In trade dispute terms, it doesn’t get much better than last week for a relatively small player like Canada.
An international trade disputes committee presented Ottawa with a clear victory in its longstanding dispute with the United States over Canada’s supply management protective tariffs.
The stakes for Canada and Canadian dairy and poultry farmers were enormous. Thousands of jobs, billions of dollars worth of quota value and farmgate receipts would have been undermined had the panel ruled against Canada’s tariff wall.
Instead, it ruled that Canadian tariffs are legal under international trade law.
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The effect is that unless the panel changes its mind in the next month before the report is final and made public, Washington is powerless – short of the use of raw political power – to help American companies blast their way into Canadian dairy, poultry and egg markets.
Farmers operating in regulated sectors had a weight lifted from their shoulders.
Of course, not everyone in Canada saw it as a victory.
The Toronto Globe and Mail raged that it was a victory for protectionism and against consumers.
The Consumers Association of Canada, long a critic of supply management, complained the victory protected those who should not be protected.
Some economists likely gritted their teeth at the thought they will still have marketing boards to kick around.
But even critics of the system had to concede the point. Canada’s trade position had been vindicated.
The effort was remarkable on another front as well. For once, federal and provincial governments set aside their squabbling to co-operate in a common effort and present a united face.
The result was that by relying on the trade rule of law, Canada had managed to withstand a fierce assault from the world’s most powerful nation.
All of which led University of Guelph agricultural economist Larry Martin to wonder about the political implications of the victory south of the 49th Parallel.
He noted the Americans have been losing a few key trade disputes of late.
U.S. isolationists, critical of trade deals that bind America to rules that others help write, will be loudly proclaiming that the supply management ruling is just the latest assault on American sovereignty.
“I think we are going to see some real and growing tension between the isolationists and the trade deals,” said Martin. “I think the Yanks are going to be drawn into a debate about whether they want to be part of the world trading system or not.”
Do they have a choice?
The isolationists will say yes. They argue the U.S. is big enough to get its way without playing by someone else’s rules.
They likely will argue that America should begin to throw its weight around with Canada to accomplish what it could not accomplish through the trade court.
Do you Canadians still want to sell your lumber, cars and wheat down here? Then maybe you’d better give us access to your dairy and poultry markets, whatever those sissy rules say.
Let’s talk! Or else!
Now that would be scary.
