The business-oriented Conference Board of Canada says Canada’s defence of high protective tariffs for supply-managed sectors weakens the country’s ability to push for an aggressive outcome at World Trade Organization talks.
This defence, adds the conference board, hurts the interests of exporters and agri-businesses whose future growth depends on increased exports and market access.
“Canada has applied little pressure to move the WTO talks to a successful conclusion,” the Ottawa-based board said in a 132-page report on the competitive prospects for Canada’s resource industries.
“Protecting dairy and poultry has appeared to be the higher priority, given the Canadian Parliament’s all-party resolution of late 2005 (unanimously demanding that Canada accept no reductions in supply management over-quota tariffs).”
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The conference board said this bias toward protectionism is curious because 78 percent of farm revenues come from non-supply managed sectors, many of whom need export access, and whatever the outcome of WTO talks, sensitive sectors would retain protection.
“Protecting supply-managed commodities clearly weakens Canada’s ability to secure trade liberalization elsewhere,” said the report, published at the same time as two senior Canadian cabinet ministers prepared to attend WTO talks in Switzerland while insisting supply management protections will not be put at risk.
The report predicts WTO talks likely will not get back on track until at least 2009 and in the meantime, the emphasis will switch to negotiating bilateral or regional trade deals, a game in which Canada holds a weak hand.
“Such agreements do not favour Canadian agri-food interests,” said the board report. “Whether any specific component of the Canadian market is of sufficient size or attraction to warrant significant commitment toward liberalization by an agreement partner is doubtful. Our bargaining power in bilateral arrangements such as these is likely to be weak.”
But trade issues are not the only drags on Canada’s ability to compete in food trade, the board said.
Productivity and competitiveness are declining in the sector because of a lack of investment in research, staff training and innovative equipment.
As well, clumsy government regulations, coupled with overlapping federal and provincial rules within the federal system, add to the problems.
Janice Stein of the University of Toronto referred in the report to Canada’s “regulatory mess.”
The report bemoans different labelling and inspection rules in different provinces as a problem as well as the inefficiencies of the two-tiered food inspection process, depending on whether it is a federal or provincially licensed plant.
“Complex Canadian legislation coupled with a lack of co-operation among government departments hinders food companies in their quest to take swift and broad advantage of market opportunities,” the report said.
At the same time, “the multi-level food inspection regulations in Canada are also hobbling food producers that want to meet the demand for differentiated food.”
It was a reference to the need for federal inspection if food products are crossing provincial borders.
“In the end, consumers are deprived of market choice at a time when they are demanding food differentiation,” the report said.
“Permitting producers wider opportunities to market their goods within Canada would seem to serve both their growth needs and the desires of the market.”
The conference board, a private think-tank funded by fee-for-service work, recommended that governments support compensating farmers for ecological benefits received from farming practices, make regulations simpler and less stifling and make certain that the system for ensuring food safety remains robust.
