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### Viewing cable 06OTTAWA2237, CANADIAN DISAPPOINTMENT OVER SUSPENSION OF WTO

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06OTTAWA2237 | 2006-07-25 19:57 | 2011-04-28 00:00 | UNCLASSIFIED | Embassy Ottawa

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    VZCZCXRO0905
    PP RUEHAG RUEHAP RUEHDE RUEHDF RUEHGA RUEHGI RUEHHA RUEHHM RUEHLZ
    RUEHMR RUEHPA RUEHPB RUEHQU RUEHVC
    DE RUEHOT #2237/01 2061957
    ZNR UUUUU ZZH
    P 251957Z JUL 06
    FM AMEMBASSY OTTAWA
    TO RUEHC/SECSTATE WASHDC PRIORITY 3255
    INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE PRIORITY
    RUCNWTO/WORLD TRADE ORGANIZATION COLLECTIVE PRIORITY
    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

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