Proceedings of the Standing Senate Committee on 
Foreign Affairs

Issue 10 - Evidence - Meeting of March 22, 2005


OTTAWA, Tuesday, March 22, 2005

The Standing Senate Committee on Foreign Affairs met this day at 5:14 p.m. to examine the development and security challenges facing Africa; the response of the international community to enhance that continent's development and political stability; and Canadian foreign policy as it relates to Africa. Topic: WTO, development and agriculture.

Senator Peter A. Stollery (Chairman) in the Chair.

[English]

The Chairman: I welcome you to this meeting of the Standing Senate Committee on Foreign Affairs. We are continuing with our special study on Africa as ordered by the Senate on December 8.

[Translation]

We are pleased to have with us today, first, officials from International Trade Canada, and second, representatives of the Africa-Canada Forum, the North-South Institute, and UPA Développement international.

We are focusing today on WTO negotiations and the sensitive issue of agriculture.

[English]

We will begin today's meeting with officials from International Trade Canada. We have before us Mr. Doug George, Mr. Bruce Christie and Mr. Charles La Salle. Mr. George, you have the floor. As you know, you make your presentation and then we will have questions from members of the committee.

Mr. Doug George, Director, Intellectual Property, Information and Technology Trade Policy Division, Department of Foreign Affairs and International Trade: I would also like to introduce Mr. Marcel Saucier, Deputy Director of the Tariffs and Market Access Division.

Mr. Chairman, members of the Senate Foreign Affairs Committee, my colleagues and I are pleased to appear before you today to outline the current aspects of our work on international trade with respect to Africa. My remarks will focus on the implications of the current WTO negotiations for Africa in agriculture, development and other trade- related efforts that impact on Africa. I am joined today by other officials who will assist me in addressing your questions.

[Translation]

The subject we are dealing with today is fascinating. I believe that other departments have already appeared before this committee. The work we are doing in terms of international trade and Africa is intended to round out the work of other government bodies.

[English]

In terms of the current WTO negotiation, we believe that an ambitious outcome in the agriculture negotiations will facilitate developing countries' development and poverty alleviation efforts, including in Africa. In these negotiations, Canada is working with a wide range of developing countries for, first, the complete elimination of export subsidies by a credible date to be negotiated, a landmark in international agricultural trade, second, substantial reductions in overall levels of trade-distorting domestic support, with larger reductions by those countries that subsidize the most, and third, substantial improvements in market access for all products.

Success in each of these three pillars will deliver real benefits to Africa. It will eliminate subsidized competition by developed countries in products such as cotton; it will reduce domestic subsidies that act to restrict the size of markets; and it will open new markets by reducing and/or eliminating tariffs that act to impede market input.

These negotiations will also take into account other concerns. The July 31, 2004, WTO general council decision, widely known as the July package, affords developing countries flexibility in providing access to their markets through the ability to designate a number of products as special products that are key to food security, livelihood security and rural development needs. The July package includes the acceptance of the establishment of a special safeguard mechanism for developing countries to respond to import fluctuations or import surges for a specific set of products. It also allows for least-developed countries to be exempt from reduction commitments.

[Translation]

I mentioned cotton earlier. Cotton is of primary interest to four countries of West Africa, namely Benin, Burkina Faso, Mali, and Chad. These countries have expressed a number of concerns about trade practices that significantly limit their ability to grow and market their products successfully. In November 2004, WTO members established a subcommittee to deal with the issue of cotton ambitiously, quickly and specifically in the context of the agriculture negotiations.

[English]

Beyond agriculture, the current WTO negotiations also include efforts to address industrial tariffs. Negotiations are proceeding toward the elimination of tariff peaks, high tariffs and tariff escalation, including on products of export interest to developing countries.

WTO members also agree that negotiations take fully into account the special needs and interests of developing countries, including through less than full reciprocity in tariff reduction commitments. In other areas of the negotiating addenda such as trade facilitation, the prospects for a win-win outcome are significant. The right set of commitments in this field, reflecting the different level of development and capacity constraints, matched with technical assistance and capacity building, would promote better customs procedures within Africa, reducing red tape and promoting trade within and outside the region.

On the wider issue of development, the Doha ministerial declaration places special and differential treatment for developing countries at the heart of each of the negotiating areas. Special and differential treatment measures provide for lower levels of commitments, longer implementation periods, greater flexibility in the application of tariff formula cuts and the treatment of some products and enhanced trade-related assistance in capacity building. Negotiations with respect to special and differential treatment are addressing a wide variety of issues that were brought out by developing countries themselves, Africa included.

Beyond the WTO negotiations, I should like to discuss how Canada is taking a leadership role on other trade- related issues of importance to Africa. At the G8 summit in Kananaskis in June 2002, former Prime Minister Jean Chrétien announced steps that Canada would take to reduce poverty in the world's poorest countries. Key among these initiatives is Canada's market access initiative for least-developed countries, which aims to strengthen economic growth through trade by eliminating tariffs and quotas on most of their exports to Canada.

This program has benefited all 48 least-developed countries, including 34 in Africa, by providing duty-free quota and quota-free access to the Canadian market for all products, with the exception of a small number of supply- managed agricultural products. This initiative is one of the most far-reaching initiatives of any comparable program offered by other developed countries.

Later in 2003, all WTO members agreed to waive certain compulsory licensing obligations in the agreement on trade-related aspects of intellectual property, the TRIPS agreement, in order to allow poor developing countries better access to medicines to treat grave public health problems such as HIV/AIDS, tuberculosis and malaria. Canada was one of first countries to take concrete action to implement this agreement. The Jean Chrétien Pledge to Africa Act received Royal Assent on May 14, 2004, and it is expected that the act will come into force in the near future, once the necessary supporting regulations are passed.

It was under Canada's leadership that the G8 at Kananaskis responded to the new partnership for Africa's development, developed by African leaders. The NEPAD is a pledge by African leaders to eradicate poverty and place their countries on a path of sustainable growth and development. The integration of Africa into the global trading economy through trade and investment is an important element of the NEPAD agenda.

In response to this initiative, the G8, under Canada's presidency in 2002, launched the G8 Africa action plan. The G8's commitment to its partnership with Africa will be reconfirmed at the G8 summit at Gleneagle, Scotland, under the U.K. presidency. Africa will be one of the two main themes at that summit.

[Translation]

Action must be taken in Africa. Despite its potential and vast human resources, Africa is still facing several challenges. In spite of considerable effort on the part of African and G8 governments and other partners for the past few years, there is still a lot to be done. Trade is an important development lever. The international community must redouble its efforts to integrate Africa into the world trade system and help it to develop its trading capacity. Although trade is not the answer to all problems, it nevertheless plays a significant role in economic development and poverty reduction.

[English]

Thank you for your attention. I would be pleased to take your questions.

Senator Andreychuk: You indicated that the government has responded to HIV/AIDS and the TRIPS initiative. We were told last May that it was so urgent, and it obviously was, that we passed the act. We have waited for these regulations; we were told they were coming in February, and lives are depending on this.

We knew the problem between the generic drug companies and the patent holders — those were all the issues in TRIPS — and yet we are at the point of negotiating and consulting on the regulations. When can we expect that the government will move on this?

Mr. George: The draft regulations have been published, and the period for receiving comments on those drafts has ended. My colleagues at the Department of Industry and the Department of Health, who are in charge of implementing the regulations, tell me they are in the final stages. We hope to be able to implement in the very near future.

I would note that Canada still leads the world in implementation of this particular decision by the WTO. Norway has also undertaken legislation. The European Union has developed a directive, but I think they are still some time away from implementing. I believe we are making progress and showing leadership as we can.

Senator Andreychuk: In my discussions with African countries and parliamentarians, some countries were indicating that they are going into regional trade arrangements as one of the most effective ways for them. One of the problems is the least-developed countries, or the most impoverished countries, having an exemption, which causes a regional trade distortion. Have you looked into that issue at all — that is, that when we extend exemptions and work with some countries it causes a reverberating effect when they set up regional trade? One such area was East Africa, and now Kenya feels it is disadvantaged in favour of our relationship with Tanzania. What is your comment on statements such as those?

Mr. Charles La Salle, Senior Trade Policy Officer, Multilateral Trade Policy Division, Department of Foreign Affairs and International Trade: Certainly the issue of regional trade relationships, whether they are a regional FTA or on a bilateral basis, are a matter of concern. Canada has certainly proceeded to execute a small number of regional trading arrangements, largely in the western hemisphere. We would cite our existing agreements with Costa Rica and Chile; as well, negotiations are under way with Central America.

In Africa, however, the situation is different. The African continent as a whole is subdivided into a variety of individual regional trading arrangements. You have cited the case of Kenya and Tanzania as one particular example. East Africa has looked to themselves in terms of the three immediate countries in that region and looking at a regional element. For Africa, the challenges are far beyond. Certainly regional integration as a first initial effort has some initial promise, but many of the African countries are small and the range of products that are offered to immediate neighbours are not elaborate or enlarged. That has provided some concerns amongst Africans themselves.

