The United States last week tabled a subsidy and tariff-cutting proposal at World Trade Organization talks that would leave existing American farm subsidies largely in tact, force Canada to cut farm spending and put in jeopardy the Canadian Wheat Board monopoly and supply management over-quota tariffs.
Yet a number of Canadian officials praised the American move as an important impetus to get the WTO talks moving again.
The U.S. proposal was a “serious contribution and we are hopeful that their initiative will lead to meaningful reform and changes to farm support programs,” trade minister Jim Peterson and agriculture minister Andy Mitchell said in a joint statement after attending a meeting of WTO ministers in Zurich, Switzerland.
Chief Canadian agriculture negotiator Steve Verheul said in an Oct. 14 interview from Geneva the U.S. proposal, and a European Union counter-proposal, animated negotiations that had been stalled.
“I do think it has injected some momentum and if it continues, we might be able to go to Hong Kong (where all WTO ministers meet in December) with the expectation of decisions,” he said.
“This is a very exciting development,” added Ontario soybean producer and Canadian Agri-Food Trade Alliance president Liam McCreery, who was in Switzerland last week for the talks. “I think we are seeing real engagement now and that was needed.”
In fact, another meeting of selected ministers, including Canada’s, is being convened this week in Geneva.
All of which makes Canadian Federation of Agriculture president Bob Friesen nervous.
He said a good WTO deal is important for Canadian farmers. However, the U.S proposal would not be a good deal.
American trade representative Rob Portman proposed that the U.S. would cut its ability to subsidize farmers by 60 percent if there was agreement from other negotiators to end export subsidies by 2010, sharply cut tariffs, reduce trade distorting subsidies and continue to allow protection of some trade-distorting subsidies from legal challenge.
It would require the end of the Canadian Wheat Board monopoly and sharp reductions in Canadian supply management tariff protections.
“The U.S. will do its part and more but consistent with the (WTO) framework’s harmonization commitment, greater cuts must be required by the European Union and Japan which have much higher subsidies,” he said last week. “All countries must also simultaneously deliver real market access.”
Friesen said the American proposal is a poor basis on which to move forward.
A 60 percent cut in what the U.S. can spend would not actually reduce what it can spend in the next few years, building in commodity-specific subsidy caps would “institutionalize” inequities between American and Canadian subsidy levels and tariff reduction demands would undermine supply management while giving export sectors little new access, he said.
“This proposal would actually allow the U.S. to spend more in subsidies over the next few years and that is not something we could sell to our industry,” said Friesen. “The CFA bottom line is that no deal is better than a bad deal and this would be a bad deal.”
He chastised Peterson for praising the American position.
Verheul said the American subsidy cutting proposal would not require significant reductions in U.S. spending because its current level of subsidies is far less than what was allowed under the last world trade agreement in 1993.
However, with Canada’s recent spike in agricultural support payments, “we would have to cut back from current levels.”
And he said American (and European) proposals on tariff cuts and the end of monopoly powers for the wheat board “present us with significant challenges. We’re under a lot of pressure on those issues.”
McCreery agreed the American proposal “does not go far enough” but he celebrated the fact that the U.S. has made a proposal that has other countries reacting.
“I think the talks are back on and Canadian farmers who depend on exports need that to happen.”