US embassy cable - 05OTTAWA2881

UNCLAS OTTAWA 002881 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR WHA/CAN 
PARIS ALSO FOR OECD 
 
E.O. 12958: N/A 
TAGS: EAID, EAGR, PREL, CA 
SUBJECT: CANADA UNTIES HALF ITS FOOD AID 
 
REF: OTTAWA 1522 
 
1.  (U) Up to 50% of Canada's food aid may now be purchased 
in developing countries.  Until September 22, 90% of Canada's 
food aid contributions had to be Canadian-sourced.  The 
ministers of International Cooperation, of International 
Trade and of Agriculture and Agri-food made their 
announcement after over a year of consultations with Canadian 
agricultural producer groups.  Food aid purchases had 
accounted for only 0.3% of domestic production, so the change 
is not expected to have significant market impact. 
 
2.  (U) Food aid may now be purchased from lower-income 
countries, with the GOC announcement specifying that "users 
of trade distorting subsidies are not eligible as source 
countries."  A 2002 Cabinet decision that expanded untying 
authority for general aid had specifically excluded food aid 
to allow for further consultation and analysis.  The change 
is expected to provide increased flexibility, timelier 
assistance, and support for market mechanisms in developing 
countries.  Although those goals are in keeping with the 
development aims of Canada's International Policy Statement 
published earlier this year (reftel), this move was not 
foreshadowed in the ISP. 
 
3,  (SBU)  A contact at the Canadian International 
Development Agency explained that Canada buys very little 
food aid directly.  Most foreign food aid is provided through 
the World Food Program, with procurement decisions part of 
the contract.  Those contracts will now permit greater 
discretion by WFP in sourcing its purchases using GOC funds. 
The list of 100 countries from which food aid may be 
purchased was drawn largely from countries in the lowest 
three tiers on the OECD DAC list.  A change in the list would 
require agreement by all three ministers, as the countries 
were approved by industry groups.  Our source did not believe 
there was any science behind the choice of 50% as the cut-off 
point:  it was big enough to make a statement and serve as a 
starting point. 
 
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http://www.state.sgov.gov/p/wha/ottawa 
 
RODDY