WORLD TRADE
ORGANIZATIONG/AG/NG/W/42
5 October 2000
(00-4064)
Committee on Agriculture
Special SessionOriginal:  English/
French
THIRD SPECIAL SESSION OF THE COMMITTEE ON AGRICULTURE
28-29 SEPTEMBER 2000
Statement by Canada
Domestic Support (G/AG/NG/W/35)
One of the main concerns of the Canadian agriculture and food industry is the very high
levels, and very inequitable distribution, of support to agriculture among WTO Members.
Canada has both significantly reduced its support levels and moved toward non-distorting
forms of support in the 1990s.  Canadian producers feel strongly that it is time for other countries to
do likewise.
Our producers, like those in the majority of ot her countries, find themselves competing in an
international marketplace with European and US pr oducers that continue to receive unreasonably high
levels of government support.  Based on OECD Producer Support Estimates, US wheat producers
received 8 times more government support per tonne than Canadian wheat producers, while EU wheat
producers received 13 times more support in 1999.  Much of that support is trade distorting.  This
inequity in nature and level of support is a major issue for Canadian producers, as it is for producers
in other countries including developing countries, who often receive no support at all.
One of Canada's key objectives in these negotiations is to level that playing field by reducing
the levels of support and ultimately eliminating the disparities among producers in different countries.
We recognise that governments have legitimate policy objectives which require them to spend
on their agricultural and rural sectors.  But, we strongly believe that any such spending should be done
in non-distorting ways so that it focuses on solvin g problems within a country, rather than exporting
the problems to be dealt with by other countries.
Canada's initial negotiating position on domestic support for these negotiations calls for:- maximum possible reduction or elimination of production and trade distorting
support, including support under so called production limiting or Blue Box
programmes;
- an overall limit on the amount of domestic support of all types (green blue, amber);
- a review of the criteria of the green category to ensure that green support does not
distort production and trade;
- permanent international recognition that such support should not be countervailable;  
andG/AG/NG/W/42
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- the elimination of those elements of the "peace clause" that restrict Canada's rights to
pursue dispute settlement in cases where trade-distorting domestic support and export
subsidies cause nullification and impairment of access or disrupt sales in third
country or import markets.
Canada supports the Cairns Group proposal on domestic support because it addresses a
number of these objectives, and goes a good part of the way towards our goal.
We, together with our Cairns Group colleagues, propose a reduction formula for trade-
distorting amber and blue support that will result in major reductions in the levels of such support and
remove disparities in support levels between coun tries.  We envisage a harmonizing formula.  In
Canada's view, such a formula would be one that would bring trade-distorting support in the highest-
support countries down quickly, starting from each Member's final bound commitments, leading
finally to the elimination of entitlements to provide trade distorting support above de minimis  levels.
Obviously a lot of details remain to be worked out, including parameters of the reduction formula,
such as the time period and the degree of aggregation or disaggregation.  We will all have
opportunities to come forward with ideas on these details at a later time.
In some respects, this idea is similar to the one proposed by the United States, under which a
reduction formula would lead to a common level of trad e-distorting support in all countries, but not its
elimination.  If the US were proposing a common end point of zero with only de minimis  maintained,
the two proposals would lead to very similar outcomes with respect to distorting supports.
The Cairns Group proposal also calls for the elimination of trade-distorting support to take
place within the context of declining level of support to agriculture.  This reflects a deep concern
about the tendency for overall support levels to rise, even as the reduction commitments of the
Uruguay Round have been implemented.  This is also a concern raised by the group of developingcountries that sponsored a proposal on the Green Box (G/AG/NG/W/14.)  Of course, a reduction
programme that leads to increases in overall support levels is something that's hard to explain to
producers, in Canada no less than in developing countries.
In Canada's view, the best way to ensure that overall support levels move in the right direction
is to negotiate an overall limit on support of all ty pes.  We envisage that this would work together
with major reductions in trade-distorting Amber and Blue-Box support.  Countries would be
encouraged to move towards green programmes, w ithout increasing their overall levels of support to
agriculture.  We intend to elaborate on the mechanics of this concept as these negotiations progress.
Together with Cairns Group countries, we also propose that the criteria for Green Box
measures be reviewed to ensure that they genuinely have no, or at most minimal, distorting effects onproduction or trade.  We believe that this is the best way to deal with the very real concerns about the
Green Box that have been raised by the developing countries that submitted document W/14.
Canada considers it an important achievement that the Uruguay Round began identifying the
difference between support policies that have distorting impacts and those with no, or at mostminimal, impacts on production or trade.  We would not want to lose this distinction, which has
encouraged some Members to move away from some of the worst policies of the past.  However,
there are problems in the criteria of Annex 2.  We believe it is only reasonable to undertake a review
of the criteria in light of experience and taking into account the needs of Members, including
developing country Members, to deal with domes tic policy issues in ways that do not distort
production or trade.
In Canada's view, if we can successfully ensure that programmes in the green category do not
cause material distortions in production, then it follows logically that they will not cause material
injury to producers in importing countries.  In that case, the current rules of GATT Article VI and theG/AG/NG/W/42
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Agreement on Subsidies and Countervailing Measur es would prevent such programmes from being
subject to countervailing duties.  Canada will pursue a clear understanding on the non-
countervailability of green programmes as these negotiations progress.
In summary, Canada's over-riding objective in these negotiations is to "level the playing
field" for our producers.  We believe this is an objective that is shared by the vast majority of WTO
Members that do not provide high levels of trade-distorting support.  We are happy to join with the
Cairns Group in calling for an effective reduction formula that will bring trade- and production-
distorting support down.  We will look forward to  working with others on the details of such a
formula.  We will also be very happy to work with others in looking at the criteria of Annex 2 to
ensure that green-type support is genuinely non-distorting and non-injurious.
Canada will also seek to pursue and develop the idea of an overall limit on the amount of
support provided to agriculture, so as to ensure that our reform programme reduces inequities and
does not lead to increasing levels of support.
Canada is interested in practical, realistic solutions to reduce inequities and distortions in
market access, domestic support and export competition.  We have noted some themes that Canada
supports in the proposals that have been presented by a number of Members.  We are very interested
in working with others to develop the outcomes that we need to level the playing field for the
agriculture and food industry.
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