Harper Panders on Trade

Commentary, Marketing Boards, Rolf Penner

Canadians voted for change in the last election, and in some respects Stephen Harper is delivering it. But in the critical area of trade policy, by sacrificing the interests of most farmers for the benefit of a wealthy few he is repeating the errors of previous Liberal and Conservative governments, mistakes that have bred more regional tension by feeding the alienation of the West.

Voters ought to punish governments who put their own political interests ahead of the economic interests of the nation. This punishment should be more severe when a party puts its own political interests ahead of the people who have supported it for years and are responsible for voting its Members of Parliament into office. Yet this is exactly what Stephen Harper has done at the World Trade Organization (WTO).

The current round of trade negotiations is attempting to liberalize agriculture trade. Until now, farmers have largely been ignored because too many of the large players have powerful protectionist interests to support. In Canada, this protectionist pressure comes from dairy and poultry producers who do not want to see their multi-million dollar quotas diminish.

But protecting these relatively small sectors—they represent less than 10 percent of Canadian farmers—at all costs attacks the economic future of the 90 percent of Canadian farmers who depend on world markets for prices and sales opportunities. This majority is currently experiencing some of the lowest incomes on record, largely a function of the large subsidies and high tariff barriers of our competitors. The current round of WTO negotiations is supposed to reduce them.

Canada is the most trade-dependent developed country in the WTO. As the world’s fourth largest agriculture exporter and a significant player in agriculture trade, we have influence in these negotiations. It is in our economic interest to use this influence to push hard for meaningful trade liberalization. Instead, the political pursuits of the Conservative Party have made Canada the most protectionist country at the negotiating table.

On May 4th, WTO negotiators were on the verge of a consensus on how to reduce trade barriers for sensitive products, while still allowing countries the flexibility to manage their own domestic industries. This agreement would have required at least some reduction in over-quota tariffs. In Canada, they exceed 300 per cent for some dairy products, so it is not surprising that the rest of the world believes some reduction is reasonable. Because our supply management sectors have irrationally demanded that no reductions in over-quota tariffs be tolerated, Canada stood alone against the world and blocked this consensus agreement.

Why did this happen? It occurred because the Conservative Party of Canada believes it needs the votes of Québec and Ontario dairy farmers in order to form a majority government. Never mind that this position is in direct conflict with the economic interests of most Canadian farmers. Never mind that this stance is in direct conflict with the interests of the other sectors of the Canadian economy that depend upon international markets.

Industry sources indicate that the Prime Minister directly approved this negotiating mandate. What are the consequences? Perhaps most importantly, progress in WTO negotiations has slowed down at a time when it is critical that rapid progress be made. Canada’s credibility, and hence our ability to protect our interests in the negotiations, has been virtually eliminated. How can we approach other countries and request flexibility when the Prime Minister has given zero flexibility to our negotiators?

How should a grain farmer in Saskatchewan react to the fact that the Prime Minister has blatantly put their economic interests behind his own political objectives? The last time this happened, voters responded by forming the Reform Party and splitting the country along regional lines. Let’s hope Mr. Harper sees his mistake before they do this again. The next slogan may very well be “The West Wants Out.”

It’s an important issue for every Canadian, even those who are not farmers. The entire round of negotiations is in jeopardy because of the lack of progress in agriculture. This means that gains in additional trade liberalization issues, like non-agriculture market access and better trade rules for services, are held hostage by the lack of movement in agriculture. Those benefits will not occur unless there is progress on resolving the Gordian knot of sensitive products – progress which Canada has just halted.

It’s not just a matter of “dancing with who brung ya to the party.” By pandering to a small, privileged sector, the Prime Minister is hurting all Canadians. The leader of a party who won power on an accountability platform should not have to be reminded of this fact.

This article originally appeared in the Saskatoon Star-Phoenix May 19, 2006.