Evidence of meeting #38 for Agriculture and Agri-Food in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was negotiations.
A recording is available from Parliament.
Conservative
The Chair Conservative James Bezan
I will call this meeting to order.
Today we're going to be studying the WTO and the recent announcement by the minister on article XXVIII and the milk protein concentrates.
We have Steve Verheul, our chief trade negotiator at the WTO, appearing before us. We welcome Steve to our committee. He has been here before.
I'll turn it over to you, Steve. You have about 10 minutes, if you need that, to make your presentation.
Steve Verheul Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
Thank you very much.
Good afternoon, everyone. My name is Steve Verheul. I'm Canada's chief trade negotiator for agriculture. I'd like to thank the committee for asking me to appear here today to talk about the status of the WTO negotiations.
I'm going to begin my remarks by reviewing some of the recent developments at the WTO and what they mean for Canada in particular.
As you all know, the WTO negotiations are the key forum through which Canada is working to expand opportunities and achieve a fairer international trading environment for Canadian agriculture.
At the WTO, we have been working to achieve the elimination of all forms of export subsidies, the substantial reduction of trade-distorting domestic support, and real and significant improvements to market access. We've also been strongly defending the interests of our supply-managed producers.
The negotiations have been ongoing since November 2001. Although various deadlines have been set, not very many of them have been met. The most significant developments in the negotiations were a framework for agriculture, which was agreed to in July 2004, and in December 2005, at the Hong Kong ministerial meeting, we agreed, among other things, to the elimination of export subsidies by the end of 2013.
As the negotiations have progressed, they have become increasingly difficult. In July of last year, the director general of the WTO, Pascal Lamy, announced that the negotiations had reached an impasse on the issue of market access for agricultural and non-agricultural products and on agricultural domestic support. As a result, the negotiations were suspended at that time.
In November, following a period of increased informal discussion among WTO members on the key stumbling blocks in the negotiations, the WTO director general obtained support from the WTO membership for technical discussions on the various issues at play to resume across all areas of the negotiations, including agriculture.
Earlier this year, on January 27, Minister Strahl and Minister Emerson joined ministers from about 30 other WTO members in Davos, Switzerland, for an informal ministerial meeting on the WTO negotiations. Ministers at Davos clearly expressed renewed commitment to put the negotiations back on track.
This was later followed by an announcement from the director general at a meeting of the trade negotiations committee on February 7 that the negotiations were to be fully re-engaged.
While negotiating activity has increased since that time, the discussions are still largely informal. There has been particular attention focused on the U.S. and on Europe, who have been engaged in detailed technical discussions over the last several weeks to try to narrow the differences between them.
It is clear to Canada and to others that key WTO members, particularly the U.S., Europe, and some of the more advanced developing countries, will need to significantly narrow differences in their negotiating positions and show movement on the issues for real and substantial progress to be possible. It will be important to achieve such progress within the next few months or we're going to face a much longer delay in the negotiations.
Progress is needed on three key issues if the negotiations are to move forward: the U.S. needs to go further on both cuts and disciplines to trade-distorting domestic support; the European Union needs to show more flexibility on market access; and developing countries need to show more openness both on market access for agricultural products and for non-agricultural products.
For our part, Canada is continuing to work intensively in Geneva and elsewhere with a range of other WTO members to exchange ideas and advance technical work with a view to resolving the outstanding issues. We continue to be among the most active countries involved in the negotiations.
Looking forward, the success of the Doha Round will clearly remain a key priority for Canada. The WTO remains the cornerstone of our international trade strategy for Canadian agriculture. Our efforts at the WTO agriculture negotiations and through other trade initiatives will remain geared toward ensuring that we have an effective overall international trade policy strategy for Canadian agriculture, including both supply-managed products and export-oriented interests. Continued, active engagement with the provinces and the full range of our agriculture industry stakeholders will remain central to our efforts.
l also understand you may have some questions regarding milk protein concentrates. In the second hour of my appearance l will be joined by officials from the Department of Finance, the Department of Foreign Affairs and International Trade, Canada Border Services Agency, and the Canadian Food Inspection Agency, and we will be happy to deal with your questions on those issues at that time.
So with those opening remarks, I would be pleased to take your questions on the negotiations.