When we meet with Africans vis-à-vis their interest in terms of engaging with the world, Africa looks in particular to the north and their relationship because of colonial ties with the Europeans. That is a matter where they have outstanding trade relationships that go back hundreds of years.

Certainly in terms of Canada, from a broad standpoint, we have not looked to the particular issue of individual trading arrangements with least-developed countries. Certainly, senator, you are correct that many least-developed countries, which are among the world's most disadvantaged countries, are not in themselves appealing trade partners or potential trade partners, and that is a matter of broad concern.

We believe that in terms of the WTO Doha negotiations, a multilateral solution, which accounts for the needs of Africa and addresses needs in a very broad-based manner, may perhaps be the best possible means for the developed world to respond to the continent in a comprehensive way.

Senator Andreychuk: In times of apartheid and all of the restrictions that were around South Africa, other countries were looking to their old colonial ties or new initiatives. One of the issues that I have continued to hear about from those who wish to work in Africa is that it is very difficult to get trade relations going in Africa, because we simply cannot compete with the South Africans. They are moving into sub-Saharan Africa and have the advantage of being close neighbours, similar trading patterns, et cetera, so that for us to compete with South African companies is very difficult.

Is that something that you are preoccupied with or are aware of in any way?

Mr. La Salle: The case of South Africa is unique. Perhaps the members of the committee are aware that in your study of Africa as a whole there are certain players. South Africa is the richest and most diverse economy within the continent itself. Your question addresses the role particularly of South Africa as the linchpin of the sub-Saharan region in particular.

If you divide the continent of Africa, obviously the northern strip of Arab countries trade and have an established relationship with Europe. South Africa has been a centre in its own right and has been successful in attracting trade partners because their status with developing countries is on a higher scale. They have concluded a bilateral trade arrangement with the European Union and are under negotiations with the United States.

In terms of their leadership role, South Africa has concluded a bilateral trading relationship with their most immediate neighbours. That has cross benefits; for example, they are smaller players in themselves, in terms of their leadership role. However, in the case of South Africa, they have the most diversified economy. Their range of exports includes a wide range of agricultural as well as industrial goods. Their role is not to be underestimated in terms of a catalyst vis-à-vis their immediate region, the economic effect of their neighbours.

While there are many economic factors in favour of South Africa, they are a nation that is particularly struck by HIV/AIDS, which will have a huge impact on South Africa in particular. Where we look to their role as economic magnet, certainly the size of the scale of the health challenge is one that will pose great repercussions for their ability to sustain their economy and grow in the years ahead.

Senator Grafstein: I just discovered that Africa has a population of 600 million or 700 million people. If you take a look at the organic growth of Canada, it started as a series of colonies. One of our greatest challenges to it — and we have still not completed the integration of our Canadian domestic marketplace because of tariff barriers. If we take a look at the origins of the American Revolution and the economic problems it had with England, again it was internal integration before externalities. It strikes me that regional integration with a huge population market, huge agricultural reserves, huge oil and energy reserves, and so on, is almost ideal. What is lacking is political direction and will. For the WTO to take the lead as opposed to the region itself, or the sub-regions to take the lead, seems to me to be cost- ineffective. That is my first question.

Mr. George: I can tell you that the WTO is not the only group that is trying to work with Africa. Our approach is to lower trade barriers everywhere. Canada's particular approach to lower them for least-developed countries is similar to that of the European Union which has an ``everything but arms'' initiative.

Our least-developed process has what we consider better rules of origin, which allows least-developed countries to take in precursors to products from other countries, transform them and bring them into Canada. That is to their benefit.

I have just come from a posting with the European Union. They have a series of regional initiatives to encourage, within Africa and other areas, regional groupings to improve trade within specific regions. It is having some benefits, but still it is a problem of increasing regional trade. If we could increase south-south trade between developing countries that would be of significant benefit. That is one the goals Canada has in this WTO round.

Senator Grafstein: You did allude to the fact that the Europeans have looked at this and are moving from a regional perspective before they get into the WTO perspective. We will leave it as it is.

Let me see what Canada has done and what the immediate benefit has been. We have had a very salutary program to reduce for at least 48 developed countries, including 34 African, duty free and quota access to the Canadian marketplace, with the exception of some supplies, which I will get into later. What has happened? Good, bad, different, change? It sounds to me to be a bold stroke. Has that helped?

Mr. La Salle: In our opening statement, we alluded to the fact that Canada's preferential program to least- developed countries has been in place for two years. When I looked at the African figures, we have had an upward growth trend with regard to African trade. Looking at the figures before me, our merchandise imports from Africa have grown on an annual rate of up to 20 per cent between 1990 and 2004, which is much better than our overall rate of growth with other countries worldwide.

In the particular case of LDCs, African LDCs in particular, the imports over the last two years are up about 4.8 per cent in 2003-04 over past trends.

Stepping back from the LDC program, there are two elements. The first is Canada's offering zero tariff and quota access to the LDCs; the second element is those particular LDCs taking advantage of the program. We may offer from a trade policy side open markets and a more enveloping atmosphere. The second element that needs to couple with that is increased accent on the development of markets for those particular LDCs.

An agency of the Government of Canada sponsored by CIDA, the trade facilitation office, has been looking to particular efforts to address and hope to address that particular question working with LDCs to help market exploration. It is very much a work in progress and certainly an area where further work needs to be done.

Senator Grafstein: You say a small number of management supply products have been excluded. I will name three that are hugely productive of revenues where we are not, except one, directly involved. Is coffee now available from these 34 nations duty free? What has happened with coffee? It is a commodity we use. I am talking about Kenyan coffee and others.

Mr. Marcel Saucier, Deputy Director, Tariffs and Market Access Division, Department of Foreign Affairs and International Trade: The supply managed products in question are dairy products and poultry products, including eggs. These are products that are supply managed in Canada.

Senator Grafstein: What about barley products and cereal products?

Mr. Saucier: No.

Senator Grafstein: That is all open.

Sugar, coffee and cotton are all high-yield, revenue-producing products. What has happened as a result of this generous offer that we have made to these African nations to increase their imports to Canada, which would benefit Canadian consumers?

Mr. La Salle: Looking at the top 25 products that Africa exports to Canada, you cited coffee. Coffee does not number among the top 25 products. Certainly if we were to look at the number of products that Africa actually trades with Canada, you could divide them into perhaps four categories: First, oil, of all things; second, a variety of mineral and metal products; third, a variety of commodity-based agricultural products, including cocoa, vanilla, mandarin oranges; and fourth, the last category, would be odds and sods, which would include apparel and off-road dumpers, of all things.

In looking at Africa, you look at capability among individual countries, and you have cited coffee in Kenya's case. We look at Africa in terms of the continent. Kenyan coffee will come to Canada, and you can get a cup in downtown Ottawa, but you are more likely to get a cup of Columbian.

Senator Grafstein: You can get a cup on Parliament Hill.

Mr. La Salle: That is not to say that coffee will rank in terms of exports.

Senator Grafstein: My point is that here is a huge offer that we have made, but we have not put in place the parallel program to ensure that these products have an organically domestic market that can export.

As an example, China now exports to Canada in large quantities fruits and vegetables that are canned or jarred, and they undercut the market substantially. You can get a beautiful jar of fruit in Canada worth $40 or $50, but China exports them to Canada and somehow they are in the marketplace for under $15 at Costco or Wal-Mart, all the places that everyone hates but everyone goes to. Are we missing a link here? All of a sudden, there is a huge benefit to Canada and a benefit to these impoverished states. They do have access to products that are of lower costs than other exporters to us. They do not compete with our domestic products because we do not really grow them. Sugar is another problem, though, with sugar beets and so on.

Why are we not aggressively pursuing that idea, starting with Kenya or whatever, to get them to ship their goods here? What is holding us up?

Mr. Bruce Christie, Director, Multilateral Trade Policy Division, Department of Foreign Affairs and International Trade: From a trade policy perspective, we are describing some of the actions we have taken as a country to enhance the flow of goods and services from least-developed countries, including African countries, into our market. In terms of promoting those products from an African perspective, we have programs on the other side of our department which aim to enhance countries like Kenya's ability to promote their products in markets such as ours.

There are two issues to deal with. One is that Canada, from African countries' perspective, is a relatively small market, not necessarily their preferred market. They are trying to enhance their market access to the European and United States markets, and other markets closer to them in Africa. Through our trade commissioner service, and I believe you have heard from representatives of the trade commissioner service in previous sessions, we are working to enhance some of these countries' abilities to export their products to the Canadian market and to facilitate partnerships between African companies and Canadian companies. We are trying to do it, but the link is not as strong as we would like it to be.

Senator Grafstein: We are the largest per capita consumers of coffee in the world. We drink more cups of coffee than anyone else in the world. Kenyan is one of the best coffees in the world. I just do not know why the two cannot be mixed and matched to start the flow.

