GENEVA, Switzerland – It was close to midnight July 1 at the Canadian Geneva headquarters when agriculture minister Chuck Strahl made an offer that Canada might be able to bridge the gap between the United States and the European Union that was blocking a World Trade Organization deal.
Strahl and Canadian trade minister David Emerson had been joined by U.S. trade representative Susan Schwab and agriculture secretary Mike Johanns for the final signing of a Canada-U.S. deal on softwood lumber.
In the background was the stalemate several hours earlier in negotiations to forge a new WTO trade agreement.
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One of the sticking points had been a U.S. demand that the Europeans promise to open their markets more to imports.
They argued that the European demand for higher protection for sensitive products would deny much of the average access being promised by the EU.
Strahl, with some experience in dealing with demands for sensitive products protection from supply management groups, suggested to the two American politicians that Canada might be able to help in creating rules that provide sensitive product protection while allowing a predictable and substantial increase in imports.
“I told them I thought we could be helpful in bridging some of the gaps or create some language around sensitive and special products,” Strahl said later. “I think there is a way to convince the Americans that there is an intelligent, defensible sensitive products policy that you can bring disciplines on. I think we could help craft something that people could live with.”
At the core is the Canadian argument that rather than imagine increased trade comes only with lower tariffs, trade in sensitive products can be substantially increased by increasing tariff rate quotas that guarantee a portion of the domestic market to imports.
That allows predictability for import-sensitive sectors while still increasing trade.
“All businesses need predictability,” said Strahl, a former forestry businessperson from British Columbia’s Fraser Valley. “There is a way to craft language that minimizes the impact but still allows predictability. I think Canada could help in that.”
There was no indication if the Americans will take him up on the offer but it represented a different side of Strahl’s view of sensitive product protection than was evident in Canada before he left for Geneva.
Several times, the minister had said that by refusing in Geneva to agree to any cuts in over-quota tariffs that protect supply management, Canada was isolating itself in the WTO and effectively excluding itself from negotiations since the sentiment on that issue was 148Ð1.
Supply management groups were apprehensive that the minister was signalling that he was prepared to accept over-quota tariff cuts that they said would throw their production-managed industries into chaos because of the unpredictability of imports.
In Geneva, Strahl was signalling that he agrees there is a way to increase trade and still produce predictability of supply.
Mike Dungate, general manager of Chicken Farmers of Canada, said the government was not giving tactics away during Geneva briefings with industry representatives watching the WTO talks, but he saw support.
“The minister has said he is going to be very aggressive supporting a balanced position for Canada,” Dungate said. “How they are going to do that is a decision for the government to make and they are not going to talk about tactics here, at least not with us. But we accept the government at its word that the balanced position remains.”
Later, Edouard Asnong, chair of the Canadian Pork Council, offered an example of how properly managed tariff rate quotas can increase trade.
In the last global trade agreement in 1993, all countries said they would make at least five percent of their domestic market available to imports.
The European Union said that instead of applying the five percent TRQ requirement to each meat product, it would apply it generally to meat imports. The result would have been to limit pork access to 0.5 percent of domestic consumption.
“If they had followed the rule, we would have been competing for a part of 750,000 tonnes of pork access,” said Asnong. “We ended up competing for 75,000 tonnes of access.”
