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CANADIAN EGG, DAIRY AND POULTRY FARMERS’ TRADE POLICY POSITION - 2005

International trade negotiations in agriculture resumed in March 2000 as mandated by the World Trade Organization (WTO) Agreement on Agriculture. A Framework on Agriculture was agreed to on August 1st, 2004. The Framework will guide the negotiators throughout 2005, leading to the 6th WTO Ministerial Conference.

All egg, dairy and poultry farmers across Canada have joined together to reiterate their unified vision and adopted a revised position taking into account the developments leading to the Framework on Agriculture to help guide the Canadian negotiators.

The goal of the Canadian egg, poultry and dairy farmers' Trade Policy Position is to prevent the erosion of the three pillars necessary to sustain an effective supply management system in Canada.

The pillars of supply management are:

• Import controls allowing domestic production to be efficiently planned to meet Canadian demand. Imports are limited to the level of access agreed internationally.
• Pricing mechanisms providing producers the opportunity to collectively negotiate prices with buyers in order to receive fair market returns.
• Production discipline allowing supply and demand to be balanced, thereby promoting price and market stability.

Combined, the Canadian egg, dairy and poultry sectors generate over $6.8 billion in farm cash receipts or 20% of total primary agriculture, more than $39 billion of economic activity, and over 215,000 jobs in Canada.

Future trade agreements must ensure that Canada retains the flexibility to successfully defend the ability and rights of Canadian farmers to collectively select, for their own commodity, the marketing system of their choice, including orderly marketing, and in particular supply management. This requires that the tools validating this choice of marketing system be legitimized in future trade agreements. Farmers must continue to be given the necessary legislation, infrastructure and recognition to ensure a balance in the bargaining relationships they have with others in the marketing chain. Future negotiations should ensure that farmers' marketing structures are not subject to stricter international trade rules than other corporate structures.

BASIC PRINCIPLES:

1. EXPORT SUBSIDIES

1.1 Egg, dairy and poultry farmers support the elimination of all government financed export subsidies being the primary focus of trade negotiations since they constitute the most significant distortions to trade.

1.2 Where international food aid, export credit and export promotion programs are permitted, fair, effective and stringent WTO trade rules should govern their practices.

2. MARKET ACCESS

2.1 Given that Canada has accepted the Framework Agreement:
a) Canada must ensure that dairy, poultry and egg products are selected and treated as sensitive products.
b) Canada must ensure that the treatment of sensitive products is completely separated from the general tariff reduction formula, reflects the sensitivity of the product concerned, and be treated more favourably than other products, Sensitive products should not be subject to tariff conversion.

2.2 Recognizing the sensitive nature of dairy, poultry and egg products, Canada’s over-quota tariffs (both specific and ad valorem) must be maintained at their current levels to ensure no more access than the committed level of the Tariff Rate Quota (TRQ) and any capping of overquota tariffs must be opposed. TRQs were implemented as part of the Uruguay Round to convert non-tariff barriers into transparent tariffs of equivalent effect.

2.3 Substantial improvement in market access for products under TRQs will be achieved through:
a) Establishing clear and precise rules governing minimum market access commitments in order to ensure that all countries’ minimum market access commitments are clean, transparent and equal to 5% of domestic consumption, based on the most recent reference period available. These rules must be applicable to all.
b) Reducing tariffs applying to a country’s WTO within access commitments to zero, where over quota tariffs are maintained at current levels. As a special and differential treatment, developing countries could be entitled to maintain minimal in-quota tariffs.

2.4 Product groupings should be established to define common specific product groups (e.g. chicken, turkey, eggs, broiler hatching eggs, butter, cheese, other dairy) for all WTO members.

2.5 Canada must pursue the elimination of all country-specific TRQ allocations so that access is available to all WTO members and ensure any additional access is provided on a MFN basis. As a special and differential treatment, country-specific TRQ allocations could be considered for developing countries.

2.6 Canada must pursue the establishment of transparent, effective and binding rules governing TRQ administration to ensure the committed level of access is achievable. Countries should not use administrative measures to circumvent their within access commitments. Administrative measures which are designed to take account of domestic market conditions and infrastructures, including the right to designate the market segments that receive these imports, should be allowed provided they do not impede the level of committed access.
TRQ administration in support of the objective of equivalent and achievable market access should be guided by the following principles:
a) Administration measures must be fully transparent and predictable to importers and exporters, and be applied equally to all WTO Members;
b) Administrative burdens on importers and exporters should be minimised; and
c) State Trading Enterprises (STEs) must be recognised as legitimate means of administering TRQs.
d) Provisions to address persistent under utilization of access offered under TRQ should be established.

2.7 Simple tariffs that effectively restrict access to a market should be reduced or converted into a TRQ to ensure that real market access is provided.

2.8 As the Special Safeguard Provision, under Article 5 of the AoA, is to “remain in force for the duration of the reform process” and Article 20 of the AoA states that “reform is an ongoing process”, Canada must ensure the Special Safeguard is maintained as a means of addressing high volatility in world markets.

2.9 Canada can pursue zero-for-zero initiatives for specific sectors that want to further liberalise their own trade, as long as these initiatives are not linked to any other negotiating issues or commitments.

3. DOMESTIC SUPPORT

3.1 Canada must seek greater discipline governing domestic support and seek the imposition of a cap on total domestic support including all amber, blue and green programs, measured as a percentage of total value of production.

3.2 The definitions of “green programs” must be clarified to ensure that trade distorting programs do not qualify under the green box. These definitions should allow for mutual co-existence of the various forms of agriculture and the various forms of marketing systems in all countries and a WTO system for the prior determination of the “green status” of a specific domestic program must be established

3.3 Canada must ensure that the green box criteria are changed to include administered pricing mechanisms which do not involve financial contribution by government and are combined with production discipline.

3.4 As a matter of principle, the SM-5 continues to oppose the concept of a product specific cap as it would entrench inequity into trade laws. The SM-5 deplores the endorsement of this concept in the Framework. The measurement of domestic support must remain at the aggregate level, as measured by the Aggregate Measurement of Support (AMS).

3.5 Consistent with the Framework principle seeking greater disciplines be placed on those countries with the highest level of trade-distorting subsidies, any product specific cap should be based on a common percentage of the value of domestic production.

3.6 The de-minimis exemption for amber box programs must be maintained at current levels.

3.7 The special consideration for “Blue Box” programs must be eliminated.

3.8 If Blue Box measures are maintained, a common cap for such measures and for the productspecific de minimis should be established, at 5% of the value of agricultural production. In such instance, the non-product-specific de minimis should be maintained at the current allowed levels.

4. MULTIFUNCTIONALITY

4.1 Recognising that non-trade concerns should be taken into account during the next round of negotiations, Canada should seek to:
a) clarify the concept of "non-trade concerns" and the concept of "multifunctionality", and the extent to which these two concepts are interchangeable;
b) minimise any trade distortions associated with the multifunctional character of agriculture;
c) ensure that any expenditure related to the financing of these concepts are made through
the existing domestic support categories and are subject to a cap imposed on the total support based on a percentage of the total production.

5. SANITARY & PHYTOSANITARY (SPS) MEASURES and ENVIRONMENT

5.1 Sanitary and Phytosanitary (SPS) measures must be based on sound science and not used as disguised trade measures.

5.2 Recognising that there is an interaction between trade and environmental issues, Canada should insist that the Committee on Trade and Environment become a permanent WTO body; and that trade provisions in international environmental agreements be subject to full WTO discipline.