The Chairman: Let me put what I think is on the track. You are from the Department of Trade, and we have the WTO negotiations going on. As a market for African goods, yes, there are limitations of Europe. We know that. That is an old story. We are members of the WTO, and we are an important member of the WTO and they are the agricultural round negotiations. This committee is very much aware that 85 per cent of Africans work in agriculture. Whatever agreement is reached with our agreement will have a profound effect, for good or for bad. We had three I would say almost dramatic witnesses at the last meeting, one from Mali, one from Ethiopia and one from Zambia. They gave us, more or less, the same story of the problems with agriculture that they have. I think the question is this: What are we doing about the fact that $10 million people in Africa depend on cotton? In the United States, it is 25,000, yet the subsidies are something I do not have to go on about. How about the sugar business? Are we doing anything to remove the subsidies for sugar? In Europe, it is eight times the world's price for sugar. These will be the issues our negotiators will be participating in and will have a profound effect on 85 per cent of the population in these countries.

That is my point, but I will turn over it to Senator Di Nino. I think that is the point, the specific details of products, but we have the WTO negotiations going on for the first time in the agricultural round. You are saying we want market access, but what did we do to the Mexican bean farmers? We ruined them. We know what happened. We have seen the millions of people wandering the streets, driven off their farms. Do we have a policy for this? We have one for Canada, which is marketing boards. Are we suggesting that in Africa and developing countries there is room for transitional programs in marketing boards?

Senator Di Nino: I will not engage the witnesses in a debate. I should like to suggest that, for decades, the world, and Canada has been at the forefront, has been talking about helping Africa. For decades. We have witnessed genocides and famines. We have watched while brutal despots butcher innocent citizens. We have seen some of the worst human rights abuses in the past 50 years, and we are still talking.

What I would like to do is to ask you, gentlemen, as expert witnesses, what you think we can do to change that. Forget yesterday, forget all of these programs that seem to be nothing but a diatribe to keep us happy instead of trying to see if we can solve some of the problems that exist over there. The presentation to us ended with a paragraph that begins as follows: ``Il est imperatif d'agir en Afrique.'' I totally agree.

Gentlemen, what are we missing? Help us to write this report in a way in which we can finally start making a difference.

Mr. George: The first and most important thing we are doing, at least in our area, is that the current round of negotiations in WTO is development-focused. We are trying to solve problems that developing countries have identified and wish us to address. We have heard in Africa from some leaders, ``Do not give us aid, give us trade.''

With respect to the chairman's point on agriculture, eliminating export subsidies would put developing-country agricultural producers on the same footing as the richer countries, as opposed to having to fight against high subsidies. Cotton is one example, and there are many others. The European Union has had, in the past, very significant export subsidies, which distort world markets. Trade relating to domestic support and creating market access, these are areas that we can work on.

Senator Di Nino: We have heard this before. Get rid of your briefing book. From your experiences, tell us where we have gone wrong. You will not get fired for this. This is good, constructive criticism. We have heard this over and over again. As we embark on what I hope will be a very important study of the situation in Africa, as stated in our mandate, we would like to come up with something that will make a difference. I do not want to be part of another report that will just repeat the words that were used before.

We heard from the three gentlemen that our chairman talked about, and they said that their worst problem is the World Bank and the IMO. We have heard that the UN is dysfunctional. We have heard comments of that nature, which gives us at least some idea of where we should start looking. What I want to hear from you is direction as to where we can find answers, not the talk that we have been engaged in for years and decades. I would like to walk the talk, and I would like you to help us.

Senator Prud'homme: Provoke Mr. Peterson, the other half of Foreign Affairs.

Senator Di Nino: We will make sure you do not get fired.

Mr. George: I am not afraid of being fired. What we are doing — and I know it is not as controversial, but we are doing the right thing. HIV/AIDS is a huge problem at the moment, and a long-term problem. We have taken action. We are leading the world in taking action to try to solve this. There have been long-term complaints that the WTO does not work to the benefit of developing countries. We are taking action. It is a long, slow, painful process, but we are taking action.

Senator Di Nino: You heard, we were pushed, we must get this legislation. We have not even got the regulation yet; the legislation has not been enacted. That is shameful. That is not your fault. Can anyone else give us some pearls of wisdom?

Mr. Christie: I do not know if I can offer you pearls of wisdom.

We are not trying to solve Africa's problems; we are trying to help Africa solve its own problems. Under the WTO, as you know, especially through the last ministerial conferences, first in Seattle and then Cancun, they were complete failures. Part of the reason is that, traditionally, countries like the quad members, the United States, European Union, Canada, Japan, were the engine for driving the negotiations forward to complete the round, which often would take 8 to 10 years to complete. We would then be in a position to try to convince developing countries that concluding and taking on these commitments under the WTO would be in their interest and would help them develop. That is no longer the case. We are dealing with countries in the WTO — and, as Mr. George alluded to earlier, since July, when we announced the July package centered around agriculture — and this is a development package we are negotiating now.

From the WTO perspective, we are not blindly negotiating with the hope that we will end up having slightly better access to the major markets in the west. We have to provide a balanced package that will help developing countries, specifically African countries as well. From my limited experience, working on this file, we are hosting a senior officials meeting of chief negotiators next month in Geneva. Of the 30 countries that we have invited, 10 are from Africa. We are trying to engage the African countries more in the process — and not just engaging them in the proposals and encouraging them to develop proposals that would help develop wealth and prosperity in those countries, but also through financial assistance. Canada, as one small country, is providing technical assistance in capacity-building funds. We are up to about $320 million over the past three years to help African countries participate in these negotiations in order to enhance their wealth and prosperity and ability to access markets. That is one thing we are trying to do.

Some of the Canadian initiatives Mr. George alluded to in relation to HIV/AIDS and access to medicines are LDC market-access initiatives. Perhaps we are not at a point now to demonstrate that we have had a major impact in our market, but these initiatives altogether, from our perspective in Canada, will help their cause. Also, through the leadership role, we are trying to manage in the WTO.

Those are obviously not the pearls of wisdom you are looking for, but as one country with a fair amount of influence multilaterally, we are trying to do our part.

Senator Carney: Before I get into the trade-related issue, I realize that you are the messengers, but why are you using the name International Trade Canada when DFAIT is not mandated to use it? Intellectual property that involves using designer names for non-designer products might be a good place to start on this. Why are you using a name that you are not mandated to? I am interested.

Mr. George: Since the defeat of Bill C-31 and Bill C-32, we are using Department of Foreign Affairs and International Trade and, in brackets, international trade.

Senator Carney: I do not understand that. You are using in this material International Trade Canada. What is the authority for using International Trade Canada in your presentation to the standing committee?

Mr. George: In my presentation to the standing committee, I did not use the words ``International Trade Canada.''

Senator Carney: You are listed on our agenda as that. You are right, this is DFAIT, but why are you using it at all?

The Chairman: I would point out that at the top of the statement it says Department of Foreign Affairs.

Senator Carney: I know. Then maybe I should blame you, Mr. Chairman. Why are we using International Trade Canada on the documents before us?

The Chairman: I do not know. I have not got an answer.

Senator Carney: I should like to know if you are using it in the department.

The Chairman: We will certainly not do that again.

Senator Carney: Thank you, this is an issue.

The question I want to ask relates to the trade-related issues that you raised. First, I participated in a briefing a few days ago with our ambassador to the WTO, in Geneva. In his briefing to parliamentarians, he indicated that so far the ministerial round in Doha is not really doing very well and that there is great hope that it may in the future, but it has not really moved much. Your opening statement does not really reflect that; it deals with beliefs, hopes and expectations, but it does not match what our ambassador is telling us.

Second, when you say that the WTO July package provides developing countries flexibility, and then you say that they can designate a number of products as special products, key to food security, livelihood security and rural development needs, and that it includes a special safeguard mechanism, which I would imagine is a snap-back provision that allows tariffs to revert back to their original level, if you sum it all up, it means that they are keeping their protectionist measures very much on the table. That would be consistent with what the African witnesses have told us, which is that basically and realistically they want domestic protection but protection from export subsidies from other countries. I would appreciate a feel for more where the Africans stand on this than is reflected here. What are their reactions to this?

I also want to point out that, while this committee talks a great deal — and I appreciate it — about what a leadership role Canada is taking and how wonderful we are and, as Senator Di Nino has indicated, paternalistic, if you look at the world trade atlas figures that your department has suggested, it is not very impressive.

We may be taking a leadership role, but if you look at the world trade atlas — and I am looking at the imports taken by Canada — maybe they have increased 360 per cent, in the case of the Congo, but my mathematics tells me that it has gone from $1 million to about $4.9 million.

The three countries named in this statement, which includes Benin, our imports from Benin in 2002 were zero, as I read these figures. Zero I can understand — zero is zero — but in 2003, it looks like they were $10,000. Then in 2004, they were down to zero. The change was at minus 36 per cent. If you look at Mali, which is named in the statement, it has also dropped 62 per cent, which means it has gone from $3-million worth of imports to $410,000. These are tiny numbers. If you look at the third numbers, for Burkina Faso, which has been before the committee, I believe, we have gone from, in 2002, something like $30,000 of imports, if I read these correctly, to $120,000, and we are up to an impressive $190,000 worth of imports in 2004.

