The Canadian government has agreed to a World Trade Organization negotiating framework that places supply management, the Canadian Wheat Board and Ottawa’s ability to fund farm aid packages under attack during the next 17 months of negotiation.
It also sets WTO talks on a path that will see export subsidies eliminated, trade distorting agricultural subsidies cut around the world and tariff barriers come down.
The deal on a negotiating framework came in the early morning hours of Aug. 1 in Geneva after two weeks of bargaining and more than 24 hours of non-stop talks by negotiators and ministers.
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Trade minister Jim Peterson and agriculture minister Andy Mitchell agreed for Canada. At a 1 a.m. (Geneva time) news conference, the two ministers hailed it as an important deal for Canada’s exporters, although they conceded it will make defence of supply management and the wheat board more difficult.
“This is a very important moment in the history of global trade and an important moment for Canada,” trade minister Peterson told reporters. He also conceded that the text, which promises more market access for protected products such as those under supply management systems and negotiations over state-sanctioned trading monopolies like the CWB, means Canadian negotiators have a tough challenge.
Peterson said Canada was isolated at the talks on those two issues, even as he vowed negotiators would fight for wording that would protect those institutions.
“I have to be honest, we did not attract much support,” he said. “We were one against 146. WTO is not going to be a friend of supply management or the Canadian Wheat Board.”
Canadian farm leaders were not available for comment immediately after the deal, but based on earlier positions, members of the Canadian Agri-Food Trade Alliance, including cattle producers and the Grain Growers of Canada, will see it as a good deal that promises to open markets. The Canadian Federation of Agriculture and its allies will see it as a dangerous road map to a potentially damaging final deal in 2005 or 2006.
“This text is not good news,” CFA president Bob Friesen said in a call to CFA members meeting in Quebec City July 30. The text that was approved 27 hours later was not much changed.
CWB chair Ken Ritter said in an Aug. 1 interview the deal hits prairie grain farmers disproportionately hard. He said the end of the ability to have government guarantees on wheat board sales would mean Ottawa has to pay more into the CWB contingency fund to cover potential losses.
“It also calls for negotiation on the monopoly and that is inappropriate. That is a decision for western Canadian farmers,” he said. “I’ve already told the ministers we will dig in our heels on that.”
At the WTO, director general Supachai Panitchpakdi hailed the deal as a “historic breakthrough” that breaks the negotiating stalemate that developed in Cancun, Mexico last September. He said this will lead to another ministerial meeting in Hong Kong in December 2005 where a final deal may be possible.
“For the first time, member governments have agreed to abolish all forms of agricultural export subsidies by a date certain,” he said July 31. “They have agreed to substantial reductions in trade distorting domestic support in agriculture.”
The timing of the end of export subsidies and the exact detail of domestic reductions will be negotiated in Geneva, beginning in September.
While many in the WTO saw Cancun as a failure, the agricultural talks in Geneva last week were based on an agricultural text that was not approved in Cancun but remained on the table.
For Canada, there are two main controversial parts:
- Canada will have to increase guaranteed minimum import levels for its supply managed sectors, such as the dairy, poultry and egg industries. As well, Canada’s high tariffs on imported products that come in above quota limitations may have to come down. At the last moment, a requirement that over-quota tariffs be reduced was dropped from the text but there is a strong commitment to “substantial improvement” in market access through “combinations of tariff quota commitments and tariff reductions.”
- Agreement that the final deal will end the ability of state trading entities, such as the wheat board, to have government guarantees on export sales and a commitment to negotiate “the future use of monopoly powers.”
Ritter said in an interview that would effectively eliminate the board’s ability to set initial prices at the start of the crop year, which are guaranteed by government dollars, if the market returns less than the initial price.
He insisted the issue of state trading monopolies should be outside the mandate of the WTO talks.
