Senator Yuen Pau Woo

Honourable colleagues, I would like to add my voice in support of Bill C-282 as amended, and to ask that you vote in favour of the Committee’s report on this bill.

I am a member of the Senate Standing Committee on Foreign Affairs, International Trade and Development and was an active participant in the C-282 hearings.  I have worked on trade policy issues for more than 30 years and have never seen such a boneheaded trade policy idea as in the bill before us, in its original form. 

My speech will focus on a letter which was sent to us last week from the heads of Canada’s supply managed industries.  I salute the associations representing Dairy Farmers, Chicken Farmers, Egg Farmers, Turkey Farmers, and Hatching Egg Producers for the single-minded dedication they have shown to their members and thank them for sharing their views with us. Since they represent a tiny slice of our economy that has received special protection for over fifty years, I will – for ease of reference – call them “the Favoured Five”.

The letter from the Favoured Five seeks to debunk claims that were allegedly made during Committee hearings.  I will address the most salient arguments raised in that letter, starting with the assertion that this bill, unamended, will not make it more difficult for Canada to renegotiate trade deals or to negotiate new agreements.  To quote the letter: “A trade negotiation implies a wide range of topics including agriculture, industrial goods, services, intellectual property, investment rules, and many others.  With such a range, it is clear that a mutual agreement can be found without jeopardizing Canada’s supply managed sectors”. 

Let me translate that sentence for you into plain English. What they are saying is “We don’t really care what harm may be done to other sectors of the Canadian economy, as long as there is no harm done to us”.  The Favoured Five go on to argue: “Our farmers want all Canadian agriculture to prosper and do not support sacrificing one sector at the expense of others”.  They conveniently ignore the fact that 40 other agricultural bodies are against C-282 and would make the same argument, except that they represent a much larger share of Canadian agriculture in terms of incomes, jobs, and – yes – family farms as well as contribution to rural economies.

The Favoured Five also claim that other countries have restrictive import policies for sensitive agricultural products, and that this justifies the codification of protection for their industries in the Act governing the Department of Foreign Affairs and International Trade.  Setting aside whether the extreme protection of agricultural products is good for a given economy, this argument ignores the fact that it is already Canadian policy to not make further market access concessions in supply-managed industries.  This was confirmed by officials who testified at the Committee’s hearings.  In other words, we are already doing what the Favoured Five say we should do to emulate other countries. 

What the Favoured Five is asking for is that Canada go beyond what any other country has done. Doing so, however, will represent a protectionist escalation that will prompt retaliation and pose significant risk for the negotiation and renegotiation of trade treaties.  The issue here, colleagues, is what our former representative to the WTO Jonathan Fried calls “instrument choice”. 

For a given policy objective, there are different instruments that can be deployed.  When it comes to protecting the Favoured Five, we have already chosen a very powerful instrument in the form of a policy directive.  In the current political climate, there is little disagreement on the current policy choice of protecting supply management. That is why the vote on this bill in the House was so strongly in favour of the bill.  What that means for how the Senate should respond is up to individual senators to decide, but in no way, shape or form can it be said that the bill as amended changes the current policy objective of the government on supply managed industries.

Now that I have invoked a former top Canadian trade negotiator, I am sure some of you will be thinking “Ah, but what about Steve Verheul, the legendary negotiator of CETA and CUSMA”? Senator Cardozo intoned Verheul twice in his speech last week, including in his answer to Senator Boehm on why the bill is necessary.

Well, Mr Verheul, who deserves all the praise that he has received for his service to Canada, is not only legendary, but also enigmatic. Since his comments on C-282 in February 2024, he has not been heard from again in public on that subject. 

I desperately wanted to hear from him, and our committee of course invited him to testify, but he declined. Now, I don’t know what personal or professional factors stood in the way of his appearance before the committee, but at least half a dozen other former trade negotiators and trade policy experts did show up at our committee, and all of them testified against the bill.

