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37th PARLIAMENT, 3rd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Monday, May 3, 2004

1535

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.))

Mr. Blair Coomber (Director General, International Trade Policy Directorate, Department of Agriculture and Agri-Food)

The Chair

Mr. Blair Coomber

The Chair

Mr. Blair Coomber

1540

1545

The Chair

Mrs. Cynthia Wright (Director General, Strategic Priorities, Environmental Protection Service, Department of the Environment)

1550

1555

The Chair

Mr. Paul Haddow (Executive Director, International Affairs, Canadian Food Inspection Agency)

The Chair

Mr. Tim Pettipas (Director, Multilateral Trade Policy Division, Department of Agriculture and Agri-Food)

The Chair

Mr. Tim Pettipas

1600

The Chair

Mr. Gerry Ritz (Battlefords—Lloydminster, CPC)

Mr. Tim Pettipas

Mr. Gerry Ritz

Mr. Tim Pettipas

Mr. Gerry Ritz

Mr. Tim Pettipas

Mr. Gerry Ritz

Mr. Tim Pettipas

Mr. Gerry Ritz

1605

Mr. Tim Pettipas

Mr. Gerry Ritz

Mr. Tim Pettipas

Mr. Gerry Ritz

Mr. Tim Pettipas

Mr. Gerry Ritz

Mr. Blair Coomber

Mr. Gerry Ritz

Mr. Blair Coomber

Mr. Gerry Ritz

Mr. Blair Coomber

Mr. Gerry Ritz

Mr. Blair Coomber

Mr. Gerry Ritz

Mr. Blair Coomber

Mr. Gerry Ritz

Mr. Blair Coomber

Mr. Gerry Ritz

Mr. Blair Coomber

Mr. Gerry Ritz

Mr. Blair Coomber

Mr. Gerry Ritz

The Chair

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ)

Mr. Blair Coomber

1610

Mr. Paul Haddow

Mr. Louis Plamondon

Mr. Tim Pettipas

1615

Mr. Louis Plamondon

The Chair

Mr. Tim Pettipas

The Chair

Hon. Wayne Easter (Malpeque, Lib.)

Mr. Tim Pettipas

Hon. Wayne Easter

1620

Mr. Tim Pettipas

Hon. Wayne Easter

Mr. Blair Coomber

Mrs. Cynthia Wright

Hon. Wayne Easter

Mr. Paul Haddow

1625

The Chair

Mr. Dick Proctor (Palliser, NDP)

Mrs. Cynthia Wright

Mr. Dick Proctor

Mr. Tim Pettipas

Mr. Dick Proctor

Mr. Tim Pettipas

Mr. Dick Proctor

1630

Mr. Tim Pettipas

Mr. Dick Proctor

Mrs. Cynthia Wright

Mr. Dick Proctor

Mrs. Cynthia Wright

Mr. Dick Proctor

Mrs. Cynthia Wright

The Chair

Mr. Gilbert Barrette (Témiscamingue, Lib.)

Mr. Tim Pettipas

Mr. Gilbert Barrette

Mr. Tim Pettipas

Mr. Gilbert Barrette

Mr. Tim Pettipas

Mr. Gilbert Barrette

Mr. Tim Pettipas

Mr. Gilbert Barrette

Mr. Tim Pettipas

Mr. Gilbert Barrette

1635

Mr. Tim Pettipas

Mr. Gilbert Barrette

Mr. Tim Pettipas

Mr. Gilbert Barrette

Mr. Blair Coomber

Mr. Gilbert Barrette

Mr. Blair Coomber

The Chair

Mr. Gilbert Barrette

Mrs. Cynthia Wright

The Chair

Mr. Paul Haddow

The Chair

Mr. Ken Epp (Elk Island, CPC)

Mr. Tim Pettipas

1640

Mr. Ken Epp

Mr. Tim Pettipas

Mr. Ken Epp

Mr. Tim Pettipas

Mr. Ken Epp

Mr. Tim Pettipas

Mr. Ken Epp

Mr. Tim Pettipas

Mr. Ken Epp

Mr. Paul Haddow

Mr. Ken Epp

Mr. Paul Haddow

1645

Mr. Ken Epp

Mr. Paul Haddow

The Chair

Mr. Ken Epp

The Chair

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.)

Mr. Blair Coomber

Mrs. Rose-Marie Ur

Mr. Blair Coomber

Mrs. Rose-Marie Ur

Mr. Blair Coomber

Mr. Paul Haddow

Mrs. Rose-Marie Ur

Mr. Paul Haddow

Mrs. Rose-Marie Ur

Mr. Tim Pettipas

1650

Mrs. Rose-Marie Ur

Mr. Tim Pettipas

Mrs. Rose-Marie Ur

Ms. Pam Cooper (World Trade Organization Agriculture Negotiations Coordinator, Department of Agriculture and Agri-Food)

Mrs. Rose-Marie Ur

Ms. Pam Cooper

Mrs. Rose-Marie Ur

Mrs. Cynthia Wright

Mrs. Rose-Marie Ur

Mrs. Cynthia Wright

Mrs. Rose-Marie Ur

Mrs. Cynthia Wright

The Chair

Mrs. Rose-Marie Ur

The Chair

Mr. Paul Haddow

1655

The Chair

Mrs. Cynthia Wright

The Chair

Mr. Louis Plamondon

Mr. Tim Pettipas

Mr. Louis Plamondon

Mr. Tim Pettipas

Mr. Louis Plamondon

Mr. Tim Pettipas

1700

The Chair

Hon. Wayne Easter

Mr. Blair Coomber

Hon. Wayne Easter

Mr. Blair Coomber

Hon. Wayne Easter

Mr. Blair Coomber

The Chair

Mr. Dick Proctor

Mr. Tim Pettipas

Mr. Dick Proctor

Mr. Tim Pettipas

Ms. Pam Cooper

Mr. Dick Proctor

1705

Mr. Tim Pettipas

Mr. Danny Foster (Senior Adviser, Program Planning and Performance Directorate, Farm Financial Programs Branch, Department of Agriculture and Agri-Food)

The Chair

Mr. Dick Proctor

Mr. Danny Foster

The Chair

Mr. Ken Epp

Mrs. Cynthia Wright

Mr. Ken Epp

Mrs. Cynthia Wright

Mr. Ken Epp

The Chair

1710

Mr. Tim Pettipas

The Chair

Mr. Blair Coomber

The Chair

Mr. Tim Pettipas

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 018

3rd SESSION

37th PARLIAMENT

EVIDENCE

Monday, May 3, 2004

[Recorded by Electronic Apparatus]

¹ (1535)

[English]

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.)): Good afternoon. I wish to call the meeting to order.

Today we want to look at the potential effect of the World Trade Organization negotiations regarding the Cartagena Protocol.

We have witnesses today from Agriculture and Agri-Food Canada: Tim Pettipas, director, multilateral trade policy division; Blair Coomber, director general, international trade policy directorate; and Pam Cooper, World Trade Organization, agriculture negotiations coordinator.

From Environment Canada, at the table we have with us Cynthia Wright, director general, strategic priorities, Environmental Protection Service.

From the Canadian Food Inspection Agency, we have Paul Haddow, executive director, international affairs.

We have very distinguished people at the table today and we look to you for some....

I'm being asked, Mr. Pettipas, whether you will be speaking in regard to the WTO. Yes. Blair, you will be speaking on the terms of the Cartagena Protocol. So who's first?

Mr. Coomber.

Mr. Blair Coomber (Director General, International Trade Policy Directorate, Department of Agriculture and Agri-Food): Yes, if we can start with the Cartagena Protocol.

The Chair: We want to be encompassing of the issue, but we want to be succinct to allow for our people to ask some questions.

Go ahead, Mr. Coomber.

Mr. Blair Coomber: Thank you, Mr. Chairman.

First of all, maybe I could take some direction from you. We provided a deck to the committee on the Cartagena Protocol. What it does is give quite a lot of background on the protocol and some of the issues that we're dealing with from an agricultural perspective. Then I would like to ask my colleague from Environment Canada to talk a bit about the outcome of the meeting in Kuala Lumpur. I don't know how much time we have. It's probably more than five minutes if I go through the whole deck.

The Chair: That's no problem. If I see you getting a little too lengthy, I'll rein you in.

Mr. Blair Coomber: The Cartagena Protocol on Biosafety is a multilateral environmental agreement negotiated under the Convention on Biological Diversity. The biosafety protocol provides a framework for countries to adopt so that LMOs, living modified organisms, can be traded safely and responsibly, and it includes trade obligations for parties to the protocol. LMOs are genetically modified organisms that can replicate in the environment.

Initial negotiations of the biosafety protocol focused on building the capacity of developing countries in order for them to protect their biodiversity against the potential risks of living modified organisms. The negotiations also focused on trade-related procedures that can limit the potential risks on importing countries and their biodiversity.

LMOs that are currently in commercial production in Canada are corn, canola, and soybeans. However, as these commodities use Canada's bulk grain handling system, the protocol could affect a very large share of Canada's trade in agricultural commodities. Recent advances in biotechnology are leading to development of LMOs of fish, seedlings, veterinary biologics, micro-organisms, nursery products, and agricultural products. As you can see, the biosafety protocol could extend beyond the commodity sector.

Canada currently has one of the most stringent regulatory frameworks for plants with novel traits, which include LMOs. All plants with novel traits undergo a stringent environmental, human, and animal health safety risk assessment prior to being released into the environment. As such, Canada ensures that any LMO does not pose a risk to biological diversity.

