Evidence of meeting #8 for International Trade in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was negotiations.
4:15 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. André.
On the government side now, Mr. Menzies, for five minutes.
4:15 p.m.
Conservative
Ted Menzies Conservative Macleod, AB
Thank you, Mr. Chair.
We all heard about the U.S. offer and how enthused they were about how wonderful an offer it was, to reduce their domestic support. I'm still very skeptical about how sincere they were about that.
Has that offer changed? Did the Europeans match it? I sense that there's also a lot of holdback there. We're hearing of some manipulative programs in the United States, and I don't know if there is any fact to that. For example, in Montana, if you buy a new air drill you get a $40-an-acre environmental subsidy for reduced greenhouse gas emissions, soil conservation, moisture conservation. They don't call it a subsidy as far as their commitments to reducing their domestic support are concerned, but it gets rolled into an environmental subsidy. It's still a subsidy. That's rumour.
I don't know if it's fact--so Barry Wilson, be very careful if you quote me on that one--but we're hearing some pretty solid support that this is what's happening.
How do we combat those sorts of things when the Americans are saying they've put everything on the table, they're reducing their domestic support, it's going to be a wonderful thing for the rest of the WTO? How do we address those sorts of things, and has their offer changed?
4:15 p.m.
Director, Multilateral Trade Policy Division, Department of Agriculture and Agri-Food
I can neither confirm nor refute the air drill example, but you've hit on a key dynamic in the negotiations, which is the desire of other countries for the United States to go further in its offer on reducing its own domestic support. The difficulty for the United States is that in order to sell that back at home, they need to see greatly improved offers on market access in agriculture, particularly from the European Union.
Certainly the proposal that the United States put on the table in October 2005 still stands, although, as with all countries, you signal some movement in various areas. As I said earlier, we believe, and other countries do too, that the United States certainly could go a lot further. What we're talking about here in the negotiations on trade-distorting domestic support are reductions from your limits, from what you're able to spend. So right now the United States' limit is $19.1 billion. They haven't been spending all of that, so when we hear about reductions of 60% or 70% to that, it sounds a lot, and reductions like that would have a small impact on their current level of spending, but as I said, we think they could go a lot further.
As far as the European Union matching the offer is concerned, as I mentioned earlier, the negotiations and subsidies are right now structured around the idea of the biggest subsidizers having to take the biggest reductions, and in fact, because the European Union has a much higher limit than the Americans, they will be actually taking a larger cut than the Americans. But their sensitivity is market access and being able to improve on the offer that they themselves put on the table back in October.
You may have seen in the press that they have signalled very recently that they can in fact go a bit further, so in this sort of dynamic, that's put the pressure back on the United States to improve their offer on domestic support. As I said earlier, they have their political context with upcoming elections and the renewal of the Farm Bill, so it gets rather complicated.
4:20 p.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Thank you, Mr. Chair.
Just a quick clarification: what's the difference between plurilateral and multilateral agreements?
4:20 p.m.
Director General, Multilateral Trade Policy Bureau, Department of Foreign Affairs and International Trade (International Trade)
A multilateral agreement would be an agreement among all the members of the WTO, all 149 members. A plurilateral agreement would be an agreement among a number of members, but less than all of the membership of the WTO. There are agreements within the WTO that are plurilateral, such as on government procurement, which only some members of the WTO have signed on to. Plurilateral agreements could also refer to agreements outside the WTO.
4:20 p.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
That's not my real question. I just wanted to clarify that. In our briefing note, it says that “Canada has presented its requests (of other countries) to seek greater access in other countries and was the first to table a revised services offer...” .
Can you explain in a little more detail what our revised services offer entails?
4:20 p.m.
Director, Services Trade Policy Division, Department of Foreign Affairs and International Trade (International Trade)
Thank you.
We've tabled revised services offers in the course of the negotiation. Essentially they involve making commitments related to market access to, or national treatment for, individual service sectors and subsectors, and they indicate whether there are any restrictions that apply to those sectors in a national treatment context or a market access context. It's a very detailed national schedule that indicates, in effect, the regulatory measures that apply or don't apply in services trade terms.
So the offer that is presented by Canada is a listing of those regulatory commitments that Canada, at the federal, provincial and territorial levels, is prepared to make.
4:20 p.m.
Conservative
4:20 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Thank you very much, Mr. Chairman.
Mr. Barr, I didn't understand the question of definitions. In agriculture, more specifically as regards supply management, Mr. Dorrell referred to 12% of sales, but I believe that was more about volume. Today, you're saying very clearly that this sector will be 7.5% of the tariff lines. I want to understand the difference between the two definitions.
