Maravi

(CANADIAN PARLIAMENT) FREE TRADE AND AFRICA

COMMENT - The Canadian parliament discusses free trade and the purposeful underdevelopment of African economies.

Proceedings of the Standing Senate Committee on
Foreign Affairs
Issue 10 - Evidence - Meeting of March 22, 2005

OTTAWA, Tuesday, March 22, 2005

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.

Labels: NEOLIBERALISM

posted by MrK @ 1:49 AM