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Request of
Manitoba Internal Trade Representative to Intervene in the Ontario Challenge of
Quebec's Margarine Colour Regulation on Behalf of Canadian Oil Processors
Association (COPA) May 30, 2002 Mr. Alan Barber Dear Mr. Barber: A
request by the Canadian Oilseed Processors Association (COPA) In
Opposition to Quebec's Margarine Colouring Regulations On behalf of the member companies of COPA, this is a request that the Province of Manitoba join the panel proceedings under the Agreement on Internal Trade (AIT) to support Ontario's challenge of Quebec's margarine colour regulation under the Quebec Dairy Products and Dairy Products Substitutes Act. This request is made to you in your capacity as Internal Trade representative for the Province of Manitoba. Subject Matter of Complaint The Province of Ontario has initiated a
complaint to the AIT regarding Quebec's regulation of the colour of margarine
manufactured or offered for sale in the province of Quebec.
Specifically, subparagraph (c) of paragraph 1 of section 40 of the Regulation
Respecting Dairy Products Substitutes (R.R.Q. 1981, c.P-30, r.15) as
amended, requires that in Quebec margarine "must have a colour measuring
not more than 1 and 6/10th degrees or less than 10 and 5/10th
degrees of yellow or yellow and red combined on the Lovibond colorimeter
scale". On March 21, 2002, the Province of
Ontario notified the Province of Quebec and the AIT Secretariat of its intention
to seek a dispute resolution process in this matter under Chapter 17 of the AIT. On April 15, both the Provinces of
Ontario and Quebec confirmed their intention to the AIT Secretariat to proceed
directly to a dispute panel under Article 1704 of the AIT and requested that the
AIT Secretariat establish that panel to commence on August 1, 2002. Substantial Interest of Canadian
Oilseed Processors Association Members of COPA own and operate canola
crushing plants and canola oil refining facilities in the Province of Manitoba.
These companies purchase their seed from farmers who grow canola in the
Province of Manitoba. The product
of that canola seed and canola oil produced in Manitoba is shipped to, and sold
in all regions of Canada including Ontario and Quebec where it is manufactured
into margarine, among other products, for sale in both of those provinces. The Province of Ontario contends that
Quebec's margarine colour regulation is a barrier to interprovincial trade as it
foists additional costs on margarine manufacturers to produce and market one
colour of margarine for Quebec and another for the rest of Canada. In addition to the economic injury to
margarine manufacturers, we contend that the colour regulation depresses
margarine sales in the Province of Quebec and that the sole purpose of the
regulation is to protect the dairy industry at the expense of the oilseed,
edible oil and margarine industry. As
a result, the sale of canola oil -- a principal ingredient in margarine - is
impacted negatively as margarine manufacturers have less demand for oil derived
from canola grown and processed in the Province of Manitoba. Specifically, we note that the
consumption of margarine in Quebec is approximately 58 per cent of the combined
market in the province for butter and margarine; whereas, nationally, margarine
has approximately 67 per cent of this combined market.
In total, the margarine industry suffers a loss of approximately $17
million annually due to Quebec’s colour regulation which depresses margarine
sales in that province. As noted below, the colour regulation was to have been
repealed by September 1, 1997; hence, the loss to the margarine industry,
including canola growers and crushers, is so far $85 million in the period since
the AIT was implemented -- five times the annual loss -- and this loss will
continue until the regulation is repealed. Part of this loss is shouldered
by canola growers and the oilseed processing industry in the province of
Manitoba . Quebec’s margarine
colour regulation causes canola growers and COPA processors in the Province of
Manitoba economic injury and denial of benefits of the Agreement on Internal
Trade, and the consequences of that economic injury and denial of benefits are
real and are being felt in the Province of Manitoba. Violation of AIT In 1994, the Federal government and the
provinces signed the Agreement on Internal Trade (AIT) aimed at preventing
governments from maintaining trade barriers and providing for the harmonization
or reconciliation of government regulations.
Chapter Nine of the agreement, Agricultural and Food Goods, identified
“technical barriers with policy implications” to be included in the scope
and coverage of the Agreement by September 1, 1997. Various documents and communiqués identified the need for
“governments (to) reconcile a number of agricultural regulations such as those
relating to margarine colouring and imitation dairy products”. On October 1, 1997, the Federal/Provincial Committee on Internal Trade was advised by the Federal/Provincial Agricultural Trade Policy Committee of unresolved measures involving technical barriers with policy implications; these included: ·
Margarine colouring restrictions and other
margarine standards; ·
Standards regarding dairy blends (mixtures
of butter and margarine) and imitation dairy products. While this request relates specifically to Ontario’s complaint against Quebec’s margarine colouring regulation, we note that there are other margarine standards and standards relating to blends of butter and margarine which have yet to be addressed under the provisions of the Agreement on Internal Trade. As a matter of record, COPA strongly supports the full and meaningful application of the AIT to all outstanding obligations on the part of all parties. Regarding the margarine colour
regulation, Quebec is violating the following provisions of the Agreement on
Internal Trade:
InterventionChapter 17 of the AIT, Dispute Resolution Procedures, identifies the right of any Party to intervene in the panel proceedings. (Note that a “Party” is a party to the agreement; that is a province, territory or the Federal government.) Article 1704, paragraphs nine and ten addresses the right of intervenors: 9.
Any Party that has a substantial interest in the matter in dispute,
within the meaning of paragraph 10, is entitled to join the panel proceedings on
delivery of written notice to the other Parties and the Secretariat within 15
days after the date of delivery of the request for establishment of a panel. 10.
A Party shall be deemed to have a substantial interest in the matter in
dispute where: (a)
in the case of any Party, it maintains a measure analogous to the one at
issue; or (b)
in the case of a Party that is a Province, it has significant number of
persons carrying on business in the Province who are or will be affected by the
measure at issue. Chapter 1704.10, sub-paragraph (b),
provides the opportunity for persons who have an economic interest in having the Quebec margarine colour
regulation repealed to request of their respective provincial governments who
are parties to the agreement to request of the Secretariat to join the panel
proceedings as intervenors on behalf of those persons. Request of Canadian Oilseed
Processors Association The member companies of COPA ask that
the province of Manitoba join panel proceedings initiated by Ontario to
challenge Quebec’s margarine colour regulation under the terms of the
Agreement on Internal Trade. We ask
that the Province of Manitoba indicate to the AIT Secretariat its intention to
intervene no later than June 30, 2002. We
will be calling on you and your colleagues in the near future to confirm your
support for this initiative. Sincerely, Robert Broeska President, COPA cc. Honourable Gary Doer, Premier of Manitoba Honourable Rosann Wowchuk, Minister of Agriculture and Food
Honourable Jean Friesen, Minister of Intergovernmental Affairs
A similar letter was sent to the following: Province of Alberta Ms. Mary Ballantyne, Internal Trade Representative
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