Protective instincts bad in trade terms - WP editorial

THE LONG march toward liberalized global trade is stumbling a bit as governments around the world try to revive their swooning economies.

While trade rules might present troublesome restrictions on Canada’s ability to support industry, generally free and fair trade is a boon to this country and the government must employ the full weight of its diplomatic forces to discourage growing protectionism.

The most obvious case is the Buy American provision in the United States’ stimulus package design to ensure that only American companies get the full benefit from billions in infrastructure spending.

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But Russia is also engaging in protectionism, making sure that only Russian-made agricultural equipment benefits from government supported financing.

There are other examples of creeping protectionism.

Because Canada’s economy is closely entwined with the U.S., the Buy American movement is a particular concern. Such restrictions naturally encourage a tit for tat response, such as the recent call by Canadian municipalities to bar Americans from bidding on infrastructure projects here.

A similar cycle of restrictions and retaliations during the Great Depression collapsed trade, extending the misery for years.

This is important to Canadian farmers because they benefit from a climate that welcomes trade.

More than half of the canola produced and almost two-thirds of the wheat is exported. About a third of the beef we produce is exported, as is 55 percent of our pork. When you add in the number of animals shipped out of the country, the export dependency of the livestock industry is clear.

It is distressing to see the beating that Canada’s hog producers are taking, partly because of trade impediments like U.S. country-of-origin labelling and import bans tied to groundless worries about H1N1 flu. It is equally frustrating to hear that Ottawa won’t consider a per head payment because it would trigger trade challenges.

Once again Canada is playing by the rules when others aren’t. In January the European Union responded to low dairy prices by reintroducing export refunds on dairy products. This prompted United States to bring in its own dairy export subsidies in retaliation.

These measures might not directly violate World Trade Organization rules, but they are “murky protectionism” as Brazil chided, speaking on behalf of a bloc of 23 developing countries in the WTO.

Luckily this steady drip of protectionism is reviving those who stand against it.

The Cairns Group of trading countries, of which Canada is a member, met recently and called for an immediate revival of the Doha Round of WTO talks. The United States endorsed the call and has been working with India to find a solution to developing country concerns that crashed the talks last July.

Another positive move was the full court press that Canadian diplomats launched in Washington last week where 75 members of Congress were lobbied with facts on how the benefits of free trade flow both ways.

The Canadian government must continue to use its full diplomatic weight to press for free trade with the United States and in the wider world.

Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.