Trade deal failure a lost opportunity - WP editorial

The collapse of the World Trade Organization talks is troubling, a lost opportunity that will be difficult to revive.

Canada’s supply management sector may heave a sigh of relief, but ultimately the deal’s collapse is not good news for Canada, a nation whose economy, notably agriculture, is based on trade.

The tipping point was India’s demand for the right to use special tariffs to protect poor farmers threatened when there is a surge in imports or a collapse in prices. The U.S. and others accepted the concept, but said the threshold to trigger tariffs was too low, opening the door to misuse.

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But they are not alone in blame for the breakdown.

This round never seemed to have the full commitment of most countries. The adjustments forced on populations by globalization have made many suspicious of and some hostile to trade liberalization. Politicians had to tread carefully to avoid a voter backlash.

Also, the round was more complicated than previous talks, involving more countries and tackling more difficult issues.

This was to be the development round, designed to help poor countries build their economies.

China, India and Brazil, all with rapidly growing economies, became major players, demanding that developed countries make deep cuts to agricultural subsidies.

But they argued they should not have to offer much in return because they have a special duty to protect poor peasant farmers.

The final nine-day push created an impasse, but it should not be allowed to end there. WTO chief Pascal Lamy said the parties had agreed on 80 to 85 percent of an outline deal and pledged to try to revive the talks.

The longer the stalemate drags on, the harder it will be to regain momentum and retain commitments like the American offer to cap farm subsidies at $15 billion US, down from $48 billion under current WTO rules. The European Union also offered deep subsidy cuts.

A timely resumption of talks is advisable to head off the rising protectionist sentiments that often accompany economic downturns.

The world’s economy is slowing, bogged down by rising energy and commodity costs and the debt crisis in the United States.

Also, if a Democrat is elected to the White House this fall, there will likely be less interest in trade liberalization in Washington. It is the same situation in Europe, where protectionist France is set to assume the rotating presidency of the EU.

It won’t be easy to get the talks back on track, but it is in Canada’s interest to revive them.

Half of what Canada manufactures is exported, and a fifth of jobs here are directly linked to international trade.

More than 90 percent of Canadian farmers export their products or sell them domestically at prices set by international marketplaces.

A study by the George Morris Centre in Guelph, Ont., concluded that a WTO agreement would increase the value of Canada’s grain, oilseed, livestock and meat exports by $3 billion dollars to $11 billion annually.

International trade minister Michael Fortier has said Canada will renew its pursuit of country-to-country trade agreements but such deals can’t force the Americans and Europeans to cut their agricultural subsidies and are not an alternative to a multilateral agreement.

While trade is immensely important to Canada, particularly for the agricultural sector, its voice has been muted.

In Geneva the main negotiators were the United States, European Union, Japan, India, Brazil, Australia and China. Canada appeared very much part of the second tier.

Canada’s ability to influence is impeded by its two-sided position of wanting liberalization for grain and livestock, but continued protection for the supply managed sector.

As agriculture minister Gerry Ritz noted, every country has something for which it seeks special consideration.

But at some point Canada must decide what to put on the table to help get a deal, if it wants to have a significant role in the negotiations.

The government’s pledge that it will accept no weakening of supply management ties its hands and forces it to the sidelines.

And it is a dishonest pledge. Any final deal will certainly reduce the tariffs that protect Canada’s dairy, poultry and egg sectors and it is equally certain that Canada would not kill the deal by denying the needed unanimity to bring it into effect.

It would be more honest, and enhance its negotiating powers, if the government said it would work to maintain protection for supply management, but it would not let that stand in the way of doing what is necessary to get a deal.

That stance must be accompanied by a pledge to help the sector adjust to the new trade agreement.

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