My point is this: If we were taking a leadership role and doing these wonderful things and spending all this bureaucratic money and effort and time in Africa, surely reducing our own import barriers or increasing our own trade by buying their goods for our markets would be something that we could be doing that is useful. As Senator Di Nino says, what can we do to change this situation?

I would like some comment. What is really happening in Doha? Our own ambassador says nothing much is happening in terms of some of these development issues. Second, why are we not doing more to actively buy and develop the market with some of these countries rather than talking about our leadership role, which does not impress me, on the basis of these figures?

Maybe Mr. Christie would like to answer. You can decide which one of you wants to offer an answer.

Mr. Christie: Senator, maybe I will address the first part of your question dealing with the ambassador's portrayal on the state of play. He is quite right. In my earlier comments, we got over a tremendous hurdle by agreeing to a July package framework to allow the negotiations to resume when some would say they were doomed for complete failure and breakdown.

The centrepiece of these negotiations is the agricultural negotiation. These negotiations represent, for most countries, the most sensitive sectors, including for a country like Canada. These are the areas where we have been trying to protect our markets for a long time now.

If the negotiations arrive at a certain ambitious outcome, certain elements of our economy like the Canada Wheat Board and our ability to manage our supply-managed sectors will be on the table. It will be increasingly difficult to defend those programs in those sectors.

We have a significant amount of work cut out. We are hoping that, even though the agricultural negotiations are now arguably more advanced than some of the other negotiating groups, because they are in the substance of the issues and they have made some progress, there are still a number of hurdles for them to overcome to get to success.

I agree with the ambassador's portrayal that things are not really happening. Everything seems to be centered on the agricultural negotiations right now, although there has been progress made in the non-agricultural market access side, to a lesser extent in services and rules, but we have a farther road to travel than we have come since July.

Where will things go? We still remain optimistic for achieving our outcome by the end of the year in Hong Kong at the next ministerial meeting, but we are not really in a position to say how successful those negotiations will be. However, we remain optimistic.

Senator Carney: Just to remind us, during negotiations, you must sign off on everything. You cannot just do one package and not accept the others, so this will be a long haul. Second, why are we not helping these countries, as Senator Di Nino has said, by simply buying more from them? Why do we think these kinds of import totals are anything more than ludicrous when you are talking about trade?

Mr. Saucier: Senator, I focus on agriculture. The July framework agreement was basically an understanding that we would be addressing developing-country preoccupations by special treatment of tropical products, the special products they consider necessary for rural development, for food security, et cetera, and, as you mentioned, snap back, the special safeguard mechanisms. It is like an insurance policy, so that if there is an import surge, they can react to it. We have agreed in principle that we will be addressing this, but we have to negotiate the criteria.

That is fairly challenging because we have to walk a tightrope between giving them the special privileges and protections and not impeding south-south trade, which is where trade has increased the most for developing countries, and this is where there is much potential. They want whatever protection they can get against those countries with deep pockets that can outsell them in their own market with the same products they grow. On the other hand, the protection should be engineered so that it does not impede south-south trade, and that is where the potential is.

In terms of exporting to Canada, we are dealing with agricultural products, which are perishable. They have long distances to come. We protect the health of our citizens and we need to have an agreement on a phytosanitary area to ensure that these products are healthy for the Canadian consumer.

As the playing field is levelled and the rules are made the same for everyone, their potential in our market will be greater. However, there are other issues that must be dealt with such as sanitary and phytosanitary conditions.

Senator Carney: I understand that quite well, having dealt with these issues in trade negotiations. I am simply pointing out that that reality is not reflected in this statement and, therefore, it is not of much help to us. We are trying to deal with our mandate, which is Canadian foreign policy as it relates to Africa. I appreciate you attending here, but I am disappointed because I hoped you would have more to tell us than that we are taking a leadership role in a game that is currently not going anywhere and that we are not the major players in terms of benefiting Africa based on our performance on trade-related items.

Senator Mahovlich: First, is HIV still on the rise in Africa, or have we corralled it?

Second, food production in Africa has failed to keep pace with its population. Senator Carney asked how they can export more if they do not have it. There definitely needs to be a policy intervention. Who will intervene? Who will tell them that they have to change the way they are living? Africa's food production per person in 2000 was lower than it was 20 years ago.

Mr. Saucier: It is not total food production that is the issue. It is the fact that many developing countries are tropical countries. They produce tropical products and those products face many barriers to their commerce. If we had a level playing field environment, there would not be these barriers.

The principle behind the WTO is that the more trade there is, the more wealth is generated, and that is because these countries can exploit their comparative advantage for the products they can produce effectively and efficiently, and in many cases in high quality, without having to subsidize production because it happens naturally in those countries. Yet, some countries that have less comparative advantage can outsell them because they are subsidizing.

That is the issue of levelling the playing field and allowing them to do what they know best how to do and sell the products they produce.

Mr. George: AIDS is recognized as a very serious issue in Africa. Each day, more than 8,000 people in the world die of AIDS, most of them in sub-Saharan Africa. What we are doing is not limited to what we have done through the WTO. CIDA has a number of projects in Africa to deal with this issue. I am sure they could provide you with more information.

Senator Mahovlich: Is it still on the increase?

Mr. George: As far as I know, yes.

[Translation]

Senator De Bané: If I understand correctly, 88 per cent of our imports from the African continent come from Algeria? Am I interpreting the first table correctly?

[English]

Is it correct that 88 per cent of our imports from that continent come from Algeria?

Mr. George: It would be oil products.

Senator De Bané: So 88 per cent of all our imports from that continent come from one country, and it is oil products.

If I add up the exports from all the other countries, they do not come to 12 per cent, to make up 100 per cent. Can you explain that to us?

Mr. La Salle: Senator, to clarify, the figures you are pointing to indicate that Algeria's share of Canada's imports represent .88 per cent. You are quite right to identify Algeria as the leading African supplier of goods to Canada. In sum total, senator, less than 1 per cent to 1.4 per cent of total Canadian imports are from Africa.

Senator Prud'homme: I wanted to ask about one contract. If you look at imports and exports with Libya, it looks good, but it is probably one contract. If someone were to look only percentage-wise, it looks good, and they would say, ``Wow, what an improvement.'' However, if it is only one company, and I do not want to make publicity for one in particular, and they only have one contract, that can completely change the picture.

Mr. La Salle: Senator, you are quite correct. We are dealing with a continent with 54 very small countries, in large terms, South Africa perhaps being the exception. A single contract or a particular good may change and have a great impact from year to year. We are dealing largely with very small countries that have very poor export capacity. The majority of African countries export a very small number of products. My colleague, Mr. Saucier, mentioned that most of the products of Africa are, in fact, commodity products that are extremely sensitive to price fluctuations in the world market.

The Chairman: Thank you very much. On behalf of the committee I thank you.

We will begin the second part of the meeting with Molly Kane, Co-Chair of the Africa-Canada Forum, a forum of the Canadian Council for International Co-operation that brings together more than 40 NGOs, churches, unions and solidarity groups from across Canada that have a specific interest in development issues and social justice in sub- Saharan Africa. Ms. Kane is also the Executive Director of Inter Pares, the organization that brought us the three African witnesses who appeared before us two weeks ago at what really was a terrific meeting.

We will then hear from Ann Weston, Vice-President and Research Coordinator, of the North-South Institute. Her current research focuses on the World Trade Organization and its implications for Canada and developing countries. Before joining the institute, Ms. Weston worked as a senior economics officer in the Economic Affairs Division of the Commonwealth Secretariat.

[Translation]

Our last witness today is Mr. André Beaudoin, executive director, UPA Développement international. This organization has produced several studies on, among other things, Africa's position in the world agricultural markets.

[English]

Welcome to the Senate of Canada. Ms. Kane, you have the floor.

Ms. Molly Kane, Co-Chair, Africa-Canada Forum, Canadian Council for International Co-operation: I would like to thank you on behalf of my colleagues who were here last week. They enjoyed their session with you very much.

I am pleased to be here to talk about the WTO. It is critical to African development, both in terms of the substantive issues being negotiated and as a forum for political process and global governance. There are many obstacles for African countries to participate in the WTO in an equitable way.

I will tell you a brief story to give you an idea of the importance of some of these issues. In 2001, when the Doha Round took place, there were many proclamations that this would launch a development round benefiting developing countries. We had colleagues from Africa working with trade ministers from their own countries in that round and also civil society organizations working with affected people like farmers, workers and African citizens.

What we were told about those negotiations is that the developed countries were quite intransigent on the issues that really mattered to African countries. In fact, the word often used, including for Canada, was ``bullying.'' This was in stark contrast to the proclamations that had been made in Genoa at the G8 summit just a few months before, when the G8 announced it was taking on Africa's development as part of its agenda and that it wanted to work toward a new partnership for African development.

