforms with the green box criteria, then there's no limit on it. Amber support...there is a limit and that's what is subject to the reduction commitments that were agreed, the 20% reductions.

I'm sorry, but I'm not familiar enough with what was announced 12 days ago to know exactly how that's going to be paid and which category it will fall in. But if it falls into the green box category, then it would not be subject to any limit. But even if it's done in such a way that it falls into the amber category, Canada has a lot of room within the ceiling in the amber category. So it wouldn't be a problem from that perspective either, I wouldn't think. But I'm sorry, I'm not familiar enough with just what was announced and how it's going to be paid to offer an opinion on which category it will fall into.

Mr. Dick Proctor: So the Americans, when they have increased their support payments an awful lot over the last number of years, would we assume...? You're saying their support payments were high and they've come down, but they're still high. I think farmers believe they've gone up quite a bit in certain areas—wheat production is a good example of it. Is that green or amber, what they're doing?

Mr. Terry Norman: The original idea in the current U.S. farm bill was to get away from amber support and have more green support, and the so-called production flexibility contracts—part of the farm bill—did do that. It's non-product-specific support, which qualifies for the green box. But then, in the last few years, they've added on top of that additional kinds of support specifically for the grains and oilseeds sector, which we regard as amber support. The reason I mentioned they're now getting close to their limit for amber support is because they've been doing that in recent years.

Mr. Dick Proctor: It's those amber supports that presumably the minister was reminding his counterpart in the U.S. about when they met recently.

• 1040

Mr. Terry Norman: In particular, yes, but we're also concerned with the overall level of support being provided to U.S. farmers; it's much higher than Canadian farmers. We don't think that's a good idea, even if it is green support. This is why we're now proposing in the WTO that there should be an overall limit on all kinds of domestic support, including the green support.

The Chair: Other questions, now, Mr. McCormick?

Mr. Larry McCormick: Thank you, Mr. Chair.

Just to follow up, Mr. Norman, on what you're saying, certainly the FTAA cannot probably achieve the lowering of domestic supports of the European Union and the United States, but it can lead to a better position for the WTO. Is that what you're—

Mr. Terry Norman: Yes.

Mr. Larry McCormick: Mr. Norman, we hear and we read in the newspapers that the United States—a world power—throws the money out. But we hear that the European Union will be much slower to react to lowering any supports, because of the fact that the people once were hungry.

If this is so—I mean, we have this crisis today in the grains and oilseeds—do you think there's room in the very near future where we can make some gain with the subsidies in the European Union?

Mr. Terry Norman: I think there should be and it will partly be because of developments in Europe itself. The European Union is currently negotiating with several potential new members to join the European Union. Some of those are significant agricultural producers. The general view seems to be that they won't be able to afford to maintain the high supports they have now once they've incorporated those other countries. So I think there is reason for some optimism.

Mr. Larry McCormick: Thank you very much, Mr. Chair.

The Chair: David.

Mr. David Anderson: I have just a couple of things to comment on. First, I was glad to hear you say that the government's position is that producers have the right to decide which marketing system they want. I have a number of constituents who would be happy to hear that they may have some choice in marketing their grain eventually.

But what I wanted to talk about a little bit more was the GMOs. Can you give me an explanation again about how they're being dealt with? You said they're not being dealt with here at the trade levels. Is that an issue you're going to try to deal with in terms of regulation rather than legislation? They're a huge issue and they're going to be a bigger one. I'm just wondering, how are they included in these negotiations?

Mr. Terry Norman: They're not included as such in these negotiations. The trade-related problem to GMOs is the approval process in different countries for these kinds of products. Some countries have a much more restrictive registration process than others and, in some cases, almost impossible to meet. So that causes a trade problem because you can't export a product to a country that hasn't approved that product.

So that's the trade issue and that's being dealt with on a scientific basis between the technical experts, but not really as part of any trade negotiation that's going on.

Mr. David Anderson: So that's going to just be left as a national issue, then?

Go ahead.

Mr. Billy Hewett: If I could just add one other thing that I didn't mention before in terms of this consultative body we're looking at, one of the things we would hope to be able to do with that mechanism is to use it as an opportunity to improve the level of coordination between western hemisphere countries in terms of how we are engaging in a number of different international discussions around the world. This is whether it is through the setting of international standards—for example, in the Codex system—or in discussions in other areas. So it provides one more venue where we could improve the level of coordination with other countries to the extent that we have common interests and views on that.

Mr. David Anderson: I guess I do see that as a trade issue because, in this situation again, you allow local governments to dictate what your trade in that area is by using their health standards.

The Chair: Rose-Marie, and then Marcel.

