Mr. Chairman, the World Trade Organization ministerial meeting scheduled for Qatar on November 9 to 13 is an event of great significance. In light of the current economic and security uncertainties it is vital a strong signal comes out of Qatar that the world is resuming business. The multilateral trading system embodied in the WTO has contributed significantly to economic growth, development and employment throughout the past 50 years.
We are determined, particularly in light of the global slowdown, to maintain the process of reform of trade policies to ensure that the system plays its full part in promoting recovery, growth and development. The 142 countries involved must send a signal that the failure of Seattle is behind us and we are now moving forward. It will not be easy. It will not be without its tough negotiations. It will not be without compromises.
Having said that, I note that Canada must enter these discussions with absolute resolve. Canada must insist that other countries match what we committed to and lived up to in regard to Geneva in 1993. Canada must ensure that it levels the playing field for its businesses and farmers before offering anything more on the table.
I am particularly concerned about agriculture. It is important that Canada reinstate its position in regard to global trade and demonstrate that Canada has lived up to its obligations and insist others do the same. As a major agricultural exporter-importer, Canada has a fundamental interest in further strengthening the international rules governing agricultural trade, eliminating trade subsidies and significantly improving market access opportunities. Further, agricultural trade reform will provide Canadian producers and processors with a more level international playing field and encourage a more rules based, stable, predictable and secure environment within which they can compete.
Canada needs to continue to fight for the elimination of all export subsidies as quickly as possible, for maximum possible reduction or elimination in domestic support that distorts trade or production, for real and substantial improvements in market access for all agriculture and food products and for securing new disciplines on export taxes and export restrictions. Trade distorting subsidies create difficulties for the agriculture and agrifood sector.
We need to level the playing field. However, international subsidies are preventing this from happening. There are major differences between countries and between commodities in the provision of market access opportunities, the level and type of domestic support and the use and magnitude of export assistance.
Global trade distortions have had and continue to have a major impact on Canadian farm incomes and the profitability of the food processing sector. Whereas Canada in 1993 converted its article XI protections to declining tariff rate quotas, other countries with simple quotas saw them remain the same. This must be addressed in this round. Those with simple tariffs should be required to provide the same 5% minimum access as Canadian agriculture and that access should be a zero tariff, as is ours.
Export subsidies must go. It is not good enough to agree to a formula reduction. They must disappear entirely if we are to make it a fair trading environment. For too long the EU and U.S. have bought market share with their export subsidies at the cost of Canadian producers. We can no longer afford to put our producers at risk to the benefit of their competitors.
I urge the ministers of international trade and agriculture to remain firm, to enter these negotiations with resolve and to seek and receive an advantage for Canadians from these negotiations.
Globalization has reduced the size of this planet we co-inhabit. Goods and people move more freely than ever before. Recent events such as the outbreak of foot and mouth disease in Europe provide clear evidence that we cannot and must not let globalization be a free-for-all. We must as a nation retain the right to protect our people and our industry. We must enshrine our right to err on the side of caution in matters related to health and safety.
Certainly it will be difficult in the circumstances to even get a launch to this round. If, however, the price to pay to get a launch is too costly then it is better for our government to acknowledge this fact. From Canada's perspective relative to agriculture this round must be viewed as a catch up round for others. Canada must put first things first and ensure its market access measures up to what it has already provided before going any further.
Canada has not gained a reputation as a tough negotiator. Qatar gives us the opportunity to demonstrate that we are. It gives the government an opportunity to display its resolve, to hold firm until others match us and to demonstrate to our producers here at home that government holds their welfare paramount. Therefore it is very important to develop and implement clear enforceable trade rules applying equally to all countries, which will work toward levelling the playing field.
The current state of agriculture in Canada is dismal. Therefore Canada should maintain a strong position and not commit to any trade-offs with other countries at the WTO meeting. We need to protect our farmers and in order to do that we must ensure that rules apply to all countries equally. The beauty of rules is that all countries must follow them while guidelines, on the other hand, permit individual interpretation. This is what has happened. The creative interpretation of the guidelines by the U.S. and EU introduced a new concept now known as dirty tariffication and dirty access offers. What countries actually agreed to was what they respectively submitted in their schedules, whether or not it reflected the application of the guidelines.
The issue, therefore, is not that the countries do not meet their commitments. They do. The real issue is that the commitments of the various countries are unequal, inequitable and unfair. Therefore we must insist that rules are in place that require all countries to meet the same commitments in order to eliminate the possibility of further misinterpretation.
I will use the example of the establishment of minimum access for dairy products under the tariff rate quota system. Minimum access commitments were to be established according to the guidelines at a level representing 3% of domestic consumption based on the period from 1986 to 1988 and to grow to 5% of domestic consumption by the end of the implementation year 2000.
The United States interpreted the guidelines in a manner which resulted in a market access significantly lower than the 3% to 5% levels. The U.S. did not consider offering minimum access on a tariff line basis or product by product. Rather, it invented a mechanism to measure the butterfat and solids/not-fat components of each dairy product in order to estimate the total amount of imports necessary to fill a 3% access for component.
This methodology, which could in itself lead to years of debate on the adequacy of each conversion factor used, indicated a deficiency in butterfat which the U.S. compensated by providing increased access, mostly to frozen cream. This was only one aspect of the U.S. approach which was unique to the U.S. offer. The end result of this approach was an access commitment which was significantly lower than the 3% to 5% guideline.
The European Union took a different approach. It considered the 3% to 5% access as a commitment to allow a certain level of imports into its markets independent of tariff conditions applicable to such imports. It therefore assumed that to meet its 3% commitment it only had to offer additional access necessary to reach that level. In the case of dairy products it measured this access commitment only for butter, skim milk powder and cheese, as if all other dairy products were more or less irrelevant. What this approach did was prevent any changes in the conditions that prevailed on historical imports.
All variable levies were converted to high tariff equivalents. Therefore if a product was historically imported into the EU under a specific quota allocation and subject to a most favoured nation tariff, these conditions remained under the Uruguay round. However, if these historical imports were made subject to the variable levy system they became subject to a high tariff equivalent even though they were part of the EU minimum access offer. In the end, the EU may be the only trading partner subjecting imports within its access commitments to over quota tariffs, giving a whole new meaning to tariff rate quotas.
Roughly estimated, using the different countries' interpretations, the imports of total dairy products at the end of the implementation period represented on a butterfat basis about 2.75% for the U.S., 3% for the EU and 4% for Canada. This is not a level playing field and negatively impacts on Canadian farmers and producers.
This is a good example of why the level of commitment achieved during the Uruguay round cannot be the basis for further increases. A uniform methodology, one set of rules to be followed by all countries, is necessary for future considerations. This should be Canada's goal at this year's WTO meeting and we should not downgrade this position.