In a nutshell, the biosafety protocol sets procedures for three categories of LMOs: those destined for food, feed, or for processing and are not intended for intentional release into the environment; LMOs destined for intentional release into the environment; and LMOs destined for contained use. That would be a research project or something like that that wouldn't go beyond a lab or a research facility.

The procedures reflect a specific level of risk based on the intended use of the LMO. The procedure for LMOs not intended for release into the environment is most relevant for the agricultural commodity sector. Exporters of seeds are also paying very close attention to the procedure applying to the second category, release into the environment.

Let me briefly review the general procedures that apply to each. LMOs destined for environmental release must comply with the advance informed agreement, commonly known as AIA, procedure that applies prior to the first intentional movement. The party of export must notify the party of import prior to the transboundary movement. In turn, the party of import notifies the party of export of its decision, based on a risk assessment, to either approve or prohibit the import or to ask for additional information. This procedure is meant to protect biodiversity by ensuring that a risk assessment has been carried out prior to the importation of LMOs.

The procedure for LMOs intended for direct use as food, feed, or processing is most relevant for our bulk grain and oilseed industry. First, parties must notify the Biosafety Clearing-House of a final decision to market each specific LMO. The Biosafety Clearing-House is an Internet-based information sharing website that allows all countries to access regulations in each country, decision documents on approved LMOs, and the risk assessment for LMOs. It is an Internet-based system, but also we do have to provide actual paper to the system so the documents are filed.

Second, the importing country may take the decision to import the LMO for food, feed, or processing under its domestic regulatory framework. A developing country or a country without a domestic framework may require a risk assessment as outlined in the biosafety protocol. Finally, both the exporting and importing country must ensure that documentation accompanies a transboundary movement.

Finally for contained use, the third category, exporters must follow the party of import's domestic regulations with respect to measures taken for contained use.

In summary, the potential risk of the LMO and its intended use determines the procedure for the transboundary shipments. As such, the requirements for LMOs should be proportional to the risks they pose to the environment.

That's a bit of background.

¹ (1540)

Canada signed the biosafety protocol in 2001 and supports its environmental objectives. However, the decision of Canada was not to ratify the biosafety protocol but to seek further clarification on a number of key issues regarding the documentation requirements for shipments for food, feed, or processing and obligations related to shipments in transit and unintentional shipments. The decision was to seek further clarification at the first meeting of the parties, which was held in Kuala Lumpur in February.

Other issues that are of interest to our agricultural industry include the protocol's decision-making procedures, additional rules with regard to trade with non-parties to the protocol, the compliance measures, and the protocol's relationship with other international agreements, such as the World Trade Organization. Most of these issues are of particular relevance to Canadian producers and exporters of wheat, oats, barley, pulse crops, and oilseeds, which account for a large share of Canada's agrifood exports.

The protocol that was concluded in January 2000 is missing some important implementation details. Since that time, three intergovernmental committees on the Cartagena Protocol and several technical groups have met to determine how the protocol would be implemented. Unfortunately, no consensus could be reached. Some of the concerns were addressed at the first meeting of the parties in February 2004.

However, agriculture stakeholders continue to believe strongly that the protocol can negatively impact their ability to compete globally. Their major concern is the documentation provision with regard to providing the specific identity of all varieties of LMOs that could be contained within a shipment. Currently, the documentation provision allows exporters to apply a “may contain” document, which will accompany a shipment of LMOs.

Documentation provisions were addressed at the first meeting of the parties. At that meeting parties decided to expand the documentation provision to encourage exporters to identify the specific transgenic event and unique identifier of the LMO, if available. Furthermore, the provision encourages exporters to identify what the shipment does contain, rather than what the shipment may contain. A final decision on the provision will be taken at the second meeting of the parties, which is scheduled for June 2005. So the decision from MOP-1 is that most decisions were interim. Until then, Canada is abiding by the party of import's domestic regulations pertaining to LMOs. A technical expert group meeting is scheduled to be held next year to address the issue of documentation and to provide recommendations to the meeting of the parties on the specific identity of the LMO in a shipment.

The agriculture and agrifood industry has the technology and can abide by the current mandatory documentation provisions. However, if all the additional requirements become mandatory, it could put a considerable burden on farmers and exporters of LMOs, as the current bulk handling system is not designed to segregate the different varieties of commodity crops. As most Canadian crops move through the same bulk handling system, the documentation provision could affect virtually all exports of Canadian grains, oilseeds, pulse, and other crops. These exports were valued at $5.5 billion in 2003.

Canada's major competitor is the United States, which cannot ratify the biosafety protocol because it has not ratified the parent agreement, the convention on biodiversity. Both Canada and the United States will have to comply with the domestic regimes of parties to the protocol as they develop their regulations to implement the protocol.

One of the concerns of Canadian farmers and exporters is that they do not want to be placed at a competitive disadvantage by binding them to an agreement in which unclear rules to trade currently prevail. The biosafety protocol is also in the process of developing a liability and redress regime for the damage resulting from transboundary movement of LMOs. These rules are yet to be developed. Additional liability could be placed on Canadian farmers and exporters due to these unclear rules to trade.

Another concern is the relationship between the biosafety protocol and the WTO. There's a concern that a country that is a party to the protocol would feel that it shouldn't address a dispute under the dispute settlement mechanism of the WTO. It is agreed that there is nothing in the protocol that would take away our country's rights and obligations under the WTO. All members would still retain those rights and obligations.

Furthermore, Canada has a well-developed, established position that international rules and standards are developed in a coherent, effective, science-based, and transparent manner. As such, Canada consistently uses science as an instrument to ensure that international trade interests are maintained and protected.

¹ (1545)

Perhaps before I turn it over to my colleague Cynthia Wright from Environment Canada, who will talk about the outcomes of Kuala Lumpur, I will mention the trilateral arrangement with Mexico and the United States, which you've probably heard of. A few months prior to the meeting of the parties, Canada, Mexico, and the United States entered into a trilateral agreement to provide practical guidance to North American grain and oilseeds trade on the documentation requirements for LMO shipments destined for food, feed, or processing. This addressed the need from Canadian grain and oilseed exporters to clarify the documentation requirements. Canada sought this to ensure that food supplies continued to move in a manner consistent with the protocol, and meeting the objectives of the protocol, while further guidance is being achieved under the protocol.

Presently, Canada and the United States are the only countries to apply documentation to shipments of LMOs to Mexico. This arrangement is consistent with the biosafety protocol provisions and objectives and will be revisited when final decisions are made by the parties to the protocol. The trilateral arrangement does not circumvent the multilateral negotiations, but was needed to ensure that Canada could supply needed commodities while being in compliance with the protocol.

So if I could, Mr. Chairman, I'd like to turn it over to Ms. Wright to talk about the outcomes of Kuala Lumpur.

The Chair: Ms. Wright.

Mrs. Cynthia Wright (Director General, Strategic Priorities, Environmental Protection Service, Department of the Environment): Thank you.

You should have copies of my talking points en anglais et en français.

As Blair said, I'm going to give you a brief summary of the major outcomes of the protocol. I thank you very much for the opportunity to do so.

When Canada went to Kuala Lumpur, there were five subject areas where we were seeking further clarity. Progress was made on all of these, some to the complete satisfaction of Canada and others where we're still assessing the implications of the decisions. What I will do for you today is give the outcomes of the major decisions, starting with those that are most consistent with what Canada was intending to see. I'll end with those that are more complex.

The first one is on decision-making. Normally, United Nation decision rules are such that decisions are taken by consensus of the parties to a multilateral agreement. A situation arose in 2002 at the sixth meeting of the parties to the convention on biodiversity, the parent convention that Blair mentioned, that cast some doubt as to whether the decision rule was consensus or not, and exactly what is consensus. Given that the convention on biodiversity is the parent to the biosafety protocol, this confusion spilled over into the protocol as well. Happily, the situation was clarified in Kuala Lumpur, and the decision rule is consensus, which means the absence of formal objection by a party.

The second area that Canada was seeking clarity on was the compliance regime. The protocol calls for a compliance body that will make recommendations to the meeting of the parties on how to bring non-compliant countries into line with the rules of the protocol. A few countries, notably the European Union, were seeking compliance measures that would also include trade measures. Most countries, including Canada, felt that such measures would be beyond what is possible under the protocol. The decision at the meeting of the parties was consistent with the perspective of Canada.

The third area we dealt with is trade with non-parties. The protocol requires that parties carry out trade with non-parties in a manner that is consistent with the objective of the protocol. The European Union had proposed further guidance as to what this would mean. The meeting of the parties took a decision on this guidance with which Canada is comfortable.

The fourth area is the consistency with the rights and obligations under the WTO. As Blair mentioned, the protocol states that it does not change any of the rights and obligations of a party under any existing international agreement. It is a widely held opinion that the protocol can be implemented in a manner that is consistent with the rights and obligations of the WTO, among other international agreements. However, Canada wants to remain vigilant that this is the case, and we were satisfied that the decisions at the first meeting of the parties respected this.

The fifth area is documentation. Blair spoke at length on what the requirements are under the protocol. This has been the most challenging issue, and indeed remains so. Effectively, the protocol requires that all transboundary shipments of living modified organisms be accompanied by documentation, principally to ensure safe handling in transport and use.