The good news is that Mr Verheul has not become a hermit.  He gave an interview to the National Post a few months ago in which he said the U.S. continues to feel they are not being given the access to the Canadian dairy market that was promised to them in CUSMA.  Here is what he said:

The biggest concern I would have at this point is that U.S. Trade Representative Katherine Tai has suggested that perhaps this issue needed to be addressed in the upcoming review of the agreement. And I think the notion that you might want to reverse or overturn dispute settlement decisions through a negotiating process is not a good signal to send at this stage. That very much undermines confidence, not only in dispute settlement, but in the agreement overall.

Let me unpack this comment for you.  USTR Katherine Tai, who is on her way out and will be replaced by someone who is even more protectionist, is threatening to respond to what the US sees as unfair treatment in dairy by blowing up the dispute settlement mechanism, which Canada fought so hard to protect in the CUSMA negotiations.

That is why a hard red line to protect the Favoured Five, such as C-282, could result not just in more punitive measures against a few other Canadian industries, but against the entire economy through the removal of an impartial adjudication process for trade disputes. 

Now, Mr Verheul did not raise the prospect of the Americans bailing from CUSMA altogether, but given President-elect Trump’s comments over the years, we should not rule it out.  The Favoured Five will say that this outcome is highly unlikely and in any case C-282 will not be the major reason for such an outcome.  But my question for all honourable colleagues is this:  Do we want to run that risk by passing a bill that is totally unnecessary?

Some of you may argue that the longstanding unhappiness of the US over our dairy practices is precisely why we need this bill.  In other words, we need more than a red line.  We need to slam the door and bolt it shut by amending the DFAIT Act. 

But here’s the dirty little secret that has slipped out from proponents of the bill:  It is that if we really, really, really need to do so, we can repeal the bill.  All it would take is a decision of Parliament.  Senator Cardozo said as much in his speech last week.  We have now on the record, in Hansard, for the world to see, an admission that if the pressure gets too heavy, we can reverse C-282. 

How do you think this will be interpreted by US trade negotiators?  Or let me ask a different question for those of you who have kids: If you tell your children that the family rule is that there will be no use of devices during mealtime unless someone objects very strongly, what do you think will happen?  Of course, the Americans will say to us, “You said you will change the law if the need is great enough. Change it or else”. Need I remind you of the bombshell threat from President-elect Trump yesterday?

I don’t want to presume what will happen in that situation, but do we really want to have a debate about national sovereignty over a bill on supply managed industries?  And if we did end up repealing C-282 in the face of American pressure, how do you think that will affect the overall bargaining strength of our trade negotiators, never mind the impact on our national pride?

That is why, at the start of my speech, I said this bill is boneheaded. It is not only boneheaded from the point of view of trade negotiations strategy and the broad Canadian economic interest; it is also boneheaded from the point of view of supply managed industries.  In the words of some witnesses, notably former Minister John Manley, C-282 puts a bullseye on the Favoured Five. Or if you are thinking that the bull is our most important trading partner, imagine C-282 as a red flag in front of the charging beast. 

With greatest respect to supporters of supply management, this bill is a massive strategic blunder that works against the very interests of the sector.  It takes comfort in a blunt legislative fix but ignores the quite predictable and likely devastating consequences of that action.  Rather than building on the proven track record of a Canadian trade negotiating strategy that has protected supply management from rampant imports, the industry and its supporters are trying to force an outcome in all future negotiations that will backfire on them.  What’s more, the uncompromising stand of the Favoured Five is alienating other agricultural sectors and non-agricultural industries that are trade dependent.

This bill is so flawed that I would vote against it even it was a government bill. The fact that the Government Representative in the Senate has belatedly come out so strongly in favour of the bill does not make it any better.  The amendment that was adopted in Committee makes the bill more palatable, but it is still deeply flawed.  I hope you will join me in voting for the report.

Thank you.