As agricultural negotiators meet in Geneva this week, an Ottawa-based trade analyst says negotiations should take account of massive agricultural subsidies in the United States that affect trade and production.
Peter Clark of Grey, Clark, Shih and Associates produced a report last week that estimated direct and indirect U.S. subsidies at federal, state and local levels at $180 billion in 2009.
The report, calledFarming the Mailboxand the fourth since 1986, was prepared at the request of Dairy Farmers of Canada.
Clark told a Parliament Hill news conference Nov. 24 most of those farm support payments or investments are not reported to the World Trade Organization.
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“The report describes the situation in the United States where subsidies to farmers and ranchers, direct and indirect, are massive,” he said. “We do not begrudge farmers anywhere government support but their influence on trade and production cannot be ignored.”
Clark casts a wide net when defining American farm supports, including direct farm bill subsidies but also irrigation subsidies, infrastructure, government help to cover private farm risk insurance programs, school lunch and nutrition programs, loan guarantees and food aid purchases.
He did not offer a comparable number for Canada if the definition of government subsidy was as broad.
He said that while the United States and the European Union have made more market access their key WTO negotiating objective, they are not willing to substantially reduce the domestic supports that give their farmers an unfair advantage in export markets.
Clark said that rather than challenging Americans on their huge domestic support system, Canada tries to play by the rules at the WTO by reducing domestic support.
“We are very, very holy, probably too holy.”
He noted that while the American system is quick to recognize farm sector disasters, Canadian farmers have to lobby their governments for help.
“Agriculture minister Gerry Ritz claims that Canadian farm policies should ensure that farmers get their money from the marketplace and not from the mailbox,” said Clark. “Unfortunately, this high-minded purist approach is not working and will not work. It is in effect unilateral disarmament for those parts of Canadian agriculture which describe themselves as export-oriented.”
Meanwhile, the Paris-based Organization for Economic Co-operation and Development recently published a report suggesting Canadian farm subsidies are higher than in either the U.S. or the EU and rising.
Clark told the news conference the OECD is wrong.
It shows Canadian subsidies going up because it compares Canadian supplied managed prices with so-called world prices and considers the difference to be a subsidy. During the past year, world dairy prices fell while Canadian prices were stable and the Canadian dollar strengthened, increasing the gap.
“The OECD tells us that Canadians are more heavily subsidized than their counterparts in the U.S. and Europe,” he said. “This is not only counterintuitive, it is dead wrong.”