There is often quite a gap between the rhetoric around development and assisting Africa and what actually transpires in trade negotiations. It is that gap that we are interested in trying to narrow.

I went to a gathering of African activists in January 2002. It was called the Africa Social Forum, and it was the first forum of that kind to try to bring together people from different parts of the continent. There were scholars, farmers, students, academics and women's groups there. The interesting thing for someone working for a development NGO was that no one in that entire week talked about aid. Nobody said Africa needs more aid. They talked about democratization, self-determination and the straightjacket that their countries were in to pursue development policies that were appropriate to their own national development.

At that time, the international context that was most striking and important for them was the recent negotiations that had happened in Doha and what that seemed to imply for them in terms of future possibilities for African countries. It was the global rules of development and the internal challenges they faced in their own countries for democratization and getting accountability for their own government. It is not to say there were not internal problems, but this global context was making that process of democratization very difficult.

Given the testimony you heard last week from our colleagues from Africa, I do not think any of this would surprise you very much. Indeed, I think that you are recognizing this in calling for this hearing on the WTO.

You may also remember from last week's presentation some of the context in which these negotiations are taking place. Part of that context is that the net transfer of resources, when you combine aid, terms of trade, debt servicing and capital flight, is actually from Africa to industrialized countries. Africa is subsidizing us when you look at the entire economic picture.

Another part of that context is the lost sovereignty of African countries over their own economic planning due to the conditionality of donors and global financial institutions, which are part of the restructuring for debt servicing that our colleagues described when they were here.

Also, due to their dependence on volatile commodities, the weak physical infrastructure historically was geared to extracting resources from the continent. Therefore, transport and communications structures in the continent service the extraction of resources but not the internal trade among African countries, or even domestic consumption and domestic markets.

The world trading regime is hostile to African development. It is not just a question of markets but also a question of allowing African industry to develop. Africa has gone through a period of de-industrialization over the last 20 years.

I will give you a brief example of how tariffs work against African production in the case of Japan. Cocoa beans can enter Japan with zero per cent tariffs; cocoa paste is 5 per cent; defatted cocoa paste is 10 per cent; cocoa powder is 13 per cent; and chocolate is 280 per cent. The more transformation, the higher the tariffs, which keeps Africa in the situation of being a supplier of raw materials and commodities.

Rich countries claim that trade will bring about development and that we need to level the playing field. However, there is some controversy about trade driving development or development driving trade. Clearly, it is not one or the other; but we should not lose track of the issues of production and development at the supply side.

The issue is not simply access to markets; it is also production and support for production, which includes the possibility to nurture our own infant industries through public investment and infrastructure, and protective tariffs when necessary. For African countries, the notion of a level playing field is a cruel joke. Rich countries are not only on a different level, they are kicking away the ladder that got them there. Equal rules for unequal partners make for unequal rules.

In terms of agriculture, I have a brief that goes into more detail from the CCIC food security working group that I would be happy to leave with you. Just to give you a bit of the facts around this critical issue of supports and subsidies, rich country price supports and subsidies totalling $235 billion in the OECD in 2002 allowed the export of grain up to 40 per cent below the cost of production. Put another way, agricultural support in OECD countries is 16 times the OECD aid to Africa. That is from the report of the Commission for Africa that was released last week.

The consequence of this support to agriculture subsidies in the north and what it does to food production in Africa is that hunger kills more than all infectious diseases put together in Africa. Subsidized imports flood poor countries, thanks to the IMF and World Bank loan conditions that roll back tariffs and the WTO rules that prohibit raising them.

For example, Ghana is a very fertile country that would not have problems in food production. Chickens and tomatoes are imported there because they are so heavily subsidized, and Ghana is prohibited from having tariffs to protect its own production because of its debt-restructuring conditions. Therefore, even local producers of chickens and tomatoes cannot compete with the European producers.

Many poor country markets are far more open than rich ones. Mozambique, Zambia and Mali are all more open than the U.K, France and Germany. Often what is at stake in Canadian policy is not protecting our markets from Africa, it is having access to African countries at a time when their own industries and production are quite weak.

For agriculture to prosper, farmers must receive prices that more than meet their costs of production. If the production and marketing of key staple crops is disrupted by lower-priced imports, the consequences are immediate and serious — and not just in terms of food production. The losses in income mean that children are removed from school, farmers are no longer consumers and the links between farms and cities become weakened as the purchasers and providers of other services are not able to participate in the economy. National governments must be given the flexibility to enact policies that favour local and regional agricultural development. Developing countries need to be able to carve out their own unique development path and not be held to a slower timetable to the same destination.

We have established within CCIC, within the NGO sector, some benchmarks that we were looking at to see progress on this agenda going into the Cancun ministerial in summer of 2003. Those benchmarks included that there should be no new issues on the WTO agenda. These were clear demands coming from African countries. There was consensus between the governments and civil society on these issues. That is a rare show of solidarity in terms of what people think is needed.

Other benchmarks include to address the issue of dumping in agriculture and support special and differential treatment for developing countries that ensures the policy space to promote rural development and food security; to ensure all governments the policy space to exempt essential services from privatization; to address public health, farmers' rights and biodiversity issues through intellectual property rights; to have a plan for the fundamental democratization of WTO decision making and governance so that countries can participate as equals in these negotiations.

To conclude, I have heard that you will be having Minister Goodale come to speak about the Commission for Africa report. That is an important report to pay attention to. It has consolidated many of these recommendations and situated them in an acknowledgement not just of what is needed for Africa, but the extent to which current policies have been doing harm. It is not just a question of increasing what we are doing, but changing many of our practices and opening this space and the resources for African countries to pursue their own strategies.

It is politically important for Canada to demonstrate at the upcoming ministerial meetings of the WTO in Hong Kong that we mean what we say and that we are prepared to make more significant changes, not just in terms of our relationship with Africa but in terms of the leadership we show among other industrialized countries — that we do not put pressure on African countries to trade one demand for another and that we show the same leadership that we have shown around debt reduction and around our participation in the Commission for Africa on the trade agenda and make it truly a development agenda.

Ms. Ann Weston, Vice-President and Research Coordinator, The North-South Institute: I want to complement some of the points raised by Ms. Kane. First, I want to reiterate the importance of domestic policies in African countries to support agricultural development. I will talk about the urgency of developed countries ending their export subsidies and domestic supports to agriculture. Thirdly, I want to focus on the importance of improving access to developed and other developing country markets as in the context of least developed countries market access initiative about which we have already heard this evening.

I want to underline the extent to which there has been a change in understanding about how best to support agricultural development and the contribution that agriculture can make to development, growth and poverty reduction in Africa as in other countries.

[Translation]

In the 1980s and 1990s, according to the policies of the Washington Consensus, in relation to agriculture, the development of agriculture in African countries as well as in other developing regions was to lead to open markets and a reduced role for government.

[English]

What I want to argue is that, while there may have been some benefits, for instance, for some African consumers from lower tariffs on food imports being able to buy subsidized European food and there might also have been benefits to exporters of reforming ineffective and costly state marketing boards, it is now recognized that some protection of domestic production in agriculture in Africa is important, while the state also has a critical role to play to support agricultural production. The mix of protection and other forms of state support will vary from country to country, reflecting differences in production characteristics, in other factors and in terms of differences in political choice. The challenge is to ensure that the WTO and the rules being negotiated now in the Doha Development Agenda allow for such policy flexibility. That is what we are arguing. We need to make sure that the WTO rules, complemented by policies in other organizations such as the World Bank policies of foreign aid, allow African governments to play the role needed to support small farmers to improve their livelihoods.

I will talk about the domestic trade policies that might be needed, which are now under negotiation in the WTO. African governments should be able to protect their farmers from unfairly subsidized and even from more competitive products. There might be some products not subsidized but against which their small farmers cannot compete. If they so choose, governments should be exempted from making commitments to reduce agricultural import tariffs. We were told that LDCs are exempted from opening up their markets in the context of Doha Development Agenda, but I would argue, and the Commission for Africa report argues, that low-income countries in Africa should also be allowed to be excluded from making any new commitments in the area of agricultural tariff reductions. It is true that there are special products they may list, products that are important for them in terms of food security, livelihood security and rural development needs. However, even for those so-called special products, at the moment they would be expected to make tariff reductions. I argue that should not be the case.

It is also important to talk about the role that governments can play in helping small farmers to negotiate fair prices from increasingly large and dominant foreign buyers. This may involve recreating state marketing organizations or strengthening producers' cooperatives. The WTO framework agreement reached in July last year suggests only that state trading enterprises that target consumers and food security will be allowed — not necessarily will be allowed but will receive special consideration for maintaining monopoly status.

It is important to reflect on the fact that, after the abolition of state marketing boards, in many countries farmers now face monopolies, not state monopolies but private monopolies. Often these companies are able to keep prices depressed. As well, often they do not venture into distant areas in countries to buy commodities. Very rarely would they invest in research and development needed to raise productivity. It is important to allow and support African governments to work to support their small farmers in terms of receiving fair prices.