The protocol classifies transboundary shipments into three types, as Blair mentioned: those for release into the environment, those that will be used in a contained situation, and those that will be used directly for food, feed, or processing. While the protocol states that there will be documentation for these three types of shipments, it was left to this implementation phase to determine the specifics. But the protocol does require that all parties put in regulations to implement the specifics once they are decided upon.

For the first two types of shipments, clear decisions were taken at the meeting of the parties. The outcome requires more information on the documentation than Canada would think truly necessary to ensure safe handling, transport, and use. This is because for all living modified organisms, there will be detailed information in the Biosafety Clearing-House, which Blair mentioned. It's Canada's view that it will not be necessary to repeat many of the details on the shipping documents.

The area of documentation requirements for food, feed, or processing has been the most challenging. This is perhaps in part because there are really only three countries exporting these types of living modified organisms at this time--the United States, Argentina, and Canada--which means there are only a few voices with in-depth understanding from an export perspective. And it's important to note that none of these countries were parties at the time of the first meeting of the parties, and nor are they yet.

¹ (1550)

For shipments of living modified organisms for food, feed, or processing, to implement the protocol, Canada was seeking clarity on the type of document, the information on the document, and when to actually provide the documentation.

The protocol set out two phases for documentation for food, feed, or processing. We're in the interim phase now. At this time, the only information on the document is a simple sentence to indicate that the shipment may contain living modified organisms and is intended directly for use in food, feed, or processing and not intended for release into the environment. However, the protocol requires that within two years of coming into force--so that's by June 2005--parties are to decide on what additional information is required in this regard.

In Kuala Lumpur, parties took an interim decision on both the type of document and the information to be provided. For this interim, the document will be an existing exporter-generated document, such as the invoice. The information provided will be the simple “may contain” sentence that I previously mentioned, along with additional information that is required by the protocol to identify who to contact if there are questions or concerns. But over and above this, governments are urged to require additional information that is very similar to the information requirements for shipments intended for release into the environment or for contained use, which, as I previously noted, is more information than Canada really feels is necessary.

There was no additional clarity at the first meeting of the parties on the issue of when to provide the documentation. The protocol simply states that the documentation is to accompany intended shipments of living modified organisms. For those of you who understand the bulk commodity shipment process, you will immediately understand that there may be unintended low levels of living modified organisms present in most shipments.

This issue has been recognized, but not yet resolved, and it is not clear when it will be resolved. The parties directed that a group of experts look into the matter, along with the outstanding documentation issues, before the second meeting of the parties in June 2005. But the experts were instructed to look at this issue only if time permitted, so it's not certain if we will have a resolution in June 2005.

Additionally, Canada has identified another complexity relating to when to apply documentation. It relates to the obligation, if any, of a party that is acting solely as a transit state for the transboundary shipment of living modified organisms. If Canada were to be a party, recognizing that the United States will not be a party for some time, at least, as Blair noted, a number of shipments could come through Canada without documentation. It is Canada's belief that it would be an unfair and onerous obligation to require a transit state to generate documentation.

We raised this at the first meeting of the parties and had agreement to bring this issue forward for a decision at the second meeting of parties in June 2005. We've discussed the issue with several countries, and most seem to agree with our view.

In closing, I hope I've given you a brief overview of the major decisions of concern to Canada that were taken at the first meeting of the parties. A number of other decisions were made on which I'd be pleased to answer questions, but as you can see, for Canada the key outstanding issue remains the question of documentation, particularly for shipments for food, feed, or processing.

There is an opportunity for countries to submit views on this before the end of June of this year. There will be meetings on this matter between now and the second meeting of the parties in June 2005. The second meeting will be a critical one as important further decisions on the documentation will be required and Canada will have to determine what its desired outcomes are and how best to achieve those outcomes.

At this stage, we're still assessing the details and listening to different stakeholder views on the decisions taken at the first meeting of the parties to shape our best advice to ministers to enable them to take the decision on whether or not to ratify.

Thank you very much, Mr. Chair.

¹ (1555)

The Chair: From the Canadian Food Inspection Agency, we have Paul Haddow.

Are you making comments now or not?

Mr. Paul Haddow (Executive Director, International Affairs, Canadian Food Inspection Agency): To speed things up, I don't think I need to make any further introductory remarks, but I appeared in order to answer questions.

The Chair: Okay. We'll direct our questions to you, if there are questions. I'm sure there'll be questions, because there are a lot of unanswered questions, in my mind, on some of the things that were said. I guess that's why there are going to be more meetings.

Mr. Pettipas, do you have anything to add?

Mr. Tim Pettipas (Director, Multilateral Trade Policy Division, Department of Agriculture and Agri-Food): I understood that I was going to speak to the WTO negotiations, but I can do it afterwards, if you'd like.

The Chair: Why don't you do it now, and then we can direct our questions appropriately?

Mr. Tim Pettipas: Perfect.

Thank you very much for the opportunity to speak with you this afternoon. I'd first like to give you a brief update on the status of negotiations, or where we're currently at, before turning our attention to aspects of the negotiations of particular interest to the grain sector.

The WTO members have held two negotiation sessions in agriculture since the Cancun ministerial conference in September 2003. The discussions have been positive; members are committed to try to reach an agreement on the agricultural negotiating framework by the end of July. A framework in this context would identify the concepts and approaches to be used in an eventual agreement. Members would then work out specific rules and reduction commitments at a later stage in the negotiations. The negotiations are clearly intensifying, and will intensify further through June and July.

Based on what we saw during the most recent negotiating session, which was the week prior to last, the week of April 20, market access remains the most difficult issue, with wide gaps remaining between the positions of members. The shape of a potential outcome in domestic support and export competition, on the other hand, is clearer, but still far from agreed.

Turning our attention to the interests of the Canadian grain sector, it's clear that the sector wants and needs the opportunity to be able to compete fairly on a level international playing field. As a result, making gains in domestic support and export competition are crucial for the future prosperity of the sector.

On domestic support, Canada is seeking the elimination, or maximum possible reduction, of trade-distorting domestic support. Obviously, the United States is one of our primary targets, especially given that U.S. support levels are concentrated in the grains and cereal sector. We're working with a wide range of other countries to ensure that trade-distorting subsidies are disciplined effectively and reduced substantially. We've been successful in getting several of our ideas on domestic support into play in the negotiations. The draft text that was on the table at the Cancun ministerial conference includes Canada's idea that those with the highest levels of distorting domestic support should make the biggest reduction commitments. That approach would help to level the playing field, where the United States, European Union, and Japan account for 93% of current levels of trade-distorting subsidies.

On export competition, the elimination of export subsidies has been a longstanding Canadian objective. The majority of WTO members share our view, and the European Commission has recently indicated that it is prepared to move towards agreement to negotiate an end date for the elimination of export subsidies, if it can obtain disciplines in other forms of export competition and advance other issues in the negotiations.

Export subsidies are generally considered to be the most trade-distorting measure, as they tend to depress prices, shift production towards inefficient uses, and displace local production and competing exports. The elimination of export subsidies will help to ensure that trade in grains and other agricultural commodities is based on comparative advantage rather than governmental support.

As you may be aware, Canada is facing considerable pressure from both the United States and the European Union on the issue of placing new disciplines on export state trading enterprises, like the Canadian Wheat Board. Canada's position is that there is simply no mandate, and no demonstrated need in the first place, to negotiate new WTO disciplines on STEs such as the Canadian Wheat Board. We'll continue to strongly promote this view in the negotiations and work to ensure that WTO members remain focused on the mandate that was set out for us by ministers in Doha.

In the area of market access, Canada is seeking real and substantial access improvements for all agricultural and agrifood products. Canadian grain products are in demand because of their high quality. Nevertheless, tariffs in some markets impede access opportunities, and in others, tariff quotas may distort market signals or constrain our exporters from realizing their full potential. Achieving our objectives in market access would help to address these constraints.

In summary, Canada is working hard to level the playing field, so that Canadian producers and processors have the opportunity to compete even more effectively in international markets. There is still a long way to go in the negotiations; however, we remain well positioned to achieve our objectives, which were developed following extensive consultations with the provincial government and a full range of agrifood stakeholders, including those from the grain sector.

Canada enjoys wide support on a number of our priority issues, such as export subsidies; export credit, food aid, a number of market access issues, and various aspects of domestic support reduction disciplines. We've also been successful in having many of our negotiating objectives reflected in the negotiating text to date. The Government of Canada will continue to consult closely with provincial governments and industry stakeholders as negotiations progress.

Once again, thank you for this opportunity to speak with you. I understand you've received a background document that has been prepared, which provides a little more detail to what I've brought forward today. We would, of course, be happy to answer any questions the committee may have.

º (1600)

The Chair: Okay, we've had the presentations. Now we go to questioning.

Mr. Ritz, for seven minutes.

Mr. Gerry Ritz (Battlefords—Lloydminster, CPC): It's very interesting that you folks have been at the Cartagena Protocol and so on for 12 years, and we've got 12 minutes to come up to speed. It's a bit of a contest for us.

I'll start with Tim first because he ended off there. One of the stumbling blocks at all of these WTO negotiations and so on seems to be the definition of developing nation. What's being done about that?

Mr. Tim Pettipas: As you may be aware, in the WTO, developing countries are self-declared, but we have been working and continue to work with a wide range of developing countries and developed countries in the negotiations. In Cancun, there was certainly a significant push brought forward by many of the developing countries to address issues of interest to themselves. We share a lot of those objectives, including the reduction of trade-distorting support.

