Letter to Steve Peters, Minister of Agriculture in regards to Ontario's Violation of Agreement on Internal Trade Article 1704 Panel Findings and Recommendations as a result of Amendments to the Milk Act

January 26, 2005

Hon. Steve Peters
Minister of Agriculture
Ontario Ministry of Agriculture and Food
Floor 11 – 77 Grenville Street
Toronto , ON
M5S 1B3

Dear Minister:

Re: Ontario's Violation of Agreement on Internal Trade Article 1704 Panel Findings and Recommendations as a result of Amendments to the Milk Act

VOIC is an industry group representing 25,000 Ontario soybean growers, 70,000 canola growers in Ontario , Manitoba , Saskatchewan , Alberta and British Columbia , oilseed processors and makers of oilseed-based food products, such as soy and canola-based margarines and cooking oils. VOIC members make a combined annual contribution to Canada 's Gross Domestic Product of approximately $10 billion. Members include the Canadian Canola Growers Association, the Ontario Soybean Growers, the Canola Council of Canada, the Canadian Oilseed Processors Association (ADM Agri-Industries Ltd., Bunge Canada, Canbra Foods and Cargill Limited), and Unilever Canada.

We are in receipt of your letter dated January 7, 2005 , signed on your behalf by Suzanne van Bommel. Thank you for your prompt response to our January 5, 2005 letter.

We would like to clarify that our letter was not about “milk products with some edible oil content”. It was about products that combine vegetable oil and dairy ingredients that are not dairy products and cannot be regulated as dairy products according to national food standards.

These are “dairy blends”, which were and are the subject of the Article 1704 dispute brought forward by B.C. and Alberta , and are defined by the Panel report as “… vegetable oil products with any amount and kind of milk ingredient and that resemble a dairy product.” You have now made these dairy blend products illegal by inappropriately expanding the definition of a milk product to extend the reach of the Milk Act to regulate non-dairy products and prevent the entry into Ontario of B.C., Alberta , Saskatchewan , Manitoba and Ontario canola and Ontario soy oil based vegetable oil/dairy blends.

On June 30, 2004, you advised the market place, in a letter to the Dairy Farmers of Ontario, that the Ontario government would not replace the EOPA with an “alternate or substitute regulatory regime”, once the EOPA was repealed, thus acknowledging your government's commitment “…under the umbrella of the Council of the Federation, to ensure no new barriers are erected to limit interprovincial commerce.”

On November 10, 2004 , the Article 1704 Panel, in the dispute brought forward against Ontario by Alberta and B.C., issued its report with findings and recommendations that include:

• Ontario should repeal the EOPA on January 1, 2005
• Dairy Blends and Dairy Analogs are subject to the provisions of the Agreement on Internal Trade and the substantive issue of the dispute (contrary to the statement in your letter) was and is not restricted to the mere repeal of the EOPA.
• The Government of Ontario should make it clear it will not use the Milk Act to implement limitations on the sale of Dairy Analogs and Dairy Blends.
• The Government of Ontario should “take careful note” of the findings with respect to the transparency obligations of the Agreement contained in Articles 406 and 907.

In spite of your commitment and the Panel's findings and recommendations, the Ontario Farm Products Marketing Commission – an Ontario government agency for which your Ministry is responsible – made amendments to the Milk Act on December 24, 2004 by prohibiting dairy/vegetable oil blended fluid products, with very limited exceptions, and severely restricting dairy/vegetable oil spreads, such as butter/margarine blends.

Regrettably, your response to our January 5, 2005 letter requesting the immediate withdrawal of these amendments neither confirms that the Ontario government has done so nor adequately explains the reasons for the introduction of these amendments. Specifically, the position taken by Ontario in the letter:

• Fails to address the actual subject matter of the Article 1704 Panel dispute referred to above and minimizes the scope of the type of products involved;
• Does not address or explain why you have taken actions that ignore the Panel finding that the Ontario government not use the Milk Act to limit the sale of dairy analogs and dairy blends.

In addition, your letter states that the amendments “are seen as a means to facilitate the transition [emphasis added] between repeal of the EOPA and the development of effective national standards… ” [emphasis added]. In fact, however, a national approach was identified and recommended by the Federal//Provincial/Territorial Agri-Food Inspection Committee (FPTAIC) in February 2001: “Provinces should deregulate products that imitate or resemble dairy products, whether or not they contain dairy ingredients, and defer to existing federal regulatory processes that address the consumer information and fraud issues.” Moreover, the notion of any “transitional” restrictions on “dairy blends” ignores the specific findings and recommendations of the Panel and is inconsistent with the national standard already in place. …/3

In summary, therefore, to date, your government's action in this regard:

• Contradict your internal trade commitments made to your provincial partners under the Council of the Federation and your government's Throne Speech commitment to reduce internal trade barriers and statements by the Premier to that effect;
• Dismiss the Panel findings and recommendations and the governments of B.C. Alberta , Manitoba and Saskatchewan .
• Ignore Ontario 's AIT obligations, and the important trade liberalizing intent of those obligations clearly valued by Canadians.

All of this you have done with no public explanation and for no apparent reason other than to protect dairy producers from legitimate competition. We believe that the Parties to the Article 1704 dispute and other key stakeholders deserve a clear explanation of the inconsistency of your government's action with the Panel findings and recommendations, and Ontario 's AIT obligations.

In any event, it is requested that you rectify this situation by immediately repealing all amendments to the Milk Act that offend the Panel findings and recommendations.

Yours sincerely,

Sean McPhee
President

COPIES:

Government of Canada

Rt. Hon. Paul Martin, Prime Minister of Canada

Hon. David Emerson, Minister of Industry

Hon. Andy Mitchell, Minister of Agriculture and Agri-Food

Premiers

Premier, Honourable Dalton McGuinty

Premier, Honourable Ralph Klein

Premier, Honourable Gordon Campbell

Premier, Honourable Gary Doer

Premier, Honourable Lorne Calvert

Premier, Honourable Jean Charest

Premier, Honourable John F. Hamm

Premier, Honourable Bernard Lord

Premier, Honourable Patrick G. Binns

Premier, Honourable Danny Williams

Premier, Honourable Dennis Fentie

Premier, Honourable Joseph Handley

Provincial Members of the Committee on Internal Trade

Honourable Joseph Cordiano

Honourable Ed Stelmach

Honourable John Les

Honourable Scott Smith

Honourable Len Taylor

Honourable Michel Audet

Honourable Earnest Fage

Honourable Percy Mockler

Honourable Michael Currie

Honourable Kathy Dunderdale

Honourable James Kenyon

Honourable Brendan Bell

Provincial Ministers of Agriculture

Honourable Doug Horner

Honourable Jon van Dongen

Honourable Rosann Wowchuk

Honourable Mark Wartman

Honourable Francoise Gauthier

Honourable Chris d'Entremont

Honourable David Alward

Honourable Kevin MacAdam

Honourable Trevor Taylor