AGRI Committee Meeting

Notices of Meeting include information about the subject matter to be examined by the committee and date, time and place of the meeting, as well as a list of any witnesses scheduled to appear. The Evidence is the edited and revised transcript of what is said before a committee. The Minutes of Proceedings are the official record of the business conducted by the committee at a sitting.

For an advanced search, use Publication Search tool.

If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.

Previous day publication Next day publication

37th PARLIAMENT, 2nd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Tuesday, April 8, 2003

0905

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.))

The Honourable Sheila Copps (Minister of Canadian Heritage)

The Chair

Hon. Sheila Copps

The Chair

Hon. Sheila Copps

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

0910

The Chair

Hon. Sheila Copps

0915

0920

The Chair

Mr. Alan Latourelle (Chief Executive Officer, Parks Canada Agency)

The Chair

Hon. Sheila Copps

The Chair

Mr. Howard Hilstrom

0925

Mr. Alan Latourelle

Mr. Howard Hilstrom

Hon. Sheila Copps

Mr. Howard Hilstrom

Hon. Sheila Copps

The Chair

Hon. Sheila Copps

The Chair

Mr. Howard Hilstrom

Hon. Sheila Copps

The Chair

Mr. Howard Hilstrom

Hon. Sheila Copps

0930

The Chair

Mr. Howard Hilstrom

Hon. Sheila Copps

The Chair

Mr. Dick Proctor (Palliser, NDP)

Mr. Alan Latourelle

Mr. Dick Proctor

Mr. Alan Latourelle

Mr. Dick Proctor

Mr. Alan Latourelle

Mr. Dick Proctor

Mr. Alan Latourelle

Mr. Dick Proctor

Mr. Alan Latourelle

Mr. Dick Proctor

Mr. Alan Latourelle

Mr. Dick Proctor

Mr. Alan Latourelle

Mr. Dick Proctor

The Chair

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.)

0935

Hon. Sheila Copps

Mr. Alan Latourelle

Mrs. Rose-Marie Ur

Mr. Alan Latourelle

Mrs. Rose-Marie Ur

Hon. Sheila Copps

Mrs. Rose-Marie Ur

The Chair

Mr. Rick Borotsik (Brandon—Souris, PC)

Hon. Sheila Copps

Mr. Rick Borotsik

Hon. Sheila Copps

Mr. Rick Borotsik

Hon. Sheila Copps

0940

Mr. Rick Borotsik

Hon. Sheila Copps

Mr. Rick Borotsik

Hon. Sheila Copps

Mr. Rick Borotsik

Hon. Sheila Copps

Mr. Rick Borotsik

Hon. Sheila Copps

Mr. Rick Borotsik

Hon. Sheila Copps

Mr. Rick Borotsik

Hon. Sheila Copps

Mr. Rick Borotsik

Mr. Alan Latourelle

Mr. Rick Borotsik

Mr. Alan Latourelle

Mr. Rick Borotsik

Mr. Alan Latourelle

Hon. Sheila Copps

Mr. Rick Borotsik

The Chair

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ)

Hon. Sheila Copps

Mr. Louis Plamondon

Hon. Sheila Copps

Mr. Louis Plamondon

0945

Hon. Sheila Copps

The Chair

Mr. Louis Plamondon

0950

M. Alan Latourelle

The Chair

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

Hon. Sheila Copps

Mr. Mark Eyking

Hon. Sheila Copps

0955

The Chair

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance)

The Chair

Mr. David Anderson

Mr. Alan Latourelle

Mr. David Anderson

Hon. Sheila Copps

Mr. David Anderson

Hon. Sheila Copps

1000

Mr. David Anderson

The Chair

Hon. Sheila Copps

Mr. David Anderson

Hon. Sheila Copps

Mr. David Anderson

The Chair

Mr. Howard Hilstrom

The Chair

Hon. Sheila Copps

The Chair

1100

The Chair

1105

Mr. Phil Calvert (Deputy Director, Technical Barriers and Regulations Division, Department of Foreign Affairs and International Trade)

The Chair

Mr. Mark Corey (Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food)

The Chair

Mr. Mark Corey

1110

The Chair

M. Ian Thomson (directeur, Division de la politique commerciale de l'hémisphère occidental, Direction des politiques de commerce international, ministère de l'Agriculture et de l'Agroalimentaire)

1115

The Chair

Mr. Howard Hilstrom

Mr. Mark Corey

Mr. Howard Hilstrom

Mr. Ian Thomson

Mr. Howard Hilstrom

Mr. Ian Thomson

1120

Mr. Howard Hilstrom

Mr. Mark Corey

Mr. Howard Hilstrom

Mr. Mark Corey

Mr. Howard Hilstrom

The Chair

Mr. Louis Plamondon

Mr. Alan Schlachter (Trade Policy Analyst, Western Hemisphere Trade Policy Division, International Trade Policy Directorate, Department of Agriculture and Agri-Food)

Mr. Louis Plamondon

M. Ian Thomson

Mr. Louis Plamondon

M. Ian Thomson

1125

Mr. Louis Plamondon

M. Ian Thomson

Mr. Louis Plamondon

The Chair

Mr. Phil Calvert

The Chair

Mr. Gérard Binet (Frontenac—Mégantic, Lib.)

M. Mark Corey

Mr. Gérard Binet

M. Mark Corey

1130

Mr. Gérard Binet

The Chair

Mr. Claude Duplain

M. Mark Corey

Mr. Claude Duplain

M. Phil Calvert

The Chair

Mr. Mark Corey

The Chair

Mr. Rick Borotsik

1135

Mr. Mark Corey

Mr. Phil Calvert

Mr. Rick Borotsik

Mr. Mark Corey

Mr. Rick Borotsik

Mr. Mark Corey

Mr. Rick Borotsik

Mr. Mark Corey

Mr. Rick Borotsik

Mr. Mark Corey

Mr. Rick Borotsik

Mr. Mark Corey

Mr. Rick Borotsik

Mr. Mark Corey

Mr. Rick Borotsik

Mr. Mark Corey

Mr. Rick Borotsik

Mr. Mark Corey

1140

Mr. Rick Borotsik

Mr. Mark Corey

Mr. Rick Borotsik

Mr. Mark Corey

Mr. Rick Borotsik

The Chair

Mr. Howard Hilstrom

Mr. Ian Thomson

Mr. Phil Calvert

1145

Mr. David Anderson

Mr. Mark Corey

Mr. David Anderson

Mr. Ian Thomson

The Chair

Mrs. Rose-Marie Ur

Mr. Mark Corey

1150

Mr. Phil Calvert

Mrs. Rose-Marie Ur

Mr. Phil Calvert

Mrs. Rose-Marie Ur

Mr. Mark Corey

The Chair

Mr. Louis Plamondon

M. Mark Corey

1155

Mr. Louis Plamondon

M. Mark Corey

Mr. Louis Plamondon

The Chair

Mr. David Anderson

Mr. Mark Corey

Mr. Ian Thomson

Mr. David Anderson

Mr. Ian Thomson

Mr. David Anderson

Mr. Mark Corey

1200

The Chair

1205

Mr. Neil Jahnke (President, Canadian Cattlemen's Association)

1210

1215

The Chair

Mr. Edouard Asnong (President, Canadian Pork Council)

M. Martin Rice (directeur exécutif, Conseil canadien du porc)

1220

1225

The Chair

Mr. Larry Friesen (Manitoba Pork Council)

1230

The Chair

Mr. Howard Hilstrom

Mr. Neil Jahnke

Mr. Howard Hilstrom

Mr. Neil Jahnke

Mr. Howard Hilstrom

Mr. Neil Jahnke

1235

Mr. Dennis Laycraft (Executive Vice-President, Canadian Cattlemen's Association)

Mr. Howard Hilstrom

Mr. Neil Jahnke

The Chair

Mr. Louis Plamondon

M. Edouard Asnong

Mr. Louis Plamondon

M. Edouard Asnong

Mr. Louis Plamondon

M. Edouard Asnong

Mr. Louis Plamondon

M. Edouard Asnong

Mr. Louis Plamondon

The Chair

Mr. Claude Duplain

1240

Mr. Martin Rice

The Chair

Mr. Larry Friesen

The Chair

Mr. Rick Borotsik

1245

Mr. Larry Friesen

Mr. Rick Borotsik

Mr. Neil Jahnke

Mr. Dennis Laycraft

Mr. Rick Borotsik

Mr. Dennis Laycraft

Mr. Rick Borotsik

Mr. Dennis Laycraft

Mr. Rick Borotsik

Mr. Larry Friesen

Mr. Rick Borotsik

Mr. Neil Jahnke

1250

Mr. Rick Borotsik

Mr. Neil Jahnke

The Chair

Mr. David Anderson

Mr. Neil Jahnke

The Chair

Mr. Jim Caldwell (Director, Government Affairs, Canadian Cattlemen's Association)

Mr. David Anderson

Mr. Dennis Laycraft

The Chair

Mr. Martin Rice

Mr. David Anderson

1255

Mr. Martin Rice

Mr. Dennis Laycraft

The Chair

Mr. Gérard Binet

Mr. Larry Friesen

Mr. Gérard Binet

Mr. Larry Friesen

The Chair

Mr. Rick Borotsik

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 025

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, April 8, 2003

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.)): Order, please.

Ladies and gentlemen, Minister, we want to welcome you to our meeting this morning.

We want to continue our discussions this morning pursuant to Standing Order 108(2), continuing our information sessions on the issue of tuberculosis in the elk and deer herds in Riding Mountain National Park, Manitoba.

For some time, we've anticipated the minister's presence at our meeting and we're pleased that she could be with us this morning. We want to get right into the meeting.

The meeting will be yours to begin, Madam Minister, and we look forward to your presentation, followed by questioning from our panel of people here representing the various political parties.

So thank you very much, Ms. Copps. You're on. How much time do you anticipate?

The Honourable Sheila Copps (Minister of Canadian Heritage): Well, I think there's a call for all of us to be in the House at 10 o'clock.

The Chair: How much time do you anticipate for your presentation?

Hon. Sheila Copps: Oh, probably 20 minutes.

The Chair: Try to keep within that time, if you can. It's a little more than we usually have, but it's important. We need to hear from you.

Thank you. You're on.

Hon. Sheila Copps: Well, since this is the first time I've been to the committee, I wanted to lay out a bit of context, not just for the role of Parks Canada but for my role in relation to Parks Canada.

First of all, thank you very much for the invitation to appear before your committee. Most of you may not be aware that the single biggest engine of economic development in every riding in the country is actually Parks Canada. I think we're present in over 220 ridings across the country. I'd really be pleased at some future point to spend more time on the economic benefits that Parks Canada brings to all regions of the country.

As you know, Parks Canada is, legislatively, a special operating agency. What does that mean? That means I'm responsible for the overall direction of the agency and for the implementation of new policy directions, while the operation of Parks Canada is in the hands of the chief executive officer, who is beside me here. I believe you've already met him--Alan Latourelle. It's the role of the chief executive officer to manage the agency in respect of its operations and to prepare for review by me the guiding principles and operational policies that attach to every park across Canada.

We just came out of a round table that occurs every two years. At that round table, which was held here in Ottawa a couple of weeks ago, we had representatives from the community. Forty-five recommendations came out of the first round table in 2001, and 20 recommendations out of the second round table in 2003. Those round tables were mandated by legislation that was passed by Parliament when we changed the legislation to create the new Canada Parks Act.

Those of you who were there when the new Canada Parks Act was implemented will recognize that when we passed the new law in Parliament, the law mandated that the top priority in all parks is ecological integrity, and in a sense that ecological integrity trumps all other imperatives when you're dealing with the status of Canada's parks. You may recall that was the legislation that was mandated to put a cap on growth in Banff. Prior to the new legislation being introduced in 1999, it was up to the minister every time somebody wanted to build or change to issue a permit, a variance. What we did with the new Canada parks legislation is we said it's no longer the role of the minster to make such a determination, it's actually the role of Parliament.

Parks Canada, as an operation, has 5,000 employees across the country. It has an annual budget of $448 million and it has approximately $7.1 billion in infrastructure and welcoming--

Mr. Howard Hilstrom (Selkirk—Interlake, Canadian Alliance): Excuse me, on a point of order, Mr. Chairman, did you tell the minister what this hearing was about, that this was about tuberculosis in Riding Mountain National Park? Was she instructed in that regard?

¿ (0910)

The Chair: I think, Mr. Hilstrom, it's fair to ask that question, but I think it's also fair to ask the minister to proceed with her presentation. There'll be questions. She'll have to get to that point at some point. Yes, she knows what she's here for.

Thank you.

Ms. Copps.

Hon. Sheila Copps: Mr. Chairman, I'm giving an overall context so people know that when any issue addressed in the parks is brought to the table, there is a legislative process that was agreed to by Parliament.

The infrastructure they're responsible for is about $7.1 billion. In fact, I think we should be pretty proud we were the first country in the world to have a national parks system. We are consistently rated as one of the best government agencies for service by the people of Canada.

Parks Canada is certainly playing a powerful role in every region of the country. We should also be very proud of the fact that UNESCO has designed 13 world heritage sites that are under the management of Parks Canada, including Lunenburg, Quebec City, and Banff, the national jewel and the first park in the parks system.

[Translation]

Ninety-seven percent of Canadians tell us that, as regards Parks Canada, it is important to protect national parks, and 92% mention the preservation of national heritage as being essential for the preservation of culture and identity.

[English]

Not only does it represent a powerful way of protecting our own identity, but it makes good economics. As I said, Mr. Chair, I'd be happy to come back in the future with some specifics on a riding-by-riding basis. Parks Canada is responsible for 26 million annual visits to parks and historic sites across the country and 38,000 full-time jobs. It introduces $2 billion into the gross domestic product on an annualized basis. It's responsible for $425 million in expenditures by foreign tourists, who come to Canada because of our parks system. For every dollar that's invested by the taxpayers, it returns $3.5 billion in economic activity. If I can give you a couple of examples, the economic impact of Riding Mountain in Manitoba is close to $85 million, and in Saskatchewan the economic impact of the parks budget represents $40 million, for a total of $125 million in economic activity in Saskatchewan and Manitoba.

[Translation]

Communities are also involved, as sites are not managed only by Parks Canada employees. There are 560 communities in Canada's regions. For example, Mr. Eyking knows that in Louisbourg, there is a small committee called Friends of Louisbourg. This committee is involved in the management and administration of everything relating to Louisbourg.

Another one of our goals is the promotion of Canada's rural areas as places to live and work.

[English]

Parks Canada helps to make rural regions of Canada great places to visit, but more importantly, great places to live. We build partnerships with aboriginal peoples. We have a very new program that is targeted to young people in urban regions to get them interested in their first taste of what it is to belong to a country that had the first park system in the world.

[Translation]

In Canada, we have 39 national parks and two marine conservation areas.

[English]

We have almost 900 historic sites, of which 146 historic sites and 9 historic canals are managed by Parks Canada.

We've designated certain priority themes. The priority themes we're focusing on are aboriginal peoples, women, and minority communities. You might ask why aboriginal peoples. When I became minister, I was shocked to learn that the 2 million people who visit Banff annually learn an awful lot about the flora and the fauna and very little about the people, so I instituted a program that involves the interpretation of the people as well as the flora and the fauna. That's on the people side.

