The proposed deal at world trade talks would cause more harm than good and would impose “too high a price” on Canada, says the Canadian Wheat Board.
And promises by trade advocates of up to $3 billion in new market access opportunities if the current World Trade Organization proposal was signed are exaggerated, the CWB recently told MPs.
“While the CWB has supported efforts to achieve a good agriculture deal for the wheat and barley farmers of Western Canada, in its current form the promised benefits of the proposed agreement come at too high of a price,” said the board.
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In a background analysis presented May 14 to members of the House of Commons agriculture committee, the wheat board said predictions of export gains under the text prepared by the George Morris Centre should be looked at skeptically.
The text that was on the table when WTO talks collapsed in 2008 and that likely will be used when they are revived calls for an end to monopoly powers by state trading enterprises like the CWB.
At the committee, CWB president Ian White said the board agrees with the Conservative government that the fate of the monopoly should be decided domestically.
“The vast majority of wheat and barley farmers, irrespective of their views on the single desk, support the position that they should determine their marketing structure and not their international competitors,” said the CWB brief presented to MPs as background.
“The modalities (WTO proposals) remove this decision from their hands.”
The board analysis also questioned the George Morris Centre estimate of potential increased export market access if only Canada would accept a deal that would eliminate the CWB monopoly and erode supply management protections against cheaper imports.
Those predictions are the basis of enthusiasm by the pro-free trade lobby Canadian Agri-Food Trade Alliance for the deal on the table. CAFTA members insist Canada’s priority at WTO talks should be increased access for exporters rather than defending supply management protective tariffs.
Flawed assumptions
The CWB analysis said the prediction of $3 billion in added market access is based on an assumption that tariff cuts would open markets.
But the cuts proposed would reduce maximum allowed tariffs while actual tariffs are lower than maximums and would not be reduced much, if at all.
“The CWB’s analysis reveals that the cuts in bound (maximum) tariffs, although large, would have little to no impact on applied tariffs,” said the CWB analysis. “The CWB cautions the use of these (George Morris Centre) figures to promote a deal as the study uses cuts in bound tariffs to estimate gains in market access and to forecast adjusted trade flows.
“The study fails to account for the fact that actual applied tariffs in many markets are dramatically lower than bound tariff levels, resulting in gross overestimate of the potential benefits of a WTO deal.”
It noted that $1 billion of the presumed $3 billion in potential increased trade would come from wheat and barley sales and it is skeptical that the estimate is reliable.
