Win-win isn’t going to happen.
Win-lose is most likely.
So prairie grain and oilseed farmers shouldn’t cheer if a new world trade deal appears to be allowing special protection for Canada’s supply-managed industries, said Liam McCreary of the Canadian Agri Food Trade Alliance during the Canada Grains Council annual meeting.
“The more aggressive we are, the more successful we are at having ‘sensitive’ products, the more it hurts our exporters,” said McCreary, whose group represents farm product exporters such as canola, pork and beef.
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“That’s just the way of the world. The more provision we leave for tariffs remaining high, the more it hurts exporters.”
Many experts on international trade are hopeful that a world trade deal will be reached this summer, in time for it to be enshrined before the United States executive loses its negotiating powers in the first half of 2007.
Canada has always tried to increase access to foreign markets for Canadian farm products like wheat, canola and pork, and simultaneously block access to the Canadian market for foreign producers of dairy and poultry products.
Some Canadian farm groups, such as the Canadian Federation of Agriculture, have argued that both goals can be achieved. There have been special provisions made for “sensitive” products and industries in past world trade deals.
But McCreary argued that protection of Canada’s sensitive products – the supply management sector – will undermine efforts to open foreign markets. There’s always a tradeoff, and that tradeoff for protecting supply management will be worse access for export commodities.
“That’s a reality we can’t dance around. We can’t pretend it’s not there,” said McCreary.
But Saskatchewan dairy producer Emile Marquette, president of the Dairy Farmers of Saskatchewan who spoke as part of a panel with McCreary, said supply management sectors are one of the few areas where farmers can make a living. Marquette said there is no justification for trading away their protections for the sake of exporting industries that may not be helped by a new world trade deal.
“The topic of this session is how will the dairy industry adjust to a WTO deal? The answer is: why should it?” said Marquette.
“Canada’s supply management system is part of the solution to raising producers’ income.”
Marquette said supply management does not distort world trade because Canadian farm products produced through supply management are generally not exported.
But the barriers are needed if Canada wants to maintain basic farm industries such as dairy. It costs only 15 cents per litre to produce milk in New Zealand but 65 cents to produce the same amount of milk in Canada.
And he said not much will be achieved if foreign countries agree to lower their tariffs to Canadian goods, but are still allowed to leave them prohibitively high.
If a present 240 percent tariff is lowered to a 120 percent tariff, “what have you gained? You still have a 120 foot wall,” said Marquette. “You still can’t get in.”
But McCreary said exporters need to reduce tariff levels as a long-term process. Doing nothing isn’t acceptable because “this agreement will affect us for a generation.”
In an interview, Marquette said he believes a compromise is possible because the goals of the exporters and the supply management farmers aren’t in opposition. But he said the biggest problem is that groups like CAFTA portray the discussion as an either-or situation, and that makes it hard to achieve a reasonable solution.
“We need compromise and to go to government together, rather than CAFTA and supply management saying two different things,” said Marquette.
“I think if you do it properly, sensitive products can work quite well, because every country has a sensitive product. In Canada, it’s supply management.”
