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Cablegate: Canadian Disappointment Over Suspension of Wto

VZCZCXRO0905
PP RUEHAG RUEHAP RUEHDE RUEHDF RUEHGA RUEHGI RUEHHA RUEHHM RUEHLZ
RUEHMR RUEHPA RUEHPB RUEHQU RUEHVC
DE RUEHOT #2237/01 2061957
ZNR UUUUU ZZH
P 251957Z JUL 06
FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC PRIORITY 3255
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE PRIORITY
RUCNWTO/WORLD TRADE ORGANIZATION COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 OTTAWA 002237

SIPDIS

SIPDIS

STATE FOR EB/TPP, WHA/CAN - LEN KUSNITZ AND E
DEPARTMENT PASS USTR
USDOC FOR 4322/ITA/MAC/WH

E.O. 12958: N/A
TAGS: EAGR ECON ETRD WTO WTRO CA
SUBJECT: CANADIAN DISAPPOINTMENT OVER SUSPENSION OF WTO
DOHA TRADE ROUND TALKS

REF: A. STATE 120938
B. 05 OTTAWA 3747 (NOTAL)

1. (U) Summary: Shortly after the WTO announcement that the
Doha Trade Round negotiations would be suspended
indefinitely, Canada's International Trade Minister Emerson
and Agriculture Minister Strahl issued a statement expressing
their "disappointment." Emerson said that Canadian farmers
as well as manufacturers and service providers would have
benefited from the expanded market access that the Doha
negotiations aimed to achieve. Strahl saw the suspension as
a "serious setback," but reiterated that Canada remains
committed to advance the interests of its supply-managed and
export-oriented agricultural industries. Since the WTO talks
have stalled, Canada will ramp up its efforts to conclude
regional and bilateral trade agreements. End Summary.

2. (U) On July 24, International Trade Minister David
Emerson and Agriculture Minister Chuck Strahl jointly
expressed their disappointment following WTO Director-General
Pascal Lamy's announcement earlier in the day that the latest
round of WTO negotiations -- the Doha Development Agenda --
has been suspended until further notice. "Despite enormous
efforts by all WTO members and 11th-hour meetings between G6
participants, the gaps in negotiating positions proved to be
too large to bridge within the current time frame," said
Minister Emerson. "This is very disappointing for Canada and
for all developed and developing countries, given the
significant economic benefits that could have been achieved
through an ambitious outcome for these negotiations. He
noted that "Canadian agricultural producers and processors,
as well as other manufacturers and service providers, would
benefit from the expanded market access that the Doha Round
was aiming to achieve. We are a nation that depends heavily
on international commerce, and our government will continue
to focus on more liberalized trade, the rules-based
multilateral trading system and the objectives behind Doha
negotiations."

3. (U) Agriculture Minister Strahl described the
negotiations suspension as "a serious setback," but added
that "Canada remains committed to pursuing opportunities and
seeking a fairer international trading environment for our
agricultural producers and processors. We will continue to
advance the interests of Canada's agricultural sector,
including both supply-managed and exported-oriented
industries."

4. (U) As one of the most trade dependent countries in the
world, Canada is deeply committed to the WTO, an organization
which Minister Emerson has called "critically important to
Canada" because it is "a truly international framework, which
makes it very different -- more stable, more predictable and
more reliable, and a better friend of smaller countries."

5. (U) Canada's main goal in the Doha Round has been to
defend its controversial supply management system for eggs,
chicken, milk and cheese, while trying to persuade other
nations to reduce their barriers to allow for greater
Canadian exports of grain, beef, and oilseeds which face
depressed global prices because of foreign farm subsidies.
But Strahl conceded in a late June meeting of his provincial
and territorial counterparts that it might be difficult to
strike a balance between protecting a system management
Qsystem which "has worked well for Canada," and obtaining
greater market access in other sectors.

6. (U) Significantly, the July 24 statement said that
"Canada will also continue to pursue regional and bilateral
trade initiatives that serve its future commercial
interests." In a speech last month Trade Minister Emerson
signaled that Canada would ramp up its bilateral trade deal
negotiations even if the WTO talks stalled, noting that
Canada has signed only one such deal in the last five years
(Costa Rica) while the U.S. has approved seven agreements
with 12 countries since 2001. The Minister said that "Canada
is the only major trading nation that has not negotiated a
single free trade agreement in the past five years. A pact
with Costa Rica signed three administrations and two Prime
Ministers ago does not suggest that we are globally engaged
as a trading nation. Consequently, ... we are falling behind
Australia, Mexico and particularly the United States in terms
of bilateral trade agreements. This will eventually hurt our
export industries, who will find themselves discriminated
against in third-country markets."

OTTAWA 00002237 002 OF 002

7. (U) In recent years, Canada has worked periodically on
bilateral or regional trade agreements with Singapore, the
Andean countries, FTAA, EFTA, CARICOM, the Central American
Four (El Salvador, Guatemala, Honduras, and Nicaragua), the
Dominican Republic and South Korea (with whom Ottawa will
conduct a sixth round of trade talks in August). It is worth
noting, however, that about 80 percent of Canada's exports go
to the United States, with whom it already has NAFTA.
Therefore, any additional free trade agreements that Canada
might negotiate would give it only marginal trade gains, but
the new GOC mantra is to produce more FTAs.

8. (U) Initial press reaction featured expressions of
disappointment from farm producers. Ontario farmers, who had
long tried to get the USG to reduce subsidies to its grain
producers, saw their hopes dashed. "We are disappointed the
talks have dissolved," said an official of the Ontario Corn
Producers' Association. Ontario corn growers must compete
with their American counterparts who are guaranteed minimum
prices, resulting in bumper crops flooding the market and
pulling down world prices, he observed. However, other
countries came in for criticism, too. An Ottawa-based
international trade consultant noted that Ontario farmers had
also sought better access to Japanese and European markets,
especially in pork, bean, and soybeans. He said that
Canadian farmers had been promised by the EU in prior trade
negotiations to get access to 5 per cent of the market in
beef and pork: "Instead, they gave us two-tenths of one per
cent and they even tried to rig that." On the other hand, a
professor at the University of Toronto opined that Ontario
dairy and poultry producers, who benefit from a supply
management system of quotas, may be somewhat relieved that
the WTO talks have been scuttled. The U.S. has long been
demanding that Canada modify its system of supply management,
and any trade deal could have forced some compromises on that
front. The professor argued that Canadian supply management
is more about guaranteeing Canadian farm incomes since not
many countries besides the U.S. are interested in sending
Canada dairy or poultry products: "The American and EU
subsidies are really the issue. The Canadian ones are pretty
minor."

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

WILKINS

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