US embassy cable - 05OTTAWA3586

UNCLAS OTTAWA 003586 
 
SIPDIS 
 
STATE FOR EB/TPP/BTA, EB/TPP/BTA/EWH AND EB/TPP/MTA 
 
WHA/CAN - BREESE AND HOLST AND E - U/S SHINER 
 
STATE PLEASE ALSO PASS TO USDA 
 
DEPT PASS USTR FOR MELLE AND CHANDLER 
 
USDOC FOR 4322/ITA/MAC/WH 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, EAGR, CA, WTRO, Agriculture 
SUBJECT:  WTO HONG KONG MINISTERIAL:  INDUSTRIES PUBLICLY 
LOBBY PRIME MINISTER ON AGRICULTURE 
 
REF:  OTTAWA 3519 
 
1. Reftel reported a joint press availability at which trade 
ministers from the GOC and the provinces of Ontario and 
Quebec vowed to defend Canada's agricultural "supply 
management" system at the WTO.  In subsequent days, the 
House of Commons unanimously passed a motion supporting 
supply management, which prompted various farm and business 
groups to address public letters to Prime Minister Paul 
Martin criticizing the motion or (in the case of dairy, egg 
and poultry farmers who benefit from the system) supporting 
supply management. 
 
-- Canada's two leading big-business lobbies, the Canadian 
Council of Chief Executives and the Canadian Chamber of 
Commerce, separately wrote to protest the House of Commons 
motion.  The CCCE said it "threatens to move Canada from 
being part of the solution to the current impasse to being 
part of the problem."  The CCC said the motion "would 
totally marginalize Canada in the agriculture discussions" 
and "is a contradiction to the already agreed upon WTO 
Framework that Canada supported." 
 
-- A large coalition of agricultural and food industries 
wrote to PM Martin on November 30, also to protest the House 
of Commons motion.  This letter said that the negotiating 
mandate implied by the motion would "remove Canada's 
agriculture negotiators from agriculture market access 
negotiations" and "would also likely exclude them from 
negotiations on export competition and subsidies."  "A 
mandate like this would also send a clear message to the 
rest of the world . . . that Canada no longer supports the 
overall goal of the World Trade Organization." 
 
-- An opposing coalition of dairy, poultry and egg farmers 
placed prominent newspaper ads on December 1 calling on the 
negotiating team to "promote" supply management because it 
"simply makes more sense than the U.S.-style alternative." 
 
2. MOTION:  The motion, proposed by two Quebec members and 
passed unanimously by the House of Commons on November 22, 
urges the GOC to "ensure that the supply management sectors 
are subject to no reduction in over-quota tariffs and no 
increase in tariff quotas, and also ensure an agreement that 
strengthens the market access position of Canada's 
agricultural exporters so that all sectors can continue to 
provide producers with a fair and equitable income." 
 
3. BACKGROUND:  "Supply management," which developed in the 
1960's and 1970's, uses a combination of production quotas 
and tariff rate quotas to manage the domestic supply of 
dairy, egg and poultry products.  Farmers who are protected 
by this system are concentrated in the central provinces 
where the Liberal government is based (particularly Ontario) 
and faces its toughest fight in the coming January 23 
national election (particularly Quebec).  Production quotas 
have appreciated greatly in market value over time, making 
the farmers in these sectors -- notably Quebec's dairy 
industry -- a formidable lobby.  Canada's grain and cattle 
farmers, who are concentrated in the western provinces, are 
much more interested in trade liberalization efforts and are 
also more likely to be represented by the opposition 
Conservative Party.  This regional division lends an 
important national-unity sensitivity to Canada's WTO 
positions. 
 
WILKINS