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Chicken Farmers of Canada Trade Position

Introduction

Agriculture is an essential part of Canada's economy. Canadian farm activities are the backbone of many rural communities and contribute significantly to the success and standard of living of a significant number of Canadians. In fact, the future of many of these communities is tightly intertwined with the future success of the Canadian agricultural sector. It is also a positive contributor to its social and political fabric.

Agriculture is not just another industrial sector. Unlike other primary industries, its activities are carried out by a large number of individual farms facing a relatively small (and shrinking) number of large buyers. The Canadian chicken processing sector provides striking evidence of this structure. Four companies buy almost 50% of the chicken produced by Canada's 2800 chicken farmers. The top 12 processing companies buy almost 75%. This concentration is even more pronounced at the retail level, where 4 companies dominate the Canadian grocery sector.

The chicken industry is a good example of what agriculture means to rural Canada. Our orderly marketing system has provided stability, and growth, to rural communities in all ten provinces. It has also provided a solid base from which the industry has been able to expand in Canada and more recently, beyond our borders. As the Canadian chicken industry continues its efforts to be more efficient, it is imperative that government support for our orderly marketing system be maintained, including the defense of our negotiated international rights to maintain tariffs. Such a stable policy environment will allow our industry to continue to contribute to a vibrant rural economy in Canada, and allow the entire Canadian chicken industry to continue its phenomenal growth.

It is of paramount importance that before, during and after the upcoming WTO trade negotiations on agriculture, the federal government allow the evolution of chicken supply management to be pursued.

The Uruguay Round

As the Canadian chicken industry has never used export subsidies to gain access to foreign markets, nor had recourse to domestic support through government subsidies, the most significant impact on the Canadian chicken industry originating from the Final Act of the Uruguay Round signed by Ministers on April 15, 1994 in Marrakesh, was the conversion of import quotas to tariff-rate quotas (TRQ), a conversion process commonly referred to as tariffication. The intent of tariffication was to provide a level of border control which was identical to the control provided by the previous import quota system. That objective is valid today and for the future.

However, the sound administration of the TRQ regime can only be efficiently performed if the terms of market access provided by the TRQ are effectively controlled. To this effect, over-quota tariffs must be maintained at a level that ensures no more access than the intended level of the TRQ.

Before entering into any new commitments, Canadian negotiators must also ensure that all WTO members have fully implemented their existing WTO commitments, and that new rules are negotiated to ensure equivalency of WTO commitments amongst all WTO members. Other countries must provide the same level of ''real'' market access that Canada already provides, before Canada considers any further opening of its market.

General Principles

Chicken Farmers of Canada have adopted this aggressive trade position that focuses on achieving concrete and realistic results that target the most trade distorting measures. We support eliminating export subsidies, increasing disciplines governing domestic support and seeking "real" improvements on market access, that would result in a more level playing field for all farmers.

1.

A WTO agriculture agreement must achieve positive results for all sectors of the Canadian chicken industry and recognize the importance of collective marketing tools for farmers.

Future negotiations should result in the improvement of the Canadian chicken industry's livelihood, and should ensure that farmers' marketing structures are not subject to stricter rules than private corporations face.

2. 

WTO agriculture negotiations must focus on achieving concrete and measurable results that are realistic for WTO members.

As stated in Article 20 of the Uruguay Round Agreement on Agriculture, future negotiations must take into account the experience to date on implementing the reduction commitments and their effects on world agriculture.

In order to provide real and achievable access, upcoming negotiations should focus on reducing the most trade distorting support; and targeting those WTO members that are the worst offenders.

3.

CFC is opposed to the concept of an initial down payment in the areas of market access and domestic support.

WTO agriculture negotiations should not unduly disrupt agriculture markets. The risk of a significant initial down payment will generate a great deal of uncertainty and thereby prevent expansion of markets by deferring or canceling investment decisions. Accelerating this uncertainty is the undecided time frame for the negotiations and the implementation period.

4.

A WTO agreement must preserve the ability of Canadians to continue supply management and those marketing structures necessary for the stability and profitability of Canadian agriculture.

The necessary tools to operate an effective domestic supply management system must be maintained. Supply management has allowed stability and continuous growth of the chicken industry in Canada without the need of government funds.

5. 

Commitments by the Canadian federal government impacting on international trade of chicken products must only be negotiated under the auspices of the WTO and modalities of bilateral and regional trade agreements should be harmonized to the WTO.

The WTO is the only forum where the vast majority of countries have committed to discipline their support and access for agricultural products. The WTO agreements provide the basis for all negotiations.

