Farmers the world over are skeptical about the current round of World Trade Organization negotiations because the results of the last WTO agriculture agreement a decade ago are so disappointing, says an Ottawa trade specialist.
Peter Clark, president of Grey, Clark, Shih and Associates who monitors the WTO for clients and has represented Canada’s supply managed sectors, said the last WTO agreement did not produce the promised results of better access for farm products in foreign markets and higher farm incomes in Canada.
“There is a global farm income crisis and the main impact of the last agreement has been falling prices and falling farm incomes,” Clark said. “Farmers in Canada and around the world were told the agreement would improve their situation. It hasn’t happened. Things have gotten worse.”
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Clark said the primary failure of the General Agreement on Tariffs and Trade deal forged in late 1993 by the United States and the European Union and implemented in 1995 is that it did not effectively control domestic farm subsidies in the U.S.
The 1996 American farm bill ended attempts to use farm subsidies as an incentive to limit production. The 2002 farm bill increased subsidies and led to more production.
“The real failure of the last agreement was that it did not discipline U.S. farm subsidies, their production incentive and the production that drives down prices around the world,” he said.
And when reporting subsidies and their impact, both the U.S. and the EU have not been honest with the WTO: “Some of the players cheat, ignore the rules and engage in smoke-and-mirrors reporting.”
He said the legacy of the broken promises from the last negotiation haunt this negotiation, which is supposed to produce results at a meeting of trade and agriculture ministers in Hong Kong in December.
“I think the message from the U.S. is that they are not really going to reduce domestic supports in the next farm bill,” said Clark. “They are talking about shuffling money around to different boxes, from amber to blue that is supposedly less trade distorting, but you are still going to have American production incentives, overproduction and dumped product.”
That makes farmers in many countries reluctant to see their governments sign a new trade deal.
“As long as the Americans and the Europeans are shipping subsidized products out into the world, reducing prices and displacing local products, many farmers are reluctant to open themselves up to that unfair competition,” said Clark.
For Canadian farmers, there is one other consideration.
Clark said the Canadian government has been reluctant to claim its rights under WTO agreements, preferring not to use dispute panels to insist other countries honour their commitments on access and subsidy reductions.