Mr. Gerry Ritz: In this utopian world that you're going to lay out for farmers, do you have any idea how much better off Canadian farmers would be at the end of the day? Can you put it in dollars and cents?

Mr. Tim Pettipas: I don't think we can actually put it in dollars and cents, because there are a lot of variables that will likely go into an eventual outcome of the negotiations. But I certainly think a sector such as ours that is so trade oriented will certainly stand to benefit significantly if we can get a substantial reduction in the trade-distorting subsidies in the market for certain. But I'm sorry, we don't have an exact figure.

Mr. Gerry Ritz: So if there's such a thing as a cost-benefit analysis of this, we're not sure whether there's going to be a positive or a negative result at the end of the day.

Mr. Tim Pettipas: We're fairly confident that it will be positive, given the nature of our export orientation. I think we've certainly heard from the sector that to the extent we can remove the distortions from the market, it will allow them to compete more effectively in third-party markets as well.

Mr. Gerry Ritz: Do you have any idea of the costs of all these negotiations to date? We're nowhere near finished, or even coming to some light at the end of the tunnel.

Mr. Tim Pettipas: Maybe to answer the last part of that first, I think we have seen some very positive momentum in the negotiations recently. There is still a lot of work to be done, but I think we have seen some significant momentum, with the majors looking toward moving the negotiations forward, and the large majority of the membership showing some very good will to try to move toward a framework.

Mr. Gerry Ritz: One of the first things in negotiations is establishing benchmarks so you know where you are and where you're working from. This seems to be a moving target, from everything I've read. As a farmer myself, I see things changing. Every time we seem to start to get some direction in a certain area, we get something else coming at us from the side. Now we're talking about the Cartagena Protocol and certain countries that will use it as a lever to get their way on other areas of the WTO negotiations. There's really no clear, concise direction on any one issue that I can see.

How do you negotiate and come to grips with all of these issues when there are so many coming at you from all these different angles?

º (1605)

Mr. Tim Pettipas: I won't speak to the Cartagena Protocol--

Mr. Gerry Ritz: That's just an example of one.

Mr. Tim Pettipas: --but certainly a lot of emphasis is being placed on the WTO agriculture negotiations within the context of the broader Doha round. I certainly think a large portion of the membership sees the agriculture negotiations as key to advancing other aspects of the negotiating agenda. So I think our objectives and the objectives that were provided by ministers to the entire WTO membership have stayed fairly static in terms of what we're trying to achieve in that negotiating set.

Mr. Gerry Ritz: Why does agriculture seem to be the only commodity that is a kicker in all these different agreements? We don't see anything like this for the mining sector, or other sectors of major economies around the world. Why is it agriculture?

Mr. Tim Pettipas: I think the agricultural sector is a very vital part of the economy of a large number of nations. It has also not been as central to some of the previous rounds of negotiations. Developing countries clearly have a very significant interest in seeing a degree of trade liberalization in the agriculture sector. I think that has pushed it forward as well.

Mr. Gerry Ritz: On the Cartagena Protocol, and just overall, how much of this has developed into non-tariff trade barriers? When I look at the Cartagena Protocol, I see that the EU and African nations are the big push behind it. That's in some of your documentation here. How much of this then resolves into non-tariff trade barriers?

Mr. Blair Coomber: The protocol is fairly new. It only came into force on September 11, 2003, when 50% of the parties signed it--

Mr. Gerry Ritz: But it's been worked on since 1992.

Mr. Blair Coomber: Yes. But it only came into force just over six months ago, so it's relatively new.

Mr. Gerry Ritz: But technically it's not really in force.

Mr. Blair Coomber: It is in force, but we haven't seen a lot of the results of it yet, because each country that signs the protocol has to put in its own domestic regulatory regime to fulfill its obligations under the protocol. So we haven't seen, for example, any shipments of grain or anything like that being blocked anywhere yet. However, we want to make sure that the Cartagena Protocol on Biosafety and the provisions in it are not developed in a way that countries could use them as non-tariff trade barriers.

Mr. Gerry Ritz: If I could just interrupt, if everybody develops their own policies, how do you stop them from doing that?

Mr. Blair Coomber: Maybe I'll let Paul answer that from the Food Inspection Agency, but their regulatory policies would still have to be consistent with the provisions of the Cartagena Protocol. For example, prior to allowing an LMO into its country, a country is required under the protocol to do a risk assessment to determine the health and safety of that protocol. So they would still have to do a risk assessment.

I'm going to let Paul explain where we could also--

Mr. Gerry Ritz: Is there agreement on a basic definition of LMO? Is everybody clear on that?

Mr. Blair Coomber: I would say yes.

Mr. Gerry Ritz: Is it yes or no?

Mr. Blair Coomber: It states in the protocol what a living modified organism is.

Mr. Gerry Ritz: That's fine in the States, but has everybody agreed to that, or is that another stumbling block we're going to face?

Mr. Blair Coomber: No. I think it's defined in there, so that's what the definition is.

Mr. Gerry Ritz: As things develop, will there be new additions to that list?

Mr. Blair Coomber: There won't be new additions to the definition of living modified organism. New living modified organisms will be developed as technology advances, but the definition of a living modified organism, as in the protocol, won't change.

Mr. Gerry Ritz: Okay.

The Chair: Thank you very much, Mr. Ritz.

Mr. Plamondon, please.

[Translation]

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ): Thank you, Mr. Chairman.

You arrived at a threshold of 95% in the trilateral agreement with the United States and Mexico. Why did you settle on 95%? Why not on 80% or on 98%? I'm surprised by this threshold.

[English]

Mr. Blair Coomber: I should state first of all that the trilateral agreement is a voluntary agreement. It was put in place as an interim agreement to provide North American exporters and importers with some guidance until the issue was dealt with in the protocol. The 95% level is kind of a standard marketing number that is used in other kinds of protocols within the industry itself. So that's how it was used.

But I should say up front that the 95% doesn't preclude any country from putting in a higher threshold. If a country wants to put in a 96%, 97%, or 98% threshold--whatever they want--based on a risk assessment they can do that. The 95% was the minimum.

º (1610)

Mr. Paul Haddow: Just to continue on Blair's line of thought, I think it's important that this committee understand that the trilateral agreement was not a regulatory agreement, and the 5% was not meant to mean that 5% of your shipment could have LMOs that were not approved in the country of import.

It was expected that 100% of the LMOs in any shipment would be approved in the country of import. It was just developed as a non-regulatory type of agreement, whereby there'd be a common understanding of how much leeway and tolerance there would be in order to be required to submit documentation. So if it was 1% of the shipment you wouldn't have to submit the documentation, but if it was 5%, you would. It was never contemplated that the trilateral agreement would support the shipment of products that were not approved in the country of import. I hope that clarifies it.

[Translation]

Mr. Louis Plamondon: Your explanation reassures me somewhat. My interpretation of events was quite different. But, given your explanation, I now have a very clear understanding of things.

I'd like to talk about multilateral trade negotiations. Rumours are swirling that the United States and Europe have agreed to reduce their export subsidies because it is becoming increasingly difficult for them to keep pace, given the astronomical cost of these subsidies. Is that in fact true? Apparently, they are poised to sign an agreement, or perhaps they have already signed one. While the EC and the United States continue to subsidize their industries, our grain producers here in Canada are really in a bind. Under the new strategic framework, the government is planning to offer programs based on risk management, not on export assistance. Our grain producers hope, or understand, that the Canadian government will demand an end to export subsidies so that they can compete. However, in the meantime, the income of grain producers is declining and they find themselves in need of urgent assistance. The only program the government is offering is the strategic framework initiative which is based on risk management.

Did European nations and the US in fact agree to lower subsidies significantly during last July's negotiations to bring prices back to normal levels, a move which could quickly restore some hope to grain producers?

[English]

Mr. Tim Pettipas: I thank you for the question. It's a good one, and I recognize the challenges that are faced by the grain sector and others that are facing high levels of competing support.

Certainly on what we're moving toward in July, there is some positive momentum in the negotiations toward the establishment of a framework of an agreement that will mention the general concepts and approaches we will take toward an eventual agreement.

Both the European Union and the United States have sent some very positive messages about taking on a degree of reduction in trade-distorting support. We have had some success in moving in the negotiations toward the notion that those members with the highest level of current trade-distorting support would make the most substantive reduction.

So there's a positive sense that we're moving in the right direction toward getting those subsidies down. Certainly Canada's objective remains the elimination of or substantial reduction in those subsidies. Hopefully, as we move toward July we'll get the sense of whether this momentum is carrying us toward the framework of an agreement upon which negotiations can continue.

Does that answer the question?

º (1615)

[Translation]

Mr. Louis Plamondon: That answers my question. However, if I were a grain producer, I'd be worried. No doubt subsidy levels will decline, but it could take a year, and possibly two or three years, before the cuts are implemented. They're facing an emergency right now and they're receiving a minimum amount of assistance. There's talk of bankruptcies. The grain producers that I've met with in Quebec are at their wit's end and are totally disheartened. They're wondering if there isn't some kind of ad hoc aid program—I realize that this is the minister's responsibility, not yours—aside from the strategic framework initiative.

You acknowledged that the United States and Europe plan to lower subsidies and that we can expect some action on this front in July. However, it could take two or three years to implement an agreement. By then, it will be too late for grain producers in Canada and in Quebec who must contend with unfair competition because of the subsidies that result in plummeting prices. These producers do not hold out a great deal of hope.

