Thank you, Mr. Chairman, for giving us this opportunity.
We are entering the final phase of the WTO agriculture negotiations. The chairman of the WTO agriculture negotiations, Crawford Falconer, issued a comprehensive paper on market access on June 9, 2006. The WTO objective is to agree on modalities by the end of July 2006 with a view to concluding the Doha Round of negotiations by the end of the year.
Canada entered these negotiations with a balanced position. Canada's dairy, poultry, and egg farmers supported Canada's initial negotiating position in 1999, as it represented the best opportunity to provide a win for all Canadian agriculture. Canada's mandate is to eliminate export subsidies, significantly reduce trade-distorting domestic support, substantially increase market access, and defend the import measures that are needed for effective supply management. To date, the gains secured for Canada's non-supply-managed agriculture sectors are positive.
In Hong Kong, WTO members agreed to eliminate export subsidies by 2013. Trade-distorting domestic support will be reduced by up to 70%, with the biggest cuts being made by the EU, U.S.A., and Japan. According to Falconer, “the real zone of engagement” of the tiered tariff reduction formula would substantially cut regular tariffs by 45% to 75%. The same cannot be said for Canada's supply-managed sectors, as there remains a high degree of uncertainty regarding sensitive products. The only chance for the survival of supply management depends on the positive outcome within the sensitive product category.
Canada's dairy, poultry, and egg sectors actively supported the Canadian strategy to pursue aggressive tariff reduction in the regular formula on the understanding that there would be no connection between that formula and the treatment of sensitive products. However, there is now a direct link between the general tariff reduction formula and what is required for sensitive products. As a result, we are facing a 15% to 25% cut in over-quota tariffs. While our over-quota tariffs seem high, in many cases they are already dangerously low and not doing the job they were intended to do. Simply put, we have no room to reduce our over-quota tariffs.
Cuts in over-quota tariffs would take away our ability to predict the level of imports coming into Canada. In turn, we would be unable to match supply with demand and would thereby be unable to ensure there are enough Canadian-grown products to meet the needs of Canadians from coast to coast. This could destabilize food prices that Canadians pay and that we receive for our work. The fact that all countries are prepared to take a cut in their over-quota tariffs only indicates that they have sufficient room to lower these tariffs without risking any additional access to their markets.
It is these countries that are aggressively defending, not expanding TRQ access. Why? Because expanding TRQ access would mean providing real market access. Canada already provided real access in the last round of negotiations. In fact, we already allow greater access than do other countries. They aren't even willing to provide real market access by coming up to our access levels. If these countries are not prepared to provide the access that they should have in the last round, Canada must not increase minimum market access to its supply-managed markets.
Now I will complete my presentation in French.
The fact that Canada has stood firm for supply management has been recognized in the Chairman's text.
It is in this regard that the government has been criticized within Canada for being isolated 148 to one. Let's explore this so-called isolation.
First, it is not really 148 against Canada because there was no vote. The text was the product of one person—Chairman Falconer. At best one can say that the 25 or so countries that are actively involved in the agriculture negotiations might not fully support Canada's position.
Second, what happened was far from being detrimental. If Canada was recognized by the Chairman, it was because Canada has a significant issue that needs to be addressed. This provides Canada with negotiating leverage. It is similar to the European Union being singled out on market access, the US on domestic support, India on services and the G10 on sensitive product selection.
In addition, with respect to the general tariff formula, Falconer singles out certain G10 members and warns them that they may block consensus. The fact is that there are over 200 square brackets in the market access text alone representing areas where there is no consensus. Each of these brackets involves issues of importance to WTO members that need to be addressed in the negotiations.
I am a little perplexed with regard to recent comments attributed to the Western premiers. On one hand, they are reported as saying that Canada has isolated itself and positioned itself as a deal taker. On the other, there are further reports that they are arguing that Canada is poised to single-handedly derailed the Doha round. Claims have been made that the government is now putting aside the interest of non-supply managed commodities. In fact, the firm position of Canada will only serve to enhance the ability of Canada to secure real market access globally and preserve supply management at the same time.
If the government is to deliver on its mandate for these negotiations, supply management interests must be the overarching priority for sensitive products. There is no way to consider anything less than this as a “win” for Canadian agriculture but very clearly the alternative is a significant loss.
For several years, Canada's dairy, poultry and egg industries sought to have the way countries use tariff rate quotas cleaned up. This would have delivered for all sectors of Canadian agriculture. This being impossible now, we are left with the unfavourable option of putting our products into the sensitive products category. Now, there is no longer room for adjustment. Let us be clear: unless the government sharpens its focus, this round will be a disaster for supply management.
Note that our brief also includes the economic contribution of the dairy, poultry and egg sectors to Canada.
That ends my opening remarks.