Chair's departure casts doubt on WTO agriculture negotiations

Thursday, March 19, 2009

© AgMedia Inc.

by SUSAN MANN

The future of the World Trade Organization’s Doha Round negotiations is still uncertain but a strong statement from world leaders at next month’s G20 meeting could put them back on track later this year.

That’s the view of Dairy Farmers of Canada spokesman Yves Leduc. But trade consultant Peter Clark of Ottawa doesn’t expect any real discussions in the Doha negotiations to happen before next year.

Leduc says farm leaders were told at a meeting in Rome this week that Ambassador Crawford Falconer, chair of the World Trade Organization (WTO) agriculture negotiations, is leaving. “This is seen by some as an indication that the negotiations may be in more trouble than some people like to think.”

He notes this development could further postpone any conclusions of the modalities (the targets, including numeric targets for achieving the objectives of the negotiations), and the round itself.

Falconer issued revised draft proposals on agriculture in December. The Canadian government said in a press release in December that it’s concerned some elements of the revised text would negatively affect the country’s supply-managed industries and it’s opposed to those provisions.

Leduc says observers are now watching to see if the G20 heads of state issue a strongly-worded statement from their summit on April 2 in London calling on the WTO members to finalize the modalities and the Doha Round this year. The G20 is an economic forum made up of 19 of world’s largest economies plus the European Union.

British Prime Minister Gordon Brown invited WTO Director-General Pascal Lamy to the meeting. But that’s not surprising given Britain’s position to push for a conclusion of the round, Leduc notes.

Clark, on the other hand, isn’t expecting much from the G20 meeting. He notes that the G20 leaders pressured the WTO members to do something last November. But “nobody paid any attention to them.”

He also notes the administration of U.S. President Barack Obama doesn’t “seem to be too keen on providing any leadership right now.”

In addition, people are concerned about other things in the world, like the economic recession, Clark explains.

Leduc says the current proposal calls for a minimum tariff reduction of 23 per cent for “sensitive” products. “Canada intends to declare all of its supply-managed tariff lines as sensitive.”

Supply-managed industries, such as dairy, poultry and eggs, are arguing for zero reductions in the current tariff rates. They say tariff rate decreases would be disastrous for Canada’s supply managed industries.

Even with the current tariffs, dairy products acquired at an over-quota tariff rate could be imported into Canada if world prices continue falling. “We’re pretty close to having imports of butter, cheese and skim milk powder,” he says, adding those items could potentially come into the Canadian market.

If the price of skim milk powder fell by just US$100 to US$1,500 a tonne from its current level of US$1,600 a tonne “that would be sufficient for skim milk powder to enter,” he says. For butter the world price is around US$1,700 to $1,800 a tonne and the price wouldn’t have to drop much lower to be competitively priced with Canadian product, even after the importer paid the over-quota tariff of 299 per cent.

When world prices collapse as they have in the past six months even the over-quota tariffs can’t protect the Canadian market for domestic producers, he says. BF