Strategy needs work before WTO talks re-engage - Opinion

BEFORE the perennial trade optimists get so deeply into their propaganda that they begin to convince ordinary folks that 2007 will be The Year of the World Trade Breakthrough, it would be wise to inject a little cautious common sense.

World Trade Organization talks are far from a substantive relaunch because the major players have not moved a millimetre since negotiations were suspended last July.

The United States, with protectionist Democrats now in charge on Capitol Hill and a new subsidizing farm bill in the works, appears in no hurry to announce new concessions.

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And in Canada, the most important trade policy in years (if you set aside trade minister David Emerson’s speculations about needing a trade strategy that is less driven by protectionist sectors) is the government decision to challenge American farm subsidies under existing WTO rules.

It is a bold decision that follows years of excuses from Liberal governments and trade bureaucrats that American subsidies may be production or trade distorting but we dare not challenge them in case we make them angry.

Critics were scornful. Many farm leaders were dismayed that Canada seemed so unwilling to use the few tools available to fight what they consider price-depressing U.S. subsidies.

None of these are particularly optimistic signs about a rebirth in Geneva.

Still, a new calendar year has started and as inevitable as Orthodox Christmas and the launch of the Chinese New Year are the rumours that something is happening at WTO talks.

Really, speculators say, background talks have been underway and expect breakthroughs when world leaders gather in late January at Davos, Switzerland, to talk about economics and trade.

Really, say the Geneva background talkers, the groundwork is being laid for a resumption of WTO negotiations that were suspended in July 2006. There are reports the European Union is preparing to offer concessions on market access.

New Zealand is circulating a text that would see sharp cuts in allowable domestic support and a cut of at least 30 percent in high over-quota tariffs that protect such sensitive industries as Canada’s dairy and poultry sectors.

Maybe, say the optimists, there is a chance to make enough progress that the American Congress will agree before mid-year to extend the so-called “fast track” trade negotiating authority, allowing the administration to fully engage in WTO negotiations without congressional oversight over every clause.

Last week, Montana Democratic senator and new Senate finance committee chair Max Baucus issued a reality check. Any American WTO re-engagement will require upfront concessions from others, undoubtedly including Canada.

“American farmers and ranchers don’t need more rumours,” he said in Washington. “What they need is meaningful proposals that yield significant market access to increased agricultural markets.”

And that really is the rub for Canada.

If all major players are expected to make upfront concessions in their long-fixed positions simply to get talks going again, what part of the “balanced position” is Canada willing to abandon?

It is a question farm leaders must weigh before pressing Ottawa to be a more aggressive WTO player.