Cablegate: Wto Hong Kong Ministerial: Canadian Reactions

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

231721Z Dec 05

UNCLAS SECTION 01 OF 02 OTTAWA 003747

SIPDIS

STATE FOR EB/TPP/BTA, EB/TPP/BTA/EWH AND EB/TPP/MTA

WHA/CAN - BREESE AND HOLST AND E - U/S SHINER

STATE PLEASE ALSO PASS TO USDA

DEPT PASS USTR FOR MELLE AND CHANDLER

USDOC FOR 4322/ITA/MAC/WH

E.O. 12958: N/A
TAGS: ECON ETRD EAGR CA WTRO
SUBJECT: WTO HONG KONG MINISTERIAL: CANADIAN REACTIONS

REF: OTTAWA 3586 AND PREVIOUS

1. SUMMARY/INTRODUCTION: Canadian players' reactions to the
outcome of this month's WTO Hong Kong ministerial were
generally positive, as the declaration keeps alive the
promise of greater market access for Canada's competitive
sectors such as livestock and grain, while not appearing to
threaten quota-based "supply management" in dairy, eggs and
poultry (see reftel). Canadian reporters credited the U.S.
with taking the initiative on agricultural export subsidies
in the lead-up to the meetings. The ministerial has further
energized discussion of the structure of the quasi-
governmental Canadian Wheat Board and options for reforming
it. END SUMMARY/INTRODUCTION

2. GOC: International Trade Minister Jim Peterson and
Agriculture Minister Andy Mitchell's joint official
statement said: "This text provides scope for Canada to
achieve its objectives in key areas. A number of Canadian
proposals and ideas are reflected in the Declaration,
specifically on non-agricultural market access and domestic
support to agriculture. We are also pleased that Canada's
objectives have been met on the treatment of sensitive
products and on exporting state trading enterprises. While
the Hong Kong Ministerial Conference did achieve real
progress in the areas of market access for non-agricultural
products, services, export subsidies for agriculture, and
duty-free, quota-free market access for least-developed
countries, much remains to be done. We will work
aggressively with members and domestic stakeholders toward
completing the negotiations by the end of 2006."
3. PROVINCES: The Province of Alberta noted that the U.S.
movement on export subsidies was "a huge step," and
expressed confidence that Alberta grain and livestock
producers would be globally competitive if subsidies and
tariffs were eliminated. Quebec Ministers first claimed
partial credit for removing any threat to "supply
management" in the final text. After promising to remain
vigilant on this front, they then approved other aspects of
the declaration, which they said "clears the way to creating
conditions for improved market access without compromising
our sensitivities."
4. FARM/INDUSTRY GROUPS: The President of the pro-
competitive Canadian Agri-Food Trade Alliance (CAFTA) said,
"We recognize much of Canada's work in this text on the
export competition and domestic support pillars, and we
appreciate that. But we also note that Canada advocated the
removal of the minimal progress made in the first draft on
market access for sensitive products, without achieving any
language that would have assured us that Canada is still
seeking substantial improvements in market access for our
exports even if they are designated sensitive. But this
round will not be a success without a meaningful deal on
agricultural market access. Our Ministers and negotiators
have shown they do have a strong influence on the
negotiations." The President of the more protectionist
National Farmers Union said, "Canadian farmers should be
happy . . . [Ministers], along with trade negotiators and
farm leaders, prevented calamity for farmers, at least in
the short term." Ontario Federation of Agriculture
representatives called on Canadian governments to continue
agricultural support payments until they are reduced by WTO
agreement, saying "There's no reason we should sacrifice
ourselves until everybody plays by the rules."
5. MANUFACTURERS: According to the Canadian Manufacturers
and Exporters, "We would have preferred a far more ambitious
result, but, compared to the failures in Seattle and Cancun,
these talks have restored hope for a more open and fair
trading system. CME is pleased by the reference to services
in the communiqu, but we still want to see an ambitious
agreement on industrial tariffs that cuts deeply into
applied rates in both developed and emerging countries. We
also believe it will be important to move ahead in sectoral
negotiations."
6. BUSINESS LEADERS: The Canadian Council of Chief
Executives participated in a "Statement by World Business
Leaders" which read in part, "A significant amount of work
that should have been completed in Hong Kong remains to be
done in the year ahead. . . . The gaps between the positions
of key WTO member countries remain large. Any further
delays or compromises on ambition in getting to a final Doha
Round agreement will put worldwide economic growth in

developed and developing countries at risk and may lead to
the ultimate failure of this Round. . . . In the next few
months, WTO members and negotiators must focus on achieving
real results in each of the key negotiating areas. While
some initial results have been achieved in trade
facilitation negotiations, tremendous work remains in
agriculture, non-agricultural market access, and services.
On industrial goods, WTO members must agree to substantially
reduce remaining barriers on all industrial goods, and they
should support zero duties in sectors that wish to see
tariffs fully eliminated. On services, time is running out
and all members share a responsibility to table proposals
and advance negotiations. Members must set out to achieve
commercially meaningful progress, including the application
of agreed upon benchmarks in certain areas, and a focus on
key services sectors that are most ripe for liberalization."
7. DEVELOPMENT NGO: The head of the Winnipeg-based
International Institute for Sustainable Development wrote
that while the commitment to end agricultural export
subsidies "is a welcome achievement (if a distant prospect),
the problem is that there was no real movement on domestic
subsidies. . . It is worth asking what developing countries
got out of this meeting; the Doha Round has since its
inception been sold as a ticket out of poverty . . . The
harvest for the poor was pretty meagre. . . . The
uncertainties that remain offer enough room to swing the
final Doha deal from good to bad for Canada -- and for the
poor countries of the world."
8. CANADIAN WHEAT BOARD: The CWB said, "The wording in this
new text means that the CWB's existence will not be on the
table at the WTO. This will make it more difficult for the
United States to achieve its objective of eliminating our
marketing system." A spokesperson was quoted saying that
under commitments made prior to Hong Kong, "farmers in
Canada are still poised to lose their government guarantees
of initial payments and Wheat Board borrowings under a new
[WTO] deal, with still no signs of any meaningful reductions
in European or American domestic farm subsidies or any real
improvements in market access issues."

9. COMMENT: There were no surprises among the reactions
quoted above, and the Hong Kong meeting prompted relatively
little further discussion in Canadian media. While Canadian
political leaders seem unanimously committed to defending
"supply management" in the dairy, egg and poultry sectors,
discussion of the future of the Canadian Wheat Board is much
more dynamic. The CWB was once a GOC-owned corporation and
its monopoly on the export of certain grains is enshrined in
Canadian law, but it is now run by a board of 15 directors,
ten of whom are elected by grain producers and five of whom
are appointed by the GOC. The Board election process is
currently being debated. The GOC minister responsible for
the CWB, Treasury Board President Reg Alcock, was recently
quoted saying "I believe the board is going to evolve into
further farmer control . . . There are a number of
possibilities."
WILKINS

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