To put it mildly, current World Trade Organization negotiations have not been going well. The so-called Doha round, which started in 2001, stumbled at a 2003 ministerial meeting in Cancún, Mexico, when developing countries walked out over agricultural subsidies; rich countries in turn were demanding better market access in developing countries for non-agricultural goods, services and investment. Now, in advance of the December 2005 WTO meeting in Hong Kong, progress has again been slow, and agricultural subsidies remain a sticking point. It is a debate in which Canada–the world's third-largest agricultural exporter, a dogged critic of U.S.- and EU-style subsidies, yet the only nation that still protects some agricultural segments through supply management–has a large and complicated role. Jim Peterson, the federal minister of international trade, will attend the meeting. He spoke to Canadian Business editor Joe Chidley in late November.
Canadian Business: How important is the Doha round to Canada?
Jim Peterson: Canada is one of the world's foremost trading nations. Our trade is equivalent to about 70% of our GDP–about three and a half times the proportion for Japan and the United States. Our prosperity is directly linked to our capacity to export. We want market access for Canadians. Secondly, it's the only opportunity we have to rein in the obscene level of agricultural subsidies in the EU, the United States and Japan. We cannot do that bilaterally. Thirdly, it is a unique opportunity to open the world of international commerce to developing countries. It's essential this be a true development round. Estimated agricultural subsidies exceed US$300 billion a year, and the total of all foreign aid [to developing countries] is only US$79 billion. This shows a world that is truly out of whack.
CB: How does Canada measure up against the U.S. and the EU in terms of agricultural subsidies?
JP: Our AMS [aggregate measure of support] is US$3.7 billion; it's US$19.1 billion in the U.S. and US$79 billion in the EU.
CB: The U.S. and the EU have proposals to cut agricultural support. What is your position on those?
JP: Neither go far enough. The U.S. proposal was a good start. We've heard from countries such as Brazil that the EU proposals fell short of what was expected. In terms of market access, we want to see the EU go further.
CB: Given the importance of agricultural exports, why hasn't Canada put forward its own proposal?
JP: We have. We have put forward a proposal that would recognize in every country there are sensitive products in agriculture. We would carve them out of the overall tariff reductions and set them aside and treat them far differently. We can have even bigger cuts in the other areas if we set aside sensitive products.
CB: So sensitive products in Canada are eggs, dairy, poultry–we're talking the supply management system?
JP: Right. There are proposals on the table that would do away with supply management. [But] we will defend supply management vigorously. We've made that very clear.
CB: In a number of areas, especially outside agriculture, the United States seems a natural ally of Canada. How does the dispute over softwood lumber affect that relationship on trade?
JP: Not a bit. We're working very closely with the United States. We enjoy the world's largest trading relationship, and fully 96% of it is dispute-free.
CB: What are the prospects for a successful outcome in Hong Kong?
JP: The one good thing is members all want to maintain a high level of ambition. [If Hong Kong falls short], the door will be open for a brief period in 2006.
CB: So time is of the essence?
JP: It is, because U.S. fast-track legislation [allowing executive negotiation of trade deals, which Congress can only approve or deny] expires July 1, 2007. Also, the EU common agricultural policy and the U.S. farm bill will be up for reconsideration.
CB: If Hong Kong fails, what's next for Canada's trade policy?
JP: I don't think Hong Kong will fail completely. It may not achieve what we wish, which means we have to vigorously pursue a successful resolution in 2006.
CB: If that doesn't work, are we in a world of bilateral deals?
JP: Well, I don't want to contemplate what would happen with failure.