Conservative
The Chair Conservative James Bezan
Thank you, Mr. Verheul.
You understand that in the first hour we are talking strictly about the WTO. We're going to deal with milk protein concentrates in the second hour.
Conservative
David Anderson Conservative Cypress Hills—Grasslands, SK
Can I interrupt for one second? I wanted to make the opposition members aware that there's a briefing tomorrow on the OUI-GROU program and strychnine. I think they've been made aware of that, but I just wanted to remind them, so they're aware of it.
Conservative
Liberal
Paul Steckle Liberal Huron—Bruce, ON
Thank you, Mr. Verheul, for appearing today.
You've been before this committee numbers of times and always at a time when perhaps we were moving forward with some optimism that an agreement could be achieved. We're in a situation now where we believe talks may reconvene. I'm wondering, do you share the optimism of the other partners in this partnership? What's your sense of where we're going on this? I say that because of the fact that there have been bilateral communities of people meeting and bilateral agreements trying to be struck. Is that in some way going to be counterproductive in terms of us moving forward under the Doha Round?
Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
Yes, I think we're certainly in a period now where the next few months are going to make the difference as to whether we can move this forward or not. There have been a lot of discussions between the U.S. and Europe at a very detailed technical level. Our understanding is that they are making progress. They're making progress on issues that are important to each of them, which means it's of limited value to the rest of us. They clearly need to narrow the gaps between themselves, but there would be very strong resistance to having that imposed on the rest of the membership.
We certainly need them to try to make some more advances, and that's really going to be the determining factor as to whether we can move or not. But then we need to be involved in a much broader process, and we're not at that point yet. All the discussions now are very informal and, as you say, on a bilateral basis. So I think there's certainly potential there, but the biggest blockage, I would say, is probably the question of whether the U.S. can move on cutting its subsidies more than it has offered to, to date.
Liberal
Paul Steckle Liberal Huron—Bruce, ON
Given the circumstances of the recent past, Mr. Emerson's comments in terms of the supply-managed sector, messages whether real or otherwise are sometimes misinterpreted, but messages are given. I'm just wondering, are these kinds of messages, the messages from the current government in terms of its direction on the Wheat Board, positive messages or are they negative messages? Obviously, we believe these are sectors that we have protected with a great deal of vigour over the history of government for many years. Where do you see us going, and where does that leave you as our negotiator in terms of a solid premise from which to negotiate, knowing that you have the support of government, the support of this committee, and the support of the industry back home in terms of supporting those measures? I'm just wondering whether you feel as positive today moving forward in your negotiating role as you did two years ago.
Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
We certainly bring a fairly difficult negotiating position to the WTO. That has always been the case. We have very different interests in our agriculture sector in Canada, and the export-oriented part of our sector is clearly interested in more access, getting rid of subsidies to the extent we can, whereas supply management is clearly interested in maintaining border protection to the extent that's possible. We've got a difficult challenge ahead of us with respect to that.
On the Wheat Board, our position hasn't changed in the negotiations. We continue to say this is not an issue that should be decided by the WTO. It should be decided by Canadians themselves rather than have the WTO impose some kind of solution.
On the issue of market access with respect to supply-managed products, we've taken a very clear and very firm line that we're not prepared to accept tariff reductions or tariff quota expansion on supply-managed products. That has clearly positioned us in a somewhat different place than other countries. All other countries have agreed to open up market access on all products. So we have an uphill fight there as well.
Liberal
Paul Steckle Liberal Huron—Bruce, ON
Engaging in the debate on article XXVIII, how does that impact our position in terms of us having a voice going forward, because now we have countries who obviously are going to take issue with that? Has that diminished? Is it partially hindering us, or hindering you, particularly, as our negotiator? Where does that place you? Obviously this is something we've talked about for a long time, and it has now been acted upon, at least up front. We don't know whether that has even gone to the WTO yet. Probably not.
How does that impact your work?
Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
To date, I can't say I've seen any real impact. I was in Geneva last week--I got home on the weekend--and it was raised by a number of countries with me, some of them expressing concern that it would affect their interests, but I can't say I've seen any linkage being made to the negotiations, at least until this stage.