Mrs. Rose-Marie Ur: Mr. Norman, can you tell me the amount of dollars given to you or your department under the Western Hemisphere Trade Policy Division that you operate within and provide the committee with a cost-benefit analysis of the same? I think it's important when we have to be accountable—what are we gaining for this? Is FTAA a duplication of any other venue out there presently working on the same cause? Not to say what you're doing is wrong, but is this being done by someone else? Are we spending our dollars wisely?

That may be a little heavy but we'd like to hear some answers on that.

• 1045

The Chair: Rose-Marie, are you looking for something to be sent back to the committee? It may be quite difficult for Mr. Norman to—

Mrs. Rose-Marie Ur: I think I indicated that in my—

The Chair: Yes, but I just want to emphasize that before he started to answer.

I think it would be best, Mr. Norman, if you could get that back to the committee. Take it under advisement.

I have a couple of...I still can't get to those now. I have many others here, but I have to recognize Marcel.

[Translation]

Mr. Marcel Gagnon: I would like to return to genetically modified organisms. We are told that they are not part of the negotiations. However, according to the answer given to my colleague, they are part of the negotiations, albeit indirectly. I would like to know Canada's position on genetically modified organisms in these negotiations. Where are we at? If we go to France, we realize how much more stringent they are with respect to GMOs. Here, the debate seems to be taking much longer, but we have to broach the issue sooner or later. What is Canada's position on genetically modified organisms?

[English]

Mr. Billy Hewett: In terms of GMOs, Canada is actually expending a significant amount of energy on the issue. Basically, our fundamental approach and strategy is to want to maintain and enhance a transparent, rules-based and science-based approach to the regulation of health, safety, and the protection of the environment. In that regard and in terms of relationship to trade, prior to the Seattle ministerial meeting, Canada proposed the establishment of a fact-finding working party on biotechnology within the WTO, to begin to raise the level of awareness of, for example, how existing WTO rules within a number of different agreements apply to the technology and products produced using GM technologies.

In addition to that, we are working within....

On that front, one of the things to be clear on is that we see the agreement on sanitary and phytosanitary measures applying, and there are also other areas in which we're engaged in a number of significant discussions. For example, through the setting of international standards, there is work underway in Codex Alimentarius with respect to food safety. In the International Plant Protection Convention, there are discussions on standards for GM crops. Of course, Canada was also involved in the biosafety protocol negotiations.

So there are a number of different areas in which it's taking place, but once again, it's not one of those issues that we've seen as being a technical matter up for discussion within the FTAA.

The Chair: Garry.

Oh, I'm sorry.

[Translation]

Marcel, you have time for one last question.

Mr. Marcel Gagnon: I would like to talk about transparency. Everybody seems to find that these negotiations are secret, and not open enough. According to what you have said, the ministers of the countries involved agree on what is to be disclosed regarding the subject discussed, or the positions of different countries.

However, if I understand correctly, Canada's position can be viewed on the Internet. Is this true for other countries as well? And if it is, why can everything simply not be made public? As far as I know, a great many people have Internet access and could obtain the information. Why do we have to make so much effort to discover what everyone's position is, when it would be so much simpler to put them on the table so that they would not be misinterpreted? This would certainly eliminate the widespread impression that there are many aspects of different countries' positions that remain secret. May I suggest to our minister that she put the idea before other ministers? This seems very important to me. Thank you.

• 1050

[English]

The Chair: Thank you.

Garry.

Mr. Garry Breitkreuz: Yes, thank you.

You described the process at great length. My question is, why do the negotiations take so long? It will take until 2005 for an agreement to be reached, then 10 years down the road there might be some subsidy reduction. There's a lot of frustration at the grassroots level. Many farmers say they just can't hang on that long.

Mr. Terry Norman: First on that transparency issue, I mentioned Canada made its positions publicly available on the Foreign Affairs and International Trade website. So far as I'm aware, we're the only country that has done that. I mentioned the United States has made available a public summary of their proposals, but not the actual proposals they've made in the negotiating groups. I'm not aware that any other country has made anything public relating to these negotiations.

Why do trade negotiations take so long? I wish I knew. I wish I could speed them up. They just do. You get 34 countries, or in the WTO more than 100 countries, trying to reach agreement on something. It's complicated. There are a lot of complicated issues, and it takes a lot of time. Each country has a lot of domestic interests that have to be looked after and consulted as they try to come to a conclusion. I certainly would prefer it to be quicker, but I'm not sure how you can make it quicker.

The Chair: Thank you, Mr. Norman. I think most questions have covered the topics I had been looking at. But we didn't get one in relation to our marketing strategies, our boards, and production in Canada for export over and above the marketing system.

The second comment I'd like to hear from you would relate to transportation, because transportation is the key to trade. Right now our whole Canadian economy is suffering greatly from fuel costs, both at the farm level and with regard to trucks and the rest moving things to market, and the trains. It's probably at least a dollar a bushel, even with the railways, for moving that commodity to port. Are transportation subsidies figured into the subsidy system that's being applied to agriculture?