On the ecological side, those of you who look at the environmental systems will know that the precursor to the new legislation was the Banff Bow Valley study. My predecessor, Michel Dupuis, asked a number of scientists to take a look at the ecological integrity of the Banff National Park at a time when UNESCO was actually looking at placing Banff on an endangered watch list. What UNESCO had said in the late 1990s was that the Government of Canada had not been careful enough in protecting our national parks, and as a result, they were looking at taking Banff off the list of UNESCO heritage sites. In response to that particular concern, my predecessor, Michel Dupuis, named scientists to look at the situation, and they produced the Banff Bow Valley study, which was a kind of template for how to meet the test of the environment in Banff.

Following that particular study, which was very extensive and dealt specifically with one park, I named a gentleman by the name of Jacques Gérin to chair a panel, which included representatives from across the country. They did a two-year study and issued a report, which is now commonly known as the Report of the Panel on the Ecological Integrity of Canada's National Parks. That expert panel looked at how you marry the objectives of Parks Canada and the environment. That particular study led to a complete legislative renewal in which we introduced new legislation on the Canada parks system that made ecological integrity the cornerstone of everything we do.

Since the introduction of the new legislation, we have created seven new parks and one new marine park, and we've established over 300 new historic designations, which focus on some of the history that has not been spoken about in our history books, including the designation of the first ever national Gurdwara . The first ever Gurdwara outside of the Punjab was designated as a Canadian historic site last summer.

¿ (0915)

[Translation]

What did we do? We permanently limited development in seven park communities. There are seven national parks that are old enough to have people living within them. Now, when we create a new park, we try to ensure there are no houses within its boundaries. For parks in which there were already communities, we limited development, and we also signed an agreement with the Tourism Industry Association of Canada to promote partnerships and encourage viable, environmentally friendly tourism. We also launched several initiatives on historical sites.

[English]

We've now established the new legislation and made a commitment to create ten new national parks and five new national marine conservation areas, and expand three existing national parks by 2007. Those of you who have such venues in your constituencies will know that we've been working very closely with members of Parliament in the rollout to establish the new parks and marine conservation areas because we truly want a partnership.

We've managed to secure $411 million of new funding to the Parks Canada envelope in the last number of years, and that is the context in which we're looking at how to deal with the very serious problem of the bovine tuberculosis issue.

On February 27, your committee told Alan Latourelle, “We want to resolve this issue and we want you to take this message back to your minister....we are serious about this issue”. We too are serious about this issue. When I speak about the seriousness of this issue, I know in very moving terms the conviction and passion the member for Brandon--Souris brings to this issue. I know the conviction and passion your vice-chair brings to this issue, and I certainly know the conviction and passion that Liberal members of Parliament who've personally spoken to me on this issue carry to these deliberations.

While two members of Parliament from Manitoba have led the charge on this issue, all members present, all parties in all parts of Canada, want to eradicate tuberculosis in the elk population. This is not just a regional issue or a local issue, this is a national issue. It has tremendous impact upon ranchers, farmers, communities, families, and food safety. Whenever there's even a hint of tuberculosis, the Government of Canada has to be concerned. Anyone living in the real world, anyone watching the medical fallout from the SARS virus, will know that a matter of contagious disease in the human population or the animal population requires the most rigorous public responsibility, the most open and transparent communications, and the most serious sense of partnership.

I do not treat this issue as a local issue. I treat it as an issue that can affect hard-working Canadians who see their livelihood threatened by something beyond their control. My conversations with the chair of the Riding Mountain Biosphere Reserve and with the executive of the Canadian Bison Association have reinforced this perspective. Their anguish is very real, and I fully support the TB management program.

The chief executive officer of Parks Canada is here today to update you on the actions taken by Parks Canada since Mr. Latourelle met with you seven weeks ago. Parks Canada intends to play a leadership role in solving this problem. You know from your meetings with Alan Latourelle that he is personally taking a lead on this matter and is willing to step up to the plate on whatever action is required.

I wish we had a firm date for the resolution of this problem. The truth is that we do not, in the same way as we do not have a firm date for eliminating the SARS problem. Controlling and eliminating a disease is not something to which we can attach a fixed date.

¿ (0920)

[Translation]

My commitment is to work hand in glove with you and all the other partners to do what it takes to eliminate this virus.

On this promise, I would like to ask Parks Canada Agency's Chief Executive Officer to provide more information on the progress we have accomplished since our last visit, seven weeks ago.

[English]

The Chair: Yes, Mr. Latourelle, I apologize for not mentioning you. I intended to do that later, but since you're coming on, welcome to the committee meeting this morning. We look forward to your comments.

Mr. Alan Latourelle (Chief Executive Officer, Parks Canada Agency): Thank you, Mr. Chair.

I want to take the opportunity to update the committee in terms of the commitment that I had shared with you about a month ago now and to explain where we are at in the process from a Parks Canada perspective.

Since the last time we met, clearly I have outlined our action plan, which has included the testing of some 150 elk this year, in 2003, to establish a multi-stakeholder committee, to enhance the barrier fencing program, and to reconfirm our commitment to close to $700,000 in terms of investment to deal with this issue. Since that time, I am pleased to report that 115 elk have been captured and tested to date. Of those 115 elk, nine cases were inconclusive.Those were inconclusive tests. We could not confirm that they were not TB-free so we destroyed those elk.

Basically we're doing testing now, and in early June we should get the formal results. We have 40 elk that will be captured in the fall. So by December we will be meeting our objective that I shared with you of 150. It should be noted that we have now tested close to 675 elk over the last two years without any positive test so far.

We spoke briefly about establishing the multi-stakeholder committee. Since the last time we met, Parks Canada has had close to 12 information sessions with stakeholders and local organizations in the Riding Mountain area. The multi-stakeholder committee has been established. It has met twice since the last time we met. It represents about 15 different stakeholders from cattle associations to the biosphere reserve and all of the key players.

Finally, in terms of the enhanced barrier fencing, I had committed the Parks Canada funding of $40,000. That has been supplemented by partnership funding of close to $120,000. So we expect we'll be able to deliver this summer on our objective to create 75 barrier fences.

Thank you, Mr. Chairman.

The Chair: Thank you very much.

Will this conclude your comments?

Hon. Sheila Copps: Yes, Mr. Chairman.

The Chair: Again, we want to remind everyone to be succinct in their questioning because we are limited by time. We have about half an hour to conclude the final portion of the meeting.

Mr. Hilstrom, you are first for questioning.

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

Mr. Latourelle, when you appeared last time you had no statistics on the cattle industry in Manitoba. Do you have those now? Do you have the size of the industry, the number of head there, the dollar value of the cattle industry?

¿ (0925)

Mr. Alan Latourelle: Yes, I had shared some of that data the last time, as part of my presentation.

Mr. Howard Hilstrom: Well, you didn't, and you don't have it today.

The point I'm making is that in the cattle industry we have $1 billion worth of cattle in that province. And I don't know what figure you guys use to multiply by, but I would say, if you want to multiply that economic activity by five, that there is probably $5 billion worth of spin-off activity compared to your $85 million in that park. So we're talking about a very important issue to Manitoba and the country.

What we've seen from the start of this tuberculosis issue is that your cabinet, your government, Madam Minister, covered up the loss of TB-free status five years ago. Since that time the farmers and ranchers around the park have been stonewalled by the park officials.

When I asked you a question in the House of Commons, Madam Minister, on whether or not you would cull some of those elk out of there, your answer to me was along the lines of, do you expect me to cull the elk? At that point you sat down.

What we see--

Hon. Sheila Copps: Sorry, you have made an allegation about--

Mr. Howard Hilstrom: That's not an allegation.

Mr. Chairman, I'd like to finish--

Hon. Sheila Copps: I did say, if there is--

The Chair: Allow him to finish the question.

Hon. Sheila Copps: Yes, that's fine.

The Chair: It may not be what you like, but let him finish.

Mr. Howard Hilstrom: You can speak after I'm finished asking my question.

Hon. Sheila Copps: I think the beginning of your statement relates to a cover-up. I would be very happy to have any evidence of that put forward, because I'd love to follow up on it. There's no cover-up in my department, I can tell you that. I would deal with it.

The Chair: Can you do that?

Mr. Howard Hilstrom: We have had witness after witness come to this table, including the Minister of Agriculture from the Province of Manitoba and the president of the Manitoba Cattle Producers Association, who said they were not told by this federal Liberal government when Manitoba lost its TB-free status. That is not an allegation; that is a fact.

Your presentation now, Madam Minister, has not dealt with the tuberculosis issue. What you've given us is a parks presentation, which is not what we wanted from you here today.

This disease problem is a major one. It's not only in Riding Mountain but also in Wood Buffalo National Park, which is also under your jurisdiction. What I see is that this tuberculosis issue is out of the ordinary, it's unusual, because the park legislation doesn't deal with it, and ministerial responsibility has to kick in someplace where some minister says, I'm in charge of this business and I'm personally going to make sure that this tuberculosis issue gets taken care of.

If it's not eradicated in the next timeframe--you didn't even give us a timeframe--are you prepared to have a cull of the elk inside that park? Will you have a cull? You know what that means--a kill-off of x number of elk in that park to reduce the number so that the incidence of tuberculosis is either so low or non-existent that it doesn't affect the cattle. Will you commit to that?

Hon. Sheila Copps: I'd like to respond, because I think you've made a number of statements that are factually incorrect.

Number one, when you asked me the question in the House some time ago, and when you repeated the question, I said then what I say now, that I do not make decisions based on science information. I'm not a scientist, and I would be very happy to follow the recommendations of the scientists.

We're in the middle of a huge human viral outbreak here in Canada called SARS. You don't see the Minister of Health making the decisions on what the eradication method is. It's improper for a politician to make decisions on what the proper eradication is. The reason we put in the law in 1999 the overriding template of ecological integrity is precisely that it's up to the scientists to give us recommendations, which we will implement immediately.

When I was sitting in your spot many years ago, we actually looked up the whole issue of brucellosis in Wood Buffalo National Park. I would love to eradicate every form of viral disease that passes between domesticated and wild animals. I'm not a scientist, and what I do is receive the recommendations from the scientists and implement them. The whole idea of ecological integrity is to say the decisions should not be made by the politicians; they should be made by the scientists.

One of the reasons we set up a tripartite organization some years ago, including the Manitoba Natural Resources, including Manitoba Agriculture and Food, including Agriculture Canada, including Parks Canada, is to get the sound science solution. I think what Mr. Latourelle has told you today is that we're certainly working very hard with our partners, Agriculture Canada, Manitoba Agriculture, and Manitoba Natural Resources to stop the spread of this disease, but it's a disease that's stoppable with good science, not by politicians.

That's what I said in the House. I was not being flippant. I was being very sincere about the fact that, going back again to the SARS example, you don't see the Minister of Health giving advice on how to stem the outbreak of the human virus. It's actually being given by experts in the field who are scientists and doctors, and that is as it should be.

¿ (0930)

The Chair: Okay, a very, very short question. We have about 40 seconds left.

Mr. Howard Hilstrom: On this ecological integrity, up until this tuberculosis came along, until the pressure came from the local farmers and ranchers, it was back to nature; let the wolves take care of it; let the beavers dam up everything. Now the park is finally starting to do some actual habitat management inside that park, which you were not doing, Mr. Latourelle, until this tuberculosis issue came up. There was no logging. There was no haying. There was nothing allowed to be done in that park. It was just back to nature.

Do you agree, Madam Minister, that your ecological integrity definition is wrong and that in fact our national parks do have to be managed as to the number of wildlife allowed to be alive inside that park?

Hon. Sheila Copps: No, I do not agree.

The Chair: Mr. Plamondon, thank you very much for deferring.

Mr. Proctor.

Mr. Dick Proctor (Palliser, NDP): Thanks very much, Mr. Chair.

Mr. Latourelle, the out-count was about 4,000, and then we were told more recently it was much less--in the neighbourhood of 2,500 or 2,700. That's a fairly large reduction. Can you elaborate on what you think has happened there over the intervening months?

Mr. Alan Latourelle: Yes. The result over last year, the change in the population, is from roughly 3,200 to 2,700. I think part of it is the wolf population and the impact it has had. The other part is that we are moving with prescribed burning, for example, the end result of which is basically that it maintains the elk population within the park. So, for example, of the 115 that are currently collared, we track the movement of...only about two in fact go distances outside the park. That's in terms of the movement.

In terms of the reduction, we've been working with the Province of Manitoba and all the experts. This is the best information we have in terms of the estimate of the population. If there are better ways to have more precise population estimates, we are working with the advisory committee to try to look at those types of issues.

Mr. Dick Proctor: I just want to be clear on the numbers. You said you've tested 115 and you're going to test another 45 this fall--

Mr. Alan Latourelle: Yes.

Mr. Dick Proctor: --and nine were inconclusive and the animals were destroyed.

Mr. Alan Latourelle: That's right.

Mr. Dick Proctor: What about the deer population?

Mr. Alan Latourelle: The deer population in the area is about 80,000 deer, and only a small portion of the 80,000 are within Riding Mountain National Park. So the issue of deer management, if I can call it that, is clearly a significant one, one on which we have to work with the Province of Manitoba, because the vast majority are outside the park.

Mr. Dick Proctor: Just elaborate a little bit on the barrier fencing. You said 75 barrier fences will be built or have been built.

Mr. Alan Latourelle: That's our objective for this year, to achieve 75 barrier fences.

Mr. Dick Proctor: Tell me what that is. When you say “barrier fencing,” what are we talking about?

Mr. Alan Latourelle: It's basically where the elk, in this case, for example, potentially could be eating--

Mr. Dick Proctor: They are eating haystacks that are around?

Mr. Alan Latourelle: --the haystacks. Exactly.

Mr. Dick Proctor: Okay. Those are all the questions I have.

The Chair: We will then move to the Liberal side: Mrs. Ur, for your first round of questioning.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you, Mr. Chair.

Thank you, Madam Minister, for coming to our meeting.

I have a couple of quick questions. In your department, how much effort--dollars and people power--is put to health issues within national parks? Is there a separate department that looks after this and a specific amount of dollars and people power put to it?

¿ (0935)

Hon. Sheila Copps: In the context of the parks budget, which I think I put forward as $448 million, after we introduced the legislation on the Canada National Parks Act and we brought in ecological integrity as the cornerstone of parks management, there has been a specific amount of money set aside for ecological integrity. That basically means building the science, because in a lot of cases the science can be inconclusive and it can require more research on any issue, whether it be tuberculosis and how it's transmitted, through to how you deal with naturally occurring bugs in various parts of the national parks system.

I think the amount of money that's actually budgeted annually for the science of the parks is around....

Mr. Alan Latourelle: What was announced recently is $25 million.

To give you an example, in terms of Riding Mountain National Park, the investment is close to $700,000. In Wood Buffalo National Park, the investment in science on the wood buffalo issue is close to $5 million. That was the investment by Parks Canada.

Mrs. Rose-Marie Ur: I appreciate the minister's statement. We need research, we need science, but we also need to follow up quickly on action, because as has been indicated, the cattle industry is certainly a vital industry for that province.

That said, I had a news release on my desk, it so happened, from Ag Canada, that they have put in over $202,000 for a program with CCIA. I just wondered. Here again it's coming from Ag Canada, and I guess I'm being a little bit protective in that respect, that we have precious few dollars there, and when we're putting these kinds of dollars into this specific project, we really need to work together. Because the dollars are so scarce within Ag Canada, we both have to work together, the national parks as well as the agriculture industry. Do you put those kinds of dollars into those?

