WHILE the federal government ponders whether to challenge European Union export subsidies on pork, the case illustrates the importance of securing a World Trade Organization agreement – one that can better protect vulnerable Canadian producers.
Given the damage the subsidies will likely cause to those in the industry, Ottawa has little choice but to launch a trade challenge.
The EU recently announced shipping subsidies for fresh and frozen pork products from its member countries.
Like producers in Canada, European pork producers are seeing some of their lowest incomes in decades as they struggle to contend with rising fuel and feed costs. The export subsidies are aimed at easing some of that pain.
But the problem is that it off-loads the economic hardship from producers in Europe to those in other countries.
That’s because the subsidies, which could reach as high as 75 cents per kilogram, will drive down prices and make it difficult for Canadian producers to compete in international markets.
Farmers deserve a hand up when they need it and when the crisis is not of their own making, but export subsidies are the wrong way to go about it.
It is a regressive policy that harkens back to 1980s, when the EU and the United States were embroiled in a bitter grain subsidy war.
Producers outside the U.S. and Europe could only watch as worldwide grain prices plummeted in a game of subsidy one-upmanship.
That subsidy war caused untold damage to farmers in Canada, Australia, Brazil and other major grain exporting nations, where governments could not afford to match the generous programs of the U.S. and Europe. Many say the grain industry is only now recovering.
The EU’s pork export subsidy exemplifies an attitude that must change. Governments must resist convenient, political decisions made at the cost of market stability.
Farmers and taxpayers worldwide are better served by long-term, reliable international markets than by continual and expensive government subsidies.
But instead, the EU has sent a message that those with the largest treasuries have a right to buy their way out of trouble, regardless of collateral damage.
As long as those attitudes persist, the need for a strong WTO deal, one that has no tolerance for export subsidies, also persists.
The latest round of WTO negotiations, which focuses on agriculture, has until the end of 2008 to wrap up. Proposals in those negotiations would outlaw export subsidies by 2013.
Canadian trade negotiators must redouble efforts to get a deal done. The consequences of failure for middle-power countries like Canada, which cannot afford to become trapped in the crossfire of another subsidy war, are dire.
Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.