4:20 p.m.
Director, Multilateral Trade Policy Division, Department of Agriculture and Agri-Food
By the way you're explaining it and explained it earlier, it sounds right. It matches in my mind what the statistics are—that our supply-managed sectors account for exactly 12% of Canada's total farm cash receipts, which is different from how many tariff lines.... Basically—
4:20 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
All right, but in both cases, when you refer to a 1% limit on the U.S. share, you're talking about the same figures.
4:20 p.m.
Director, Multilateral Trade Policy Division, Department of Agriculture and Agri-Food
The 1% that the United States put on the table referred to the percentage of tariff lines; it did not refer to the percentage of farm cash receipts.
4:20 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Thank you.
I'd like to go back to the service sector, more specifically education and health.
I'd like to know what measures are being taken to exclude health and public education from the negotiations. How do you draw the line between public education, which is important, and private education, which is growing? Is it correct to say that public education could be threatened?
4:25 p.m.
Director, Services Trade Policy Division, Department of Foreign Affairs and International Trade (International Trade)
Thank you.
The government's position throughout the negotiations is that sectors such as health and public education aren't things we're going to negotiate in the services negotiations.
First of all, the GATT is a very flexible agreement, but there are two essential protections. There is an exclusion in the treaty for services provided in the exercise of government authority. That's the first broad protection. The second is the fact that whether or not you take commitments has a bearing on the kinds of obligations that might apply. Canada is also not taking commitments in those sectors.
So from our perspective, there is very clear protection for both of those broad sectors in the negotiation.
4:25 p.m.
Conservative
The Chair Conservative Leon Benoit
You have two minutes, Mr. Julian, if you'd like to use them. I have a couple of questions too that I'd like to ask.
4:25 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
How do you define social services and culture? There's some question of excluding them from the negotiations in the case of Canada.
4:25 p.m.
Director, Services Trade Policy Division, Department of Foreign Affairs and International Trade (International Trade)
The mechanics of the negotiation are such that there's a services classification list; it's an extensive document that subdivides services into a whole range of sub-sectors.
It's a UN classification system that the negotiation turns on. Sectors are described in that list, and the sectors I've referred to aren't sectors we're negotiating.
I should also add, because you raised the question of education, that as I mentioned earlier there was a plurilateral request in which Canada was neither a co-sponsor nor a recipient. That is the education services plurilateral request. It's not a sector we're engaged in at all on that basis.
4:25 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
I know it's a long list, but I'd nevertheless like you to give the committee an example of the fact that, in the case of Canada, social services and culture are not included in the negotiations on services.
4:25 p.m.
Director, Services Trade Policy Division, Department of Foreign Affairs and International Trade (International Trade)
I would have to refer to the list, but clearly the audiovisual sector is a cultural sector in the services area, where we're not negotiating; similarly, day care services, I suppose, would be an example in a social services setting.
I would be happy to share with the clerk what the UNCPC describes as some of those sectors.
4:25 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you very much, Mr. Julian. Your time is up.
A couple of members have asked questions on your prediction about how the talks are going. I'm not going to ask you for that exactly, but Mr. Collins-Williams, you indicated you were around through the Uruguay Round of the GATT, or part of it at least. I don't know if either of the other gentlemen here was, or even through some of the bilateral talks, but have you ever been involved in a round of trade talks where the players are saying that things are going really well and we're moving along wonderfully, or is this the normal tone, the brinksmanship and the negative kind of tone that comes out of trade talks—or is it neither of the above? I'm looking for the tone of these talks compared with your experiences particularly in the Uruguay Round of GATT.
4:25 p.m.
Director General, Multilateral Trade Policy Bureau, Department of Foreign Affairs and International Trade (International Trade)
I would say there are considerable similarities between where we are in the Doha Round now and where we were in the Uruguay Round in 1991, when we went to Brussels for a ministerial conference that was supposed to lead to the conclusion of that negotiation. In fact the negotiations broke off, and there was a two-year hiatus before we could return in 1993, when some major agricultural issues were settled. Then the negotiation could be wrapped up in a matter of about six months.
So this isn't unusual. As you say, negotiation is brinksmanship. There are 149 members of this organization, and it's a very complex agenda. It's taken more time than it should, but we're at a point now where we can see the outcome; whether we can get there or not politically remains to be seen.
4:30 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you very much. I appreciate that. For some of the younger members, the experience some have can be valuable at a time like this.
Thank you all very much. I really appreciate your coming today, and we may well look to have you at some time in the future. And the best of luck with the talks; they're important to all of us.
Thank you. We'll take a break and then resume with the next two witnesses.
The meeting is adjourned.