They said this was a pilot system. I had understood that there was something going on through national parks. So is there already something in the same vein going on with the national parks system?

Mr. Alan Latourelle: Yes. When I mentioned the $700,000, that is the investment we are making. I'll give you a very practical example. Last summer through the barrier fencing, the amount we invested was the cost of buying the goods. But we have our park wardens in fact helping farmers and working with them and actually building that barrier fencing. From our perspective we have invested significantly, as a percentage of our budget, in Riding Mountain.

Clearly, I think the solution to this issue is one of multi-stakeholder involvement, and all various components of the federal and provincial government and the private industry working together to try to achieve the objective.

Mrs. Rose-Marie Ur: I appreciate that. I certainly agree. There's no one more respectful of a national park than me. But I think we also have to realize we're both neighbours. As much as we like animals and for our families to see all these animals in nature, or in natural surroundings, I think it's imperative we have a vital industry that depends on both of us being good neighbours.

Could you tell me the date we lost our TB-free status? I'm not aware of that.

Hon. Sheila Copps: It's something that comes through Agriculture Canada. We're not involved with that.

Mrs. Rose-Marie Ur: I was wondering.

Thank you. I'll pass if I have any time left.

The Chair: Mr. Borotsik, seven minutes.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman.

First of all, Madam Minister, welcome. You speak to your Parks Canada and Heritage portfolio with the same passion as we do to agriculture.

Sometimes, Madam Minister, you get one side of the story and perhaps not the other side. That's why we thank you for coming here. We love to give you the other side of the story.

Help me. Maybe I was wrong in hearing, but I think you said that in your opinion Parks Canada was one of the single largest economic engines in our riding. Did you say that?

Hon. Sheila Copps: In the country, actually.

Mr. Rick Borotsik: In the country.

Hon. Sheila Copps: In the country, because if you look at the role of tourism, one of the reasons that so many people come to Canada on visits is because they're first drawn by the national parks system.

Mr. Rick Borotsik: I don't dispute that. I have a national park north of me, not in my riding. However, I would have to certainly agree with Mrs. Ur--

Hon. Sheila Copps: I was talking actually, Rick, not just about the parks but about the parks and historic sites. So it would include not just the parks system but also the historic site system together.

¿ (0940)

Mr. Rick Borotsik: The beef industry in Manitoba is much larger than what the economic impact would be for Riding Mountain. I want that message sent very loudly. We have a huge impact right now, particularly with them taking our TB-free status away from us. We have impacts with our exports, our trade with the United States, which is very important.

Madam Minister, have you taken this issue to the cabinet table at all? Is the cabinet aware of this?

Hon. Sheila Copps: No.

Mr. Rick Borotsik: You have not.

Hon. Sheila Copps: No. Normally what would happen--and this goes back to the question that was posed a couple of years ago in the House--when there's a problem identified like the problem of the TB potential being transmitted between the cattle and the elk....

There was a group established, which included the stakeholders of Agriculture Canada, Agriculture Manitoba, Natural Resources Manitoba, and Parks Canada. That group was put together some years ago. The idea of the group was to put the best brains around the table who are in the business of obviously protecting cattle and, at the same time, in the business of figuring out how it's transmitted. They were to make a recommendation.

I think the first question on that in the House came up a year and a half ago on that, and what I said was, whatever needs to be done, we will do it.

Mr. Rick Borotsik: Thank you. That's a great segue to my next question. First, I should note that Mr. Latourelle, by the way, has been here speaking the right talk, and we appreciate that.

But if that group comes forward and says there is a need for a cull of that herd, would you then recommend that to your cabinet, and would that take place?

Hon. Sheila Copps: Absolutely.

Mr. Rick Borotsik: I see.

Hon. Sheila Copps: In fact, the reason I spend a little bit of time on the legislation is that the legislation now is such that it is not a cabinet decision to make a scientific action.

Mr. Rick Borotsik: It's parliamentary.

Hon. Sheila Copps: It's actually a parliamentary decision.

Mr. Rick Borotsik: But I'd like your answer. That's on the record. I appreciate it. If we can get Mr. Latourelle's group to say that the only thing we can do to prevent this is cull, then that recommendation will come forward.

I have another question aside from tuberculosis. A lot of my constituents go to Riding Mountain National Park for the summertime. There is a new development plan, a new development agreement, that has been agreed to by the park but that has not been endorsed by your office as yet. There are some people up there who would love to be able to develop the new plans. Can you, and would you, see that development plan is signed and off your desk and in place for this year? Is that a possibility?

Hon. Sheila Copps: Absolutely. I think one of the reasons I wanted to do the overall advance is that most people don't realize the complexities that take place in every single park. We have 39 management plans that I have to approve but that are based on sound science, etc. So, yes.

Mr. Rick Borotsik: This one is based on sound science, it is approved, and it's simply a matter of being implemented. So if you could do that, a lot of my people would be extremely happy about it.

Mr. Latourelle, are you comfortable that the 150 test animals are sufficient to give you the proper base in science, or are you considering expanding those 150 test animals--maybe not even this year, but next year?

Mr. Alan Latourelle: The commitment I made and what I shared with the committee was for this year. Clearly, the program will continue. I'm looking for the advisory committee to come up with some consensus recommendations.

Mr. Rick Borotsik: Do you mean the advisory committee?

Mr. Alan Latourelle: It's the chair of the biosphere reserve. The Parks Canada superintendent is a participant in the committee, but in fact--

Mr. Rick Borotsik: But would the chair of the biosphere reserve--and don't take this the wrong way--be more of an environmentalist, perhaps?

Mr. Alan Latourelle: No, he is a farmer. I've met with him. In fact, he appeared before this committee

Hon. Sheila Copps: He's a rancher.

Mr. Rick Borotsik: Perfect.

The Chair: Thank you, Mr. Borotsik.

We'll move to Mr. Plamondon.

[Translation]

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ): You spoke of the economic impacts generated by Parks Canada. Could you tell me how many parks there are in Quebec, and how many there are, in total, in Canada?

Hon. Sheila Copps: We have not established any parks in Quebec for the past 30 years because the government of this province refuses to do so. They do not want to cede land to establish national parks. The last park we created was the Forillon Park; if I'm not mistaken, it was in 1972.

Mr. Louis Plamondon: How many are there, in total, in Canada?

Hon. Sheila Copps: There are 39 parks in Canada, including three in Quebec which were established before 1972. But if you want to create more, I'm at your disposal. I'm trying to do that.

Mr. Louis Plamondon: I don't want to open a debate on this issue, but it's clear that your conditions are unacceptable to Quebec. All political parties in power in Quebec have always refused to cede land, as a provincial law forbids ceding land to any government whatever the reason.

The fact that you do not want to establish parks in Quebec in compliance with Quebec legislation indicates to me that this is only stubbornness on your part. The Liberal Party and the Parti québécois, which have both been in power for about 15 years, have always refused to cede land to the Canadian government, whether it be for parks or drilling, for example.

One way or the other, less than 10% of parks are located in Quebec. You said that parks generate enormous financial impacts. This means that Quebec financially contributes to building parks across Canada but does not benefit from the financial impacts because the Canadian government is too stubborn to comply with a Quebec law.

¿ (0945)

Hon. Sheila Copps: Currently, expenses per capita in Quebec are higher than in Ontario, for example.

I spoke earlier of parks, and I included historical sites in this. Québec City, for example, as a historical heritage city, receives from Parks Canada and other historical agencies approximately $25 million per year. I don't want to tell you how far we can go to improve heritage across Canada. When a national park is created, the land must be ceded to the government of Canada.

Let's take the example of the last park we began to develop in the Nunavut Territory. At the beginning, for the same reasons, the Innu Aboriginal people refused to cede their land. However, we had negotiations. We felt that to manage the park and protect the environment, we had to be the owner.

It has nothing to do with stubbornness; this is part of the Canada National Parks Act, which was enacted by the Canadian Parliament three years ago. This Act creates a management framework for environmental and other issues.

But I can assure you, Mr. Plamondon, that you are not deprived of Parks Canada investments; it's quite the opposite. The example of the Lachine Canal can confirm this. My province, Ontario, receives much less funds.

[English]

The Chair: Short question.

[Translation]

Mr. Louis Plamondon: Okay.

I say that you can respect the territory and conclude the agreements you need to manage the park or do what you want to do in scientific or other areas. But the fact remains that the federal government has always had this desire to define national standards. We see it today in health care, education, agriculture, everywhere. They demonstrate no flexibility for the regions of Quebec that do things differently and have different visions of management or their territory.

In 30 years of Quebec government, no matter what the political colour of the government, no Quebec land has ever been ceded. The three parties in the current campaign, no matter which party wins, will never cede Quebec land, because it is part of our heritage. We have never accepted that, but we have always accepted agreements with the government in terms of potential investments or the management of activities, whatever they may be.

In closing, I will address the wapiti issue. You stated that if scientists recommended it, total slaughtering could be achieved. As regards the wapiti herds in Quebec, do your studies include data that establish links with tuberculosis? Is it also spread among the few herds there are in Quebec?

¿ (0950)

M. Alan Latourelle: I have no information about the wapiti in Quebec, but if there were challenges relating to national parks, I would certainly know. No such challenges have been identified.

[English]

The Chair: Thank you very much, Mr. Plamondon.

Mr. Eyking, you can ask a very short question. I'm trying to get a few short questions in, then we'll go back to Mr. Anderson and then Mr. Borotsik for our closing questions.

Mr. Mark Eyking (Sydney—Victoria, Lib.): Thank you, Mr. Chairman. Thank you for coming, Madam Minister.

In your presentation, it's very clear that your department has a very large stake in rural Canada. There's a lot of responsibility in the amount of land and animals that are under your watch.

As we know, the agricultural community is also a very large stakeholder in rural Canada. In order for both to coexist, there has to be a bit of responsibility in how we manage and monitor our livestock and whatnot. It's a lot easier for a farmer, of course, to have his animals all in the barn monitoring them, or in the pasture.

It looks like you have a grip on what's happening down there in the situation in Manitoba, but I'm also concerned about the rest of the parks systems across Canada. Are there working groups, or response teams, dealing with potential problems? Say, if there were a lot of waterfowl in a certain area and there were also poultry operations, do you encourage working groups, and are there working groups dealing with that?

Or are we more reactive here and not more proactive than other systems? I want to know if your superintendents of the parks are engaged in potential stuff. I would like you to talk a little bit about that.

Hon. Sheila Copps: Obviously what we try to do is build partnerships. That's the way we've approached the management of this issue.

I think there has been an impression left that we've detached ourselves from the problem. In fact, from the beginning of the problem we said, let's get together with the various partners and figure out a good science solution. That's what you have to do.

Frankly, when there are any issues, even in terms of, I think, some of the issues that agriculture faces vis-à-vis game farms versus domesticated herds, genetically modified organisms versus natural organisms, obviously there are lots of science issues that face the community that we would like to address in a constructive way. Any time there's an issue that involves Parks Canada, we obviously have scientists who want to work with the other partners for the solution. It's in everybody's interest to cohabit our country in a positive way.

Mr. Mark Eyking: I was thinking, for instance, of your wardens and people who are out there seeing animals all the time, and how much they're getting educated on potential things to look out for, diseases and problems, and if there's a dead animal. Is it right through the system that the thing is--

Hon. Sheila Copps: That's why I spent a little bit of time on the new legislation, because up until 1999 each park was operating on the basis of local operations without a science overlay. When we brought in the new Canada Parks legislation, which really took a look at Banff Bow Valley and which also took a look at Jacques Gérin's findings.... Jacques Gérin's findings showed that a number of the parks are under huge stress. It's not just stress from transmittable viruses, but also stress from general human expansion.

If you look at Canmore, for example, which has exploded in the last few years, it obviously has put some stress on the neighbouring park. So what we did was create an overlay, which is the new overlay of ecological integrity, and we have a team of scientists who work on science solutions.

So how that should operate, for example, is if there's a problem identified by a park warden, that warden will have immediate access to science through the ecological integrity division of Parks Canada. But that division should also be working with other stakeholders, because there are a lot of people working in Agriculture Canada on the science of how tuberculosis is transmitted.

I'm a positive test for TB myself. As a kid you went around and had those tests, and as far as I know I've never actually given it to anybody, but if you tested me I'm actually positive. There was an eradication program in the 1960s that was supposed to deal with that and people thought it was completely eradicated and now the WHO has discovered that's no longer the case.

Therefore, these are pretty complex issue, and what we're trying to do is work with other partners to find the good solutions and at the same time protect the science, because if there is a widespread transmission of a virus that affects the cattle herds across Manitoba, that's not good for any animal. Whether they're domesticated animals or wild animals, we want to try to minimize the spread of disease.

¿ (0955)

The Chair: Thank you, Ms. Copps.

We then move to Mr. Anderson for two minutes, very short, then to Mr. Borotsik to close.

Mr. David Anderson (Cypress Hills—Grasslands, Canadian Alliance): I need more than two minutes, Mr. Chair.

The Chair: I'm going to give you two minutes.

Mr. David Anderson: Mr. Latourelle, 10% of the animals you've tested you've put down because the tests were inconclusive. I have the impression that you're bound and determined that you're not going to find positive tests on your animals. What does “inconclusive” mean? What are you doing so that they're inconclusive?

Mr. Alan Latourelle: Inclusive is based on the testing so far. We have not been able to confirm that they are not TB positive, so basically, using the precautionary principle, we have put them down. We are now doing the testing in the lab to get a confirmation if they are positive or not.

Mr. David Anderson: I want to talk a little bit about ecological integrity. We have a foreign disease in the elk herd in the park. Ecological integrity basically means that if you're going to maintain what was there before, you should wipe the herd out; then you should leave the animals out of the park long enough that the herd is gone and reintroduce animals to the herd. If you want to regain ecological integrity, that's one option.

Another alternative that's been suggested, particularly by the ranchers who've come to the committee, is that the herd should be thinned out, culled, so that the herd is thin enough that it isn't then transmitting the disease within itself and to the cattle.

The choice I find you've taken here--I don't know that you understand the seriousness of this problem--is basically to test elk, do nothing, and then to set up barrier fencing, which, if you know anything about it, is really of little use in stopping the transmission of the diseases.

So I want to ask a question. How is it respecting ecological integrity to leave a foreign disease in that herd and then to allow that herd to continue to propagate that disease when it's a foreign, unnatural, introduced disease to the herd in your park?

Hon. Sheila Copps: As I said before, if you go back to the study of brucellosis, which attacked the buffalo herd in Wood Buffalo during the time I was the critic on the environment for the Liberal Party, which was, I think, in the late 1980s, at that time a number of options were presented. One was a complete cull of the herd, and one was a partial cull. The scientists got together with all the other scientists and agreed on a route, which was a partial cull. My understanding, and this is 15 years later, is that this scientific approach was successful.

One of the things we've been able to do more recently, which I think has been a positive thing because the herd of buffalo has multiplied so much, is to provide herd yearlings. I don't know if that's the proper word for buffalo. When they're born, we've been able to provide some for some of the ranchers. So we've actually grown the buffalo herd in Wood Buffalo. In fact, we've created an economic opportunity for ranchers who are raising buffalo. We followed the science of what was recommended on that issue in the 1980s, and the science was that a partial cull was what was going to work.