It is also important that these governments play a role in negotiating the types of standards set internationally by foreign buyers, not necessarily by governments. Increasingly, the concentration in the retail sector internationally has meant that buyers are able to set standards that they think will get them a share of the market but often are difficult for small farmers in Africa to adhere to. There has been a number of studies showing that in a country like Kenya, where small horticultural exporters were doing well, they now find it difficult to maintain their place in the supply chain. International buyers prefer to deal with large farmers and as a result small holders are being squeezed out of the export market. The issue of standards is very important, the way standards are set and what other governments can do to address this particular issues, whether it is the Canadian government supporting African governments or the African governments themselves.

Briefly, on the issue of developed countries ending their export subsidies and domestic support — I do not want to dwell on that. It is an important issue; it has been illustrated in the case of cotton. There are other products, such as sugar and beef, where it is an issue, but it will complicated in the African case, because those exporters to the EU have benefited from higher prices in EU market. As the support to EU producers is reduced and prices fall, there will need to be consideration of compensation for African producers. The ending of domestic support and export subsidies is a complicated picture for Africa.

Let me turn to an issue in which Canada can make a difference in terms of its own policies — and that is in terms of market access. We heard earlier about the least developed country market access initiative. I would argue what the Africa Commission has argued, that is, that that initiative should be extended from covering just the least developed countries to include the African low-income countries. This includes countries like Kenya and Ghana that were mentioned earlier. It deals with the problem of Uganda and Tanzania having better access to the Canadian market than Kenya, which is also part the regional East African Community.

The Commission for Africa also calls for countries like Canada to bind this agreement in the WTO — that is, the market access initiative — and to improve the rules of origin, to make them more generous, which would require less value added in African exporting countries in order to gain zero duties on exports to the Canadian market. Those are some suggestions for how Canada can make a difference in terms of changing its own trade policies, in terms of tariffs. It is also is important in terms of standards for Canada to show leadership, especially in flexibility.

Those are some trade policies where Canada can make a difference, but as people recognize it is important that Canada show leadership not just in the area of trade policies but in terms of our Canadian aid policies, to make sure we increase the support we give to agricultural development in Africa.

[Translation]

Mr. André D. Beaudoin, Executive Director, UPA Développement international: First of all, I would like to thank the Standing Senate Committee on Foreign Affairs for inviting me to come and talk about the African context. This occasion also brings home to me a certain paradigm. I see that at a Senate committee, certain questions may be asked that call for a repositioning. I have to say that I greatly appreciated the first hour of this meeting.

Allow me to set out certain basic data for you. In West Africa, 65 per cent of the population is involved in agricultural activities. Agriculture represents 35 per cent of the gross domestic product and 30 per cent of total exports. The array of exported products is very limited. It is basically coffee, cocoa and cotton. The import rate is now 19 per cent, and the population is growing by 2.5 to 3 per cent per year. These data I am referring to are based on 15 years of involvement in Africa, particularly in the western and central regions.

African agriculture is basically subsistence agriculture. It is a labour intensive activity. Even so-called cash crops, for export markets, involve very small scale farming operations.

For 20 years, the volume and value of African exports have constantly dropped. The export sector is relatively well- organized and efficient. For example, cotton currently represents 12 per cent of the world market. It is recognized as a quality product and its price is competitive. However, food products are not well-networked. Very small scale production together with weakness in the supply structure leaves individual farmers on their own, unable to effectively connect with paying customers.

Structural adjustment programs have further accentuated the market disorganization. Government support that was abandoned under these programs has not yet been replaced by mechanisms capable of adequately meeting market needs. The increase in food production was slightly faster than demographic growth. This is due to the increased crop acreage, not to increased productivity.

As for Africa and international market conditions, it is unrealistic to think, as things stand, that African agriculture could position itself advantageously in international markets. First of all, it is faced with external problems. African agriculture has to compete with products being dumped on international markets. It is hard for African agriculture to compete with exports subsidies that it is not entitled to. African cotton is one example among many. This product has to compete with high-tech agriculture that is often integrated with pre and post-production activities.

African agriculture also encounters internal problems. For many products, the industry is in total disarray. The main participants, such as producers and economic players, do not work together.

West Africa is the largest producer of shea nuts in the world. This is a product with very high value-added. Shea butter has tremendous potential in international markets. This product can be used in both the production of foodstuffs and beauty and pharmaceutical products. However, everything remains to be done in order for this product to reach its potential.

Strengthening production, development and processing capacity and organizing the marketing all remain to be done. Only with a well-articulated overall strategy involving all participants up and down the line, with adequate policy support, will producers be able to make a living from their work, will countries benefit from the use of their resources and will Africa finally truly develop.

The spread of economic liberalism through World Bank and International Monetary Fund policies and WTO international trade rules has had devastating effects on African countries. On the one hand, the price of traditional export products has done nothing but drop in international markets. On the other, new import products, like rice and chicken, have flooded local markets. This has undermined any chance of development for domestic agriculture.

In other words, from one victory to the next, Africa is loosing ground. Try as you might to convince people that trade creates economic growth and that this growth brings greater wealth, the statistics show that in reality, that has not been Africa's experience in the past 15 years, at a time when there was a surge in economic liberalism.

The prices of the main African export crops are in free fall. At the same time, Africa is flooded with all kinds of products. People often talk about subsidies, but they are not always monetary subsidies. Importing rice brokens to Senegal puts local production under undue competition and destroys rice production in West Africa. Unfortunately, there are many examples of this kind.

The depreciation in prices for agricultural products was certainly a determining factor in the decline and lack of development of agriculture in Africa. Moreover, there are not sufficient programs for producers to protect themselves from the inherent risks in agricultural activities. The contingencies of both the markets and the weather have to be dealt with. These obstacles, among others, are part of the daily challenges facing African farmers.

There is no doubt that African agriculture and consequently Africa's economy will neither be able to develop nor become emancipated without concerted efforts made to correct the situation. Agricultural protection measures will have to be defined and kept in mind in the context of any trade negotiation, being regional or international. There was unanimous consent on this point at the Dakar Agricole 2005 international forum, organized by the Senegalese government and presided by His Excellence Mr. Abdoulaye Wade, President of the Republic of Senegal. One thousand specialists, academics, politicians, technocrats and farmers attended this forum.

Several organizations, such as the West African Economic and Monetary Union (WAEMU), the Economic Community of West African States (ECOWAS), the Réseau des organisations paysannes et des producteurs agricoles (ROPPA) or West Africa Network of Farming Organization and Producers, the Plate-forme appui au développement rural en Afrique de l'Ouest et du Centre consider that Africa is currently getting sidetracked when it comes to international trade.

To break the deadlock, it is necessary to gain a better understanding of the scope of the problems raised in this paper and to find pragmatic solutions to each one of them. There are over 300 million inhabitants in West Africa. Despite HIV and regional conflicts, there would be approximately 500 million people living in Africa in 2020.

The safest and more accessible market is certainly continental. It is therefore urgent to give Africans the means to protect and develop their market. There should be an increase in the price of agricultural products to allow them to brake even on the production costs for foodstuffs. Without such measures, 65 per cent of the population will be at an impasse.

To this end, there were six thrusts to come up of the Dakar Agricole international forum in 2005, and they are rather revealing. First, development stakeholders must take actual ownership and manage technological progress in southern countries. Second, public support and banking services must adapt to agricultural development needs. Third, thought must be put into offering stable and fair tenure systems to southern farmers. Fourth, there is need to strike a balance between supplying the domestic market and its components, while working within a balanced and regulated system of international trade. Fifth, there should be tangible and pragmatic implementation of the goals set out under the Doha round for the development of southern countries. Sixth, the concept of food sovereignty must effectively become a reality, we must go from international rhetoric to imperative action.

We believe that Canada has an important part to play in supporting agriculture for southern countries under WTO negotiations. Through supply management, Canada can show the rest of the world an effective means of protecting farmers and family on farms, while engaging in a vibrant market economy. In Canada, this market regulating instrument has performed for 40 years. It has demonstrated that it is an effective way to fully meet the needs and legitimate aspirations of Africans. Besides, Africans are the first to ask for the implementation of such a measure in there own countries.

We believe supply management could apply in the countries or geographic zones able to guaranty stable markets for farmers. They will therefore be able to engage in sustainable agriculture. Canada seeks to broaden its international influence, it still enjoys a solid reputation and it has an effective solution. This effectiveness and level of success is well documented. Canada has the scientific, technical and practical expertise needed to play a leadership role in implementing this type of instrument throughout the world.

Militarily, Canada asserts its leadership by promoting peace. We believe that Canada can also assert itself on the agricultural front, a lever of African development. As a key source of food security, agriculture, as we see it, has the potential of becoming a new instrument of peace brought forth by Canada.

[English]

Senator Carney: Your presentations were extremely helpful and certainly reflecting some reality about the situation. Both of you — I did not hear Ms. Kane — talked about the role that Canada can play. You suggested several examples in your presentations. How would you prioritize them, if you had to give us a short list from your presentation?

