A rigid stance protecting supply management should not be allowed to scuttle agriculture’s golden opportunity in fast-growing Asian countries, says a former top trade negotiator.
Michael Gifford, chief Canadian agricultural negotiator for the North American Free Trade Agreement and the 1993 World Trade Organization deal, argues in an April 23 report that Canada cannot allow itself to be shut out of Asian trade talks now being held as the Trans-Pacific Partnership (TPP).
If the price for being allowed into the talks is acceding to U.S., New Zealand and Australian demands that dairy and poultry supply management protections be up for negotiation, so be it.
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Gifford writes in a study published by the Canadian Council of Chief Executives that increased import access through expanded tariff rate quotas of guaranteed access would allow supply managed sectors to adjust but survive.
As well, government must be ready to compensate affected farmers.
He said a likely TPP outcome will be “to phase out many if not most agricultural tariffs after some transition period” and partial liberalization for the most sensitive sectors, such as supply management.
“Currently, imports account for only about three to four percent of Canada’s milk and dairy product consumption and eight or nine percent of chicken consumption,” Gifford said.
“These numbers suggest that there is scope to provide expanded import opportunities for all supply-managed sectors.… The pragmatic question is not whether supply management can survive partial liberation but rather what changes may be necessary to allow the system to coexist with a more open but still protected trading environment.”
Gifford said federal and provincial governments will have to consider diverting some of the money to be saved in farm support programs during years of high commodity prices to dairy and poultry farmers.
“It may be necessary to provide some level of financial assistance to help farmers adapt to the new import regime.”
The report, which a disclaimer says does not necessarily reflect the views of the business executives in the organization, marks another escalation in the business sector and academic campaign against supply management protectionism.
The 40-year-old system regulates production levels to domestic demand, allows cost-based price setting and sharply limits imports to allow the domestic system to work.
It was created to deal with dairy and poultry industry chaos in the 1960s and 1970s and continues to enjoy strong support from most affected farmers, who benefit from market stability and relatively high income.
So far, federal and provincial politicians have shown no inclination to move away from their virtually unanimous support for a system that operates on market returns and not taxpayer subsidies.
However, an increasing parade of critics insists the system is antiquated and flies in the face of trade liberalization trends while impeding the ability of Canadian agricultural exporting sectors to get better access to foreign markets.
Supply management has been an issue in ongoing Canada-European Union free trade talks and debate around Canadian entry into the TPP.
Gifford argues that the growing Asian economy offers significant export opportunities for canola, pork, pulse crops and beef.
Failure to be part of an Asian trade liberalization scheme would hurt sectors that already do significant business in the region, making them less competitive with rivals enjoying lower tariffs and increased access.
However, Gifford said many other countries also protect sensitive agricultural sectors and there is no guarantee they would do what they are demanding of Canada.
“The bottom line is that while all sectors are on the TPP table, it re-mains to be seen how far the U.S. Congress is really prepared to go in liberalizing sugar, dairy and other sensitive products,” he wrote.