I go back to the statement I made to Garry in the House a year and a half ago. I'm not a scientist. I wouldn't dare be the person making the decision on what the scientific approach should be. I characterize it as the same approach to any kind of viral management. This is a viral management issue, which should be decided by the scientists. I will proceed with whatever solution they provide. I don't have a degree in biology, animal management, or animal husbandry. If I were the one making the decision, you should really be scared.

Mr. David Anderson: Would 10 years of failure indicate to you that maybe you're getting bad advice from your scientists and your officials? The program has completely failed, particularly in Riding Mountain park.

Hon. Sheila Copps: You have to understand that the committee is not a committee of Parks Canada. There are a whole bunch of different stakeholders on the committee. The stakeholders include the agriculture--

À (1000)

Mr. David Anderson: That is the main problem.

The Chair: Allow Ms. Copps to finish.

Hon. Sheila Copps: The natural animals are identified as the main problem.

The committee includes Parks Canada, the Department of Agriculture of Manitoba, the Department of Agriculture of the Government of Canada, and the natural resources section of the Government of Manitoba. From what Mr. Latourelle said, they are being successful in isolating those that have the virus and putting them down.

I'm not a scientist. My understanding from what you've heard in your hearings from various and sundry people is that they're trying to bring the best science forward. I'd like to protect the best science, because I want to find a solution too. Why would it be useful for Parks Canada to allow a disease to run free that would wipe out the whole natural species? It doesn't make sense.

Mr. David Anderson: That's a good question, because you're identified by the other stakeholders as the main impediment to solving this problem.

Hon. Sheila Copps: Me?

Mr. David Anderson: Your department.

The Chair: Mr. Anderson, we're out of time--

Mr. Howard Hilstrom: What about ministerial responsibility, Madam Copps?

The Chair: Mr. Hilstrom, we're out of time.

Let me be allowed to conclude the meeting.

Hon. Sheila Copps: My responsibility is to take the scientific recommendation and implement it. My understanding at the moment is that the scientific recommendation is that we have a management plan that has all the stakeholders at the table, including the Government of Manitoba, the Government of Canada, the agricultural community, and the natural resources community, and we're implementing the recommendations.

The Chair: Thank you, Ms. Copps. Thank you, Mr. Latourelle, for appearing.

This is a very timely subject. It's something that is probably not going to end with our discussions this morning. We will be forwarding a report with regard to the hearings we've held and the testimony we've received.

Thank you, members, for participating in a very interesting and lively debate. We will adjourn for just a short time and then go in camera for the next hour.

This concludes this portion of the meeting.

[Proceedings continue in camera]

Á (1100)

The Chair: Ladies and gentlemen, I am going to call the public meeting to order. As you well know by your program today, we have a number of witnesses looking at the whole issue of country-of-origin labelling.

We have first of all with us this morning, from the Department of Agriculture and Agri-Food, Mark Corey, assistant deputy minister, market and industry services branch. We have with us Ian Thomson, director of western hemisphere trade policy division, international trade policy directorate. And we have with us Alan Schlachter, who is the trade policy analyst, western hemisphere trade policy division, also from the international trade policy directorate.

We also have with us at the table Phil Calvert, and perhaps he will tell us who he's representing.

Á (1105)

Mr. Phil Calvert (Deputy Director, Technical Barriers and Regulations Division, Department of Foreign Affairs and International Trade): Mr. Chair, I'm actually with the Department of Foreign Affairs and International Trade, the technical barriers and regulations division.

The Chair: Thank you, and welcome to the meeting.

We want to get underway. We ask that you speak succinctly and not too quickly, yet in such a way that we can accommodate our time. We have translation, but don't touch the mikes. The mikes are handled by a person who is responsible for doing that.

We are ready to begin. We'll listen to your testimony. And how many people will be speaking? We should know that.

Mr. Mark Corey (Assistant Deputy Minister, Market and Industry Services Branch, Department of Agriculture and Agri-Food): Mr. Chair, it'll be just me and Mr. Thomson, and we will take about 10 minutes.

The Chair: That's wonderful. You're on.

Mr. Corey, first of all.

Mr. Mark Corey: Let me begin. On April 9 of last year, before the U.S. Farm Bill became law, Minister Vanclief travelled to Washington to warn the United States that, “The bill's proposed country-of-origin labelling would interfere with an already integrated North American market, create no added benefit for food safety, and would add significant and costly burdens on retailers and others in the marketing system and on consumers.” In short, Canada has said from the outset that country-of-origin labelling, or COOL, is a bad idea, period, and we will continue to....

After COOL became law, even U.S. Department of Agriculture Secretary Ann Veneman expressed her disappointment. She was quoted on May 23, 2002, in the Washington-based Congress Daily as saying that the country-of-origin labelling “was something the administration did not support.” She said, “It's going to be hard to administer. It's going to be hard to identify a beef product that has been born and raised in the United States. It's going to be a very considered process.”

What we'd like to do today is to take you through four different things. First, we will deal with the changes specifically that this measure will bring on country-of-origin labelling. Secondly, we'll talk about some of the provisions that have come out now that we're in the voluntary phase and some of the things that they're requiring industry to do, if they want to label voluntarily. Thirdly, we'll discuss the anticipated impacts of the measure. And finally, we will talk about what we are doing over the next year to continue to point out the shortcomings of this approach.

First, the Farm Bill introduces a number of new requirements in country-of-origin labelling. Prior to the Farm Bill, COOL for meat was required only on imported prepackaged products. The country where an animal was slaughtered or processed generally determined the country of origin. The Farm Bill now requires COOL for all meat sold at the retail level. And to qualify as U.S. origin, it must come from animals that have been born, raised, and slaughtered in the U.S. If any of these conditions are not met, they must be declared on the retail label.

[Translation]

Similarly, prior to the U.S. Farm Bill, COL requirements only applied to imported prepackaged fish. Today, the U.S. Farm Bill applies them to all fish sold at retail, including bulk, and the label must also indicate whether it is wild or farm-raised fish.

To be considered a product of the United States, wild fish must have been harvested in American waters or by a ship flying the American flag and must be processed in the United States or on board a ship flying the American flag.

In the case of farm-raised fish, it must be hatched, raised, harvested and processed in the United States. If one of these steps was not performed in the United States, it must be indicated on the retail label. Prior to the U.S. Farm Bill, COL requirements only applied, in the case of fruits and vegetables, to imported prepackaged produce, and the country of origin was determined by the place they were grown.

The U.S. Farm Bill requirements now apply to all vegetables sold at retail, including bulk vegetables. To be considered American produce, they must be grown and processed in the United States. Again, if one of these steps was not performed in the United States, it must be indicated on the label.

[English]

There are a number of what we would consider to be fairly odd provisions in the country-of-origin labelling guidelines that apply now in the voluntary period.

Retailers must label products only if they sell fruit and vegetables with an annual value of more than $230,000 U.S. Those who don't sell fruit and vegetables or those who sell less than that dollar amount are exempt from country-of-origin labelling. Thus the effective logic of the regulations is that consumers apparently want to know where red meat and fish come from, but only if they buy it in a store that also sells a lot of produce. If they buy it at a butcher shop or a fish market, apparently they're no longer interested. If they eat it at a restaurant, apparently they're also unconcerned, because restaurants are exempt from country-of-origin labelling. Poultry meat is not included in the law, so U.S. consumers apparently are concerned where their beef comes from, but not their chicken.

There are similarly odd provisions when we look at the labelling of ground meat or blended products. Ground meat has to indicate the country of origin, but if a processor shapes the same ground meat into a patty, or if they add salt or water, then consumers apparently no longer want to know where the product comes from, because these products are exempt from COOL.

For salad, or a mixture of frozen peas and carrots, however, the label has to detail the origin of each different vegetable, as well as list the countries of origin--it may be from several different countries--in order of prominence by weight.

These are some of the factors that have led to a situation where no one we're aware of has implemented the new COOL labelling during the voluntary phase so far.

I'd now like to call on Ian Thomson and ask him to address the likely impact and go over our efforts in working with what we consider to be a growing coalition against this labelling and to talk about what we plan to do in the next year.

Á (1110)

The Chair: Mr. Thomson.

[Translation]

M. Ian Thomson (directeur, Division de la politique commerciale de l'hémisphère occidental, Direction des politiques de commerce international, ministère de l'Agriculture et de l'Agroalimentaire): Thank you, Mark. Good morning everybody.

Since the conclusion of the Canada-US Free Trade Agreement, our agri-food markets have become highly integrated. For example, calves or hogs can cross the border several times, both ways, during their lives, based on the prices of feed grain or livestock, and other commercial factors. With the new COL bill, these transfers will be impossible because of segregation, traceability and labelling requirements.

As Mark noted, even before the U.S. Farm Bill was enacted, Canada had expressed its opposition at the highest level. Minister Vanclief raised the issue with the Secretary of Agriculture, Ms. Veneman, and the U.S. Trade Representative, Mr. Zoellick. The Deputy Prime Minister, Mr. Manley, raised the issue with Vice President Cheney, and the Prime Minister raised the issue with President Bush.

[English]

On July 9, 2002, the Government of Canada, in consultation with industry and the provinces, submitted comments to the U.S. Department of Agriculture. Similarly, in January 2003 comments were submitted on the utility of the interim voluntary guidelines and on a USDA proposal for information-gathering related to the drafting of the mandatory regulations.

Other targeted advocacy activities in the U.S. have included Canada's participation in the tri-national accord meeting in May 2002 in Nogales, Arizona, and the meeting in Chicago organized by the province-state advisory group in July 2002, which was dedicated specifically to COOL.

There seems to be a growing level of awareness and discontent with the unintended consequences of COOL. The American Meat Institute says, “USDA's guidance for implementation of mandatory country-of-origin labelling for meat products is the most costly, cumbersome and complex labelling proposal in history”. A headline outlining the Food Marketing Institute's reaction reads, “Total Costs for Country-of-Origin Labeling Law Will Far Exceed USDA Estimates”. The American Frozen Food Institute says, “The new marking scheme is seriously broken. It needs to be fixed”. Tyson Food Inc. says the law would be too expensive to administer and has called for its repeal. And Wal-Mart has added that the COOL law “is a really terrible piece of legislation. It is a non-tariff trade barrier passed to appease a few regional interests in the U.S.”

We will continue to oppose this legislation. On April 9--tomorrow--the comment period on the COOL guidelines closes, after which USDA will be drafting regulations for implementation of the mandatory phase. Perhaps as early as this fall, draft regulations will be published for public comment.

The fact is that COOL is U.S. law and only Congress can change that law. The federal government, in cooperation with industry and the provinces, is continuing to focus its efforts on advocacy activities to marshall the best possible case for why U.S. stakeholders should demand the repeal of COOL.

In response to the growing opposition, the USDA recently announced it will conduct a series of information and listening sessions to gather further input on this issue. We are working with industry, the provinces, and Mexico to inform Americans of what is at stake. We want to ensure that the overwhelming message at these meetings and to Congress is that COOL should be repealed before it becomes mandatory. If COOL is made mandatory, we will then consider our options under NAFTA and the World Trade Organization, and decisions would of course be made by ministers. Case development is ongoing.

Thank you.

Á (1115)

The Chair: Thank you very much for a very good presentation. I think you've given us a lot of reason to ask questions.

We'll begin our questioning with Mr. Hilstrom, for seven minutes.

Mr. Howard Hilstrom: Thank you, Mr. Chairman, and thank you, gentlemen, for those good presentations.

On the relationship with the people you contact down there at whatever level in the USDA and other U.S. administration bureaucrats and politicians, are your calls being returned and are you getting a warm reception?

We're getting a lot of complaints from business groups saying that they have lost contracts down in the United States. The vegetable growers, Peak of the Market, in Manitoba is one example. What's the reception like as you try to work on these issues with the U.S. government?

Mr. Mark Corey: Yes, I could actually talk about that. We've had a number of meetings. For example, we had a tri-national meeting in Nogales, Arizona. It was between Canada, United States, and Mexico. This would have been a year ago. When we went through the details of what the impact of this was likely to be, particularly, for example, in the beef and pork sector--they're stuck in a way now, because it is law and USDA is bound to put it into force--they listened very carefully, I think, to the arguments.

We had a second session in Chicago. Again, both included people from the province and state level as well. I think you could see the mood of the meeting change as we started to go through the impact on the beef and pork industry in the cross-border movement of cattle and hogs, to the point where, again, I think you could say that they're listening very carefully to it right now.

We've been very careful, I think, to keep good working relationships with our U.S. counterparts because we know that if this legislation is going to be changed and repealed, it's something that will be done through the force of argument and logic, and that's really where I think we've focused our efforts.

Mr. Howard Hilstrom: That's really good to hear, because this is tremendously important to all of us right across the country.

When you talked about the United States and the American Meat Institute, pointing out, among other things, that the cost was going to be much more than the USDA estimated, it sounded an awful lot like the Liberal gun bill we're trying to put in here in Canada. These things run on an itinerary of their own and just go out of control.

You mentioned fish. Have you met with the Freshwater Fish Marketing Corporation in Winnipeg on the Ontario Great Lakes fishery on this issue? What impact is it going to have on them?

Mr. Ian Thomson: As I understand it, the Freshwater Fish Marketing Corporation has been part of our consultations, as has the Fisheries Council of Canada.

Mr. Howard Hilstrom: Okay. In addition to that, what impact, in terms of dollar and cents, if it goes ahead as written and is implemented in 2004, will it have on the cattle industry, the hog industry, and the fish industry?

Mr. Ian Thomson: We're working closely with industry to better understand and counter the COOL measure in terms of its potential negative impacts on the sector. As you can appreciate, I'm sure, this work is complicated by the fact that we're dealing with a large, complex, and integrated market, and especially with the uncertainty as to what the final regulation may require. Our focus to date has been on our efforts to ensure that the law is repealed.

Á (1120)

Mr. Howard Hilstrom: Have plans been made up? If this goes ahead and the U.S. stops importing live beef--I'll use that as the best example--for feeders and for slaughter, what contingency plans have you and the government been putting forward for maybe increasing our slaughter capability here in Canada? Have there been any discussions on that, so we can export packaged meat labelled in Canada?

Mr. Mark Corey: We have been doing a lot of consultations, particularly with the beef and pork industry on this, as we think they're the ones that will be most affected.

For the beef industry--and I believe they're appearing after us today, so you can discuss it in further detail--there is a strategy involving a number of elements. The first is advocacy, which is what we've talked largely about today, to try to head it off. The second involves things like streaming. For example, if Canadian beef does not have to be labelled in the restaurant sector, some of the larger companies are talking about the possibility of streaming Canadian beef into the restaurant sector and streaming U.S. beef then into the retail sector, so they don't have to go through this whole process of tracking and tracing, and things like that.

Mr. Howard Hilstrom: Would that streaming be done in the U.S. slaughterhouses?

Mr. Mark Corey: Again, the companies would actually do that. It would be a matter of their sourcing their beef.

On the third thing we're doing, our minister announced last June $175 million over five years for new activities on the international side. Some of that money is going to increase advocacy efforts in the U.S., particularly on this issue. Some of it is going to market diversification. We're again working with some of the industries, trying to make sure we can diversify sales outside of the U.S. if that's necessary, and trying to make sure we're streaming product in the U.S. in a way that it can be accepted and dealt with economically. But we will still be focusing a lot in the next year on trying to get this coalition going--gathering strength and making sure this does not become mandatory. That's still our primary focus.

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

The Chair: Thank you, Mr. Hilstrom.

We'll move to Mr. Plamondon for seven minutes.

