The shape of a potential World Trade Organization deal is emerging, says Canada’s chief agricultural negotiator.
Steve Verheul said it would increase export opportunities by billions of dollars for the Canadian farm and food industries but would undermine supply management and possibly end the Canadian Wheat Board monopoly.
He told the House of Commons agriculture committee and later a Dairy Farmers of Canada convention that by Easter, negotiators will have resolved all the issues they can.
It will be up to ministers to decide if they want to make the compromises needed to seal the deal. He said there is a chance for a spring deal, although he rated it less than 50 percent.
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“It is shaping up to be a pretty good package for most areas of Canadian agriculture,” Verheul said.
“We’re getting a lot of what we want to achieve in export competition and in domestic support, domestic subsidies. And we also are doing well in many areas of market access.”
However, he warned that Canada is isolated on the issue of blocking any change in supply management protections, and the government will have to make the tough political decision of whether to refuse to sign if a deal is struck that does not reflect supply management’s interests.
As well, the United States and European Union continue to insist on ending state trading enterprise monopolies by 2013, which would affect the wheat board.
Verheul said he is happy the final accept-or-reject decision will not be his, but he figures the government would have little choice.
“Canada is probably among developed countries the most reliant on trade so the WTO is essential for us,” he told MPs.
“I personally can’t imagine us walking away.”
Last week as WTO agriculture negotiation chair Crawford Falconer released his latest version of proposed agricultural rules, WTO director general Pascal Lamy said spring represents the last best chance for a deal this year.
He is expected to summon trade and agriculture ministers to Geneva in early April to try to forge a deal that could be ratified by the end of 2008.
“We know the task ahead of us is a big one and the time available for it is tight but we have never been nearer to achieving it,” he said of the negotiations that started in Doha, Qatar, more than six years ago.
“We are, I believe, on the last lap and we have now started the final sprint.”
Verheul told MPs talks “will likely slip into a lengthy hiatus” if a deal isn’t made this spring and all the detailed tariff lines aren’t negotiated by the end of 2008 when the current U.S. administration and Congress leave office.
He said the deal that could come from the emerging consensus would help Canadian exporters in many ways. The Canadian Agri-Food Trade Alliance estimates it would create export opportunities of at least $3 billion annually.
All forms of export subsidies, including tighter disciplines over use of food aid and export credit programs as a disguised form of subsidy, would be eliminated by 2013.
Tariff barriers would be cut around the world, creating more opportunity for exporters.
As well, prices would rise because domestic subsidies would be slashed. Verheul estimated that in the U.S., allowable domestic supports would be cut from the $48 billion to $13 to $16 billion over the five-year implementation period.
Verheul said a deal would also reduce Canada’s ability to spend money on stabilization and crop insurance plans. A 45 percent cut would reduce allowable federal and provincial spending to $2.4 billion from $4.3 billion.
He said a deal would mean a reduction of at least 22 percent in supply management overquota tariffs, an increase in tariff-free imports through an expanded tariff rate quota and the likelihood that Canada would not be able to include all its supply managed products in the sensitive products category that would be subject to lower tariff cuts than the more general tariff cut of close to 70 percent.
Last week, federal agriculture minister Gerry Ritz promised dairy farmers that the government will maintain until the end of negotiations its no compromise stance.
Then it will have to decide.