The Chairman: Is this question appropriate for Ms. Kane to answer as well?

Senator Carney: I did not hear her presentation, but if she could add to it, that would be helpful. The witnesses covered quite a bit of useful ground and talked about what Canada can do in terms of market access, which I referred to in the earlier panel. I am following up on my original line of questions. If we had to choose priorities, given the fact that it is a huge continent and there are so many problems, how would you prioritize them in terms of trade?

Ms. Kane: This may seem like it is not trade but I think it is. There is a critical issue of governance of global institutions that Canada can show leadership on, to make them more democratic. Within the WTO, that is certainly an issue.

The trade capacity for countries that do not have teams of 200 advisers that go into these negotiations is reduced. Therefore, it creates unfavourable conditions for participation in those negotiations. Canada can show leadership there.

Given the link between trade constraints, as determined within the WTO, and the conditionality of the other financial institutions — which also create barriers for African countries to establish tariffs, for instance — then the governance of those institutions is also a key issue for development.

Senator Carney: We have heard that quite a bit, but we do have not much of a handle on how to achieve that. When you talk about the imbalance of negotiating capacity, that is a serious problem. Is it a matter of Canada training trade negotiators? In that case, money is not the answer. How can we help on the ground?

Ms. Kane: I will let my colleagues speak more specifically about the agricultural demands, but we were often told by Africans, in terms of Canada's behaviour — one of the demands going into Cancun was to stop all the new issues that were being brought into the negotiations. The African countries said, ``We do not have the capacity to deal with these things now; we want things to slow down. We cannot adjust to this rapid pace of liberalization.'' That would be one way to deal with the capacity issue.

They actually resist having foreign advisers come in to help them negotiate because they want it to be on their own terms. It is allowing for time. That is something that the Commission for Africa report recommends, to slow down the pace of liberalization and not to tie liberalization to development in the way it has been in the past.

[Translation]

Mr. Beaudoin: We must stop being complacent. Canada has been working in cooperation with Africa for more than 40 years. As such, Canada is familiar with the African continent and understands African problems.

Honourable senator, earlier you listed many statistics on Canadian-African trade. However, in reality, everybody knows that these figures are now negligible.

In my opinion, the most useful role for Canada to play is not solely based on increasing commercial trade with Africa. Let us be clear. I am not against increasing trade between Africa and Canada. However, fundamentally, it is not what will save the African continent. Trade is not the most significant contribution Canada can make.

Certain realities go unnoticed by great economic powers, in the name of economics stakes deemed more important. Canada is in a position to expose this problem. In fact, during the meeting held in Cancun, African countries and the G90 invited Canada to join their group. It goes without saying that politically speaking, membership was not possible. Nonetheless, this invitation is testimony of Canada's considerable credibility. However this credibility may be compromised if Canada continues to be complacent and continues to close its eyes to obvious realities.

The Department of Foreign Affairs and International Trade told us that there are future possibilities for Africans, particularly in North America and Canada. Everyone is aware of the current situation in Africa with respect to very small scale production. In concrete terms, the units of production are so small, that without mechanisms to regroup supply, these people will never have access to the market.

In studying more closely your statistics, you will see that they deal mainly with multinationals based in Africa that export products to North America under trade agreements.

Canada must stop being complacent. It should rather help other great powers open their eyes to allow the African continent and African agriculture to break itself free of the model they have been locked in since their independence.

[English]

Senator Carney: I take it from your remarks that you are suggesting that Canada could play more of an advocate role on behalf of some of these countries. What can we do about the international institutions? We are constantly told in this committee that the actions of the World Bank and the IMF are counterproductive, that they hurt more than they help, but we do not get to appoint the president of the World Bank, such as President Bush does. Often, we are trading off one of our own, such as Donald Johnston at the OECD, for one of their own from the European Union. How can we assist in this very real problem, that is, that the international development institutions have a stranglehold on some of these countries' economies? What can we do realistically, besides the very fine work you are doing?

Ms. Kane: On President Bush not naming the president of the bank, this may be the year to challenge that process, given the recommendations of the commission haired by Tony Blair that strongly recommended a more democratic process, and one based on merit selection. Given this particular coming together of the leadership of the commission and that nomination coming forward, which is so controversial, not just in developing countries but in Europe as well, Canada could say now is the time to address this process and make it more democratic.

The other issue is the extent to which Canada's aid program necessarily is tied to the conditionality of the bank and the fund. There is this notion that we have a donor consensus, and it is very partial consensus that does not include many of the people in developing countries. I heard today that the Minister of International Cooperation announced four sectoral priorities, and agriculture is not one of them. Something you may want to bring forward in your discussions in the future is where has agriculture gone.

The Chairman: Would you like to run that one past us again, because I did not know that?

Ms. Kane: I was not at the press conference today, but Minister Carroll announced the four sectoral priorities for Canada's aid program and the decision to focus on 24 countries, and among the sectors that were listed agriculture was not there. The sectors listed are as follows: governance, private-sector development, health, and education. Therefore, that might be another area, if Canada is taking leadership in recognizing the importance of agricultural development?

The Chairman: For the benefit of our members, we are after Minister Carroll to come before the committee. We have been working on that. I can anticipate your request. Thank you.

[Translation]

Senator Corbin: Canada is obviously not the only player in Africa. Other rich nations are on there and are actively contributing to developing African potential. It is obvious that tonight we are focusing on policies, programs, Canadian efforts and ambitions for assistance to Africa. However, can you tell us which other countries are contributing in a ``disinterested'' manner to helping Africa particularly in the area of agriculture? This piece of information may be useful for us.

Mr. Chairman, this committee should meet with organizations, or foreign governments that have joined us in this effort. I believe that we are sometimes navel gazers when it comes to evaluating programs.

Don't tell us what is not going well in Canada, but rather what we can do to improve the situation. Can you give us examples of other nations that have made positive contributions to this African campaign? Can you enlighten us?

Ms. Weston: Take for example, Great Britain's assistance program for African agriculture. This program does not seem totally ``disinterested.'' Many efforts have been made to help African agriculture.

While our minister for International Cooperation insists more on developing the private sector, we must not forget programs that are financed by CIDA and the UPA. It would be possible to include the agricultural sector in this program. We should really insist on this point.

Firstly, we have to consider Great Britain's assistance programs. On the other hand, it is obvious that in the United States, there are particular programs. However, these programs are really disinterested and we have to be careful.

Senator Corbin: My second question is for Mr. Beaudoin, who can also answer my first question if he wishes. Mr. Beaudoin, can you tell us what you have been doing in Africa for the last 15 years?

Mr. Beaudoin: To answer your first question, I would tell you that completely disinterested cases of cooperation are relatively rare — at least, rare among those that have been brought to our attention. One cooperation in the agricultural sector which has borne interesting results is the Dutch cooperation. In fact, this cooperation has a rather original way of operating. The Dutch have an intervention structure in agriculture. In fact, there is only one similar organization in the Netherlands which operates in the area of agriculture. Its activities are conducted from two of the largest NGOs and from one agricultural organization. In other words, the government imposed a marshalling of forces, allowing this cooperation to ultimately produce significant results. This dynamic is rather interesting.

To answer your second question, for the last 15 years we have been working largely according to mechanisms that have stood the test of time and which were developed in Canada. Earlier I spoke of supply management. We do not claim to develop subsidiaries from supply management. However, we draw considerable inspiration from this concept. We make sure that there is a regrouping of supply and through this regrouping, we want to be able to approach certain problems which are never taken into account in important international debates. We approach such problems as access to knowledge, access to information and access to credit, so that these people do not find themselves in a situation whereby they have to sell off their products right at harvest time. Therefore, we are trying to manage these problems by using mechanisms which have been tested in Canada.

For nearly 40 years, there exist in Canada what is called advanced payments to agricultural producers — we are still talking about short cycle production, such is in grain production. This type of system has been set up in West Africa.

Senator Corbin: Can you give us a concrete example of a situation where such measures worked?

Mr. Beaudoin: In Mali, an organization that didn't even exist 15 years ago is now managing a Can $2.5 million program per year in commercial operations. For an African organization, this is quite a significant amount.

Senator Corbin: What commodities do these commercial operations target?

Mr. Beaudoin: These operations target dry grains, including wheat and rice. Mali produces quality bread wheat.

Forecasts are based on this annual figure of $2.5 million. The organization currently finances 100 per cent of its commercial operations. It finances 70 per cent of its own operations, including staff management, and is in the midst of becoming an autonomous organization, able to stand on its own two feet.

The WTO can give the impression that marketing agricultural products is an easy task, one just has to state the statistics. However, when one gets to the heart of the matter, an organization must be established. If one does not believe in family agriculture, multinationals will take over. So in 10 or 15 years, we will find ourselves with a few agricultural workers employed by multinationals and a population that will have continued to get poorer. This is why we put such importance on marketing organizations by taking into account real African problems. It is the type of programs that we are developing.