[Translation]

Mr. Louis Plamondon: What proportion of the Canadian production of beef and cattle, pork, vegetables and fish is currently exported to the United States?

[English]

Mr. Alan Schlachter (Trade Policy Analyst, Western Hemisphere Trade Policy Division, International Trade Policy Directorate, Department of Agriculture and Agri-Food): As has been mentioned, both the beef and the pork people will be here later this afternoon, but I have approximate numbers for beef and pork. If we look at our total production, 55% of our beef, in one way or another, is exported to the U.S. For pork it is about 35%. I do not have numbers for fish, seafood, and vegetables, but we can get those.

[Translation]

Mr. Louis Plamondon: But in the case of vegetables and fish, it must not be a very large proportion.

M. Ian Thomson: I think the United States is the main market for our fish exports. So I'm sure it's significant in this sector.

Mr. Louis Plamondon: As processed meat will not be affected by this legislation, will there be much more processing in Canada, which would be beneficial to the Canadian economy? Is it not preferable to process our products here and then export them, rather than directly export our products for the Americans to process them?

M. Ian Thomson: It's probably possible, but it's very difficult to know exactly what will happen before the bill is definitively adopted. We have to see how it will be applied. Many things could happen, including what you suggest and what was suggested earlier by Mark.

Á (1125)

Mr. Louis Plamondon: Why is poultry exempted?

M. Ian Thomson: Apparently, American consumers don't care about where their chicken comes from. Several sectors are not covered by the required labelling, including grains, oilseeds and poultry.

Mr. Louis Plamondon: According to you, what is the likelihood that Canada lodge a challenge under NAFTA or the WTO? On what specific points could we fight this?

[English]

The Chair: Mr. Calvert.

Mr. Phil Calvert: Thank you. First of all, it is important to have the mandatory laws in place before we launch a legal challenge. It's very difficult to launch a challenge on this without having the regulations in place and evidence of the impact of these regulations on our trade with the United States. So the regulations would come into place in the autumn of 2004, when the voluntary guidelines would become mandatory. Then it would be a matter of assembling the information we need to ensure that we have a good case in terms of understanding the impact on our industry and making good legal arguments, to make sure our case was well received in the WTO.

That said, we are still raising the issue in the WTO now. For example, during the meetings on technical barriers to trade there will be an opportunity to raise our concerns about it and try to garner the support of other concerned countries. So we will continue to do that in these meetings to draw attention to the problems with this legislation or guidelines and the trade impact they could have.

Similarly, we will be meeting later this month in Ottawa with the NAFTA committee on standards-related measures. At that time we'll also be raising this issue with the United States and trying to again advocate for our concerns.

The Chair: Thank you very much, Mr. Calvert.

We'll now move to Mr. Binet for seven minutes.

[Translation]

Mr. Gérard Binet (Frontenac—Mégantic, Lib.): Thank you, Mr. Chairman.

Good morning everybody.

I was listening to Mr. Plamondon's question on chicken, and I was not satisfied with the answer I heard. How can it be explained that there is not as much protectionism with chicken as there is with beef? This is obviously a big market. Is it because there is no competition in the case of chicken? Is the chicken industry not important enough for...?

M. Mark Corey: It's simply inexplicable. We raised questions on this issue and asked why there were exemptions for chicken. There are no reasons, as far as we could see. So to us, it's inexplicable.

Mr. Gérard Binet: This means there is a better future in chicken than...

M. Mark Corey: It means we cannot foresee specific impacts right now. For the moment, the guidelines indicate that it applies to all products, except chicken. There are other exemptions which, in our view, are often inexplicable, and it's very hard to know the reasons. We asked questions about this, but we did not get satisfactory answers.

Á (1130)

Mr. Gérard Binet: Thank you.

[English]

The Chair: Are you finished, Mr. Binet?

Mr. Duplain.

[Translation]

Mr. Claude Duplain: The issue of labelling cost overrun was raised. There are groups who wonder how much this labelling is going to cost. You did not give an order of this cost overrun. Are the costs provided by the associations actual costs? Were the actual costs really determined, or are these totally random figures that may not be relevant at all?

M. Mark Corey: As we mentioned, at the moment, it is very difficult to be accurate and determine precise costs, because we don't have the final guidelines yet.

[English]

There are some groups as well, as we've mentioned and you've mentioned, that have done some preliminary estimates. I think they've all qualified them as preliminary. The cattlemen, for example, have done estimates on what they feel it might cost their industry, and the pork industry has done the same.

Interestingly enough, the USDA did an estimate on just the bookkeeping costs in the United States.

[Translation]

According to their estimations, administrative costs would reach approximately $2 billion just for implementing this system in the United States, not counting economic and other costs. We all know that this is a costly measure. But we cannot provide the exact costs for the moment, because we don't have the final guidelines regarding mandatory rules.

Mr. Claude Duplain: Do we have enough information to challenge? What is the likelihood that Canada officially challenge this?

M. Phil Calvert: In the end, this decision will be made by the minister, but we must have all the information on the impact of the mandatory regulations and guidelines. I believe the regulations will be implemented in the fall of 2004. At that time, we can begin to assess the impact on Canada-US trade, and we will then be able to decide whether we should lodge a complaint under the WTO or not.

[English]

The Chair: There's a little time left, so I'm just going to take this opportunity.

Mr. Corey, you mentioned that there was a $2 billion cost attachment to this initiative. I'm wondering whether that cost is being passed on to the consumer, to your knowledge, or whether it's being borne by the primary producer. If so, what have been the comments of the primary producers on that issue?

Mr. Mark Corey: Mr. Chairman, it's actually very hard to determine who will pay the costs. It's a subject of some debate right now.

Interestingly enough, one of the provisions that has upset the food processing industry in the United States is that one of the things that could help make this system actually function in the U.S. is a tracking and tracing system. The Farm Bill specifically prohibited USDA from developing a mandatory tracking and tracing system. Again, we're not quite sure exactly why that was, but one of the tools they could have used to help develop it has been explicitly forbidden by the Farm Bill. According to their study, if they do go forward, the $2 billion are just administrative costs in the U.S. alone, which somebody would have to absorb. At this point, I really don't think we know yet what the percentage split between producers, processors, and consumers will be.

The Chair: Thank you, Mr. Corey.

I will move to Mr. Borotsik for seven minutes.

Mr. Rick Borotsik: Thank you, Mr. Chairman.

I have to admit, Mr. Corey, and gentlemen, that you have not instilled a lot of confidence in me or in the department right now in dealing with the U.S. Farm Bill.

The U.S. Farm Bill didn't come out of the blue. We had an understanding as to what was in the Farm Bill long before it was enacted. Prior to the U.S. Farm Bill being signed, what did your department do to try to get this particular inclusion out of the bill, particularly the country-of-origin labelling? Rather than just sit back and say, well, we're going to try to get it out now....

In fact, Mr. Corey, you said a couple of times that your efforts will be to repeal the law. I've always found that it's been a lot easier to get it out of a bill before you have to try to repeal the law. What did you do prior the Farm Bill being signed?

Á (1135)

Mr. Mark Corey: I'll start off, and then I'll pass it over to my colleague from Foreign Affairs, who can comment more on our efforts through the embassy.

I would say that Canada was very active on this file from the moment that country-of-origin labelling was discussed in the U.S. Congress and Senate. Our minister made a number of trips to the U.S. At one of the other committees, I believe you had asked us for a list, which we did get. We made a number of representations on it, and we were also active with our counterparts in the USDA. The embassy was quite active.

I was wondering, Phil, if you could talk a little bit more about some of the representations we made in Washington.

Mr. Phil Calvert: Since we saw this thing coming down the line, our people in Washington have been raising this issue with the USDA, the USTR, and other American agencies to put forth our concerns and arguments about this issue. Not only that, but we've also been working with domestic players in the United States who are also concerned about this.

Mr. Rick Borotsik: Yes, you've been there, and you've mentioned that before. The processors, and the producers to a great extent, and the administration don't want the law, but it's in place.

Why did you fail to get it out in the first place, and why are you so confident that you're going to be able to repeal it now? You had all of those other people lined up with you before and you weren't able to keep it out of the bill. Why do you think you're going to be able to get it repealed from the U.S. Farm Bill now?

Mr. Mark Corey: First of all, this legislation has been passed by the U.S. government; it is not Canadian legislation.

Mr. Rick Borotsik: I understand that very well.

Mr. Mark Corey: So we don't have direct control over what gets passed and what doesn't get passed. What we can do is try to influence the legislation.

Mr. Rick Borotsik: But my point is that you had those people on your side initially.You still have them. Why do you have the confidence that you think you can get it repealed now?

Mr. Mark Corey: I think we're being very cautious and are not saying that we think it will or won't be repealed. What we're doing is focusing our efforts on trying to get information out to people, so that they will understand the impacts of it.

Mr. Rick Borotsik: You did that a number of times.

Mr. Mark Corey: When we do get that information out, as we've done at a number of trilateral meetings between Canada, the U.S., and Mexico, and people start to understand the disruption in the beef and pork industries, people start to pay very close attention to it.

I think a lot of it was passed in haste. Its impact probably wasn't fully considered, and now that they're starting to see the impact, our view is that the more we can publicize the impact, the better the chances are that people who know the impact will lose support.

Mr. Rick Borotsik: What is the financial impact on the beef industry in Canada, and what is the financial impact on the pork industry in Canada? You've just mentioned “impact” four times in that sentence. What is the impact?

Mr. Mark Corey: Again, as my colleague Mr. Thomson has said, we're really working with the industry right now to try to understand what the impact would be, but we don't have the final regulations.

Mr. Rick Borotsik: How can you say there's going to be an impact when you argue with the Americans if you don't know what the impact will be? You've just said four times that they have to know what the impact is in order to know what the impact is, but you've never told us what it is.

Mr. Mark Corey: We know, for example, in terms of the disruption for the industry it will be disruptive for cross-border trade, in particular for cattle and hogs. A lot of cross-border trade goes on. In the last 10 years the industry has become quite integrated.

Mr. Rick Borotsik: Have you done a worst-case scenario in your department as to what the impact is?

Mr. Mark Corey: We have been working with the industry. We had a round table with the beef industry a couple of weeks ago where we went through what the likely impact would be, and we went over the representations we're making in the U.S. to try to make sure we put our best case forward on this right now. But again, it's very difficult to come down with a final dollar estimate on this.

Mr. Rick Borotsik: The cattle industry have said the impact will be $92 an animal. Can you accept that as the financial impact, or do you refute that?

Mr. Mark Corey: We're doing neither. We're saying we need to get more information, and we're working closely with the cattle industry and pork industry to try to better understand exactly what the impact will be.

Again, we need to see what the final regulations will be. We're not sure exactly how the U.S. will react to these regulations, how they will be put in place, whether or not the industry will able to stream things out of the retail sector into the food service sector. There are a lot of unknowns right now and we're trying to better understand how this will work.

Á (1140)

Mr. Rick Borotsik: From what I understand right now, there are two things you're doing. You're depending on $175 million in additional marketing dollars going into agriculture to try to mitigate this. The second is you're going to try to streamline the beef and pork into the restaurants instead of into the supermarkets. As I understand it from your being here today, those are the two initiatives you're taking to try to mitigate the American farm policy on country-of-origin labelling.

Mr. Mark Corey: No, I would say the principal focus has been a number of things. It has also been on working with the industry, working with the provinces and the state governments so people will understand how disruptive this could be for both countries. This will cost the U.S. industry as well as the Canadian industry. The best way to convince the Americans to change the legislation is to point out that it's not in our national interest, but it's not in their national interest either. That's the approach we're taking.

Mr. Rick Borotsik: You use terms like logic, argument, negotiation. That logic, argument, and negotiation didn't work initially with this particular inclusion in the Farm Bill, yet now you're saying that logic, argument, and negotiation will help now.

Mr. Corey, you haven't told them what that impact is going to be on their industry because you said we can't know what that impact will be until it's implemented. So we have a catch-22 here.

As I said in my opening comments, I'm not very confident that our position going forward with the Americans right now is going to have this particular clause repealed from the legislation. You've already admitted to that. So we have some legislation that's going to be in place mandatorily in September 2004. We don't know what the cost is and we don't know how we're going to be impacted by it. I'll tell you, I'm very concerned about this piece of legislation, and you haven't helped me, Mr. Corey.

Mr. Mark Corey: I would say we're very concerned about this piece of legislation. One of the things that have changed is that a year ago the American Meat Institute was not saying this would be the most costly, cumbersome, and complex labelling proposal in history. We didn't have a number of things like the American Frozen Food Institute saying it's broken and it needs to be fixed. There is a growing coalition in the United States now that is starting to understand the difficulties with this.

Mr. Rick Borotsik: Who's in favour of it, do we know?

The Chair: All right, Mr. Borotsik. It's Mr. Anderson's turn.

Mr. Hilstrom, you're going on for five minutes.

Mr. Howard Hilstrom: Yes, I have a quick question. The cost to the Canadian cattlemen of reduced exports, of course, is lower prices and lower demand. That's the real cost, and there's no way of passing that along because the sales just aren't there.

Currently under the WTO, with New Zealand, Australia, and some other countries, we agreed to import x tonnage of beef from those countries, outside of NAFTA. Is there any plan to not give over that tonnage of beef--over quota or whatever tonnage permits from the minister to come into the country? Will we hold those other countries to the limit of what we're obligated to under the WTO for imports outside of NAFTA?

Mr. Ian Thomson: Well, Mr. Chairman, we do have obligations that we need to respect, as I'm sure you can appreciate. In light of the fact that we haven't seen the final legislation, a lot of this would be pure conjecture on my part.

We should remember that country-of-origin labelling doesn't apply only to Canada; it applies to the Mexicans, who have a beef interest in the U.S. as well as other interests, and the Australians and New Zealanders--whoever exports any of the named commodities to the U.S. So taken as a whole, it's a little difficult to piecemeal together at this point what may or may not occur in terms of trade flows and requirements.

I believe my colleague from Foreign Affairs has a comment.

Mr. Phil Calvert: In terms of strategy too, what we're trying to do now, especially by raising this in the technical barriers committee of the WTO, is to try to draw attention to and garner support for our point of view in putting more pressure on the United States to repeal these measures. It would seem to me that the best way to garner their support at this point would not be to discuss lowering their own import quotas or lowering their own imports. At this point, in addition to what we are doing domestically, I think we have to build a coalition to put external pressure on the United States. In the past, when we have raised this in the WTO, we had the support of Brazil and Argentina. New Zealand and Mexico are also quite concerned about it. At this point, I think that's going to be the focus of our work.

Á (1145)

Mr. David Anderson: I'd like to come back, as three or four members already have, to the cost to Canadian industry, particularly the beef, pork, and fish industries, as Mr. Hilstrom asked. You have the USDA analysis, and we've got some information on that too, saying that it's going to cost close to $2 billion, with $1 billion of that to be absorbed by the producers.

Have you done those cost-benefit figures or not? I see that you're not willingly giving them to us today, but have you done those for the Canadian industry?

Mr. Mark Corey: Again, Mr. Chairman, it's very difficult to come up with precise numbers at this point. We don't have the final regulations for the mandatory period. What we're working with right now are the guidelines in place for the voluntary period. Again, we're working to try to understand exactly what the impact will be. We did mention before that some preliminary work has been done, but we would not be in a position today to say with any precision what the impact of the final mandatory regulations would be.

Mr. David Anderson: How did the USDA come to their figures, then? If you used that same analysis, wouldn't you know where the Canadian industry would be?

