In a direct challenge to the warnings of some of Canada’s most powerful farm lobby groups, the George Morris Centre says Canada’s international trade goal should be to support the sharpest tariff reduction possible, including on supply management over-quota tariffs.
It argued in a mid-April report that supply managed sectors covering dairy, poultry and egg sectors with over-quota tariffs of between 200 percent and 300 percent could withstand a quota cut of 50 percent or more.
Meanwhile, export sectors like beef and pork would gain new international sales if they faced quotas reduced to 50 percent or lower.
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Existing proposals on the table at World Trade Organization talks should be embraced by Canada as a basis for a deal rather than rejected as too extreme and hurtful to Canada’s import sensitive industries, said the report from one of Canada’s few agriculture policy analysis groups.
“It is hard not to conclude that the export-oriented components of Canada’s agrifood sector are likely to reap substantial benefits from the market opportunities offered by reduced tariffs,” said the report.
A tariff reduction from 200 percent to 100 percent for a supply managed product still is a formidable import barrier. For exporters now facing 60 percent tariffs, a reduction to 30 percent could offer some opportunity.
The centre said Canada should compromise at World Trade Organization talks to accept sharp tariff cuts in return for sharp subsidy cuts offered by others.
“The proposals would leave Canada’s supply managed industries with tariff protection of 75-125 percent after a phase-in period,” said the analysis. And those sectors could protect between one and eight percent of products as sensitive ones with the higher tariffs.
“The proposals would be a major potential benefit for more than 80 percent of Canadian agriculture that is export oriented,” argued the report written by Larry Martin, Al Mussell and Terri-lyn Moore. “Using beef and pork as examples, average tariffs in 106 countries are 70-75 percent. The proposals would reduce these tariffs to 30-35 percent.”
The privately and corporately funded George Morris Centre argued that a deal to aggressively cut tariffs would force the United States to reduce distorting subsidies in return.
The argument is solace to the exporter lobby represented by the Canadian Agri-Food Trade Alliance that promotes the sacrifice of high domestic tariffs as a reasonable tradeoff for more market access.
It flies in the face of the Canadian Federation of Agriculture and its supply management members who argue that tariff reductions will not offer real increased access but they would destabilize the sensitive sectors. They argue that the best way to increase trade in sensitive products is to maintain over-quota tariffs but expand the tariff rate quotas, which guarantee a fixed percentage of the domestic market to imports.
The George Morris Centre also said the evidence is mixed on whether the Canadian Wheat Board monopoly, now under discussion at the WTO, really returns the benefits defenders say it does. And the centre analysts say once an agreement is reached, Canada will have no choice but to sign it.
“Canada is too dependent on exports, too dependent on innovation and too dependent on investment not to be part of the international rules and to have the same market access as everyone else to the majority of the world’s economy.”
