IT IS AN enduring and endearing Canadian self-perception that when it comes to living by the trade rules we agree to, Canada is a boy scout and our competitors are scoundrels able to find ways around the rules to take advantage of the Canadian innocents abroad.
It has been a particular cause of veteran Liberal MP Wayne Easter, who regularly complains that while Canada tempers farmer support programs to meet trade obligations, competitors ignore their obligations.
Last week, Easter used an appearance at the House of Commons agriculture committee by chief agriculture trade negotiator Steve Verheul to renew his complaint of Canadian goody-two-shoes behaviour, this time around how we have implemented 1993 rules that dictate how supply management markets should be opened to import competition.
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The 1993 General Agreement on Tariffs and Trade suggested that sensitive product protections be tempered by opening at least five percent of the domestic market to imports in a tariff rate quota.
In current WTO talks, Canada is under enormous pressure to increase its tariff rate quota import level.
“In the previous rounds, the U.S. made certain agreements, Europe made certain agreements and Canada made certain agreements,” said Easter. “We as a country have basically always lived up to our obligations in terms of allowing imports. Other countries have not, especially the U.S.”
Verheul’s answer was not Easter friendly.
“I think there has been a misconception,” he said. “While the U.S. and Europe were quite creative in putting together their obligations, no one was more creative than we were. We didn’t follow the exact guidelines any more than our trading partners did. In fact, we have several tariff quotas in which we provide zero access, far lower than five percent.”
Mother of God, are we rogue boy scouts, sipping from the protectionist flask behind the club house?
Then it got worse as Bloc Québécois MP Eve-Mary Thai Thi Lac wondered why Canada’s supply management rules are a target at WTO, since we do not export and therefore are not trade distorting.
This too is part of the Canadian self-perception. If we are not exporting and distorting foreign markets, we are not trade-distorters. Myth-buster Verheul waded in.
Actually, most of the world considers any system that creates and sustains domestic prices higher than world prices to be a distorter, he said. While supply management does not export, “others do have a great interest in our market and accessing our market and that’s where we’re facing the pressure.”
Verheul’s coup-de-grace was his explanation of why Canada is isolated at WTO, one against 151 on supply management.
All other countries have moved or are moving from production quotas and import controls to direct producer payments that they devise to be trade and production neutral under WTO rules. It means they have nothing to gain by supporting Canada as the last holdout for farmer protection through high tariffs, production controls and price setting. The world has moved on.
It is a tough message for Canadian supply managed farmers.
But Verheul’s decision to offer uncomfortable truths should make for a more informed debate.
