OTTAWA – With its challenge to Canada’s supply management tariffs, the United States is trying to invent a legal loophole to gain a victory it could not win at the trade bargaining table, agriculture minister Ralph Goodale has charged.
On Feb. 26, the Canadian government tabled with a trade disputes panel its defence of supply management tariffs imposed last year to comply with new world trade rules.
A ruling, key to nervous supply-managed sectors of poultry, dairy and egg producers, is expected to be sent privately to governments in May and to be made public in June.
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“In shorthand form, the United States is trying by a legal manoeuvre to accomplish what they could not at the bargaining table,” Goodale said Feb. 23 after a Toronto meeting of federal and provincial agriculture ministers who were briefed on the Canadian position.
“That’s one of the reasons we are determined to defend our position very strongly.”
At the core of the Canadian case is a contention that when the Americans signed the 1988 free trade deal and then the 1993 North American Free Trade Agreement, they agreed to set aside the issue of supply management protections to be settled in world trade talks.
Then, in 1994, the Americans signed a new General Agreement on Tariffs and Trade that required countries to convert their quantitative import controls to tariffs.
Canada filed tariff levels for protected dairy, egg and poultry industries and received no objections from the United States.
Only after the tariffs took effect last summer did the Americans insist Canada was violating the NAFTA, which bars new tariffs and promises to get rid of all existing tariffs by 1998.
Political move
Goodale said the timing of the American complaint to a NAFTA trade panel suggests it is a political, rather than a legal, manoeuvre.
Still, as the first such challenge, he said he does not presume which way the five-member panel of trade experts will rule.
“We believe our legal position is clear, strong and correct,” he said.
The Canadian submission argued that a U.S. victory, effectively nullifying the negotiated GATT agreement to convert import barriers to tariffs, would have “absurd and unreasonable” consequences.
The next step in the process will be oral arguments by both governments in a private session of the panel in mid-March.
A judgment, eagerly awaited by the supply-managed industries which have predicted billions of dollars and thousands of jobs lost if the Canada-U.S. border opens, is expected in May or June.
A government trade specialist said last week a win by the Americans would not bring an immediate border opening, a premise on which the supply management predictions were based.
Instead, there would be Canada-U.S. negotiations to decide how much access will be required.
“Even if we lose, which we do not expect to do, it will not mean instantaneous free trade,” said the official.
