Q: The World Trade Organization, the North American Free Trade
Agreement and international trade make the news daily. How are the
agreements enforced? Should the American farm subsidy bill be
challenged under these agreements?
A: Under international law, Canada or any other country can ban the
importation of all goods. Some countries have done this.
Alternatively, a country could decide to allow only some goods.
Travellers to the Soviet Union 20 years ago kept getting asked if they
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had jeans for sale because such goods were banned. Even today in
Canada, we ban the importation of certain items, such as ivory.
As an alternative to banning goods, a country can impose tariffs to
make foreign goods expensive. Hypothetically, Canada could impose a
tariff of twice the value on meat imported into the country.
The federal government has passed various legislation dealing with
trade. For example, the Special Import Measures Act allows for the
imposition of anti-dumping and countervailing duties. Dumping means
that the goods are being imported into Canada at less than normal
value. A countervailing tariff can be applied when the imported goods
are subsidized and the tariff is equal to the subsidy.
While countries have the power to ban imports or impose tariffs on
them, most countries have moved toward liberalizing the movement of
goods, services and investments. This has been formalized in a number
of international legal agreements.
In 1947, a number of countries entered into the General Agreement on
Tariffs and Trade with the aim of establishing rules for international
trade. That agreement has evolved into the WTO. Today, the WTO consists
of 60 agreements comprising some 30,000 pages of text to which nearly
140 countries have adhered to, and others are negotiating to join.
The WTO is a Geneva-based international secretariat with some 500
officials. The secretariat’s role includes dealing with disputes,
reviewing trade policies in member countries for compliance with the
agreements and assisting with ongoing negotiations.
One area where negotiations are ongoing is agriculture. Member
countries have set Jan. 1, 2005, as the date for achieving an agreement
whose goal is “reductions of, with a view to phasing out, all forms of
export subsidies; and substantial reductions in trade-distorting
domestic support.”
In addition to the WTO, there are inter-country and regional trade
agreements such as NAFTA. Chapter 7 of NAFTA deals with agriculture. It
states that “the parties shall work together to improve access to their
respective markets through the reduction or elimination of import
barriers to trade between them in agricultural goods.”
However, the agreement provides that “domestic support measures can be
of crucial importance to their agricultural sectors” but that parties
will work toward support measures that “have minimal or no trade
distorting or production effects.”
Finally, the agreement declares that the parties share the goal of
“multilateral elimination of export subsidies.”
Critics have argued that the WTO and NAFTA are a limit on Canadian
sovereignty and that these agreements threaten various social and
domestic programs. By agreeing to international rules, countries are
indeed voluntarily ceding some of their independence. Whether this is a
good thing or bad is a political question that is still hotly debated.
Next week: Dispute resolution.
Don Purich is a former practising lawyer who is now involved in
publishing, teaching and writing about legal issues. His columns are