Mr. Ian Thomson: In the Federal Register notice providing that particular information, they break it down, with $1 billion to U.S. producers; $340 million to food handlers, including packers, processors, importers, wholesalers, and distributors; and $628 million to retailers. Therefore, the total first-year costs are estimated to be about $2 billion. But I would emphasize that this is the USDA's estimate for the U.S. domestic industry's record-keeping purposes alone, to verify the labelling process that would need to be put in place.

So, no, we don't have the similar issue at hand that the U.S. is facing in terms of the accounting, accountability, and auditability that they will be required to put in place through their system.

The Chair: Your time has expired, Mr. Anderson.

We'll move to Mrs. Ur.

Mrs. Rose-Marie Ur: In your presentation this morning, I believe that Mr. Calvert stated that you're waiting for the legislation to happen in 2004, and then you'll react. Would you not be putting various case scenarios on paper and looking at them?

I can't believe that we're going to wait until the legislation is passed and then we're going to decide. This is what happened with the Farm Bill, and it was months upon months after the Farm Bill had passed, and then we're going to decide what we're going to do. I'm a little bit like Mr. Borotsik; I hope we're a little bit more a proactive than reactive. It's time we switched our mode to that proactive one, I would hope.

Mr. Mark Corey: Mr. Chair, maybe I'll start off and then I'll turn it over to my colleague.

When you look at international jurisprudence on these trade cases, we're now in a situation where we have voluntary guidelines. In voluntary guidelines, there's no forced compliance. That's probably the weakest case for us to bring right now, because it's very hard to demonstrate that there's damage in a voluntary situation with no forced compliance. We know that the jurisprudence is not strong on that.

The next step will be next fall when they publish the proposed rules for the actual mandatory period. That's the point at which we will at least have the rules to go on. When it comes into effect, that is your strongest case, because that's when you can actually demonstrate economic injury. It's unfortunate it's this way, but it's how international jurisprudence works. When you can demonstrate economic injury, that's when you have the strongest case.

Again, I would underline that we've been working very hard—but not unilaterally, because this is not a Canada-U.S. issue. There are a number of other countries, and we've been consulting particularly with Mexico and other countries who are interested in taking a case on this. We are developing cases that will be put to ministers for them to decide as the situation evolves.

Phil, maybe you can add more.

Á (1150)

Mr. Phil Calvert: Just to add to what you said, I'd say there has been quite a bit of legal analysis done on the voluntary guidelines to give us a sense of where the problems lie. For example, if we wanted to go after the United States on the national treatment obligations under article 3 of GATT, that in essence requires that there be a regulation, a law, or a requirement in place before we can actually launch a case.

Mrs. Rose-Marie Ur: I can appreciate that, but for the work done prior to that happening, you'd have a lot of the paperwork done or the research work done. I realize you can't make a challenge until there's a law to challenge, that's pretty obvious, but not to have anything prepared just in case A, B, or C happens....

Mr. Phil Calvert: No, we have this, and we are continually preparing information on this and getting our case ready. As I said, up to a certain point there's only so much we can do, and then we'll have to look again at the final regulations. It may be that the voluntary guidelines provide good information and are very similar to the final regulations that come into place, in which case we'd have our legal legwork done.

What we want to do is present a strong case, and if we go too soon, we can end up having a very weak case. That wouldn't, I think, help anyone.

Mrs. Rose-Marie Ur: Thank you.

Apparently one of the reasons this is coming in is for food safety. How can they really justify food safety if it's really allocated towards red meat and hogs and not to chickens? I would think Tyson would have a pretty strong foothold on the chicken industry. As to Wal-Mart, if they're going to listen to anyone, there may be a couple of people who would certainly pull up to the table and want to listen to their.... I can't see how they can justify saying it's for safety when so many things are left out.

Mr. Mark Corey: Mr. Chairman, that's actually a very good point. That is the point we keep making to them.

It says in the regulations that this is being put in place for the purposes of helping consumers to be better informed. We are puzzled by the fact that it applies to beef and not to chicken. We're puzzled by the fact that if you buy it in a large store that sells more than $230,000 worth of vegetables and produce, it applies, but not to butcher shops, to seafood shops, or to smaller stores. If the purpose is genuinely consumer information, you'd think consumers would want the same information no matter where they shop.

We're puzzled by the fact that if you take ground meat and sell it as ground meat, it applies, but when you shape it into patties, it doesn't apply. There are a whole lot of provisions like this, as you point out, that are raising a lot of questions with us as well. These are the questions we're raising with the U.S.

The Chair: Mr. Plamondon, you may have a very short question, and I believe there's a short question from the Alliance.

[Translation]

Mr. Louis Plamondon: Thank you, Mr. Chairman.

You raised the issue of feedlots. Certain feedlots for cattle are on both sides of the border; i.e. the animal is first fed in the United States and the feeding is then continued in Canada, or vice versa. So I don't know whether the animal is Canadian or American, or both. I assume that this is a question you will also ask.

M. Mark Corey: Mr. Chairman, this is another very good question. We rose this issue several times with the Americans. Currently, in North America, our industry is quite integrated; this is obvious when we see certain products cross the border two or more times during their lives. So it's very hard to determine.

[English]

When we were consulting with the Americans in a number of these sessions, this was one of the points we raised. We said, how will you deal with animals of mixed origin? In other words, if they cross the border a few times, are you going to start detailing the life history of each animal that goes into a product?

What they have come up with now is a situation where they're actually going to start saying that it could have been raised in Canada and then processed in the United States. They will have to be very specific on their label about this, which makes it cumbersome and complex, and it's really questionable as to how much additional information this is really going to give to consumers.

Á (1155)

[Translation]

Mr. Louis Plamondon: Do you have statistics on processed food that will not be affected by this legislation? Certain provinces export live animals, while others export them completely processed. Which provinces have the largest quantity of this processed food?

M. Mark Corey: Mr. Chairman, I'm sorry, but we don't have these numbers with us. We can however get them and provide them to the committee.

Mr. Louis Plamondon: Thank you, Mr. Chairman.

[English]

The Chair: Thank you, Mr. Plamondon.

Mr. Anderson, I think, has another short question.

Mr. David Anderson: In response to Rose-Marie's statements, I just wanted to make a statement and ask a question. When I was reading through the material, my first question was, how did the chickens escape? I think clearly the reason is that it's not a food safety issue here; it's not about consumer protection and it's not about trace-back. Given Senator Johnson's history, it's clearly a protectionist measure to try to restrict the beef and pork trade coming from Canada to the United States.

My question to you is, why haven't we treated it more aggressively as simply a trade restriction issue? It seems like we've been really nice about this thing right from the beginning, from before the bill was even passed. We haven't made a lot of noise publicly about that. Why has it not been treated that way?

The second question I'd like to ask is about the provisions in the bill that say they are not allowed to develop or use a mandatory marketing system. What kinds of suggestions are they using within the U.S.--and for us as well--and what are they saying we're going to have to use to track this if they won't allow mandatory tracking systems within the United States?

Mr. Mark Corey: Mr. Chairman, on the first one, I would say that we've actually been very aggressive so far. In the opening remarks we went down the long list of representations we've made. Our minister's been active, Minister Pettigrew has been active, the Prime Minister has been engaged, and the Deputy Prime Minister has been engaged. I've been working with my counterparts at USDA, as has the department. The embassy in Washington has been very active on this issue, and we've worked with the U.S. embassy here in Ottawa.

The nature of these things has largely been information, because when you're dealing with an issue like this, the most effective thing you can do is to provide information to people to show the negative impacts of this. I would say we've been very aggressive, and the nature of our interventions has always been to draw their attention to the downsides and to provide information.

I could probably get Ian to talk a little bit more about the mandatory system and that aspect of it.

Mr. Ian Thomson: Essentially, what USDA has done through the guideline is, as suggested, effectively force the industry to come up with an auditable trail of their own. Despite what's in the Farm Bill, there is going to be a de facto--mandatory, if you will--trail required to be able to trace from the retailer back to the farm.

Mr. David Anderson: Would the ear tag system that's being used in Canada now be the system considered to be useful and one we could use?

Mr. Ian Thomson: For imported products, tracing starts at the border. I'm not sure if you're asking whether an ear tag system put in place in the States would serve the purpose, but I believe it would.

Mr. David Anderson: We do have cattle that move back and forth a couple of times before they're slaughtered, and I'm just wondering, would the type of system we have now be useful, or is there going to have to be something else developed?

Mr. Mark Corey: Mr. Chair, again if I could, I would say that this would probably address part of the problem but not all of the problem. If we had a North America-wide cattle identification program that was uniform and consistent--which we don't--that would help, for example, in a case where someone wanted to bring in a number of Canadian cattle and mixed them with a U.S. herd; they then could identify those at some point and sell them as Canadian cattle. That's one of the principal obstacles right now, that this really can't be done effectively.

What that doesn't address, though, is the fact that further down the line, when you actually get into the processing industry, labelling is expensive, for example. If you have to start doing one run where you label something as U.S. beef and another one saying that it's produced in Canada or processed in the U.S. and your labels are different, it adds costs. There are a whole bunch of these costs that get added all the way through the system, so even if you had a cattle ID program North America-wide--which we don't--there would still be a lot of other costs further down, and we still think it would be a major problem.

Â (1200)

The Chair: Thank you very much, Mr. Anderson and Mr. Corey, for your response. Thank you, gentlemen, both from Agriculture and Agri-Food Canada and from DFAIT; we thank you for appearing this morning.

You have added a great deal to our knowledge base on this issue. It's certainly something that isn't going to end here, but it has given us impetus to go on to another day. Thank you again for appearing, and we'll look forward to your future appearances.

If we could, let us have the other witnesses as soon as possible. Find your way to the table so we can continue on with our meeting.

The Chair: We will continue our deliberations on the whole issue of country-of-origin labelling. This morning we have already had other presentations. We look forward to the presentation from the Canadian Cattlemen's Association. We have with us Dennis Laycraft, who is no stranger to this forum. He's the executive vice-president of the Canadian Cattlemen's Association. Mr. Neil Jahnke is the president. Jim Caldwell has become a regular around the table. He's director of government affairs.

From the Canadian Pork Council we have Edouard Asnong, president; Martin Rice, executive director; and Catherine Scovil, executive associate. From the Manitoba Pork Council we have Mr. Larry Friesen.

We are all at the table, so let us begin.

Mr. Jahnke, are you first? Will you be covering the area of the Canadian Cattlemen's Association? You're the lone speaker. The other people will be speaking on behalf of their organizations, one speaker per organization, maximum of ten.

We have one hour, and if you keep your comments short we'll be able to get the questions in, and perhaps then you can best address the concerns we have at the table. Thank you.

Mr. Jahnke, you're on. Please be as brief as possible.

Â (1205)

Mr. Neil Jahnke (President, Canadian Cattlemen's Association): Thank you, Mr. Chair, and good afternoon, ladies and gentlemen. On behalf of our Canadian cattle industry, we certainly appreciate your invitation to express our views on this vitally important issue.

The Canadian beef industry is made up of approximately 92,000 beef cattle producers and accounted for 22% of Canadian farm income in 2001, with $7.8 billion in farm cash receipts. Over the past 15 years, beef and cattle have grown to be the largest agricultural export to the U.S. We are the third-largest exporter of beef and cattle in the world, accounting for 15% of world exports. Our beef and cattle exports reached a new record, exceeding $4 billion in 2002, and 60% to 70% of our production is now exported. Over half of our production is exported to the U.S. Mexico is now our second-largest export market, with remarkable growth in the last five years.

Our sector is one of the great success stories of the Canada-United States trade agreement and the North American Free Trade Agreement. We are also diversifying into Asia and taking greater advantage of gains in market access to Japan, Korea, and Taiwan. Recent improvements in access to China will offer new opportunities in the longer term. Trade has become an essential part of our industry and has allowed the growth and development we have enjoyed. It is absolutely key to our future successes.

We appreciate your committee holding special hearings on this very serious issue. We expect you are familiar with the requirements found in the 2002 U.S. Farm Bill and the initial guidelines that were published in October. The USDA also published its estimate that COOL requirements will cost $2 billion U.S. per year. Our analysis indicates that the unmitigated impact of COOL will cost our industry between $280 million and $300 million per year, or $90 to $100 a head. It is one of the most serious issues that our industry has faced.

The Canada-U.S. market has become closely integrated. Our two largest packers are U.S.-owned. These new rules would force segregation. Many U.S. retailers have indicated that the easiest way to deal with the complex rules is to source their beef from one country. Our beef exports, while large to us, only represent about 3% of the U.S. supply. We would not have the capacity or the opportunity to sell to any of the large retailers that adopt this policy. We couldn't even make it to the counter to be a choice.

We have worked closely with the Minister of Agriculture and Agri-Food Canada and his department, the Department of Foreign Affairs and International Trade, and the embassy in Washington. We have had excellent support from them. We're very well represented in Washington.

To address these very serious issues, we're pursuing a three-tier strategy: work with our allies to change the law to remain voluntary, and we have many allies in the U.S.; legally challenge the requirements through either WTO or NAFTA; and enhance global marketing strategy to mitigate its impact and achieve U.S.-equivalent pricing.

Clearly, preventing the measures will be the optimum solution for the North American industry. Many producers in the U.S. are now waking up to the extra costs and record-keeping requirements that the proposed system will require. The challenge is to obtain enough legislative support in the U.S. for a change to be made. In our view, this will require addressing a number of their cross-border concerns. We will talk about this in more detail at the end of our submission.

Â (1210)

Our industry established a global marketing strategy in 2001, recognizing the ongoing risk of the U.S. COOL. The initial strategy was to move from a 90%-plus export dependence on the U.S. for beef and cattle to an equal balance--50% between U.S. exports and exports to the rest of the world by 2010--and to reach price equivalency with the U.S.

Today, our beef products sell at a discount to equivalent U.S. beef products, resulting in about a $70 to $90 per head discount. Our analysis indicates discount would double under COOL. This new threat means we need to accelerate that strategy with the following objectives: by 2005, prevent price erosion due to COOL; beyond 2005, achieve a sustained U.S. price equivalency.

Some of our priorities are to build a stronger quality and food safety association with Canadian beef products; identify and establish attributes and processes that will differentiate our products as superior in every key market; support credible branded programs, case-ready programs, and new product development, using Canadian beef or a percent thereof; support import replacement initiatives to ensure domestic customer requirements are better met with Canadian product; expand the U.S. mandate to assist packers and processors to protect existing clients in the U.S.; and accelerate marketing efforts to increase exports to the rest of the world by 100,000 tonnes of beef muscle cuts that will be impacted by COOL by 2005.

Our three marketing groups have identified the need for an additional $8.1 million per year over the next three to five years to effectively undertake this initiative quickly enough to mitigate the serious impacts of mandatory U.S. COOL requirements set to come into effect in October 2004.

Recognizing the serious threat that COOL poses, our sector was the first to move forward under the round table process of the new agriculture policy framework. While we have received encouraging support for this process, we remain puzzled that billions of dollars are available for safety net programs to subsidize income shortfalls, while funding for industry development and competitiveness, which could prevent income shortfalls, runs into the tens of millions of dollars.

