Senator Yuen Pau Woo

Honourable senators, I am not on the scroll to debate today, but I thought I would join the debate now, in part because I was originally going to speak on Bill C-234 at third reading. I had my speech ready, but the vote has been deferred and I can’t do it today. I can’t do it next Tuesday either. I’m hoping I can speak the following Thursday and would ask you for your indulgence and give me that chance.

To show that I have good faith in using my time in this chamber, I am going to do somewhat of an extemporaneous speech on Bill C-282.

I want to tee off from Senator Simons’s reportage on the CUSMA panel decision last week which she accurately described but, with respect to her, I’m going to give more colour to that decision.

You will recall from her speech that the three-person panel ruled in favour of Canada on the question of whether Canada is appropriately managing its tariff rate quotas, or TRQs. This is the system whereby, above a certain quantity of milk, cheese or poultry, a very high tariff kicks in.

Canada and the United States negotiated a way of managing TRQs that would allow for American suppliers of milk and cheese products within the quota to enter the country without paying very high tariffs. Canada did it in such a way that essentially allowed the processors in Canada to decide what could be brought in from the United States, excluding, in large part, the ability of retailers in Canada to make that decision.

You can see the strategic thinking behind that move, because it puts the processors — the supply managed farm sector — in control of what comes in, presumably so that there is less competition for them. That’s my interpretation of why they have done that.

The Americans lost that argument; this is the second time they’ve lost the argument. It would appear that the decision, this time around, is decisive.

Senator Simons is correct in saying that this is, on the one hand, proof that our negotiators are looking after our supply management industries. They engineered wording in CUSMA to allow them to give the privilege of importing TRQs — below quota product — to processors to the exclusion of retailers. Shame on the Americans for not picking it up.

But do you think they are oblivious to this sleight of hand after the decision? Do you think they don’t understand now that they were duped — that a fast one was pulled on them? Do you have any doubt that in 2025, when the mandatory review of CUSMA comes up, the first thing on the Americans’ agenda — or high on their priority list — will be that they are going to renegotiate this provision? “You duped us. Congratulations. You won the first two rounds, but you’re not going to win the third round.”

The way in which they’re going to do that, colleagues, is by referring to another deal that we signed which, in fact, doesn’t have that clever wording. In fact, it has different wording allowing retailers to have control over below-quota allocations: and that, of course, is the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA.

Many of us were here when we debated that legislation. There was fierce debate. I remember the processors arguing strongly against that clause, because they wanted to control the import of milk and cheese products from Europe.

However, in the end, in order to get CETA done — this is the key point — not in order to sell out supply-managed sectors, the government allowed for a limited number of retailers to bring in product directly.

In contrast, the other major deal we have negotiated in recent years, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, doesn’t have the provision for retailers to import directly, and that’s why we are in conflict with New Zealand over that very measure. Because CPTPP is an “open accession” agreement, in other words, any country can apply to join if they meet all of the conditions that other countries have signed onto, this is an ongoing process of negotiation both with potential new entrants as well as with the current membership of the CPTPP. Some of you will know that the United Kingdom is now a Pacific country because they joined CPTPP a few months ago, and we had to negotiate with them in order for that to happen.

My point is simply that both in the case of CUSMA, which has a mandatory review mechanism, and in the case of CPTPP, it is certain that we’ll have to deal with this issue again of how we deal with TRQs on milk and dairy and other supply management issues in exchange for concessions that we seek in markets that we are negotiating with, such as the Philippines when it comes to milk or Indonesia when it comes to beef and so on and so forth.

Senator Simons’ point about maintaining flexibility for negotiators is not hypothetical. It is real, and the great irony of our victory a few weeks ago over the United States is that it actually makes it a sure thing that it will be an issue for us.

