FORMER Canadian Dairy Commission chair Guy Jacob made no friends in the Liberal government in the late 1990s when he told a Parliament Hill hearing that the fate of supply management was sealed.
When the Liberals signed onto the World Trade Organization deal in 1994 that changed border protections from quantitative restrictions to tariff restrictions, the eventual end of the system was ordained, he told MPs.
Over time, those tariffs will fall and the import certainty needed to run a system of production controls and price setting will be eroded.
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It is not a question of if, it is a question of when, he said. Liberals, vowing to defend supply management, were unhappy with the message and perhaps not coincidently, Jacob’s appointment was not renewed.
In 2004, the “when” has moved much closer, as Jacob predicted.
The current Liberal government has accepted a WTO framework agreement that promises the current round of negotiations will result in “substantial improvement” in access for each product. There will be a “combination” of increased guaranteed access and reductions in tariffs.
At the negotiating table over the next two years or so, the job of chief agriculture negotiator Steve Verheul will be to try to limit the damage. It is inconceivable he will be able to entirely stop the damage.
“I simply don’t see a chance that we will get through the negotiation without seeing supply management tariffs cut,” says George Morris Centre chief executive officer Larry Martin.
Ontario soybean producer Liam McCreery, head of the Canadian Agri-Food Trade Alliance who was in Geneva during the final frantic days of bargaining before the Aug. 1 deal, agrees. “There is a mood among most delegations that there must be cuts in all tariffs.”
Even trade minister Jim Peterson signaled that painful decisions lie ahead. “There’s no doubt the WTO is not going to be a friend of either supply management or the Canadian Wheat Board.”
A year ago, former agriculture minister Lyle Vanclief said Canada was outnumbered 146 to one on the issue.
Yet supply management defenders seem oddly upbeat about the WTO agreement.
It largely is a case of “it could have been worse.”
Until the last day, the text included a line that cuts in over-quota tariffs would be required. The line was dropped and now the issue is at least negotiable.
Supply management defenders insist that removing the explicit requirement for tariff cuts means Canada will be able to avoid them. In truth, the odds of that happening are not good. Years of trying to find allies on the issue have failed.
The goal of the WTO is to reduce tariffs, not protect them. Canada has shown that when backed into a corner, it is not politically prepared to scuttle a WTO deal it thinks will benefit the broader economy. A few years from now, it will face that choice.
The government and most of the farm community fancy themselves part of a world that favours freer trade.
To imagine that means supply management can be isolated from tariff cuts would be to imagine joining a temperance union and convincing the others that a few nips a day for medicinal purposes should not lead to expulsion.