Liberal
Paul Steckle Liberal Huron—Bruce, ON
If the negotiations were to break down totally and we were to be starting from a different vantage point, can anyone imagine the economic impact to Canada? Is this something anyone has put a dollar value on? And if we simply break down and don't restart the negotiations, and if they should fail for a number of years, would we be better off going forward with the current agreement, which is in an expired mode, but continuing under those terms? Would we be better served under the current terms than a bad deal going forward?
Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
I think that's really going to depend on where we manage to come out. I think what's under discussion right now are some fairly important moves forward. Certainly the elimination of export subsidies is something that Canada has sought for a long, long time. If we can get some real, effective cuts in domestic subsidies, particularly those being provided by our neighbour to the south, then that will make a difference to us, and it will allow our producers to compete on a fair basis. Certainly, many of our commodities would like the opportunity to have better access to foreign markets, and if we could get some of that access improved, then we do stand to make significant gains.
The challenge is going to be that when that access opens up, it's going to be available to all countries, so we're going to have to compete for that access, and that's going to determine how much of an advantage it will really be to us. It's going to be up to the industry to take advantage of the changes that can be made.
Conservative
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
Thank you, Mr. Chair.
Thank you for being here, Mr. Verheul. You are at the very heart of international negotiations, and you more often than we committee members are in the countries where all these negotiations are taking place. It is important for us, as well as for farmers, to have your viewpoint and to know exactly what is going on in these negotiations.
The Doha Round, which began in 2001, was devoted to developing countries. Since the start of these negotiations, I note that those countries do not seem to have much of a voice in the matter. It's currently more a major battle between the European Union and the United States.
First, I'd like you to tell me whether I am right. The European Union and the United States obviously resumed negotiations in February. As a result, they have agreed to restart discussions.
Do you think that the decision made with regard to the Doha Round to benefit developing countries is still on the table now? Or are we witnessing the appearance of a completely different scenario?
Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
Certainly, as you say, the major objective of the Doha Round was to improve the opportunities for developing countries in the international marketplace, and I think that while the current focus has been on discussions between the U.S. and Europe, the issue of development, improving the situation of developing countries, is still front and centre in the negotiations.
I think part of the reason so much of the focus is on the U.S. and Europe is that, in the case of the U.S., developing countries very much want to see some real cuts to the U.S. subsidies to give them a better chance to compete, and with Europe, they want to get some real access into the European market. It's 25 countries and growing, so they want to get some access to what is a very wealthy market from a development perspective.
So those issues are there, but the pressure is really on the U.S. and Europe as the two biggest players to make some real moves, and then we'll see whether they're taking the development issue seriously or not. For our part, we've been aligning ourselves very closely with developing countries and spending a lot of time working with them, because we have many similar objectives. We want to get subsidies in the U.S. down. We want to improve market access to a lot of different countries. So we've been conducting a lot of joint analysis with developing countries and doing a lot of work with them.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
In the United States, there have obviously been some changes: the Democrats have taken control. Have you heard anything about what might happen? Without the United States, we won't be moving forward in these negotiations.
There's been a lot of talk about fast-tracking. Would the Democrats, who historically are usually a little more protectionist than the Republicans, let President Bush fast-track this?
The new Farm Bill has also just been announced. This isn't very clear. Would you have any more information? We hear about reduced subsidies. Will there nevertheless be excessive use of the green box?
How is that lining up, from what you've heard in the United States? In the context of these negotiations, we can't disregard what's going on there right now.
Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
Yes, as you imply, the focus now is really on the U.S., and what happens in the U.S. will determine whether or not we move forward.
The trade promotion authority, or fast-track, is going to be essential, and if the U.S. doesn't obtain fast-track approval, then there's really no basis to negotiate.
The problem we're experiencing right now is that we're trying to pull together a package that the U.S. administration could then take to Congress. But we're not really sure what Congress might do with it and want to add to it, in order to get the approval for the trade promotion authority. So there's an issue of whether the administration can obtain authority, and there's also a timing issue as to how much detail we can put into any kind of package before it goes to Congress.
More recently, there is more potential for the U.S. to obtain that approval from Congress, partly because they're looking at a broader package than just the trade promotion authority on the Doha negotiations. They're also talking about including things, such as trade adjustment and assistance, as part of a broader package. So that may appeal to some of the Democrats and make this a little easier.