[English]

The Chair: You may continue.

That was the last question, Mr. Plamondon.

Mr. Tim Pettipas: Unfortunately, I'm not well positioned to give you an answer on the domestic aspect of that question. Certainly with respect to the negotiation, we recognize it's not a short-term solution in terms of moving subsidies out of the market, but we do see it moving in the right direction.

The other aspect of your question is perhaps better responded to by someone other than me who's involved directly in the negotiations.

The Chair: Mr. Easter, you have seven minutes.

Hon. Wayne Easter (Malpeque, Lib.): Thank you, Mr. Chairman.

First on the WTO, where are we, Tim, on the supply management side of the negotiations? You know very well there's always a strong suspicion in the farming community, especially among the supply management five, and especially a lack of trust for the bureaucracy's support of supply management. It has proven itself time and time again; in fact, although margins are tighter than they were, it's the industry that hasn't required government support in the last number of years.

Where are we on that side of the negotiations?

Mr. Tim Pettipas: We're working very closely with the five supply-managed industries you referred to. We're working very hard to defend the ability of all Canadians to operate orderly marketing systems, in fact. In the negotiations one of the concerns that are expressed by the supply-managed industries is that significant tariff reductions could represent a problem for the ongoing functioning of the orderly marketing systems. Canada's approach to the negotiations has been to advocate an approach to market access that provides for substantial improvements in market access for all products. But for those products that are sensitive products for countries, we provide flexibility for how those improvements can be made. That's an idea we've had significant success in moving through the negotiations.

Hon. Wayne Easter: We have, in the supply management sector, marginally increased access into this country as of the last round. I know there is a concern that if you reduce the tariff wall and the tariff levels substantially, you could in effect nullify our supply management system—I want to point out that is key to that industry—or if you increase the rate of reduction of the tariffs on those commodities that are affected, we would certainly put those commodities in trouble, and we don't want to do that.

º (1620)

Mr. Tim Pettipas: Yes, and on that basis we've certainly been advocating an approach that would provide for improved market access in other ways, such as through tariff break quotas as well.

Hon. Wayne Easter: On the Cartagena Protocol, I'm listening as you go through this stuff and trying to review it. What does it mean down on the farm? What does this protocol really mean down on the farm to the guys producing the food for export?

Mr. Blair Coomber: That's a good question. It is a complicated agreement. What does it mean? Simply, what I think it means is that we don't want an international trade agreement out there, as I said earlier, that could be used to construct trade barriers and create problems for the grain industry. What the industry wants out of the protocol is very clear rules about what the protocol means, so that when a shipment of commodities is being exported, they know what the rules of the game are, so that they know when that shipment gets to a foreign market it's not going to be stopped at the port.

Simply, what it means to the guys on the farm is to make sure they continue to have access to those international markets for crops that are genetically modified, and that those crops can continue to be sold on international markets and not be impeded by unclear shipping documentation requirements.

Mrs. Cynthia Wright: Perhaps I could just add one point on why it's so difficult to say what it means for Canadian farmers. The protocol is really aimed at protecting global biodiversity. In the Canadian context, we already have the regime in place to protect our biodiversity, so it doesn't make a substantial difference to the domestic decision-making. What it does is enable other countries to protect their biodiversity, from which we benefit in terms of seed source and that sort of thing. The benefits are quite indirect in that sense for the farmer, but it is important that Canada contribute to protecting the global biodiversity for the indirect long-term benefits.

Hon. Wayne Easter: Someone said earlier, and I'm not sure who it was, that it's not a regulatory type of agreement you're looking at here; it's not imposing regulations. But I'd be awfully surprised if that isn't what it becomes down the road. They'll switch them. I will be awfully surprised if this doesn't eventually lead to more regulations down the road. It is certainly something else we have to abide by.

On the opposite side of the coin, we're getting lots of concern in Ottawa and across the country from the Canadian Wheat Board about genetically modified wheat and how it could affect our marketing of wheat, especially in the export industry. You can't distinguish between the two. You can't distinguish between red spring and genetically modified wheat.

Do you have any comments on those two points?

I just can't see down the line that there isn't something here that's going to be another problem for the farming community.

Mr. Paul Haddow: Well, perhaps I was unclear. When I was talking about the fact that it was not a regulatory agreement, I was referring to the trilateral arrangement that was signed by Canada, Mexico, and the United States.

In terms of the biosafety protocol, you're quite correct, it is very much a regulatory agreement. In fact, that's part of the reason for the Government of Canada taking such time to decide whether or not to ratify. If we were to ratify, there would be obligations on the Government of Canada that would also then be on the industry of Canada.

What we're wrestling with is the question of whether we have enough clarity and predictability to buy into those obligations. One of the cornerstones of Canadian regulatory policy, and it has served the Canadian agricultural community quite well, is science-based regulation. We need to make sure this protocol continues that tradition of science-based regulation. Canadian agriculture has done very well under regulations that are based on science.

So you're absolutely correct, it is very much a regulatory agreement.

The GM wheat issue is an issue we in Canada will deal with, with or without the protocol. I don't think whether we ratify the protocol or not would affect how we came down on that issue. It's essentially a domestic issue we need to think through. I don't think we need to further complicate it by adding a biosafety protocol dimension to it.

º (1625)

The Chair: Thank you, Mr. Easter. We'll get to you the next round.

Mr. Proctor, you have seven minutes.

Mr. Dick Proctor (Palliser, NDP): Thank you, Mr. Chair.

To Ms. Wright, you indicated or identified under documentation that there were special difficulties or burdens for grain and oilseed exporters. I wondered if you could elaborate on those burdens.

Mrs. Cynthia Wright: There are two aspects. The first aspect involves clarity about when to provide the document. For the grains and oilseed sector, they're using the bulk commodity shipment process. There's always a residue of the previous shipment or shipments. If they're intending to ship something that does not contain living modified organisms, there still could be trace levels of those living modified organisms, and so they need clarity: does that trigger the documentation? If it does, there's going to be a lot of documentation coming out of Canada.

The secondary aspect where I said it could be a burden is in dealing with transit states. If Canada is acting solely as a transit state—or any other country that would be a party; a lot of countries are affected by this issue—our reasoning is that that should not be the country that initiates the provision of documentation. For instance, a shipment coming up through the United States would not, unless the United States were required to provide it for some other reasons, have that documentation. Canada doesn't want to be in the position of testing the shipment, finding out what's in it, and putting the proper documentation on it.

The same would be true for Rotterdam, and for a number of other countries. That is why this is of interest to a number of countries who tend to see it the way Canada does.

Mr. Dick Proctor: Okay. Thank you.

Let me turn to the WTO. You talked about the trade-distorting subsidies and said you're making progress. According to newspaper accounts, even if there were an agreement reached as early as July, it might take eight or ten years for the trade distortion to begin to diminish. Is that your sense of it, Mr. Pettipas?

Mr. Tim Pettipas: I hope it would be much faster than that. Certainly, as I mentioned, we are working toward a draft framework by July, and the next steps would be moving toward a final agreement. The agreement would certainly then have an implementation process attached to it, which could take a number of years, but we're just not at the point now where we know exactly what those would be.

I think we'll certainly be looking to try to get the most substantial reductions as early as we can.

Mr. Dick Proctor: Obviously, given what has happened to Canadian agriculture over the last number of years, it would be paramount that we do that. But I suppose it's easier said than done, in the sense that countries such as the United States and the European Union will want as much time as they can to prepare their farmers for the changes. So you're still talking about years. In your previous answer, you said that you hoped it would be a lot less than eight or ten years. But we're still talking in terms of years.

So how much resistance are you expecting from countries like the United States on this?

Mr. Tim Pettipas: I think there will be a very forceful push from a number of members, including us—and certainly the large number of developing countries who comprise the majority of the WTO right now. That's a new dynamic with respect to the influence that those countries are putting into the negotiations. And I think there will be significant impetus for moving as quickly as we can on the subsidies, because that is an issue where we have a very shared and common objective with developing countries. The more we focus on that, the better.

Mr. Dick Proctor: On the supply management side, one of the things that have become apparent to me over the last year and a half is the fact that a lot of other countries really don't understand supply management and how it works in Canada—and certainly, I think, their agricultural industries don't particularly understand it. Is there greater understanding now? Do countries that we're negotiating with have a better sense of what supply management is all about in Canada and how it might work in other countries?

º (1630)

Mr. Tim Pettipas: There is a wide range of countries, obviously, in the World Trade Organization. All of those countries have specific agricultural policies, and to a greater or lesser extent, there is an understanding of how those operate from country to country. Certainly with the majors, a large majority of countries seem to understand how aspects of their agricultural sector operate. I certainly think there's a fairly good recognition of how the Canadian agricultural sector operates as well.

Mr. Dick Proctor: Okay.

Finally back to Ms. Wright again, the U.S. has not ratified the convention on biosafety, right?

Mrs. Cynthia Wright: Yes, neither the biodiversity convention, nor the protocol.

Mr. Dick Proctor: What's the reason for that? Why have they not?

Mrs. Cynthia Wright: There are probably a number of reasons on the biodiversity convention that I'm not well versed on. It's been a longstanding issue for them. Depending on what government's in power, they sometimes consider it, but they can't ratify the protocol until the they ratify the convention.

