RENO, Nevada Ñ Canada may have lost its only ally in the world trade arena when it comes to defending marketing agencies like the Canadian Wheat Board.
Australia recently signed a bilateral free trade agreement with the United States that includes a commitment for the two countries to work together at the World Trade Organization to limit the powers of export-oriented state trading enterprises.
It’s a surprising move by a country that markets its wheat through a single-desk system. But Australia’s support for STEs appears to be waning since the government-controlled Australian Wheat Board became the publicly traded AWB Ltd.
Read Also
Saskatchewan farmer uses tile drainage to manage water
The integration of both irrigation and tile drainage results in higher yields, water efficiency, improved soils and less nutrient runoff, says one producer.
Canada has become increasingly isolated in its defence of the marketing system at world trade talks, said Barbara Spangler, executive director of the Wheat Export Trade Education Committee, a U.S. wheat industry government lobby group.
Speaking at the North American Grain Congress, an annual meeting for the three key U.S. farm groups, she said the state trading enterprise clause in the bilateral agreement with Australia, which came into effect on Jan. 1, is
another blow to the wheat board.
“It commits the parties to work together in the WTO to eliminate restrictions on the right to export, to eliminate special financing guaranteed to export state trading entities and to ensure greater transparency in export state trading operations.”
A similar clause was included in free trade agreements the U.S. negotiated with Morocco and Chile. WETEC has asked the U.S. special trade negotiator for agriculture to continue that practice in any future bilateral agreements.
Ron Krystynak, agriculture counsellor for the Canadian embassy in Washington, D.C., said the U.S. wheat industry appears to be building a network of support for its anti-CWB agenda, but it might not be as threatening as it appears.
He said the language used in the Australian agreement is not binding.
“It doesn’t commit Australia to do anything. It just commits them to talk about it.”
But according to Chris Shaffer, WETEC’s producer representative on WTO issues, the Australians made a pledge and they better uphold it.
“You know what? We’re going to hold their feet to the fire.”
Shaffer said the U.S. wheat industry is “gaining some real headway” on the issue, and not only with foreign governments. Lobbyists have convinced their own trade negotiators that state trading enterprises give competitors unfair marketing advantages.
“Our government understands it,” said Shaffer.
Krystynak said the waning international support for agencies like the Canadian Wheat Board forced Canadian negotiators to make some unpopular concessions in the latest WTO framework agreement, including agreeing in principle to eliminate government financing and underwriting of losses of STEs.
“From Canada’s perspective these are significant concessions,” Krystynak told his American audience.
He said Canadian negotiators won’t be going that extra step and agreeing to eliminate export monopolies altogether.
“Our government and negotiators have faced significant heat on this issue,” he said.
The Australian free trade agreement isn’t the only one of concern for Canadian farmers. There is one in the works between the United States and six Central American countries that would lock in zero percent tariffs for U.S. wheat.
The agreement is being opposed by labour and environmental groups and the strong U.S. sugar lobby. Spangler said it will be the most debated trade legislation to go before the U.S. Congress this year.
“What we stand to lose is the current 80 percent market share to Canada and Argentina. Canada currently has a free trade agreement with Costa Rica and Argentina has said they want to expand trade throughout the region,” said Spangler. “The U.S. would certainly not expect to maintain the current friendly trade relationships that now exist if the agreement is rejected.”