Your comment on the farm bill is also a very interesting case of timing right now, because the U.S. is in the midst of starting to design their new farm bill while the negotiations are going on. Many of us in the negotiations are clearly trying to constrain them in what they can do when designing that farm bill.
We saw some proposals from the U.S. administration a couple of weeks ago. Our view is they don't go nearly far enough in terms of what will be needed to conclude the negotiations.
There's going to be a difficult debate within Congress about what that farm bill should look like, but the connection with the negotiations is going to be very direct.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
What is your perception of Canada's role in everything that's currently taking place? We were talking about those two major players, the European Union and the United States.
You've always mentioned that it's been tougher for you since that motion was unanimously passed by the House of Commons on November 22, 2005. How have you been feeling since then? Do you keep clear of the negotiations?
I read articles in newspapers to which you've granted interviews. You have a reputation for being very frank. That's all to your credit, except that we claim it's important to defend the supply management system, of course. According to a Léger Marketing survey, 85% of Canadians think that as well, whether they're farmers or not.
Are you a participant in those negotiations, or are you watching what's currently going on from the sidelines? How do you view matters in relation to the negotiations that are resuming?
Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
Yes, that's certainly an important question in the negotiations right now. Canada has been probably the most active player in the negotiations in terms of providing new creative ideas for trying to move the negotiations forward and advancing our interests.
When it comes to the issue of sensitive products, we have taken a very hard line and said that consistent with the motion, we will not be accepting or talking about tariff reductions or tariff quota expansion for supply-managed products.
That has meant that we aren't in a position to engage in the design of the approach on sensitive products that others are engaging in. We're certainly aware that the U.S. and Europe have been talking primarily about the treatment of sensitive products. That's most of what they've been discussing over the last several weeks. So they are starting to design an approach on sensitive products, and there are also discussions taking place in various other forums.
We're a bit limited in what we can do in terms of having those discussions. The U.S. is talking individually to various countries now. We're likely to get a request to meet with the U.S. in the next month or so. They will be coming to us and saying, what are you prepared to offer us on dairy, poultry, and eggs, because the rest of our market is open to them under NAFTA. At that time, we will be saying that we're not prepared to do anything.
Obviously that's going to bring some kind of reaction. It's also going to mean that we're not going to be able to have a discussion about where we might be able to provide access that won't cause any kind of impact, which would be the case with respect to some supply-managed commodities. So we won't be having that kind of discussion.
I think we have a very strong position in support of supply management, but we run the risk of the discussions among other members going in a different direction.
Conservative
The Chair Conservative James Bezan
I just want to follow up, Mr. Verheul, one of the quick questions Mr. Bellavance raised, and that is on the issue of timeline of the U.S. farm bill and the WTO negotiations. Which is more advantageous, to get WTO done before the farm bill comes down the pipe or to get the farm bill out of the way and then we'll know what we're dealing with in the ongoing WTO negotiations?
Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
I think the most commonly held view is that it would be better to get the WTO negotiations done first, or at least get the shape of an agreement made pretty clear before the farm bill is finished. The U.S. administration has told us they can always go back and make changes to the farm bill afterwards, but in our estimation it would be very politically difficult to go back and change a farm bill, and in all likelihood make it less generous, after they've already designed it.
So our preference, if the timing could be made to work, would be to get the negotiations advanced further than the farm bill.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
First, I'd like to congratulate Steve Verheul for his professionalism. I had the opportunity to work with him in Geneva over one weekend, and I enjoyed the experience.
Mr. Verheul, in the global commodities market, a limited percentage of commodities is traded internationally, but a large proportion of that percentage comes from Canada.
There are 150 countries in the WTO, and we are one of those that exports the most products. In terms of political weight, are we at an advantage or disadvantage relative to other countries as a result of the fact that we are an exporter country?
Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food
I think Canada is one of the leading exporting countries when it comes to agriculture, and we're certainly well known for that. We're generally either the third or fourth largest exporter of all the WTO members. So we have a strong role to play there, and we are a part of the Cairns Group, which is a group of exporting countries. That's given us a certain amount of influence. It also gives a certain amount of expectation on the part of other countries; they do see us coming to the table with both export interests and some defensive interests, which obviously creates questions from time to time. But we're hardly unique in that: the U.S. has its sensitivities and Europe has its sensitivities, so this is an issue we're always going to be dealing with.