Colleagues, this bill is not principally about the merits of supply management. I don’t want to go too deeply into that question, but it is on public record that I don’t get Christmas cards from the Dairy Farmers of Canada, and it is because my reading of supply management sectors is that while they do look after farmers in those sectors, it is at the expense of consumers, particularly poorer consumers. Studies have shown that supply‑managed sectors lead to higher costs compared to international prices and that they are regressive. They hurt lower‑income people more than they hurt the wealthy.

Removing some of the protections for supply management, but not dismantling them — for example, through CUSMA, CPTPP, CETA and maybe other trade agreements — in a limited way does reduce the market share of supply management farmers because there will be import competition, but it doesn’t reduce the income because that is the nature of supply management. It doesn’t necessarily reduce the income because the whole logic of supply management is income maintenance, and you maintain income by reducing supply. It’s basic economics.

If you’re going to get more product in, you want to reduce supply of the product you can control so prices will go up and you can maintain the incomes of the farmers who produce those products.

That system can work and continue to help farmers to stay in the business as long as they want to, in part because the consumption of dairy products is on the decline. This has been a trend for a number of decades now. We can like it or not like it. That’s normative, but the fact is there are many younger people who are shifting away from dairy-based to plant-based milk-type products, and that will allow for some transition of certain dairy farmers to consider their options in terms of the long-term future of their industry.

I will make one more point to build on Senator Simons’ point on the question of exports. She is absolutely right that there are promising markets, particularly in Asia, for some of our supply-managed products. I’m thinking especially of eggs because we have a really fascinating diversity of egg products in our grocery stores. It’s confusing sometimes when you go to the fridge and you look at the five or six permutations of free-range and omega and omega plus and brown and white and so on, but these are highly desirable options in fast-growing, middle-income countries that want to upgrade their dietary choices. Exports are very low in supply management sectors precisely because of supply management, precisely because there isn’t enough supply to allow for exports. It, in fact, discourages the exports of those products, and there is really no reason to expect that the supply management industries themselves will seek to expand exports in a very major way unless some pressure, if I can put it that way, is placed on them.

We saw this in the wine industry after, first, the Canada-U.S. Free Trade Agreement in 1979 and then the NAFTA agreement in 1984. Some of you will remember infamous Canadian wine products like Baby Duck. Let’s say that sommeliers did not recommend Canadian wine products in the 1980s and even the early 1990s. There were predictions of the demise of the industry. Many people were genuinely worried that we would no longer have winemakers in Canada, and it’s true that many wineries did go under as a result of competition from American producers, but as we all know, that industry has turned around. Inefficient producers have gone out of business. More efficient producers have cropped up, literally, and we now have many wines to be proud of in my own province of B.C. and across the country as well.

I want to thank Senator Gerba for her passion in supporting this bill. She has worked extremely hard, and her heart is absolutely in the right place in supporting dairy farmers and others.

I cannot support this bill, even though I want us all to remember that this is not about dismantling supply management in any way. It is about encouraging a shift in competitiveness for our supply management sectors. It is about making sure we can support our other export industries in trade negotiations and providing the flexibility for our negotiators to do so.

Senator Gerba: Would Senator Woo take a question?

Senator Woo: Yes.

Senator Gerba: Thank you, Senator Woo.

Senator Simons said herself in her speech that a lot of other products have been exported. Supply management has been in place for 51 years, and it has never prohibited or prevented the export of products. What’s different is that supply-managed products aren’t always exportable. I don’t think it is entirely accurate to say that farmers can’t access the market. Eggs and milk can’t be frozen. Anyway, what do you think about the motions that were moved in the other place, seeking to protect certain products, and that were defeated every time?

Senator Woo: Thank you for the question, Senator Gerba.

You’re right that there is not a lot of export, in part because the product we have is oriented to the domestic market, but that’s exactly what supply management seeks to do. It seeks to contain and cater to the domestic market by ensuring that supply meets domestic demand. To the extent that there is some surplus that can be exported, the very nature of the system mitigates and militates against exports.