ON BOTH sides of the Atlantic last week, scene-setting for the next round of world trade talks continued and the implications for Canadian negotiators was as clear as it was depressing.
It is going to be a tough fight to emerge from the talks with several of Canada’s key goals preserved – protecting domestic marketing systems from being undermined and convincing other countries to apply more discipline to their domestic supports.
While all sides are jockeying for position, the pressures are growing on negotiators from other countries to target some Canadian positions.
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Canada heads to the talks with a restrained, balanced package, but some of her main bargaining competitors are being urged to go for the jugular.
Pressure against the Canadian Wheat Board and similar state monopoly sellers is one example.
Last week in Brussels, European Union agriculture ministers drew up their wish list, a combination of defending what they do and attacking what they see as the hypocrisy in their opponents’ positions.
One of their targets was state traders like the wheat board. “Appropriate solutions must be found to other less transparent forms of export support such as state trading…”
Meanwhile in Washington last week, a collection of private trade specialists and academics gathered under the umbrella of the International Policy Council on Agriculture, Food and Trade also targeted state traders and urged trade negotiators to eliminate them.
Monopolies, said the group, “have the ability to distort domestic markets and international trade flows,” even if they are not directly supported by government payments.
“As long as they enjoy exclusive powers or advantages not shared by their competitors, monopolies will not behave like at-risk enterprises,” it said.
The answer is that their elimination should be sealed in the next WTO round.
In the last round, state trading monopolies were set aside in the determination to end Article 11 of the General Agreement on Tariffs and Trade – the article that allowed import restrictive supply management to be created.
This time, focus is shifting to traders like the wheat board.
When push comes to shove, Canada may have few allies on the issue, even though many other countries have state-sanctioned import or export monopolies disguised as something else.
Canada is more transparent, and therefore more vulnerable.
In a view that will surprise many Canadians, U.S. National Farmers Union president Leland Swenson last week complained in Washington that previous trade agreements and domestic farm law leave American farmers too exposed to world market volatility.
He urged U.S. negotiators to keep the government’s ability to subsidize farmers as much as is needed. “We cannot allow new accords to further erode the government’s right to set domestic farm policy.”
This directly contradicts Canada’s view that U.S. subsidies are too rich already.
The NFU is not the largest U.S. farm group, but it is a traditional ally of the Democrats who will be setting the American trade agenda. Watch out.
