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Canada urged to go on trade offensive over subsidies

Hitting back should be an important part of dealing with Canada’s tricky agricultural competitors in negotiations, says a new report.

Foreign competitors have been clever in appearing to abandon trade-distorting subsidies but have actually done little to minimize their actual production-distorting farm support spending.

“Clearly, some of our competitors and many of our customers offer significant income support to their producers beyond what they re-ceive from the market,” Canadian Agri-Food Policy Institute pas-president Ted Bilyea said in the introduction to the report.

“Many of the countries to which Canada exports are structurally uncompetitive yet have policies to promote self-sufficiency.”

CAPI is a federal government created organization backed by a number of provincial governments and involving private sector agricultural players.

It has been highlighting the sins of foreign competitors in recent years, suggesting that “shifting from defence to offence” should be an important part of both increasing Canada’s export trade opportunities for free market industries and defending the trade distortions of its supply management system for dairy.

It reiterates that call in the Understanding Agricultural Support report.

“In dairy, Canada has been pressed to defend changes to elements of its dairy policy. Understanding the nature and effects of (European Union) support for dairy could open an offensive dimension for Canada in its broader strategy for dairy policy, especially as (the Canada-EU trade deal) comes into force,” said the report.

“It is striking that while the (U.S.) dairy industry has received lower direct support payments under programming in place since 2014, milk production in the U.S. is rising during a period of lower prices for dairy products.… What is remarkable about the sharp decline in support notified to the (World Trade Organization) for dairy by the U.S. is how little actually changed (in terms of government support for U.S. dairy production.)

“The U.S. is expected to press Canada on its dairy policy during renegotiations of NAFTA or otherwise. An analysis of U.S. dairy policy could form an element of an offensive strategy for Canada with the U.S.”

The report openly solicits support from potential partners for additional research.

The report targets distortions created by three major players: the EU, the U.S. and China. In each, the report argued, apparent attempts to reduce production-boosting subsidies have mostly just shifted the spending to defensible categories that don’t run afoul of trade agreements but still cause overproduction.

That overproduction would not occur without the government spending, the report suggested.

These subsidies include:

  • EU support for beef and dairy production that supplies almost all the net income those producers receive.
  • U.S. subsidies for crop insurance at levels that promote overproduction.
  • Chinese crop stock programs that support domestic prices for farmers.

The report also highlighted what it describes as unsustainable environmental practices encouraged by EU, U.S. and Chinese governments, including “water-mining of aquifers.”

It said Canada’s “natural capital is an asset” and is being depleted at a low rate. However, the unsustain-able depletion in other countries is harming Canada’s export competitiveness.

The report received “generous support” from the Ontario government and the Canadian Federation of Agriculture.

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