While continuing to honour its commitments, Canada should harmonize the bilateral and regional trade agreements to the WTO modalities in order to use identical reference periods, product group definitions and market access measures.

6.

The federal government must not make trade-offs between agricultural commodities, nor between agriculture and another sector of the Canadian economy.

Benefits of trade agreements should not be achieved in one sector at the expense of another.

7.

Zero-for-zero for specific commodities.

The federal government can pursue zero-for-zero initiatives for specific sectors that want to further liberalize their own trade, as long as these initiatives are not linked to any other negotiating issues or commitments.

Export Competition

Export subsidies are the most trade distorting measures causing decline in world prices. They must be eliminated.

8.

Eliminate all export subsidies.

The European Union and the United States are the largest users of export subsidies for agricultural products. Not only can Canada not compete with the public treasuries of these two large trade players, it has already eliminated all of its export subsidies.

Other export promotion tools such as export credits and food aid should be governed by WTO rules.

Domestic Support

Support provided must be subject to a cap to ensure minimal trade distortions while recognizing that the specific characteristics of agricultural production often require a minimal level of support.

9.

Discipline governing domestic support with the imposition of a cap on all categories of support.

An overall cap should be imposed on total domestic support and measured as a percentage of the total value of production.

Maintain the de-minimis exemption for amber box programs to allow countries to maintain a minimal level of support that is often critical to offset cycles encountered in agricultural production.

Eliminate blue box programs.

Harmonize the definition of green programs and Canada's domestic agriculture policy. The Canadian government must match the level of green support given to our competitors in other countries.

10.

Maintain the measurement of support at the aggregate level.

Domestic support programs should be reported on an aggregate basis to allow flexibility to address the specific nature of agriculture, and to include all programs, either commodity specific or generally available.

Market Access

In order to achieve significant improvements, this position proposes concrete measures that address the real impediments inhibiting market access. Simple tariffs should be reduced as much as possible, or converted into TRQs. Real access gains for TRQs, will only be achieved by ensuring that in-quota tariffs and TRQ administration are such that the negotiated level of in-quota access is achievable.

11.

 Over-quota tariffs negotiated at the WTO must be maintained.

Over-quota tariffs are an essential tool that allows us to operate a domestic supply management system. Without effective over-quota tariffs, it would become impossible to have predictable and stable supply on the domestic market.

Over-quota tariffs provide the means to determine the level of in-quota access, and must be maintained at levels that ensure no more access than the committed level of the TRQ.

12. 

All countries must provide equivalent market access.

Clear and binding rules governing market access must be established to ensure all countries provide 5% market access.

There should be no further expansion of our level of market access until all countries match our access.

13.

In-quota tariffs should be reduced to zero.

"Real" market access without any impediments should be provided for the in-quota access of the TRQ.

14. 

Make TRQ administration equitable and fair.

Maintain Canada's right to administer TRQs in a manner that best suits the requirements of our domestic market and supports the goals of our agricultural marketing structures and agri-food industries, including the right to designate the market segments that receive in-quota imports, provided it does not impede the level of committed access.

Remove all country-specific TRQ allocations so that access is available on a true MFN (most favoured nation) basis.

15.

Reduce simple tariffs or convert them into TRQs.

Simple tariffs that effectively restrict access to a market should be reduced or converted into a TRQ to ensure that real market access is provided.

16.

Establish an international definition of product groups.

Standards should be established to define common specific product groups (e.g. chicken) for all WTO members.

Common specific product groups will ensure that countries are not able to use aggregation or disaggregation of products to circumvent their market access commitments.

17.

Treat primary and processed forms of products equally.

Access should be provided for primary or processed products on the same basis.

18. 

Fully implement existing WTO commitments in agriculture.

Ensure that all WTO members have fully implemented their existing WTO commitments before Canada enters into any new commitments.

Market access should be provided on an equivalent basis, using the same reference period for all agriculture products.

Other Issues

19.

Remove sanitary and phytosanitary barriers that are not based on sound, and internationally accepted science.

Addressing the SPS measures that are often used as disguised trade barriers would significantly contribute to a "real" improvement in market access.

20.

Maintain the WTO special agricultural safeguard.

The WTO special agricultural safeguard must be maintained in case of special circumstances that could drastically undermine a domestic production sector.

Chicken Farmers of Canada: 350 Sparks Street, Suite 1007, Ottawa, Ontario K1R 7S8 Tel: (613) 241-2800 Fax: (613) 241-5999 Email: cfc@chicken.ca