Mr. Dick Proctor: As you say, they're years away from being able to sign on to this.

Mrs. Cynthia Wright: Correct.

The Chair: Thank you, Mr. Proctor.

We now move to Mr. Barrette, for five minutes.

[Translation]

Mr. Gilbert Barrette (Témiscamingue, Lib.): Thank you, Mr. Chairman.

I'd like the witness to explain a few things to me, because I'm unclear about certain points.

Most likely you know about the visit paid two weeks ago to all Quebec MPs by a number of grain producers. You do know about that?

[English]

Mr. Tim Pettipas: I'm sorry, but could you repeat that. Who exactly were you referring to?

Mr. Gilbert Barrette: The grain producers from Quebec, who came to meet all of the MPs from Quebec.

Mr. Tim Pettipas: No, I'm sorry, but I wasn't aware of that.

[Translation]

Mr. Gilbert Barrette: My comments tie in with what Mr. Plamondon was saying. No doubt we'll show you the letter we received and speak to you about their grain sacks.

I'm curious as to how the market price is set. I assume it's set by the Americans.

[English]

Mr. Tim Pettipas: The market price for grain?

[Translation]

Mr. Gilbert Barrette: That's correct.

[English]

Mr. Tim Pettipas: It's a world price.

[Translation]

Mr. Gilbert Barrette: In any event, it's not that easy for me or for producers to grasp the situation. In a subsidy market where countries subsidize grain production to various degrees and where the world price is fixed, it's not so easy to understand what's going on. The situation seems rather odd. How can Canadian and Quebec producers properly compete on markets and live decently off the fruits of their labour if the rules are unclear or unfair? At least that's my take on the situation.

[English]

Mr. Tim Pettipas: I'm not sure if I'm answering the question directly. A number of variables go into the determination of the world price. For a product that's traded across the world, such as grains, it's determined in large part by global supply and demand. The cost of production is different across a number of countries. As you've mentioned, there would probably be a subsidy element to that. A wide number of parameters would go into the determination of the world price. But overall it's an equilibrium based on demand and supply.

[Translation]

Mr. Gilbert Barrette: When you hold your talks, how do you go about assessing risk, in terms of the strategic framework? From a global perspective, is this viewed as a form of production support?

º (1635)

[English]

Mr. Tim Pettipas: Are you referring to how the WTO makes a ruling on the categorization of income support provided by governments?

[Translation]

Mr. Gilbert Barrette: Yes.

[English]

Mr. Tim Pettipas: A fair amount of language in the WTO agreement applies to that. In summary, there's support that is categorized as green support, which is exempt from the reduction commitments that countries need to apply, as well as amber support, which is trade-distorting support. For market price support, it cannot be related to type or volume of production or to prices to any degree, domestic or international. That's a synopsis of it. There's more language to it than that, as you can imagine.

[Translation]

Mr. Gilbert Barrette: Now then, what has Canada's response to the protocol been?

[English]

I'd like to know the difference between signed and ratified.

Mr. Blair Coomber: In 2001 the protocol was finalized, and countries signed it. But in order to become a party to the protocol, they have to go through a ratification process in their own countries. Canada has signed the protocol, but we have not yet ratified it.

Mr. Gilbert Barrette: Why?

Mr. Blair Coomber: As mentioned earlier, Canada took the position that it would not ratify the protocol until it sought further clarification around a number of key provisions at the first meeting of the parties in Kuala Lumpur.

The Chair: You've exhausted the question period. Do you have a short question? Is there something you want to expand on?

[Translation]

Mr. Gilbert Barrette: I wanted to know Canada's position vis-à-vis the protocol, given that we had signed it, but not yet ratified it.

[English]

Mrs. Cynthia Wright: Signing means we support the overall objective of the protocol, which is to protect biodiversity from transboundary movements of living modified organisms. We're obliged to act in a manner that is consistent with that overall objective. However, until we ratify it, we do not have to put in place regulations to implement the protocol. We're trying to get clarification. As Paul said, our regulations have to be science based. We have to know what the actual requirement is. These would be regulations governing exports. Our regulations for imports would not significantly change. We need to know the requirements for exports. As I said, the key issue that we still are seeking clarity on is the ultimate decision on the requirements for exports of food, feed, and processing that require this documentation. That's still the outstanding issue for us of a major dimension.

The Chair: I think Mr. Haddow wants to respond.

Mr. Paul Haddow: To supplement what my colleague has just said, it's absolutely correct that when you sign, you support the objectives of the protocol, which the Government of Canada does. When you ratify, you are legally bound by the specific provisions of the protocol and you would transform them into reality in Canada through regulations, which would then be legally binding on Canadian industry. So there's a difference of specificity in terms of supporting the objectives versus being legally bound by a specific provision. So that's the difference between the two.

Thank you.

The Chair: Thank you.

I have to cut you off for now. We'll come back in the next round.

Mr. Epp, please, five minutes.

Mr. Ken Epp (Elk Island, CPC): Thank you, Mr. Chairman.

I have a couple of questions with respect to the WTO.

You mentioned that the Canadian Wheat Board is a stumbling block to reaching an agreement. I would like to know from whom you have pressure to keep the Canadian Wheat Board in its present state. I would like to know whether, if it were changed so that marketing through the wheat board were voluntary instead of compulsory, that would change the negotiations.

Mr. Tim Pettipas: If I mentioned it was a stumbling block, I didn't intend to capture it quite that way. I think what I may have been referring to was the fact that both the European Union and the United States have certainly brought to issue state trading enterprises as part of their strategy on the export competition issues. I don't think that would come as a large surprise to most people at the committee, because the United States has certainly brought forward a number of challenges to the Canadian Wheat Board outside the negotiation context as well.

But I think that issue is dealt with separately, insofar as we certainly haven't seen a mandate for negotiation of discipline on STEs. We see a mandate for the disciplining of export subsidies as part of the negotiations and have tried to maintain the focus on that issue, but I don't think the Canadian Wheat Board, or STEs broadly speaking, really represent a hurdle. So I apologize if I gave that impression.

º (1640)

Mr. Ken Epp: The Americans and the Europeans are subsidizing their grain producers to a much greater extent than Canadians are. It seems as if the only direction we are pressing for is that these countries should reduce their subsidies in order to provide a level playing field. Am I accurate in that statement? Is that what Canada is pushing for?

Mr. Tim Pettipas: Yes, we're certainly looking for a substantial reduction in trade-distorting support, as well as elimination of export subsidies applied to all commodities.

Mr. Ken Epp: And what justification or argument do these countries use to say that they want to sustain them?

Mr. Tim Pettipas: I don't think any country would really argue that they want to sustain trade-distorting support. I think there's a recognition, and I think it's embedded in the declaration that launched the negotiations in Doha, that we need to move towards substantial reductions in trade-distorting support. And so I think all countries recognize that's the objective. I think moving towards that objective is cast differently by different countries. Certainly, I think the pace at which they'd like to get there may be different, but I think there are few countries that would not recognize that that's a necessary objective.

Mr. Ken Epp: If that's the case, why is it taking so cotton-picking long? As long as I can remember, and I'm getting old, this has been an issue. Why is it taking so long? If, as you say, most countries recognize that this is an issue and they want to move toward it, then I can't understand why it is taking so long.

Mr. Tim Pettipas: I think part of the answer is that the negotiating complex is a difficult one in the World Trade Organization, given that you have over 145 members now largely negotiating as groups as well as individuals. I think that any process where you work on the basis of consensus with that wide of a membership presents some challenges in moving quickly.

But I think, on the question of trade-distorting support, there really is a handful of countries that currently have commitments to provide support. So I think that issue will remain a fairly significant priority amongst the bulk of the membership. So I hope we can get there sooner than later.

Mr. Ken Epp: What incentive is there, on the part of the negotiators, to complete this, since if they were ever successful they'd be out of a job?

Mr. Tim Pettipas: I'm not sure if a negotiator looks at it that way. I certainly don't think we do. We have clear objectives set out. I think we would be very pleased to be unemployed if that was the basis upon which it was achieved.

Mr. Ken Epp: Good. I'm glad you recognized the little tongue-in-cheek question there.

With respect to the LMOs, living modified organisms, what is the effect on Canada of the United States not being included in this particular agreement?

Mr. Paul Haddow: Simply put, the Government of Canada, and through Government of Canada regulations Canadian producers and exporters, would be obligated by the specific provisions of the protocol and our American competitors would not be. That is why we are all, in various departments of the government, trying to work together to bring as much clarity and predictability to what those provisions are. Once we know what they are, then it's a question of whether undertaking those obligations is a burden or not.

Mr. Ken Epp: So what's the present status? Are these organisms moving across the border or aren't they?

Mr. Paul Haddow: Yes, they are, and they're subject to the regulations in importing countries. We occasionally will have a problem with China, for example, with canola. They'll put in new regulations and we deal with it on a one-off basis. As Mr. Coomber mentioned before, Canadian exporters, whether or not the protocol exists or whether or not Canada is a party, are still obligated to the importing requirements of the markets to which they ship.

º (1645)

Mr. Ken Epp: And if the Americans aren't in it, then that means it's a wide-open market.

Mr. Paul Haddow: If the Americans aren't in it, then they're subject to the importing party obligations just like they are today, but they would not be subject to the specific provisions of the protocol because they would not be a party to the protocol.

The Chair: Mr. Epp, your time has expired.