The U.S.-Canada beef market has become increasingly integrated and trade has expanded in both directions. We currently enjoy a large trade balance in our favour to the tune of $2.6 billion. Live cattle trade has generated animosity in the U.S. The U.S. producers see a large number of Canadian trucks hauling our cattle south--20,000 to 25,000 shipments a year--and they associate any downturn in the market with this volume. As well, U.S. producers absolutely believe our animal health requirements for blue tongue and anaplasmosis are unfair and are an unnecessary impediment to sales into Canada.

We mention this because it has soured the attitude of many producers in the U.S. toward Canada. It's an undercurrent that has contributed to the recent trade investigations we faced in 1998 and 1999 and has led to support for the U.S. country-of-origin labelling in the states that are closest to Canada.

We have worked with our U.S. counterparts and had scientific conferences to support changes to our requirements that would allow safe year-round access for U.S. feeder and breeder cattle. We are in favour of these changes that would eliminate a major irritant and a source of resentment in the U.S. We have been working on this since 1985--18 years--and still face reluctance from our government when we are very comfortable with the very small and manageable risks that are involved. In reality, the greatest risk is U.S. resentment and retaliation.

Â (1215)

We believe we have a tremendous opportunity to work with our NAFTA partners to pursue greater harmonization in our border procedures, our approval procedures for products such as pharmaceuticals, and our animal health requirements; to improve access between regions; and to strengthen our joint ability to keep serious diseases like FMD and BSE out of North America. By working together and pursuing either Canada, United States, or NAFTA initiatives, we see the opportunity to stem the growing fear of protectionism and create greater security within North America. We need to be building on these measures around North America, not between the countries within it.

Communication and information sharing is important to this process. In the vacuum of good information, misinformation thrives. We've found this to be the case with many issues we deal with in the U.S. Funding good statistical services through government is important, including meeting information requests from our trading partners such as cattle-on-feed reports. These services in the U.S. are funded by the U.S. Government.

In spite of recent developments like U.S. mandatory country-of-origin labelling requirements, we remain very positive about NAFTA and our relationship with both the U.S. and Mexico. We need to foster a greater appreciation of the benefits of NAFTA and seriously address the cross-border issues that undermine support for it.

Thank you.

The Chair: Thank you, Mr. Jahnke.

Now we move to the Canadian Pork Council. We have Mr. Asnong, who's going to do the presentation.

[Translation]

Mr. Edouard Asnong (President, Canadian Pork Council): Thank you for the opportunity you give us to make a presentation on the country-of-origin labelling provisions before this committee. I will ask my executive director to make this presentation.

M. Martin Rice (directeur exécutif, Conseil canadien du porc): Thank you, Édouard.

The Canadian Pork Council is a federation of provincial pork producer associations, and it represents the national and international interests of about 15,000 Canadian producers.

As demonstrated by the Canadian government at a presentation to the American Department of Agriculture in January, the country-of-origin labelling legislation of that country, which states that only products derived from animals born, raised and processed in the United States can be labelled as originating from that country, is even more restrictive than the country-of-origin identification systems required in other countries.

A mandatory country-of-origin system creates a very bad precedent for the other countries to which Canada and the United States export, as national industries can very well look for examples of mechanisms designed to discourage consumers from buying imported products.

Â (1220)

[English]

The Canadian Pork Council has no difficulty with voluntary programs that, as part of domestic promotion efforts, highlight the availability of products from within the country. However, mandatory systems impose marketing costs, with no corresponding increase in consumer benefits in terms of quality and safety. And we fear that they will become impediments to the free and open trade environments to which both of our countries are committed through such instruments as the NAFTA and the WTO.

We view it as very disappointing that the USDA has not been able to simply look at adopting existing NAFTA rules for tariff purposes, which specify that the country of slaughter and processing confers origin.

Contrary to the expectation of U.S. legislators and the protectionist groups they were intending to favour with the country-of-origin provisions in the new Farm Bill, virtually every analysis of COOL suggests that it will impose huge costs on the U.S. parties. Furthermore, it turns out that the record-keeping and other costs of compliance with COOL provisions will fall disproportionately on smaller independent farmers. Management effort and capital requirements will have large fixed components, regardless of the size of the operation; thus the cost per hog will be lower for the larger enterprises. Pigs originating from independent farmers would be subject to more record keeping costs, a point that we will again touch on later. Recent communications from several individual U.S. pork processing companies, examples being Hormel, Swift, and IBP, bear out the large and expensive record-keeping obligations that COOL is creating for independent producers to ensure that the packers are in compliance with requirements, which they in turn are being confronted with from their own customers, the food retailers.

Mandatory COOL will also create label information overload. The U.S. Food Marketing Institute has pointed out that “The end result will be a patchwork of confusing labels that conceal the product”.

In addition to the implementation costs that mandatory country-of-origin labelling imposes on pork and other food producing farmers, processors, and distributors, there are other major economic impacts for the North American pork sector arising from COOL. We expect mandatory country-of-origin labelling to negatively impact U.S. hog slaughter capacity and competition. If, as we expect, many U.S. packers will cease purchasing Canadian slaughter hogs due to costs of segregation and record keeping, etc., the capacity utilization and economic viability of certain U.S. plants will be negatively affected, thus potentially resulting in closure.

We fear that compliance costs will have to be absorbed largely within the meat and livestock sector rather than be passed along to consumers. This is because the production and distribution chain will be forced to absorb the costs of COOL if pork and red meats are to remain price competitive with poultry, which is not subject to mandatory labelling, as you know.

The further deterioration in the cost competitiveness of pork relative to poultry meats will further depress the domestic sales potential of hog producers.

The imposition of mandatory COOL could also seriously upset hog production and marketing patterns within North America, leading to surplus production. Last year Canada exported almost 4 million feeder pigs and weanlings to the United States. If COOL discourages U.S. hog feeding enterprises from purchasing Canadian feeder pigs due to costs of segregation, record keeping, and lack of buyer interest, i.e., packers, this will encourage increased feeder pig production in the United States.

Mr. Friesen certainly can expand on that, if he wishes.

At the same time, there could be an expansion taking place in feeding capacity here in Canada to finish the feeder pigs formerly shipped to the United States.

Such an increase of as much as 6% in North American hog supplies will undoubtedly result in severely lower prices to hog farmers. That's roughly the kind of percentage increase in production we saw in the devastating market circumstances at the end of 1998.

Evidence that the initiative is not seen as being in the interest of the food industry in the United States is the strong opposition to mandatory country-of-origin labelling coming from such national organizations as our counterparts, the National Pork Producers Council; the American Meat Institute, representing meat processors; the National Meat Association; the Food Marketing Institute, representing retailers; and the American Frozen Food Institute.

The USDA was the first to issue an estimate of the costs of just the record-keeping aspects of COOL, coming up with a figure of $2 billion for the first year of implementation. That included $1 billion for the producer sector and $1 billion for the post farm gate entities, the processors, the retailers, etc.

Analysis performed for the National Pork Producers Council indicates COOL will cost producers about $10 per pig. That needs to be viewed in the context of current market circumstances, where producers in the U.S. are receiving less than $100 for finished hogs, that is, more than 10% of current revenues would be represented by those costs.

The study done for NPPC also projected a 7% decline in U.S. consumption of pork due to the decline in its price and cost competitiveness, mainly, competitiveness with poultry.

The CPC is pleased to be able to report to you today some results of two additional studies that have just been completed. We will be happy to make them available to members of the committee, and they will appear on the public record tomorrow when they are submitted to the USDA.

The first is one performed by the American economic analysis firm, Sparks Companies, which concludes that the costs for U.S. hog producers would be very substantial, up to $11 per pig marketed. On the one hand, it adds to the credibility of the USDA and the NPPC estimates of costs, but it also reveals the significantly higher costs that will be borne by the independent, or non-integrated, producers. The Sparks study demonstrates the much higher record-keeping and data verification costs that will occur in cases where ownership changes hands between farmers and processors. For the completely integrated company, which owns the pig from birth to final processing, the costs of compliance with mandatory COOL are roughly a third of those for the independent producer.

A second study, performed by Canada's George Morris Centre in association with Virginia Tech University, has concluded that mandatory country-of-origin labelling would have the following impacts: loss of independent farms and growth of large integrators, loss of up to five hog packing plants in the United States, lower hog prices, and a loss of economic activity to the U.S. economy amounting to over $4 billion U.S.

Canadian live swine experts, as feeder pigs and slaughter swine, now account for 6% of total hogs processed in the United States. This Virginia Tech-George Morris Centre study indicates that “if the free flow of these weaners and feeders is stopped due to COOL, the livelihoods of approximately 1,300 independent farmer-finishers in the U.S. will be placed in jeopardy”. Expected closures of packing plants and other developments could cause hog prices to fall significantly. Given the close economic links between the American and Canadian hog sectors, lower hog prices in the U.S. can be expected to lead to precisely the same in Canada.

We thank you for this opportunity to provide our views on country-of-origin labelling. We would be pleased to answer any questions or suggestions committee members will have and we would greatly appreciate your support in seeking repeal of mandatory country-of-origin labelling.

Â (1225)

The Chair: Thank you, Mr. Rice.

We now move to the Manitoba Pork Council. Mr. Friesen, can we have your presentation.

Mr. Larry Friesen (Manitoba Pork Council): Okay. I'm from the Manitoba Weanling Exporters. I represent the producers that export weanlings to the United States, which flows from the Manitoba Pork Council to the Canadian Pork Council. So we're all part of the same organization.

I want to talk for a couple of minutes on the mechanics of what's going to happen. We've spent 20 years building our industry. We thought we had an open border. And we are exporting out of Manitoba currently about 4 million young pigs to the United States. So they're born in Canada and we keep them for about 17 to 21 days, and then they're sent down to Iowa or Nebraska, or somewhere in the Midwest. That represents about 250,000 sows or about 2,000 jobs in Manitoba. These operations are highly capitalized, with an investment of about $2,000 a sow. A lot of the people who own these farms are highly leveraged.

And I want to talk about what is the problem with keeping these pigs in Canada. It sounds like a golden opportunity. The problem is, we only have one year and it's impossible (a) to get the building permits, (b) to build the two or three hundred barns that would be necessary to house these pigs, and (c) to get the money, because you usually have to have 25% or 35% in equity. Most of these operations are highly leveraged already. They couldn't borrow the money if they wanted to. And in addition, we don't have any kill capacity.

Ontario has the same problem. Ontario is rapidly catching up to us, but I'm just quoting you Manitoba statistics.

In Manitoba we have basically one plant, the Maple Leaf plant in Brandon. It's a fabulous plant and everything, but its one shift is full, the day shift. They're trying to get a second night shift. We don't know if that's ever going to happen, and even if they do, they still wouldn't be able to kill the 4 million hogs that we don't have the barns or the money or the building permits for, for environmental reasons or whatever. It's hard to get the permits through. And we wouldn't even have the carpenters and the electricians and the cement trucks to build these barns. So we don't know what's going to happen.

And currently, there's only one plant in the United States that's saying perhaps they will kill these born-in-Canada pigs.

We thought we had a NAFTA agreement. We spent 20 years building this industry.

It's a fabulous thing for Manitoba, and it's a growing industry. Suddenly it had the rug pulled out from underneath it, and it happened very quickly. It happened overnight. One day we were building our industry, the next day there was this COOL thing coming and customers in the States asked where they were supposed to sell their pigs. All their plants--Swift, Hormel--were telling them to shut down or they wouldn't be able to source pigs that were born in Canada, because they don't have the ability.... It's not that they don't want the pigs; the packers want the pigs. They don't have the ability to say that 10 pigs out of this pen of 100 were born in Canada, that 95% of their life, 100% of their feed--because they were milk fed until they went down there--and 100% of their corn and soybeans.... These things are really American. Now they can't put a “Made in America” sticker on those pigs.

I'm going to end about there because I know this time is a huge thing--and I'm one of those producers, by the way.

Â (1230)

The Chair: Thank you very much, Mr. Friesen. We understand your frustration. I think we're all frustrated, and this is why we're here today.

We'll begin our questioning with Mr. Hilstrom, a fellow Manitoban.

I wonder if we can keep the comments to five minutes, because we only have half an hour left.

Mr. Howard Hilstrom: The continental market is a really big thing for agriculture, and I think every commodity should be in it in the NAFTA context.

What's the estimated cost to Canadian cattlemen per animal? The hog industry says $11 roughly per hog. Do you have a ballpark figure per animal or to the industry as a whole if COOL goes in as 100% mandatory, as it's perceived to be?

Mr. Neil Jahnke: Our analysis indicates $80 to $90 a head.

Mr. Howard Hilstrom: The Hilstrom ranch will be out of business if that goes ahead, because we run 300 cows and we will not be able to operate with $100 per head less. That's a black and white given, and I know there are many other ranches like it.

So we have to do something about it. On the terminal feedlot program that you mentioned, you used words like--and pardon me if I'm a little bit intense on this--you “worked closely” with the government on this, on other issues, increasing exports and everything, but they still refuse to go ahead with this terminal feedlot program.

My question to the Canadian Cattlemen's Association is, are you prepared to pull your support for the agricultural policy framework to bring home to the government that they have to move on these issues?

Mr. Neil Jahnke: We don't like to make trade-offs like that. It's blackmail, or whatever you want it to be.

We want year-round access for those feeder cattle. It's imperative that we have it. It's the most irritating thing. Every time we are in the United States talking to fellow producers, that comes up.

But let's deal with one issue at a time.

Mr. Howard Hilstrom: Agreed.

Have our countries--Canada, Australia, New Zealand, probably Brazil, Argentina--formed an alliance, and are we preparing to challenge, at the WTO, the COOL provisions? Do we have that formal alliance in place yet?

Mr. Neil Jahnke: We have a five-nation alliance of cattle producers--being the United States, Canada, Mexico, New Zealand, and Australia. The American cattle producers are as concerned about COOL as we are.

Now, to get into the details of what has been done, I'll turn it over to Dennis.

Â (1235)

Mr. Dennis Laycraft (Executive Vice-President, Canadian Cattlemen's Association): I guess there's another aspect to the options we have in front of us. We're also meeting and working closely with our Mexican counterparts, because one of the key options we'll look at may be a NAFTA challenge. Currently, the way it's written, I would favour probably going in that direction because of the cost considerations under NAFTA.

So the short answer is yes, we are working. We met with the international group in February. We meet regularly with our NAFTA counterparts, and of course the U.S. National Cattlemen's Beef Association also favours voluntary country-of-origin labelling. Tomorrow we're going to travel down and meet with them and officials in Washington as well.

The short answer to all of this is that the best way to deal with this issue is to try to prevent it from coming into effect. But that said, we're still working on all these other plans, either to mitigate it as much as we can or to challenge it successfully.

As frustrating as it is, it's true that we have to wait until we see the final guidelines, because a big part of the challenge will be based around issues like national treatment, substantial transformation, and the actual costs that will serve as a clear impediment to trade, and all those things do involve that final point of analysis.

Mr. Howard Hilstrom: Canada's lack of support for the coalition fighting the war in Iraq has had a negative impact on Peak of the Market in Manitoba, a vegetable exporting business, and many other businesses in this country. Has the Canadian Cattlemen's Association noticed any, or can you give me any examples, or whatever, of a cooling attitude towards Canada in beef exports?

Mr. Neil Jahnke: There have been no disruptions at the border. Our trucks have been moving, although maybe it takes a little more time. But there's certainly a lot of concern, and I have a lot of concern. In our talks with our counterparts in the U.S., one comment was made: if we're going to buy beef, we'd just as soon as buy from somebody that's a friend.

