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Cablegate: Canada Unties Half Its Food Aid

This record is a partial extract of the original cable. The full text of the original cable is not available.

261818Z Sep 05

UNCLAS OTTAWA 002881

SIPDIS

SENSITIVE

STATE FOR WHA/CAN
PARIS ALSO FOR OECD

E.O. 12958: N/A
TAGS: EAID EAGR PREL CA
SUBJECT: CANADA UNTIES HALF ITS FOOD AID

REF: OTTAWA 1522

1. (U) Up to 50% of Canada's food aid may now be purchased
in developing countries. Until September 22, 90% of Canada's
food aid contributions had to be Canadian-sourced. The
ministers of International Cooperation, of International
Trade and of Agriculture and Agri-food made their
announcement after over a year of consultations with Canadian
agricultural producer groups. Food aid purchases had
accounted for only 0.3% of domestic production, so the change
is not expected to have significant market impact.

2. (U) Food aid may now be purchased from lower-income
countries, with the GOC announcement specifying that "users
of trade distorting subsidies are not eligible as source
countries." A 2002 Cabinet decision that expanded untying
authority for general aid had specifically excluded food aid
to allow for further consultation and analysis. The change
is expected to provide increased flexibility, timelier
assistance, and support for market mechanisms in developing
countries. Although those goals are in keeping with the
development aims of Canada's International Policy Statement
published earlier this year (reftel), this move was not
foreshadowed in the ISP.

3, (SBU) A contact at the Canadian International
Development Agency explained that Canada buys very little
food aid directly. Most foreign food aid is provided through
the World Food Program, with procurement decisions part of
the contract. Those contracts will now permit greater
discretion by WFP in sourcing its purchases using GOC funds.
The list of 100 countries from which food aid may be
purchased was drawn largely from countries in the lowest
three tiers on the OECD DAC list. A change in the list would
require agreement by all three ministers, as the countries
were approved by industry groups. Our source did not believe
there was any science behind the choice of 50% as the cut-off
point: it was big enough to make a statement and serve as a
starting point.

Visit Canada's Classified Web Site at
http://www.state.sgov.gov/p/wha/ottawa

RODDY

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