June 10, 1999

On June 10, 1999 the Standing Committee on Foreign Affairs and International Trade tabled its Report, "Canada and the Future of the World Trade Organization". The report is the outcome of an intensive hearings process initiated in February 1999, summarizing the views of over 400 witnesses heard in more than 30 public sessions. The report reflects the Committee's advice to the government in widely different areas of trade including agriculture, services, information technologies, competition policy and many other areas that are of concern to Canadians.

In the area of agriculture, the Committee referred to an emerging consensus on certain important elements for consideration in developing Canada's opening negotiating position. However, it was noted that "Setting aside the elimination of export subsidies and the elimination of the blue box . . . the Committee's hearings showed that the other principles of the consensus appear to be more fragile."

In particular, the Committee concluded that "The least solid of all the elements of the consensus appears to be market access." It was observed that "While there may in fact be a consensus among agricultural groups on real access equivalent to 5% of consumption and reduction to 0% of the tariffs applicable to access commitments (intra-quotas), the fact remains that many groups and individuals told the Committee, they considered that approach to be inadequate."

"The least solid of all the elements of the consensus appears to be market access."

"Some representatives of the processing sector . . . also made the point that this lack of symmetry in Canada's trade policy, which consists in maintaining high tariffs outside access commitments for some products that are sensitive to foreign competition and not for others, does not foster the dynamic development of the processing sector and makes for slower adjustment by the agriculture sector to new trends in market globalization." The Food and Consumer Products Manufacturers of Canada (FCPMC) reminded the Committee Members that Canada has set a target of doubling its agri-food exports to $40 billion by the year 2005. "To meet that target, they argued, Canada will have to substantially increase the proportion of value-added products among its exports and . . . be open to the idea of reducing import tariffs as a way of creating more opportunities for Canada to access foreign markets."

The Committee commented specifically on the sugar industry experience noting that"previous trade negotiations on freer trade have not resulted in greater market access for their products. The reason for this is that the United States, which constitutes the primary export market for the Canadian sugar industry, has applied strict rules in administering its tariff quota, making real market access gains impossible for Canadian sugar producers. The latters' representatives said that if the proposed 5% minimum access actually opened up on an individual product basis, it could mean an increase of $400 million in Canadian exports of refined sugar and products containing sugar. This would not be sufficient in and of itself: to achieve its full potential, the Canadian sugar industry argues, certain existing rules such as the rule of origin and the practice of establishing intracontinental access based on individual products (raw and refined sugar treated as distinct products) would have to be revised and improved to encourage trade. For such a revision to be possible, the sugar industry considers that Canada must also aim at reducing, progressively and following a pre-determined plan, excessive extra-quota tariffs, while recognizing that these tariff reductions would have to be equitable and evaluated separately for each sector and product."

In concluding its comments on market access, the Committee observed that "The fact that there are differences in viewpoint from sector to sector is not surprising given that Canadian agriculture is extremely diverse, geographically subject to different constraints and characterized by marketing structures that vary considerably from product to product." The same is true of other countries, including EU countries, which widely use dual-track agricultural policies to protect their sensitive sectors; however, in contrast to countries that are able to rely on significant domestic demand, Canada has to look to the foreign market to sustain its growth. That reliance on foreign markets means that any protectionist policy Canada might adopt lays the country open to criticism from its trading partners."

The Committee's report can be found at:
http://www.parl.gc.ca/InfoComDoc/36/1/FAIT/Studies/Reports/faitrp09-e.htm#TO