We also have a training program based on capacity building for agricultural leaders, in preparation for the next round of WTO negotiations that will bring together about 100 agricultural leaders from seven African countries. This program is designed specifically to equip them with the tools they need to defend their points of view during the negotiations more effectively.

[English]

The Chairman: I think you were here when I was talking to the trade people — and Mr. Beaudoin said this — that it would be unrealistic to think that very soon we are going to have a big effect on the African market. We would like to — I am not against it. However, it seems to me that our big importance in all of this is as part of the WTO. We have to sign off on whatever arrangement is arrived at on agriculture. We are part of that. Our force as part of that is much bigger than our force as a consumer of African goods.

When I ask the question of the minister and our trade people, they have been saying that our goal is market access and a reduction of subsidies. We know that in the European Union something like 75 per cent of the budget goes to 4 per cent of the people. That is a fact. On the other hand, in Africa, we have been told that 75 per cent to 80 per cent of the people are involved in subsistence agriculture. When you talk family agriculture, I am saying the same thing.

If we say we want market access, it does not sound to me as though that is enough. That is not sufficient. For example, to say that we want to be able to sell, with our efficiencies and everything, wheat to Mali, we will wipe out the wheat farmers there. That happened in Mexico with the bean and maize family farms. What do you think this committee should be suggesting? We cannot just say we want market access, because what about them? How do we raise the standard of living in Mali or Kenya, take your pick. For us to get market access does not seem to me to be sufficient.

Ms. Weston: I would say not only that market access is not enough, but also that it is counterproductive. When we are alking about the African countries that we are focusing on today, the least developed countries and the lower- income countries, we are saying that if Canada is going to insist on market access to those countries that will endanger further agricultural production, which has already been weakened because of a variety of factors. We are saying, let Canada be ambitious in other markets. However, in the case of the African countries, what is needed is turning off the market access button and allowing those countries to put in place and to maintain the sorts of policies that at the moment they are being told, in the context of the World Bank and IMF support programs, they are not allowed to maintain. In some cases, in the context of WTO, they are also being told that they should not be following that route. That is the critical part.

The Chairman: In Canada, we protect a sector of our segment, an important part of our agriculture, with marketing boards. We want to maintain our marketing system. We think it has been a success. I know it is complicated; it is not a simple negotiation. It seems to me that the only way out of this is to allow these subsistence farmers, the overwhelming population of the country that are farm families, some form of marketing — the same system that we use — as the transition period takes place to a more efficient agriculture, where they are not 85 per cent of the population. Is there something wrong with that?

[Translation]

Mr. Beaudoin: We fully agree, for a very simple reason. In examining all of the data, we see that the rapid development of agriculture in industrialized countries started during the Second World War, when modern agriculture had to make additional efforts to offset difficulties in Europe. That is what enabled agriculture to develop in Canada and the U.S. At the same time, many people left agriculture to work in factories; a large number of women were recruited into factories. Efforts to industrialize agriculture were stepped up to offset the labour shortage. That is not the case in Africa.

Taking people out of agriculture and sending them to the city when there is no industry is not a sustainable solution. Why do we think the domestic African market needs to be protected? There is a hoist of examples to answer that question, including wheat production.

What if Africans were to use their land to grow wheat and if mills were built there so that they could produce high- quality flour and make bread for the people using their own production? By doing that for all products that can be processed, two issues might well be resolved. First of all, the lot of peasants and agricultural producers would be improved.

That would also create a primary processing industry in the country, which would generate jobs. Some people from rural regions would be drawn to the city, which would create a viable demand.

Let us look at processed juice. When a company wants to buy mango or orange pulp, or any other exotic product, Canada could encourage the building of plants to process the commodities in the countries where the raw materials are grown.

It has been shown that the most efficient cotton producers are in West Africa. As a result, if high-level cotton processing plants were built in West Africa, the world's leading producer of clothing would not be China, but West Africa.

When people say that Africa should have access to external markets, they often forget that the main market for Africa is first and foremost its own population. In Africa, 65 per cent of the people work in subsistence farming, and a viable demand must be created for agriculture to continue to develop.

Considering this data, the solution does in fact lie in the Canadian approach which is to protect domestic markets. These supply-management mechanisms were developed here, and are still effective today. They correspond to Africa's capacity to respond to its own market development.

So why would Canada not defend that tool? The Africans would be only too pleased to use this mechanism.

Senator Corbin: Don't these mechanisms, these marketing boards and measures like that run counter to the approaches used by the World Bank and other financial institutions that want to impose a comprehensive solution on Africa? You say that Canada is an expert in this field — and I share your opinion. However, do we not risk running into some resistance on the part of these large financial institutions that want to control everything?

Mr. Beaudoin: My position on that is relatively simple. As long as Canada is accommodating and not bold enough to present its proven and documented solution to these large powers, the current trend will not be good for them.

I do not understand Canada's attitude. Canada feels capable of defending its positions on defense, for example, however as regards agriculture, despite the figures to back it up, it does not attempt to explain or show its know-how. It is not just a simple theory, but a 40-year-old practice.

Quite frankly, I think that Canada should stand up and say: ``We have a tool here, let us show you how it works.'' After that, the international institutions can discuss whether or not they will use the tool. But Canada is not even taking that first step.

The Minister of Foreign Affairs and International Trade has asked us to help Canada overcome its isolation. He considers Canada isolated in its position on trade. But to overcome this isolation, we must do some work, and we are convinced of what we are advocating. At the same time, Canadian authorities must show courage and determination to defend the tools that they have put in place and that have enabled Canadian agriculture to be what it is today.

[English]

Senator Di Nino: There was a question as to how we could influence these multinational institutions. I just would like to put on the record that we should remind ourselves, as it relates to the IMF and the World Bank and other institutions of that nature, that we sit at the table, we pay the dues, we have a voice and we have a vote. This is not the first time we have heard that these institutions, at least in many parts of Africa, are probably doing more harm than good; they are certainly not helping the situation. One of our recommendations should be to those folks at those institutions on behalf of the witnesses who have suggested that we should certainly have more influence, or at least have more courage to speak on behalf of the African nations.

[Translation]

Senator Robichaud: We were talking about supply management. I think that the country defends its position well. In the case of the Canadian Wheat Board, we are constantly threatened with retaliation for all supply-managed commodities. We are continually defending the use of these programs.

I agree that these means would certainly be useful if we could use them in African countries. However, as was said, that runs counter to the free-trade philosophy, among other things, that we want to advance. I think that we defend our position well, but that we are alone in defending it.

Mr. Beaudoin: For my part, I think we defend ourselves rather well. Indeed, as you said, we are on the defensive. However, an attitude like that will not help us accomplish our utmost. I think we need to be on the offensive instead. We must stop justifying ourselves at the World Trade Organization.

You are undoubtedly right, perhaps we have no choice but to act that way. But we must do more. We must go to the World Trade Organization not to defend our position, but to explain why we feel these mechanisms are a solution for the future and why the supply-management systems are mechanisms which are in keeping with the vision for agricultural development in the world.

Canada defends its position on international panels very well, but it has not yet decided to go on the offensive and to explain its point of view on world agricultural development using the mechanisms it put in place 40 years ago.

[English]

Senator Grafstein: I have a short question to Ms. Weston. I did not quite understand whether or not she was in disagreement with the government position already adopted, and the OECD and the group of eight, about reducing tariffs to zero with respect to agricultural products for the least-developed countries. Are you in disagreement with that?

Coming in, I thought I heard you say that we should not encourage that, or words to that effect. Did I mishear you?

Ms. Weston: No, it is slightly more complicated, in the sense that we need to talk about market access to developed country markets and market access to developing country markets. I was making the distinction and arguing that, while market access to developed country markets might be a good thing, increasing the opportunity for exports and processed agricultural products to markets like Japan — as we heard earlier, they are quite protected — we should not demand of developing countries reciprocal treatment for our exports. In other words, we should not say that market access is something that African countries should also comply with.

The point was being made with respect to Canadian exports. The Canadian government, typically, when it is talking about market access, is talking about access to other countries' markets. I am saying that, in the case of Africa, let us let them off that particular obligation, because many people would argue that this is not the way to support agricultural development at this point.

Agricultural development in Africa has suffered from many different policies, but one of them is forcing them to open their markets. This is partly because they are then faced with this huge flow of imports that are heavily subsidized, but also, in some cases, even if those products are not subsidized — Canadian wheat, for instance — they still cannot compete. Nevertheless, they should be able to protect their markets and increase domestic production.

Senator Grafstein: Do you have any statistical analysis to support that position, or some studies that you say have been done to support that position?

Ms. Weston: I am sure we can send you some information.

The Chairman: I do not think anyone is suggesting that the marketing system stay in perpetuity, but it is absolutely vital as a transition system because, as we all know, they will just be wiped out.

I want to thank our witnesses and explain to them that we have studied NAFTA. We are quite knowledgeable about NAFTA, and this problem happened with NAFTA, with the maize and bean farmers in Mexico. This is not just an African experience.

On behalf of my colleagues, I want to thank you. The presentations were extremely interesting.

The committee adjourned.