Quebec has been given until the end of the year to repeal provincial laws that have effectively banned sales in that province of edible oil dairy substitutes, such as some margarines and non-dairy creamers.
The sections of Quebec’s Food Products Act and related regulations in question were shot down in a ruling Wednesday by a dispute resolution panel established under the pan-Canadian Agreement on Internal Trade (AIT).
The panel also ordered that until Quebec brings its rules into AIT compliance, the Quebec government must “refrain from enforcing” the non-compliant measures.
However, AIT officials noted Wednesday, Quebec declared Monday it will appeal the panel’s ruling — which stops the clock for Quebec to comply with the panel’s deadline until after any re-hearings of the dispute are concluded.
That appeal process could take up to seven more months, the Saskatchewan government said Wednesday.
The AIT panel was convened by request last June from Saskatchewan, with the support of the other three oilseed-growing western provinces. [Related story]
The panel’s ruling, dated March 31 but publicly released Wednesday, followed a hearing Jan. 8 in Quebec City, at which Saskatchewan alleged Quebec’s bans on production and sale of “dairy alternatives” are discriminatory in favour of Quebec’s influential dairy sector.
Specifically, the Act allows Quebec’s government to designate dairy product substitutes that may be prepared, offered for sale, sold, delivered, processed, held, displayed or transported for sale.
The Act also allows the province to determine when milk or any derivative of milk “ceases to be a dairy product” and when milk is to be considered the main ingredient in the making of a dairy product. The province can also authorize standardizing of the proportion of fat and other solids of any dairy product.
Saskatchewan also claimed Quebec’s ban on such sales acts as a barrier to movement of dairy-alternative goods into and across Quebec, restricting their possible export by Quebec-based manufacturers.
Also, Saskatchewan claimed, given the size of the Quebec market, any ban the provincial legislation imposes is an “ongoing impediment” to internal trade in edible oil products. Such bans, Saskatchewan said, weigh on Canada-wide demand for dairy alternatives, deprive consumers of choice and access both within and outside Quebec, and leave oilseed processors’ return on innovation “greatly diminished.”
“Cannot be justified”
Quebec, during the January hearing, argued that its provincial assembly had since tabled Bill 56, a package of related regulatory amendments which would repeal some of the legislation Saskatchewan aimed to have pulled.
Saskatchewan and the intervenor provinces agreed that Bill 56, as tabled last Sept. 19 by the former Parti Quebecois government, would be a “positive development,” the AIT panel noted.
However, the challenger provinces argued, Bill 56 hasn’t yet passed; there’s no guarantee it will; and even if it does, it’s “not sufficient to address all the issues raised.”
The three-member AIT panel has now ruled that the Quebec laws and regulations being challenged are “inconsistent” with the terms of the AIT. The federal government and all provinces and territories except Nunavut are parties to the AIT.
The AIT panel didn’t rule on whether Quebec’s regulations “serve the legitimate purpose of consumer protection,” but ruled that even if Quebec’s rules did serve such a purpose, their provisions “cannot be justified” as per the AIT.
“We initiated the trade challenge on that principle and to ensure everybody is adhering to the same trade rules,” Tim McMillan, Saskatchewan’s minister responsible for trade, said in a release Wednesday. “The AIT panel has agreed with our position.”
“We’re confident the original ruling will prevail and that Quebec will adjust its rules as quickly as possible, allowing full access to its market for our producers,” Saskatchewan’s agriculture minister Lyle Stewart said in the same release.
“Today’s ruling is a positive development, one we expect to be upheld on appeal,” Vegetable Oil Industry of Canada president Sean McPhee said in Saskatchewan’s release. “It seems like a small thing, but businesses in Canada should not be discriminated against by unfair trade rules.”
A strenuous defender of its dairy sector, Quebec has previously placed substantial limits on the marketing of non-dairy products such as margarine.
An AIT panel in 2005 shot down Quebec’s decades-old ban on the sales of margarine sporting the same “pale yellow hue” as butter. Until 2008, margarine could only be sold in Quebec with a lard-like whitish appearance. — AGCanada.com Network