Mr. Ken Epp: I'm aware of that. I was just wondering how long I could push it.

The Chair: You were testing how generous I'd be. We'll come back.

Ms. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thanks, Mr. Chair.

One of the presentations mentioned a strong consultative approach with the industry. Have the grain growers been a part of this strong consultative process? And how much credence have they put into all this discussion?

Mr. Blair Coomber: Are you talking about the Cartagena Protocol?

Mrs. Rose-Marie Ur: Yes.

Mr. Blair Coomber: Last fall I wasn't involved, but there were very extensive consultations, not only with the agriculture community but also environmental organizations as well. Yes, they are very involved. We do extensive consultations with the grain growers, with the Canada Grains Council, and other organizations. But they also participate through their international organizations. Their international organizations, for example, were observers at the meeting of the parties in Kuala Lumpur, so they're very well versed and know very well what the protocol is all about.

Mrs. Rose-Marie Ur: I find it interesting that in your answer you brought forth environment. Through some information that we've been able to get through research, I'm aware that Greenpeace seems to have a bit of a stance as well. I wonder how much credence you put on Greenpeace versus our agriculture industry, because their hands seem to be tied, and sometimes we seem to put a little bit more emphasis on Greenpeace than we do on our grains industry.

Mr. Blair Coomber: I think we can all answer that a bit. Yes, it's clear that there are different views out there amongst all stakeholders about the protocol and how we should proceed for it. I suppose our job is to make sure the concerns of the agricultural industry are addressed. There are two of us here from within the agricultural community.

Mr. Paul Haddow: From CFIA's perspective, we have a broader range of stakeholders than the agricultural sectors. We regulate. We also have consumer groups and environmental groups. When we regulate food safety, we do it on behalf of consumers, not just the agricultural producer groups.

But I can say that on this file we have been acting with all the government departments, because we try to consult with all stakeholders at the same time and not have each department go off and talk to their favourite stakeholder. In that regard, we have gone out of our way to make sure that environmental groups that are interested in this issue are there when the agricultural industry is there. But I can assure you that the agricultural industry has been very active, very articulate, because at the end of the day, the immediate impact of the protocol will fall on them.

Mrs. Rose-Marie Ur: Exactly.

Mr. Paul Haddow: They've been very effective in making their views known. Sometimes they don't agree with each other, but they're in the same room. We talk to everybody and we listen to everybody.

Mrs. Rose-Marie Ur: Okay. Good.

In one of the presentations, you had indicated that the countries with the highest distortion have to make the biggest concessions. That being said, in past experience, Canada has always been the Girl Guide or Boy Scout of the venues. In this discussion, where is Canada compared to other countries?

Mr. Tim Pettipas: That was in respect to the approach to reducing trade-distorting support in negotiations. Certainly, the European Union and the U.S. are viewed as part of the target, I think, in the context of an approach that would have those who provide the most support make the greatest effort in reducing that support.

I think it's a generally accepted notion for a lot of members in the membership. I think they see it as taking us to a more equitable outcome, whereby you would see those who have been distorting the market the most relieving the market the most. Certainly, Canada comes in well below those countries.

º (1650)

Mrs. Rose-Marie Ur: Are we idle while all these discussions are now going on?

Mr. Tim Pettipas: No, we've been promoting that notion in the negotiations, fairly successfully, in fact. I think we'll continue to make sure it stays on the screen and on the minds of all members, particularly developing countries that have a big interest in keeping those who are providing support focused on the issue, as well as the Europeans and the United States, in terms of their responsibility to take leadership.

Mrs. Rose-Marie Ur: Will there be any change with the ten additional new members in EU? Will it have an impact on the forthcoming discussion?

Ms. Pam Cooper (World Trade Organization Agriculture Negotiations Coordinator, Department of Agriculture and Agri-Food): I think it strengthens the voice of the community because we're speaking for 25 members rather than 15. However, we don't expect a substantial change in the position of the community. The ten members who have joined the community have been working very closely with it for the last few years, so we don't expect a substantial change in position.

Mrs. Rose-Marie Ur: Do they have a large agricultural sector within those ten countries?

Ms. Pam Cooper: A number of them do.

Mrs. Rose-Marie Ur: Okay.

One of the presentations, I believe it was from Ms. Wright, in the latter part, says: “At this stage, we are stillassessing the details and listening to the different stakeholder views on thedecisions taken at the first Meeting of the Parties to shape our best advice toMinisters to enable them to take a decision on ratification.”Being a farmer in my previous life, it's nice to sit back, look at this, and discuss it, and to look at it and discuss it again. Is there any timeframe on this, so you can come to a consensus, eventually, and put some words to paper in some kind of documentation?

It seems like it's an open-ended, never-ending discussion. Are we actually going to see something come out of this in due time?

Mrs. Cynthia Wright: You will see advice go to ministers. I guess it's important to—

Mrs. Rose-Marie Ur: It's what you had said.

Mrs. Cynthia Wright: —understand the detail on how the protocol works.

Should Canada decide it wants to ratify and be a party by June 2005, in order to have a more direct influence on the decisions, we have to do so 90 days before June 2005. It's a detail on how the protocol actually works. There's a cooling-off period, if you will, for 90 days after a signature for ratification. It means that ministers need to make a decision early in 2005.

Mrs. Rose-Marie Ur: Also, your documentation said: “recognizing that the United States willnot be a Party for some time at least, a number of shipments could come throughCanada without documentation”. Should I see that as a red flag for Canada? Could it make a difference between Canada and the United States on the protocol they have within each country, where the United States hasn't signed on and Canada has? Is this another possible irritant?

Mrs. Cynthia Wright: Well, it's a possible one, which is why we're looking for clarity on whether or not Canada, if Canada were a party, would be obliged to provide that documentation.

As I said, we've talked to a number of countries. None of the countries we've spoken to believe it would be an obligation to put on a party, if it was only a transit state, but we're looking for a clear decision out of the meeting of the parties.

The Chair: Your time has expired, Ms. Ur.

Mrs. Rose-Marie Ur: Thank you.

The Chair: In keeping with the line of questioning, given that we have spent a lot of time this past year on BSE, we talk about science-based information and science-based decisions. Is the protocol we're talking about, the Cartagena Protocol, totally based on science or is it based on other factors that are more dominant than the science factor?

Mr. Paul Haddow: I guess from the perspective of the Canadian Food Inspection Agency, which is a government regulator in the area of biotechnology, that's been one of our cornerstones in terms of our approach to the protocol. I think we went into the Kuala Lumpur meeting, as Ms. Wright briefed you on, with a lot of good, practical solutions to practical problems, based on a scientific approach. They were not always embraced.

So that's one of the prisms through which we have to look at the specific text, to make sure it is a science-based agreement. We're still deliberating on that in terms of just how scientific it is. Is it perhaps still sort of scientific, but going in a non-scientific direction? Those are the types of reflections going on within the government.

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The Chair: Ms. Wright.

Mrs. Cynthia Wright: I'd just perhaps elaborate a bit more.

Having signed the protocol, Canada has indicated that it is content with it as the framework. As Paul said, we're looking at implementation details to see that science is still the foundation. In the protocol itself there are requirements for information to be provided--for instance, for risk assessment--and Canada agrees with those information provision requirements.

An awful lot of it is science based. It does, however, allow countries to take socio-economic factors into decision. That's yet to be elaborated upon, and that will start to be elaborated upon in the meeting in 2005.

The Chair: Thank you very much.

Mr. Plamondon, you have a short question, or perhaps a couple of questions.

[Translation]

Mr. Louis Plamondon: Earlier, Mr. Pettipas, you answered a question from my colleague Wayne concerning supply management.

Your response left me with the impression that you are not very determined when it comes to saying that supply management is non-negotiable. The former Minister of International Trade, Mr. Pettigrew, the former Minister of Agriculture, Mr. Vanclief, and the current Minister, Mr. Speller, have all told me, in response to my questions, that when Canada takes its place at the table, supply management, which does not distort global markets, is a non-negotiable issue. If that's the case, then everything else becomes negotiable and that is what distorts the global market.

I'm left to ponder your answer. Perhaps I misunderstood you. You seemed to say that this could be on the table in negotiations.

[English]

Mr. Tim Pettipas: No, that's certainly not the impression I wanted to give you. Supply management itself is certainly not part of the negotiations. It's not on the table in negotiations in any way whatsoever. I think what I was referring to at the time was the fact that we work closely with the supply management sector, as well as all the other sectors in the broader agricultural economy, to advance our objectives. One of those objectives is clearly to defend the ability of producers to operate orderly marketing systems, in fact.

[Translation]

Mr. Louis Plamondon: When you're sitting at the table, do you get the feeling that the United States, or the other countries, are very concerned about the supply management policy as currently practised in Canada? Some European countries have in place supply management programs that may distort markets somewhat, but that's not the case with our programs. Do you get the feeling that the United States would like this to be a negotiable issue?

[English]

Mr. Tim Pettipas: Sorry, but just to clarify, you're asking if they're willing to negotiate on what basis...?

[Translation]

Mr. Louis Plamondon: We've heard it said in certain negotiations that the United States would like to take advantage of these talks to gain access to the Canadian and Quebec markets through the lowering or outright elimination of tariffs. We can allow ourselves to impose tariffs because our supply management system doesn't distort the world market. However, the Americans apparently don't like the fact that they do not have free access to our dairy product market.

