International Trade Committee on Oct. 6th, 2009

[Gilles Gauthier]

In both cases, the proposals are intended to grant Canada its request to have the right to designate up to 6% of tariff lines as sensitive products. That is the basic point. In exchange, Canada would have to accept the different ways of structuring its increase in quota.

There are two different ways of calculating the quota expansion. It could be by calculating only the additional 2% of tariff lines, because the others are agreed upon under the principle of 4% of tariff lines, or by calculating a tariff quota expansion that applies to the entire 6% of the tariff lines. Therefore, those are the two possibilities intended to achieve the same objective: how to calculate the tariff quota expansion that would be granted to other countries in compensation for having granted Canada an increase in tariff lines that could be designated as sensitive products.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

May I ask you a final question?

Where and when will this week's consultations take place?

[Gilles Gauthier]

The agricultural negotiation group will meet next week. The final schedule has not yet been announced, but in any case, there will be discussions next week concerning Canada's position on sensitive products.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

And they will take place here, in Ottawa?

[Gilles Gauthier]

No, they will take place in Geneva.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I was referring to the Canadian consultations.

[Gilles Gauthier]

Ah, I see.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Unless everyone decides to fly over to Geneva.

[Gilles Gauthier]

I'm sorry, I had misunderstood your question.

We are holding consultations with industry representatives this week on the subject of supply management, here in Ottawa.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

On which day?

[Gilles Gauthier]

They will take place today and tomorrow, here in Ottawa.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Julian.

Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman.

Welcome, Mr. Gauthier and Mr. Stephenson, to the committee. I appreciate your time in coming here and the level of expertise that you bring to the discussion.

Just before I start my questions, Mr. Chair, Mr. Allison has a question he wants to ask, and then I'll take the rest of the time.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

I'll just echo; thank you for being here today.

Mr. Cannan and I represent large wine regions, and I know one of the things we did a few years ago was to drop the excise tax. Obviously that was challenged at the time through the WTO.

As we go back to these negotiations with the WTO and try to prove out unfair subsidies, the challenge is always what is a subsidy and what isn't a subsidy, which I'm sure you gentlemen have to deal with all the time.

Obviously they have great access to our markets in terms of foreign wines, European wines and Australian wines, and because of the monopolies that exist at the provincial levels, it makes it tough for our Canadian wines to be in there.

Are there ways for us to be able to try to challenge these things, these subsidies? Just because the WTO deems it not a subsidy doesn't actually mean that's the case in terms of what's happening, because they get around these things. My concern is, in the future, as we challenge some of these things, will we always have these issues?

[Don Stephenson]

I'm not entirely sure I know which set of rules you would wish to challenge, the internal trade rules or the international trade rules. In respect of international trade rules and subsidies, they are difficult cases to make and they require a large investment in terms of time, and even expenditure, in the sense of the analytics that have to go into making a subsidy case.

As well, my first lesson on subsidies was to learn that you need a violation of the rules; second, you need somebody who's willing to challenge, because there are subsidy practices in almost all countries that, at least in theory, could be challenged. So there's a little bit of “glass houses” in respect of subsidy challenges.

In the Doha Round, there would be the possibility of dealing with both tariff and non-tariff barrier issues, which is certainly one part of market access.

With regard to where we're going on subsidy rules in general, it's frankly too early to tell. The chairman of that part of the negotiations, the so-called rules negotiations, essentially withdrew his text after the failure in July and agreed to start over. It's a little too early to tell what additional disciplines, what new constraints on subsidies might arise in the Doha negotiations.

[The Chair, Conservative, Lee Richardson]

Thank you very much.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thanks, Chair.

[The Chair, Conservative, Lee Richardson]

Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you.

I'd like to try to go over a little bit of what we have discussed already and maybe break it down into layman's terms. Clearly, the message I've heard from both of you is that you have very clear working orders to maintain marketing choice for sensitive products in Canada—I've not heard anything besides that—and I think that's important for our supply managed industry. At the same time, we have to recognize that we send you folks in, Mr. Gauthier in particular, a negotiating team on agriculture products, almost with one hand tied behind your back, because you have a level that you can't ignore and you can't go any further than that, and we need that, quite frankly, in order to protect supply managed products in Canada. So I appreciate the challenge you face.

At the same time, we're not alone on the planet. We have other countries, Japan in particular, that actually would like to have a larger margin for sensitive products than Canada is asking for. So we do have some allies.