Mr. Terry Norman: That's actually a very complicated question. It really depends on what kind of subsidy there might be for transportation. If it's a subsidy that's contingent on the product being exported, then it would be categorized as an export subsidy, and we would certainly be discussing that in trade agreements. If it's a general subsidy to transportation within a country, then that would be considered not an agricultural subsidy, but a subsidy available to the economy generally and subject to the rules of the WTO agreement on subsidies and countervailing measures, rather than the agriculture agreement. I'm not sure I can give you a much better answer than that.

I didn't really understand the first part of your question about production above the orderly marketing system. Would you mind repeating that for me?

The Chair: Especially with milk, we have various prices, the price for Canadian consumption, the price for surplus, in other words, the market. You probably are aware of the various prices under which milk and milk products could be in or out of the country. With the two-price system they have with milk, for example, what is the position of your trade talks when we attempt to sell a product, say, into the New England states out of Atlantic Canada or out of Quebec.

Mr. Terry Norman: This is exactly the issue the WTO panel process is now looking at. It was that part of our pricing system for milk that was found to be an export subsidy by the WTO panel that looked at this. We've now changed our milk pricing system within each province, so that exports can occur without intervention of government or the marketing board. Our view is that this now complies with the WTO requirements, but the United States and New Zealand are both challenging that, so it's unclear at the moment. I think this is the best answer I can give you.

• 1055

The Chair: I'd like to thank you for coming this morning. We certainly have learned a good deal, and I think probably have answered some questions for the agricultural community across the country.

Again, I'd like to emphasize that your work is very important to all of us. I know when you start to bargain or trade, you don't always win for everybody, but we can hope to see a resolution to this that will be in the best interests of our agricultural community across Canada. Thank you for coming.

For members, I have a couple of brief questions. We'd like to remind you that the group are here and would like to meet with some of us after the meeting this morning. The minister will be coming next week, on Wednesday. We've arranged for that to be televised, we hope, on CPAC, which will give our community an opportunity to see his answers to our questions.

With that, a decision has to be made. We asked him to come simply to talk about agricultural activity and situations across the country. Do we want him to deal with the estimates as the major portion of his presentation? It was my impression that we wanted him to deal with general issues when we made up our proposed agenda two weeks ago.

Mr. David Anderson: We spent some time looking at those estimates, and I would certainly like to ask a couple of questions about them.

The Chair: The point is, the estimates might take up most of the meeting. Do we want to deal with general issues such as farm income, safety net, financial systems to farmers, cash advance, and the insurance programs? Or do we want to say mainly estimates? Dick.

Mr. Dick Proctor: Trying to recall the discussion we had, I think there was a general feeling around the table that we'd like to see the Minister of Agriculture before the committee more frequently than we did in the last Parliament.

The Chair: And he has agreed.

Mr. Dick Proctor: He has agreed to that?

The Chair: Yes.

Mr. Dick Proctor: On that basis, why wouldn't we proceed with having a discussion on the general issues you just indicated, then inviting him to come back at a later date to deal specifically with the estimates? I think all of us have questions on both.

The Chair: So that is agreed.

The second point concerns the Auditor General and the Canadian Food Inspection Agency. Should we divide the meeting into two parts? Is that satisfactory?

Mr. Clerk, are there other points of concern? We have an expert here with great experience.

The Clerk of the Committee: Thank you, Mr. Chair.

Mr. Garry Breitkreuz: I hope we're not done with that one point about dividing it into two parts.

The Chair: Garry, you have a comment?

Mr. Garry Breitkreuz: I think we need quite a bit of time with the AG. I wouldn't want to limit his time too much. If you divide that into two parts, he makes a presentation, you have one short question, and it's over.

The Chair: Subject to the Auditor General's being given the majority of the time then, we have both? But to deal with them separately is what we're.... Yes.

This letter about the potato wart situation in Prince Edward Island has not been circulated. It did come to my office last week, requesting a time for the officials to come here to explain the situation in relation to the potato wart and the problems of the producers in P.E.I. Shall we table that for later, or could we have the group in here on Thursday to meet with the committee and talk about the situation? Thursday is an open day, and if it were agreed by the committee, we certainly could have the officials come here to....

Murray.

Mr. Murray Calder: Mr. Chairman, I think it's necessary that we have these people in. I've talked to Wayne Easter on this issue. It's as much of a disaster for the potato farmers in Prince Edward Island as it is for grain and oilseed producers. Let's get to the bottom of this. It affects Ontario also.

The Chair: Marcel, you would agree? And others? Are there other comments before we adjourn this morning?

• 1100

Well, thank you for coming, and again thanks to our witnesses. As many as possible could stay to meet with the group from across the country with the leadership program.

The meeting is now adjourned.