WORLD TRADE G/AG/N/CAN/5
20August 1996
ORGANIZATION(96-3262)
Committee onAgriculture Original: English/French
NOTIFICATION
Theattached notification concerning newormodified domestic support measures exempt from
reduction (Table DS:2) wasreceived from thedelegation ofCanada on30July1996.
_______________
CANADA
Theattached notification concerns theWestern Grain Transition Payments Program (WGTPP)
asanewormodified green boxprogram under theprovisions oftheAgreement onAgriculture. In
notifying theprogram inthisway, Canada isindicating thattheprogram, consistent withAnnex 2
oftheAgreement onAgriculture, should beexempt from reduction commitments.G/AG/N/CAN/5
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Table DS:2
DOMESTIC SUPPORT: CANADA
Notification under Article 18:3oftheAgreement:
Newormodified domestic support measures exempt fromreduction
(1) Fulltitleofmeasure:
Western Grain Transition Payments Program (WGTPP)
(2) Domestic legislation reference:
Budget Implementation Act,1995 (BillC-76)
Western Grain Transition Payments Act,1995
Western Grain Transition Payments Regulations, 1995
(3) Detailed description ofmeasure withreference tocriteria:
Major changes ingrain transportation policies wereannounced bytheGovernment ofCanada
aspartofitsFebruary 1995Federal Budget. TheWestern Grain Transportation Act(WGTA)
which subsidized thecostofmoving western Canadian grain toports waseliminated effective
August 1,1995. Since then, grain shippers havebeenpaying thefullcostofmoving grain
byrailtoport.
Toassist thegrains sector inwestern Canada inthetransition toanunsubsidized transportation
environment, theGovernment ofCanada established theWestern Grain Transition Payments
Program (WGTPP). Under thisadjustment measure, acapital payment of$1.6billion isbeing
made toowners ofprairie farmland inrecognition oftheimpact onlandvalues thatareexpected
toresult from thetermination ofthelong-standing WGTA freight subsidy.
Theone-time $1.6billion payment hasbeenallocated toeachwestern province onthebasis
oftheirhistorical shares oftheWGTA subsidy overthepast10years (1984/85-1993/94).
Theprovincial shares reflect historical shipments ofcommodities benefiting from the
transportation subsidy, including wheat andwheat flour, coarse grains, oilseeds, vegetable
oils,oilcakes, anddriedleguminous vegetables. Eachprovince 'sallocation isasfollows: 16.1%
($257.60 million) forManitoba, 56.42% ($902.72 million) forSaskatchewan and27.48%
($439.68 million) forAlberta andBritish Columbia.
Thepayments toeligible landowners within eachofthese regions willbebased oneligible
acresin1994, landproductivity anddistance fromport. Theacreseligible forpayment include
allfarmland onwhich aneligible annual crop ofgrain wasgrown in1994, including
summerfallow, provided that,inthecaseofsummerfallow, aneligible annual cropofgrain
wasgrown onthelandin1993. Examples ofineligible farmland include forage land(including
landunder thePermanent Cover Program), natural pasture, government grazing lease,
uncultivated land, wasteland, yardsitesandlandthatwasnewbreaking in1994. Eligible
farmland doesnotinclude cultivated landthat,in1994, grew anineligible crop(e.g.sugar
beets, potatoes). Differences inlandproductivity arebeing accounted forbased onprovincial
cropinsurance historical yield dataandregional croprotations. Inaddition, thereason for
including adistance factor incalculating individual payments isthattheWGTA subsidized
freight ratesweredistance-related (thesubsidy pertonne thatwasactually provided under theG/AG/N/CAN/5
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WGTA increased withdistance fromport)and,hence, thedistribution ofthebenefit reflects
thelocation oflandrelative tothewestcoast andThunder Bay.
Anindividual landowner 'spayment isbeing calculated using thefollowing formula:
Payment = Acres ofEligible Farmland xProductivity Factor x
Distance Factor xProvincial Allocation Factor
TheWGTPP represents aone-time direct payment toproducers thatismarket neutral and
complieswithCanada'sinternationaltradeobligationsundertheWTOAgreementonAgriculture.
Furthermore, thistransitional assistance meets thebasiccriteria under paragraph 1ofAnnex 2
foradomestic support measure tobeexempt from thereduction commitments:
(a) TheWGTPP isapublicly-funded government program. TheWestern Grain
Transition Payments Actprovides fortheamount ofupto1.6billion Canadian
dollars tobeappropriated andpaidoutoftheConsolidated Revenue Fund.
Itisaone-time payout program inexchange forterminating, asofAugust 1,
1995, thegovernment 'sstatutory commitment under theWGTA forannual
ongoing payments of$560.6 million totherailways; and
(b) TheWGTPP doesnotprovide price support toproducers asthepayment is
historically based, istargetted tolandowners, andisnotinanywaylinked
tocurrent orfuture levels ofdomestic grain prices.
Inaddition tomeeting thebasic criteria, thetransitional support provided tolandowners under
theWGTPP isadirect payment toowners ofeligible landthatalsomeets thepolicy-specific
criteria andconditions established fordecoupled income support assetoutinparagraph 6of
Annex 2:
(a) Theeligibility forpayment isgoverned bytheWestern Grain Transition
Payments Regulations. Eligibility criteria include thefollowing:
- thepayment ismade toowners ofprairie farmland provided thatthe
owner holds thetitletothelandasofFebruary 28,1995; and
- eligible farmland isdefined aslandonwhich aneligible cropofgrain
wasgrown in1994. Ifthelandwassummerfallowed in1994itisalso
eligible, provided thataneligible cropofgrain wasgrown onthatland
in1993.
(b) Byusing the1994 historic baseperiod fortheacreage-based payment, the
payment isnotrelated tocurrent orfuture production levels. Assuch, the
program doesnotinfluence production ormarketing decisions, noworinthe
future.
(c) Current orfuture domestic orinternational grain prices havenoinfluence on
thepayment asitisbased oneligible acreage in1994.
(d) Given that theeffective date ofownership ofland isdefined as
February 28,1995, anylandpurchased after thatdateisnoteligible for
payment. Therefore, theamount ofpayment cannot beinfluenced byfactors
ofproduction employed inanyyearafterthe1994 baseperiod.G/AG/N/CAN/5
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(e) Under theterms andconditions oftheWGTPP, asoutlined intheregulations,
anowner 'sentitlement toapayment isnotmade conditional onanyproduction
occurring, noworinthefuture.
(4) Costofmeasure:
Thetotalcostofthismeasure willbeupto$1.6billion.
(5) Date ofentry intoeffect:
Thefirstinstalments under theprogram wereissued starting inFebruary 1996, andcovered
upto75percent ofeachlandowner 'sentitlement. Thefinalinstalment isexpected tobeissued
inthefallof1996.
(6) Period ofapplication:
TheWGTPP wasfirstannounced aspartoftheFebruary 27,1995Federal Budget foreligible
landowners ofthatdate.
(7) Products toprincipally benefit (ifanyindividual product(s)):
Noproducts benefit from thispayment, butowners ofeligible landwillreceive payment.