World Trade Organization negotiators are wrestling this year with issues that will affect Canadian farmers directly – how much can their government support them, protect them, give them access to new markets? Over four weeks, this column is exploring some of the issues at WTO talks past and present and their impact on farmers. This week part 2: some sustaining Canadian trade myths.
While nuts-and-bolts trade negotiations are all about hardheaded economic calculations, the ideologies that drive those who have a stake in their outcome often are based on more softheaded mythology or at least a sprinkling of self-delusion.
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Well, that’s true in Canada at least.
The Americans show little fuzziness at the talks. Their goal is to blast their way into the markets of countries where they think they can mop up, all the while keeping domestic subsidies as high as they can afford and protecting sectors that need protection from lower-priced producers, notably cotton, peanuts and sugar.
There is not a modicum of embarrassment that they have offensive and defensive strategies.
The European Union is much the same.
In this regard, Canada is a different kettle of fish, or herd of swine, to keep it in a Prairie context.
There is a constant debate about the appropriateness of Canada’s “balanced position” of protecting supply management and the Canadian Wheat Board monopoly while pressing for as much foreign access as possible for exporters. There is a defensiveness about Canada’s position.
The public struggle between the two visions gives the world a view of Canada as a country with a weak position and divided trade loyalties.
And to support their entrenched positions, both sides rely on comforting assumptions that must be challenged.
The exporter assumption is that elimination of trade distorting subsidies and tariffs would increase trade, raise prices and allow exporting farmers to live comfortably off a suddenly functioning market.
To achieve that, they would cut or eliminate tariffs for the protected but prosperous multibillion dollar dairy, poultry and egg sector. There would still be remnants of those industries competing in the market but the stability of Canada’s few farm income bright spots would be gone.
What would be the reward? At a December 2004 trade conference in Toronto, Canadian Agri-Food Trade Alliance president Liam McCreery presented a study predicting that elimination of all production distorting subsidies and all tariffs would raise prices by 11.6 percent.
Would that optimistic economic model prediction solve the farm income problem for grains and oilseeds producers with a greater gain than the supply management loss? How long would it take for fuel prices or other costs to eat that up?
It sounds more like theology than policy.
On the other side, supply management defenders fortify their arguments by insisting their system is domestic marketing policy with no impact on trade.
Hello? Tariffs of 300 percent that block cheaper imports are by definition trade impediments. To suggest otherwise diminishes the credibility of the argument.
Advocates of supply management protections should defend it on the basis that it provides stability and that trade isn’t the only agriculture policy worth pursuing.
Trade positions based on myths and self-deception are a shaky basis for the high stakes WTO game.