So we don't know. It has had no effect to this date, and it's only pure speculation what might happen in the future. But it's something that I think we have to think about.

The Chair: Mr. Plamondon.

[Translation]

Mr. Louis Plamondon: I would like to know what regions process the largest quantity of pork before exporting to the United States. In fact, could you provide the total quantity for Canada as a whole, and then for the different regions?

M. Edouard Asnong: I don't have these numbers with me, but I would say that in Quebec, almost all hogs are slaughtered in the province; there is almost no exports of live hogs. This is due to a choice made by the federation, but also to specific restrictions in Quebec.

Ontario, on the other hand, is near American corn growers, which makes things easier. The situation in Manitoba is similar, producers there being practically neighbours of American grain or corn producers.

Mr. Louis Plamondon: Compared to Canada as a whole, how much pork is produced in Quebec?

M. Edouard Asnong: Currently, production in Quebec represents about 31% or 32% of the Canadian production.

Mr. Louis Plamondon: And all of this 30% is processed in Quebec before being exported, isn't it?

M. Edouard Asnong: That is correct.

Mr. Louis Plamondon: Are there hog feedlots shared with the United States, as there are for cattle?

M. Edouard Asnong: No. Currently, piglets leaving Canada are grown in the United States. It can be done by the same owner. A person who has a farrowing house in Canada can also have a feedlot in the United States. It's possible. However, it would be impossible for calves born in Canada to be exported to the United States for growing, then brought back to Canada to be finished, and then sent back for slaughtering. There are almost no live hog imports from the United States; I would even say there are none at all, for sanitary reasons.

Mr. Louis Plamondon: As far as I'm concerned, it's okay.

[English]

The Chair: Thank you.

We'll go to Mr. Duplain for five minutes.

If he wishes to share with his colleagues, that's fine.

[Translation]

Mr. Claude Duplain: To reassure Mr. Hilstrom, I will say that the Salon international de l'Alimentation was held last weekend. I saw producers and processors who wanted to leave as early as Friday because their order books were so full they couldn't meet the demand. We are told that exchanges with the United States currently had no connection with...

I asked a question earlier, and I would like you to answer it. Does Canada have all the information required to lodge a challenge, and what is the likelihood that it would?

We were told earlier that we would have to wait for the legislation to be implemented before lodging a challenge or initiating proceedings. Do you agree with this principle?

Â (1240)

[English]

Mr. Martin Rice: It would appear that there's nothing in the actual writing of this law, or as the government people mentioned, it hasn't become implemented as a mandatory program yet in a way that treats the product that originates from another country any worse or better than a product that originates from domestic production. That would be an important thing to observe when the mandatory rule comes out. There's supposed to be a draft rule this fall. It will be important to examine that for whether or not there is anything you could say is discriminating against a product that comes from outside the country.

If the U.S. government had decided to write the law the way the proponents of the legislation asked for, which was to make all the record keeping, and so on, requirements of imported product and leave the domestic stuff without any such requirements--and there are still groups arguing that this the case--then we would have definitely had a case that it was discriminating against imports. The application, if it becomes law--and we're hoping it won't--if it does get implemented and it shows it results in imports being avoided, then we obviously again have evidence that we could pursue a trade case.

For the first time on the record, recently a U.S. pork processor, Joe Luter, with Smithfield Foods, has actually gone on the public record saying they will probably stop buying Canadian pigs. I think that's as close as we've gotten yet to evidence that this will result in that. If there is any continuation, or if that becomes more precise policy, then I think we can say there are the beginnings of something on which we could challenge the U.S.

The Chair: Larry, did you have something to add?

Mr. Larry Friesen: Under NAFTA there was a provision for country-of-origin labelling, but I talked to the lawyers down in Washington who were actually involved in writing that text, and nobody ever dreamt of the word “born”. When you take a young pig, it's only about 10 pounds, and you add another 250 or 260 pounds to that pig with 100% American feed. Under NAFTA all you need is 40% components, so that is truly an American pig. But nobody ever dreamt of the word “born” when the NAFTA agreement was made. This clearly violates the spirit of NAFTA, if it doesn't violate NAFTA itself.

What I would like to challenge the government to do is this. Under NAFTA there's a process of mediation before you get involved in all the lawyers and stuff like that. With that mediation process you can just meet and say, hey, if it doesn't violate the law of NAFTA, it certainly violates the spirit of NAFTA.

I would like to urge the government to begin that process now, because September 2004 is going to be here in a minute. The cattle guys are already involved in this, but the hog thing is going to start in December. That's when we have to stop sending pigs to the United States. That's only a minute from now, so those mediation meetings need to start now.

The Chair: Thank you, Mr. Friesen.

We move now to Mr. Borotsik.

Mr. Rick Borotsik: Thank you, Mr. Chair.

On that, Mr. Friesen, have you lost any contracts? You contract your weanlings to American feeders. Have you lost any of your contracts or are any of those contracts in jeopardy?

Â (1245)

Mr. Larry Friesen: Well, yes. Swift was buying 350,000 pigs from our customers. They put our customers on notice that they need to source their feeder pigs somewhere else because, as of September 2004, Swift will no longer kill Canadian pigs. Those people are urging us to locate in the United States; they will not be buying born-in-Canada pigs.

Mr. Rick Borotsik: So they will not be buying born-in-Canada pigs. Swift has said that, so there are 350,000 pigs right off the bat that will not be sent to the States.

One of the strategies of the group before us was that they're going to stream Canadian product into the restaurants because there's a bit of a loophole there with the American Farm Bill.

I have two questions for the cattle guys. What percentage of Canadian cattle are killed and processed in the U.S.? Do you just have a ballpark number?

Mr. Neil Jahnke: Dennis will have them right on, I expect.

Mr. Dennis Laycraft: It varies. Last year we sent down close to 1.6 million head. That included around 500,000 head of feeder cattle. That was largely driven by drought. A more normal range of slaughtered cattle is around 800,000 a year. Our annual kill is a little over 3 million head, to put it in perspective, and 800,000 go to the U.S.

Mr. Rick Borotsik: The reason I ask is this. Will the American plants be able to segregate that 800,000 or 1 million animal kill? Will they be able to segregate that, because we're talking about now...?

The Canadian kill I can understand. You have Canadian cattle, you have Canadian kill, you have Canadian boxed meat or chilled meat you can now process; you can now send that as a Canadian product. It's the 800,000 I have some difficulty with. Can they segregate that Canadian kill in those plants?

Mr. Dennis Laycraft: It depends on the class of livestock. Right now, because of their requirements for their military contracts and the U.S. school program, these are typically the cow boners and those that process the culled bulls. They do segregate to meet those contracts. If they're getting a large percentage of imported cattle to make those plants viable, we expect some of that to continue.

It's much harder with the fed cattle, because a lot of them just go into a distribution system that moves either way. We may see a couple of them try to go into the mode where they will process certain days a week. There are two markets they can go into, the food service or the export trade, which is kind of ironic because they can process our cattle and export them as a product of the United States with USDA grade, but they can't sell the meat to retail the same way. That is another possibility, but they believe their costs will be somewhere between $24 and $36 Canadian in additional segregation costs to handle our cattle. That's what comes back as part of our analysis.

Mr. Rick Borotsik: But you are then saying that they could segregate and they could stream that into a different market. They could stream that into the restaurant market.

Mr. Dennis Laycraft: There are several who may try to do that. Quite frankly, they're not sure they can and still compete.

Mr. Rick Borotsik: Can the pork industry do that?

Mr. Larry Friesen: No, they can't. They'd have to dedicate a whole plant to hogs to keep all the hogs separated. They're killing 10,000 an hour. The confusion on the kill floor would be...because sometimes they go onto held rails for a minute, and it's just too complicated.

Some might try to dedicate a whole plant. There's only one plant saying maybe they'll think about it, and that's IBP. The rest are all saying they won't kill Canadian pigs.

Mr. Rick Borotsik: So the pork industry is going to be impacted substantially more than the cattle industry may well be at this point in time. We don't know; we won't have the regs for a while.

There was some suggestion that there's still some optimism. I think the term was “logic, negotiations, and argument”. Does the cattle industry feel quite as confident in those arguments, that there may well be an exemption to Canadian cattle within the U.S. Farm Bill and within the mandatory implementation of the COOL by September 2004? Do you feel that confident?

Mr. Neil Jahnke: We have a lot of good allies in the United States, right from the cowboys and cow-calf guys straight through the chain to the retailers. Our big problem is whether or not the politicians, a senator, will lead the charge for us to get the bill opened up and have the mandatory part removed.

Â (1250)

Mr. Rick Borotsik: It was the cattle guys who started this whole thing.

Mr. Neil Jahnke: It was, but you know why it was, and one of the main reasons was year-round access for those feeder cattle. We cannot keep on irritating our American friends and then expect them to come and pat us on the back and give us whatever we ask for.

The Chair: Mr. Anderson, please.

Mr. David Anderson: I'm going to follow up on that questioning as well. I'm going to ask, where do you see yourselves right now in terms of congressional influence? We talked earlier about the fact that it's far easier to change a law before it comes in than it is to change it. Do you have congressmen who seem to be onside? Do you have people at that level who are working with you? I understand you have allies in the industry, but has anyone taken this up? Mr. Friesen is saying that it is essential that it be done immediately. Where are you at with that in terms of Congress?

Mr. Neil Jahnke: If I might, I think it's very hard to say that Dennis, Jim, or I have a lot of influence with any particular senator. But our allies in the U.S. certainly have some influence with their senators, and I can assure you that they are doing what they can, with our help and cooperation, to influence them. But they're the ones who are working on it. We don't do it directly ourselves, but we are meeting with the staff people of one of the senators the day after tomorrow. At that level we don't have much influence with American politicians, but our friends do, and I can assure you they're working on it.

The Chair: Mr. Caldwell.

Mr. Jim Caldwell (Director, Government Affairs, Canadian Cattlemen's Association): Just don't discount what you fellows and ladies can do for us as well. You're the ones who talk to the congressmen and the senators, so we're counting on your getting the word out as well.

Mr. David Anderson: What can we do for you? Some of us have felt this is a terrible piece of legislation right from the time it came in, but what more would you like from us?

Mr. Dennis Laycraft: I think there are a number of things we have to do, and we talked about how we are going to move beyond the post-9/11 environment and build these safeguards around North America instead of increasing barriers between us. What we have to do is persuade a sufficient number of senators and representatives that North American trade is good, that we will all be better off if we approach this differently. We're seeing Missouri, Kansas, Texas, areas like that, beginning to come out and question what is in the Farm Bill, but you have 33 or 34 senators up for election next year, depending on the rotation, plus the entire House of Representatives.

How do we change the mood down there around this issue? I think the Government of Canada has a significant role. We have to sit down and address some of these cross-border issues so they can go back and say, yes, we addressed this and we've decided the country-of-origin thing was a bad idea.

What we're hearing down there from a larger groups is that they believe the rules are uncompliable; in other words, there are going to be a lot of cattle coming to market in October that will not meet the retail guidelines. Ironically enough, what that's going to do is just completely fill the food service channels, fill the export channels, and just create market chaos down there. So we have that ally we're working with now as well; they just view this as bad legislation.

The Chair: Mr. Rice, do you want to comment on this one?

Mr. Martin Rice: Yes. Thank you,

Mr. Anderson, there's a sad irony in this, in that those congressmen who promoted this and thought that it was really going to help their constituencies are from the very areas that are probably going to be the most severely impacted by it. They're from the upper Midwest, smaller, independent producers. The poultry industry and the integrated companies, such as Seaboard and Smithfield, are the ones that are going to see an opportunity in this.

We mentioned the study that has just been done for us by the George Morris Centre, which identifies who is really affected by this in the U.S., from those 1,300 producers that have been buying Canadian pigs, as well as several plants. This information is fairly well documented. We will have it available to distribute to the committee if there are any opportunities where members will be having a dialogue with their U.S. counterparts, particularly those in the upper Midwest, to show that this is not going to have the impact they thought it was going to have. It is probably going to take away from the ability of those producers in South Dakota, Iowa, and so on, to continue to produce.

Mr. David Anderson: Some of us are trying to work hard on that. I know that Mr. Hilstrom has met with U.S. embassy and consul officials a number of times specifically on COOL to try to make those points.

I'd like to switch over to NAFTA. Mr. Friesen, I think, had talked a bit about the fact that there are mediation opportunities there that we should be pursuing. Also, I understand that if we can establish that there's an intent to obstruct trade, we can begin to pursue action under that. Has the government expressed any interest in pursuing that direction? I don't think we can be content to wait until that law has been implemented before we begin to pursue some of these things. Obviously it's going to start affecting the hog industry a year before it's mandatory.

Do you have any comment on that?

Â (1255)

Mr. Martin Rice: We're expecting to see the rule published in the fall, and we will be better able to determine then if we have a case.

Dennis.

Mr. Dennis Laycraft: There were, of course, meetings in Montreal this past week where, I understand, these issues were discussed to some degree. The USDA is being forced into implementing it, but they have grave concerns about going ahead with this. Our challenge is how to resolve this at the policy-maker level down there. We would certainly welcome more consultations, but we have to take something to the table if we're going to make any progress on this. Just talking isn't going--

The Chair: Thank you, Mr. Anderson. Your time has expired.

Next is Mr. Binet, for five minutes. You will be the concluding questioner.

[Translation]

Mr. Gérard Binet: Thank you, Mr. Chairman. My question is for Mr. Friesen. I think I heard earlier that the Manitoba pork industry has no slaughterhouses or processing plants.

[English]

Mr. Larry Friesen: That would be correct. Currently they're working eight hours a day and they're killing 1,200 pigs an hour. That's all the licence they have. They're not yet licensed to go to a double shift. They've made application to do that. Number one, they don't have a licence to kill 16 hours a day, and, number two, they don't have the workers. They're currently having a hard time just keeping the plant going eight hours a day, never mind 16 hours a day. I'm sure they're going to get it done over the course of the next three or four years, but we don't have that much time.

[Translation]

Mr. Gérard Binet: In my area, we have Olymel, who have a good processing plant and a good slaughterhouse. They hire many people. This is a fine industry which is very important for the region. I thought you had a similar structure. All I can say is that this generates good jobs and that it's very profitable for my region. Thank you.

[English]

Mr. Larry Friesen: Olymel is a good plant. They're also in western Canada. They have a large plant in Red Deer. We welcome them in the west, as you do in the east.

The Chair: Thank you, Mr. Binet.

Mr. Borotsik, do you have any questions?

Mr. Rick Borotsik: I just have to respond to that. The Maple Leaf plant in Brandon is state of the art. It's a brand new plant. It has about 1,200 employees currently on one shift. We're going into a second shift. Mr. Friesen is right, we're attempting to get into that. It's a huge plant that processes a lot of hogs. The problem is that right now we have less than 3% unemployment. So you can send us some of your people, Mr. Binet, to work in that plant. That would be very beneficial.

Thank you.

The Chair: Okay, gentlemen.

We do go into regional politics at this table, but if I began to tell you about my region, it would of course take a long time. So we'll forgo that this morning.

I want to just thank you for coming and presenting this morning. It was very timely, and we take this issue very seriously. It will certainly help us as we determine our future business, because some of these issues are very urgent and we need to move very quickly on them.

So thank you, each one of you, for appearing. Sometimes it's on short notice, but we know that you people always try to accommodate us and we try to work with your timetables.

Thank you very much, and have a great day.

The meeting is adjourned.