This record is a partial extract of the original cable. The full text of the original cable is not available.

231721Z Dec 05

UNCLAS SECTION 01 OF 02 OTTAWA 003747 
 
SIPDIS 
 
STATE FOR EB/TPP/BTA, EB/TPP/BTA/EWH AND EB/TPP/MTA 
 
WHA/CAN - BREESE AND HOLST AND E - U/S SHINER 
 
STATE PLEASE ALSO PASS TO USDA 
 
DEPT PASS USTR FOR MELLE AND CHANDLER 
 
USDOC FOR 4322/ITA/MAC/WH 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EAGR CA WTRO
SUBJECT:  WTO HONG KONG MINISTERIAL:  CANADIAN REACTIONS 
 
REF:  OTTAWA 3586 AND PREVIOUS 
 
¶1. SUMMARY/INTRODUCTION:  Canadian players' reactions to the 
outcome of this month's WTO Hong Kong ministerial were 
generally positive, as the declaration keeps alive the 
promise of greater market access for Canada's competitive 
sectors such as livestock and grain, while not appearing to 
threaten quota-based "supply management" in dairy, eggs and 
poultry (see reftel).  Canadian reporters credited the U.S. 
with taking the initiative on agricultural export subsidies 
in the lead-up to the meetings.  The ministerial has further 
energized discussion of the structure of the quasi- 
governmental Canadian Wheat Board and options for reforming 
it.  END SUMMARY/INTRODUCTION 
 
¶2. GOC:  International Trade Minister Jim Peterson and 
Agriculture Minister Andy Mitchell's joint official 
statement said:  "This text provides scope for Canada to 
achieve its objectives in key areas.  A number of Canadian 
proposals and ideas are reflected in the Declaration, 
specifically on non-agricultural market access and domestic 
support to agriculture.  We are also pleased that Canada's 
objectives have been met on the treatment of sensitive 
products and on exporting state trading enterprises.  While 
the Hong Kong Ministerial Conference did achieve real 
progress in the areas of market access for non-agricultural 
products, services, export subsidies for agriculture, and 
duty-free, quota-free market access for least-developed 
countries, much remains to be done.  We will work 
aggressively with members and domestic stakeholders toward 
completing the negotiations by the end of 2006." 
¶3. PROVINCES:  The Province of Alberta noted that the U.S. 
movement on export subsidies was "a huge step," and 
expressed confidence that Alberta grain and livestock 
producers would be globally competitive if subsidies and 
tariffs were eliminated.  Quebec Ministers first claimed 
partial credit for removing any threat to "supply 
management" in the final text.  After promising to remain 
vigilant on this front, they then approved other aspects of 
the declaration, which they said "clears the way to creating 
conditions for improved market access without compromising 
our sensitivities." 
¶4. FARM/INDUSTRY GROUPS:  The President of the pro- 
competitive Canadian Agri-Food Trade Alliance (CAFTA) said, 
"We recognize much of Canada's work in this text on the 
export competition and domestic support pillars, and we 
appreciate that.  But we also note that Canada advocated the 
removal of the minimal progress made in the first draft on 
market access for sensitive products, without achieving any 
language that would have assured us that Canada is still 
seeking substantial improvements in market access for our 
exports even if they are designated sensitive.  But this 
round will not be a success without a meaningful deal on 
agricultural market access.  Our Ministers and negotiators 
have shown they do have a strong influence on the 
negotiations."  The President of the more protectionist 
National Farmers Union said, "Canadian farmers should be 
happy . . . [Ministers], along with trade negotiators and 
farm leaders, prevented calamity for farmers, at least in 
the short term."  Ontario Federation of Agriculture 
representatives called on Canadian governments to continue 
agricultural support payments until they are reduced by WTO 
agreement, saying "There's no reason we should sacrifice 
ourselves until everybody plays by the rules." 
¶5. MANUFACTURERS:  According to the Canadian Manufacturers 
and Exporters, "We would have preferred a far more ambitious 
result, but, compared to the failures in Seattle and Cancun, 
these talks have restored hope for a more open and fair 
trading system.  CME is pleased by the reference to services 
in the communiqu, but we still want to see an ambitious 
agreement on industrial tariffs that cuts deeply into 
applied rates in both developed and emerging countries.  We 
also believe it will be important to move ahead in sectoral 
negotiations." 
¶6. BUSINESS LEADERS:  The Canadian Council of Chief 
Executives participated in a "Statement by World Business 
Leaders" which read in part, "A significant amount of work 
that should have been completed in Hong Kong remains to be 
done in the year ahead. . . . The gaps between the positions 
of key WTO member countries remain large.  Any further 
delays or compromises on ambition in getting to a final Doha 
Round agreement will put worldwide economic growth in 
 
developed and developing countries at risk and may lead to 
the ultimate failure of this Round. . . . In the next few 
months, WTO members and negotiators must focus on achieving 
real results in each of the key negotiating areas.  While 
some initial results have been achieved in trade 
facilitation negotiations, tremendous work remains in 
agriculture, non-agricultural market access, and services. 
On industrial goods, WTO members must agree to substantially 
reduce remaining barriers on all industrial goods, and they 
should support zero duties in sectors that wish to see 
tariffs fully eliminated.  On services, time is running out 
and all members share a responsibility to table proposals 
and advance negotiations.  Members must set out to achieve 
commercially meaningful progress, including the application 
of agreed upon benchmarks in certain areas, and a focus on 
key services sectors that are most ripe for liberalization." 
¶7. DEVELOPMENT NGO:  The head of the Winnipeg-based 
International Institute for Sustainable Development wrote 
that while the commitment to end agricultural export 
subsidies "is a welcome achievement (if a distant prospect), 
the problem is that there was no real movement on domestic 
subsidies. . . It is worth asking what developing countries 
got out of this meeting; the Doha Round has since its 
inception been sold as a ticket out of poverty . . . The 
harvest for the poor was pretty meagre. . . . The 
uncertainties that remain offer enough room to swing the 
final Doha deal from good to bad for Canada -- and for the 
poor countries of the world." 
¶8. CANADIAN WHEAT BOARD:  The CWB said, "The wording in this 
new text means that the CWB's existence will not be on the 
table at the WTO.  This will make it more difficult for the 
United States to achieve its objective of eliminating our 
marketing system."  A spokesperson was quoted saying that 
under commitments made prior to Hong Kong, "farmers in 
Canada are still poised to lose their government guarantees 
of initial payments and Wheat Board borrowings under a new 
[WTO] deal, with still no signs of any meaningful reductions 
in European or American domestic farm subsidies or any real 
improvements in market access issues." 
 
¶9. COMMENT:  There were no surprises among the reactions 
quoted above, and the Hong Kong meeting prompted relatively 
little further discussion in Canadian media.  While Canadian 
political leaders seem unanimously committed to defending 
"supply management" in the dairy, egg and poultry sectors, 
discussion of the future of the Canadian Wheat Board is much 
more dynamic.  The CWB was once a GOC-owned corporation and 
its monopoly on the export of certain grains is enshrined in 
Canadian law, but it is now run by a board of 15 directors, 
ten of whom are elected by grain producers and five of whom 
are appointed by the GOC.  The Board election process is 
currently being debated.  The GOC minister responsible for 
the CWB, Treasury Board President Reg Alcock, was recently 
quoted saying "I believe the board is going to evolve into 
further farmer control . . . There are a number of 
possibilities." 
WILKINS