[English]

Mr. Tim Pettipas: I think what's in question is in part the approach to the negotiations, because the process we're negotiating at the WTO is how to move towards the development of a text that applies to all countries. It's not really a dynamic of one country putting one thing on the table and another country putting another; it's the development of a sort of negotiating framework that would lead to an eventual agreement, a fairly comprehensive agreement.

Our objective at this point is very clearly ensuring that whatever framework arises, it meets all of our Canadian objectives, one of which is defending the ability of Canadian farmers to operate orderly marketing systems. It's really not an issue that's of the nature of give and take; it's more about the development of a negotiating text amongst the membership.

I don't know if that clarifies it a bit.

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The Chair: Mr. Easter, I believe you had a short question.

Hon. Wayne Easter: I think maybe Ken touched on this one earlier. The United States is not selling the protocol, right? Now, given that they haven't and that we're negotiating further, where does that leave the United States versus us in terms of marketing into some of these countries that will have signed the protocol?

Mr. Blair Coomber: I think what's important to remember about the protocol is that whether they're parties or not, all countries that ship products into a country that is a party are going to have to meet the domestic regulations of that country. If the United States is shipping soya into a country that is a party, it has to meet the domestic import regulations of that country whether it's a party or not, the same as Canada or any other country.

Hon. Wayne Easter: So in the end it will come down to both of us having to abide by the same rules in terms of the requirements of the country we're exporting into. Then I guess the question I'm trying to get at is, why are we so involved and they're not?

Mr. Blair Coomber: Involved in the...?

Hon. Wayne Easter: Are they involved in the discussions but just haven't signed on?

Mr. Blair Coomber: That's right, but they were still at the meeting in Kuala Lumpur as a non-party to the protocol, just like Canada.

The Chair: Mr. Proctor.

Mr. Dick Proctor: Thank you.

I want to go back to the WTO. I appreciate your answer to Mr. Plamandon that we're in a framework for negotiations and it's not give and take, but let's assume we have a happy outcome on the framework. When do we plug in the programs we have, and how do we ensure we can maintain those programs once the framework has been signed?

Mr. Tim Pettipas: Well, on the process side, what will happen after we have arrived at a framework is the development of modalities, as they're referred to, which will essentially be looking at the numbers and the approaches to reduction commitments that would move us towards an agreement. Certainly for Canada and, I assume, for most countries, an integral part of that process is ensuring your approach is adequately informed by your domestic policy agenda and vice versa; that would be an imperative for us moving through. It is now and it always is, but I think that's part of the answer to that.

Mr. Dick Proctor: What's the timetable as you see it? Suppose an agreement is reached in July or September or something. What do you see as the timeframe for all of this?

Mr. Tim Pettipas: Maybe I'll let Pam speak to that issue.

Ms. Pam Cooper: It's really not clear. I think members are looking at July because effectively, for the WTO negotiations, after the end of July the political year is over, with the U.S. election in the fall and the changeover in the European Commission. There's been no specific time set for the next stage after the framework. It's likely that the framework itself would set some of those dates in terms of what comes out of July, what the next steps are, and when those would be taken.

Mr. Dick Proctor: I don't know if you can answer this or not, but you can give me your perspective. We have risk management programs in Canada like AIDA, CFIP, and the CAIS program now, yet we see our major competitors, the Europeans and the Americans, with direct support programs to their farmers, like the Farm Act. The question that bedevils our farmers, our producers, is why can't we have programs like that? I'd just be interested in knowing, since you're one of the negotiators representing Canada at the table, what answer I can take back to the farmers in my area.

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Mr. Tim Pettipas: From the trade perspective, we've always looked at maximizing our ability to provide green support, thus ensuring that we stay within our commitment on trade-distorting support, which is a binding commitment within the World Trade Organization.

More specifically, with respect to the programs we do have in place in Canada and how those compare, what I might like to do is draw on Lynn McGuire, a departmental colleague who is here with me today. She can maybe speak more directly to that.

Mr. Danny Foster (Senior Adviser, Program Planning and Performance Directorate, Farm Financial Programs Branch, Department of Agriculture and Agri-Food): I'm not Lynn McGuire; I'm Danny Foster, a senior adviser with farm financial programs.

I was before this committee a couple of weeks ago, and if you recall, we did a deck presentation on the CAIS program for most of the committee members. There were a couple of key program principles that federal and provincial ministers agreed to, and one was to conform to our international trading obligations and also to minimize the risk of countervail. As well, we do not want to be seen to be influencing producers' marketing decisions on production. When you start targeting specific commodities for support, you start doing those two things.

We recognize, certainly, the impact of the foreign subsidies, but we're trying to keep our programs as clean as possible for that day, hopefully, when we do get these subsidies off the table.

The Chair: Please stay at the table. We may need you again.

Yes, Mr. Proctor.

Mr. Dick Proctor: This is just to pick up on the comments of Mrs. Ur a few minutes ago to the effect that we're the girl guides or the boy scouts in the whole process, and meanwhile our producers are having a heck of a time making ends meet.

Mr. Danny Foster: We're also exporting 80% of our production in grains, for instance, so we very much rely on the export market. As we also know, we're currently under a CVD investigation on hogs. Certainly, the CAIS program is going to be coming under the microscope. We think that if we abide by the principles of that program, we should come out okay on that investigation. We certainly wouldn't want to see that happen for the wheat producers.

The Chair: Thank you.

Before I go to Mr. Epp, I just want to remind my committee members of an in camera meeting tomorrow afternoon at 3:30. I encourage you to be here, each one of you.

Mr. Epp.

Mr. Ken Epp: I have a question for Ms. Wright. I'm wondering whether the definition of LMOs is short enough that you can read it to us, or is it so long we will want a copy of it in writing?

Mrs. Cynthia Wright: I can read the main parts of it: “'Living modified organism' means any living organism that possesses a novel combination of genetic material obtained through the use of modern biotechnology”. There are two supplementary definitions: “'Living organism' means any biological entity capable of transferring or replicating genetic material, including sterile organisms, viruses and viroids”, and then “'modern biotechnology' means the application...”, and essentially that goes into more detail about using recombinant DNA and fusions of cells beyond the taxonomic family.

We can make the definition available to you.

Mr. Ken Epp: I wouldn't mind having that.

This, you are telling us, is going to remain unchanged, or at least you anticipate it will remain unchanged, as new developments in science produce new species and subspecies of different organisms in different forms.

Mrs. Cynthia Wright: That's correct. We think the definition of living modified organism will stay the same.

Mr. Ken Epp: Thank you.

The Chair: Are there other questions from committee members? I think we've exhausted the questioning.

I have one question, and I'm going to put it to any one of you. Having been in Cancun and having experienced what we experienced there, not only the heat physically but other things, I'd like to know how we reconcile the following differences.

The SM-5 has concerns about protection and the ability to operate in that system in this country, and at the same time we have the grains and oilseeds trade component of our agricultural community demanding greater access and market share. Are those two components diametrically opposed in some sense, because one is very much controlling the import of product? Are they reconcilable at the WTO? Do you see that as a possibility, or are we playing mind games because at the end of the day one of those two groups is going to lose? Can they both win?

It's a very dangerous question to put out, but I'm going to put it to you. We'll see what kind of response I get.

» (1710)

Mr. Tim Pettipas: Mr. Chairman, I think in fact it's entirely achievable. I know Canada has a very realistic and credible negotiating position, and that has in fact been arrived at through extensive consultation with the entire sector. That position has been extremely effective in allowing us to advance ideas in negotiation. I think it has positioned Canada well as a bit of a broker amongst a wide range of negotiating groups and bilaterally with other countries.

The strength of that position is that it was arrived at through that nature of consultation. I think all sectors are looking at trying to get some common objectives, including the substantial reduction of trade-distorting support, but equally, substantial improvement in market access for all agricultural products. That's a shared objective. As I mentioned, that has put us in a good position.

So I think the short answer is yes, it is achievable.

The Chair: Does anyone else want to touch on that?

Mr. Coomber.

Mr. Blair Coomber: The only point I would raise is, whether it's with the WTO or in any other area we work in internationally, we need to recognize that Canada isn't the only country that has.... Agriculture is a sensitive industry in every country of the world. There are areas that are sensitive at times where approaches may seem to be not compatible or whatever, but we're certainly not the only country out there that needs to find this balance between our export-oriented industries, our domestic industries, and so on. But that's what the job is, to go out there and try to build that support, to try to influence thinking in other countries and make them understand how our sector works.

As Tim said, I think it is achievable in whatever forum we're operating in internationally.

The Chair: I'm glad you mentioned that, because I'm wondering, have we done enough to foster a good relationship? Have we been building the kinds of relationships we should have been building? Have we been working with the right people in terms of building new allies, or have we been playing the game with the same old players, where we know we can win?

Mr. Tim Pettipas: Yes, we've been extremely active, I would be willing to say probably as active as or more active than any other member in the WTO, in reaching out to the widest range of other countries. A part of that has allowed us to bridge ideas.

Building on what Blair mentioned, I can say we've moved ideas in negotiation, such as flexibility in how you provide market access improvements on the basis that the majority of the members have sensitive products. It's been by working through conventional and less conventional alliances that we've been able to do that.

The Chair: Thank you very much, everyone at the table. I want to thank you all for coming.

This is a very complicated subject, as you well know and we're beginning to know. All the best as you continue your negotiations, and we'll see you again at the table sometime.

The meeting is adjourned to the call of the chair.