My question to you is a little more general. Given the desire of certainly the developing world, and quite frankly, a lot of developed countries, for food security, which is really what we drill down to here—that's really what we're talking about—and the intentions of the Doha Round to respect that, to allow developed countries to have greater food security and some protection from massive influxes of agricultural products from the developed world, I may be oversimplifying but that has certainly held this round back up to this point.

Now that we're at the point where we have changing economic times around the planet, I think we have not only a greater consensus of the developed world to recognize the wants and needs of the developing world, but also a greater consensus of the developed world to look at sensitive products in a different way and to have a willingness to accommodate those sensitive products--and in our case, we're talking supply management--that wasn't there perhaps four or five years ago when the world was in a different economic cycle.

Am I overgeneralizing in that?

[Gilles Gauthier]

I think you have certainly characterized the situation very well in terms of the developing countries' desire to maintain a degree of protection to their nascent farming industry to a large extent, and the overall Doha Round is premised on the notion that the outcome should provide special and differential treatment to developing countries. According to the proposal on the table, developing countries will be entitled to safeguard a certain amount of their agricultural sector from taking on any market access commitment.

In terms of the developed countries, the position that Canada is taking is still a bit at odds with where the others are. Most other developed countries have accepted the principle of making some concessions, including in their sensitive products. We feel, however, that Canada should be recognized specifically in that regard simply because some other countries, including the developed countries, are also seeking some exceptions elsewhere. For instance, the Americans would like to have special treatment in certain areas of interest to them, such as cotton production.

If the negotiations have to arrive at a point where each other's trade interests will be protected, for us, the fact that we have maintained a very hard-line position on supply management is a pretty powerful signal that, for Canada, that's what matters most and therefore some accommodation should be found to respect that position.

[Don Stephenson]

Let me add, first of all to agree, that yes, our mandate for the negotiations from the government is very clear on these points , and it does mean that Canada has both offensive and defensive interests to advance in the negotiations. But that's not unusual. All countries have offensive and defensive interests in the negotiations, and during the four years that I was ambassador for Canada in Geneva, I never heard any of my colleagues apologize for having offensive and defensive interests, so I never did.

With respect to supply management, as Gilles has said, we are in an unusual and extreme position, and typically what the chairs of negotiations do—it's what their job is—is propose the compromise that members won't propose by themselves. That explains some of the textual proposals of the chairman in agriculture as well.

What I have not noticed yet, frankly, is a softening at the negotiating table—maybe Gilles has—as a result of and flowing from the economic crisis. Certainly, there have been new calls from leaders and from ministers to move forward in the negotiations and to conclude, but at the negotiating table thus far, that flexibility has not really been seen.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Am I out of time, Mr. Chair?

[The Chair, Conservative, Lee Richardson]

You're two minutes over time.

Mr. Cannis.

[John Cannis, Liberal, Scarborough Centre, ON]

Mr. Chairman, I have a quick question. Then I'll pass my time over to Mr. Brison.

I want to pick up where my good friend, Mr. Allison, asked a question. I have the same concerns.

Mr. Gauthier, in your statement, in the area under Canada's objectives, you state that “the Doha negotiations provide an opportunity to foster Canada's trade interests” via three points. The last point was “significant improvements to market access for our exporters”. Could you tell us a little about these significant improvements and how we went about achieving them? Was it this “offensive and defensive” that Mr. Stephenson just touched upon? Could you add to that?

Lastly, could you comment on what role a government can play, or this government has played, and what it can do even further to enhance these significant improvements and take us to the next level?

[Gilles Gauthier]

Mr. Chairman, in terms of market access improvements for our exporters, we're certainly looking at significant concessions on the part of both the major developed and the developing countries in the areas of grains and of oilseeds and of the pork and beef industries as well. We're looking for significant tariff cuts affecting these products or expansion of TRQs. What is on the table would indeed provide us with some significant gains for some of these commodities.

In terms of our defensive interests, these are clearly delineated. They are essentially about supply managed products, and on these our position remains, as it always has throughout negotiations, that we don't accept making concessions in these areas.

We have these offensive and defensive interests, like anybody else. So far we've been fairly successful in bringing forward some proposals on market access that would serve our interests. In terms of tariff cuts or TRQ expansions in Europe in particular, as well as in Japan, these would be significant improvements for our exporters.