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P 251957Z JUL 06
FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC PRIORITY 3255
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE PRIORITY
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RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 OTTAWA 002237 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/TPP, WHA/CAN - LEN KUSNITZ AND E 
DEPARTMENT PASS USTR 
USDOC FOR 4322/ITA/MAC/WH 
 
E.O. 12958: N/A 
TAGS: EAGR ECON ETRD WTO WTRO CA
SUBJECT: CANADIAN DISAPPOINTMENT OVER SUSPENSION OF WTO 
DOHA TRADE ROUND TALKS 
 
REF: A. STATE 120938 
     ¶B. 05 OTTAWA 3747 (NOTAL) 
 
¶1. (U)  Summary:  Shortly after the WTO announcement that the 
Doha Trade Round negotiations would be suspended 
indefinitely, Canada's International Trade Minister Emerson 
and Agriculture Minister Strahl issued a statement expressing 
their "disappointment."  Emerson said that Canadian farmers 
as well as manufacturers and service providers would have 
benefited from the expanded market access that the Doha 
negotiations aimed to achieve.  Strahl saw the suspension as 
a "serious setback," but reiterated that Canada remains 
committed to advance the interests of its supply-managed and 
export-oriented agricultural industries.  Since the WTO talks 
have stalled, Canada will ramp up its efforts to conclude 
regional and bilateral trade agreements.  End Summary. 
 
¶2. (U)  On July 24, International Trade Minister David 
Emerson and Agriculture Minister Chuck Strahl jointly 
expressed their disappointment following WTO Director-General 
Pascal Lamy's announcement earlier in the day that the latest 
round of WTO negotiations -- the Doha Development Agenda -- 
has been suspended until further notice.  "Despite enormous 
efforts by all WTO members and 11th-hour meetings between G6 
participants, the gaps in negotiating positions proved to be 
too large to bridge within the current time frame," said 
Minister Emerson.  "This is very disappointing for Canada and 
for all developed and developing countries, given the 
significant economic benefits that could have been achieved 
through an ambitious outcome for these negotiations.  He 
noted that "Canadian agricultural producers and processors, 
as well as other manufacturers and service providers, would 
benefit from the expanded market access that the Doha Round 
was aiming to achieve.  We are a nation that depends heavily 
on international commerce, and our government will continue 
to focus on more liberalized trade, the rules-based 
multilateral trading system and the objectives behind Doha 
negotiations." 
 
¶3. (U)  Agriculture Minister Strahl described the 
negotiations suspension as "a serious setback," but added 
that "Canada remains committed to pursuing opportunities and 
seeking a fairer international trading environment for our 
agricultural producers and processors.  We will continue to 
advance the interests of Canada's agricultural sector, 
including both supply-managed and exported-oriented 
industries." 
 
¶4. (U)  As one of the most trade dependent countries in the 
world, Canada is deeply committed to the WTO, an organization 
which Minister Emerson has called "critically important to 
Canada" because it is "a truly international framework, which 
makes it very different -- more stable, more predictable and 
more reliable, and a better friend of smaller countries." 
 
¶5. (U)  Canada's main goal in the Doha Round has been to 
defend its controversial supply management system for eggs, 
chicken, milk and cheese, while trying to persuade other 
nations to reduce their barriers to allow for greater 
Canadian exports of grain, beef, and oilseeds which face 
depressed global prices because of foreign farm subsidies. 
But Strahl conceded in a late June meeting of his provincial 
and territorial counterparts that it might be difficult to 
strike a balance between protecting a system management 
Qsystem which "has worked well for Canada," and obtaining 
greater market access in other sectors. 
 
¶6. (U)  Significantly, the July 24 statement said that 
"Canada will also continue to pursue regional and bilateral 
trade initiatives that serve its future commercial 
interests."  In a speech last month Trade Minister Emerson 
signaled that Canada would ramp up its bilateral trade deal 
negotiations even if the WTO talks stalled, noting that 
Canada has signed only one such deal in the last five years 
(Costa Rica) while the U.S. has approved seven agreements 
with 12 countries since 2001.  The Minister said that "Canada 
is the only major trading nation that has not negotiated a 
single free trade agreement in the past five years.  A pact 
with Costa Rica signed three administrations and two Prime 
Ministers ago does not suggest that we are globally engaged 
as a trading nation.  Consequently, ... we are falling behind 
Australia, Mexico and particularly the United States in terms 
of bilateral trade agreements.  This will eventually hurt our 
export industries, who will find themselves discriminated 
against in third-country markets." 
 
OTTAWA 00002237  002 OF 002 
 
 
 
¶7. (U)  In recent years, Canada has worked periodically on 
bilateral or regional trade agreements with Singapore, the 
Andean countries, FTAA, EFTA, CARICOM, the Central American 
Four (El Salvador, Guatemala, Honduras, and Nicaragua), the 
Dominican Republic and South Korea (with whom Ottawa will 
conduct a sixth round of trade talks in August).  It is worth 
noting, however, that about 80 percent of Canada's exports go 
to the United States, with whom it already has NAFTA. 
Therefore, any additional free trade agreements that Canada 
might negotiate would give it only marginal trade gains, but 
the new GOC mantra is to produce more FTAs. 
 
¶8. (U)  Initial press reaction featured expressions of 
disappointment from farm producers.  Ontario farmers, who had 
long tried to get the USG to reduce subsidies to its grain 
producers, saw their hopes dashed.  "We are disappointed the 
talks have dissolved," said an official of the Ontario Corn 
Producers' Association.  Ontario corn growers must compete 
with their American counterparts who are guaranteed minimum 
prices, resulting in bumper crops flooding the market and 
pulling down world prices, he observed.  However, other 
countries came in for criticism, too.  An Ottawa-based 
international trade consultant noted that Ontario farmers had 
also sought better access to Japanese and European markets, 
especially in pork, bean, and soybeans.  He said that 
Canadian farmers had been promised by the EU in prior trade 
negotiations to get access to 5 per cent of the market in 
beef and pork: "Instead, they gave us two-tenths of one per 
cent and they even tried to rig that."  On the other hand, a 
professor at the University of Toronto opined that Ontario 
dairy and poultry producers, who benefit from a supply 
management system of quotas, may be somewhat relieved that 
the WTO talks have been scuttled.  The U.S. has long been 
demanding that Canada modify its system of supply management, 
and any trade deal could have forced some compromises on that 
front.  The professor argued that Canadian supply management 
is more about guaranteeing Canadian farm incomes since not 
many countries besides the U.S. are interested in sending 
Canada dairy or poultry products:  "The American and EU 
subsidies are really the issue.  The Canadian ones are pretty 
minor." 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
WILKINS