HONG KONG – When World Trade Organization director general Pascal Lamy presented his next-to-last proposal for a final text out of last week’s WTO meeting Dec. 17, Canadian negotiators and supply management lobbyists on-site were distraught.
It looked like their attempt to fight for no reductions in high over-quota tariffs for dairy, poultry and egg products in the market access negotiations was about to be sabotaged.
“On sensitive products, we agree that the greater the deviation from the tariff reduction formula, the greater the increase in tariff quotas,” read the text.
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In layman’s terms, it could have been interpreted to mean that if Canada opted to exempt what it considers sensitive products from general tariff reductions, it could be required to raise the limit of foreign products allowed before higher tariff rates kick in.
Canada now assesses tariffs of 200-300 percent on supply-managed products that come in above allowable limits, which is now at a maximum five percent of domestic consumption.
A day later after strong arguments by the G-10 group of protectionist countries led by Japan, Switzerland and Norway, the sentence was changed to read: “We recognize the need to agree on treatment of sensitive products, taking into account all the elements involved.”
“I see that as leaving the slate clean (on the need to cut over-quota tariffs) and our negotiators have a deep understanding of this issue in terms of the Canadian context,” said agriculture minister Andy Mitchell. “We’ll go out and engage in negotiations.”
In other words, in trade parlance that asserts “the devil’s in the details,” Canada’s ability to ride on G-10 coattails appears to have dodged a devil detail that could have made defence of supply management protections more difficult.
The Dec. 18 text that will be the basis for negotiations at least until April 30, 2006, when final agreements are supposed to be ready, contains language on the three agricultural “pillars” that affect Canadian farmers in these talks.
- Market access: There is agreement that tariffs cuts will be made through four tiers with higher tariffs being cut the most. However, a definition of “sensitive products” and their treatment must still be negotiated, including the number of products that can be designated.
The European Union has suggested a percentage of tariff lines be eligible. The United States and most Cairns Group countries suggest one percent.
Developing countries will be allowed to designate an “appropriate” number of products for special protection on the basis of food security, farmer livelihood and rural development.
- Domestic support: There will be four tiers of cuts, with highest subsidies cut the most. Canada expects to be in the lowest category and there is agreement that real cuts in support must exceed individual cuts in special support categories within countries.
Although trade minister Jim Peterson said last week this would result in reductions in the ability of Canadian governments to continue with record farm support payments, Canadian Federation of Agriculture president Bob Friesen said Dec. 18 that is not the case.
Canada could shuffle the way it supports farmers from trade distorting categories to “green box” non-distorting categories if it is creative.
- Export competition: The text says: “We agree to ensure the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect to be completed by the end of 2013.”
It means negotiators will be trying to rein in the American tendency to use food aid and concessional export financing as a means to secure market share. It means the behaviour of state traders such as the Canadian Wheat Board will face new restraints, with details to be negotiated by April 30.
