Canadian Interests Divided at Global Trade Talks

Media Appearances, Marketing Boards, Frontier Centre

A dispute pitting the U.S. against emerging economic powerhouses China and India is threatening to crush hopes of a last-ditch deal here to boost global trade and help developing countries enjoy its benefits.

European Union Trade Commissioner Peter Mandelson sided with the Americans, saying the seven-year Doha round of trade talks faces the “appalling” risk of failure if the two countries fail to open up their agriculture sectors to greater international competition.

“If they do not stretch a bit further, if they do not show that flexibility, if they do not demonstrate the will to compromise . . . then I’m afraid then the deal will go down,” Mandelson told reporters.

“It’s an appalling a prospect as that.”

But both India and China say they U.S. is making excessive demands that threaten small subsistence farmers.

“The U.S. is looking at enhancing its commercial interests, whereas I am looking at protecting the livelihood of farmers,” said Indian Commerce Minister Kamal Nath.

Ministers from 35 key trading countries are attempting to finalize a deal, and conclude a process that began in Doha, Quatar, in 2001. But the deal will still have to be ratified by all 153 member nations of the World Trade Organization (WTO) to take effect.

One of them is Canadian Trade Minister Michael Fortier, who despite representing one of the world’s top agriculture exporters, has taken a low profile at the talks. He has been unavailable for an interview with Canwest News Service since Sunday.

The Canadian government faces deeply-divided interest groups applying pressure here at the WTO’s headquarters.

The Canadian Agri-Food Trade Alliance (CAFTA) – representing export-oriented sectors primarily in Western Canada that are anxious to open up markets for products like Canadian beef – has criticized Ottawa’s negotiating stance.

The group says the federal government, by trying to protect the dairy, poultry and egg farmers with tariffs exceeding 200 per cent, is hurting Canada’s broader interest in bringing down trade barriers in key export markets.

“Canadian officials may be undertaking joint efforts with Japan and others to provide a means to expand sensitive product coverage,” CAFTA warned last week in a news release.

“If successful, such efforts may undermine access to very important markets for Canadian products – beef and pork in particular. Furthermore, efforts by any single country to seek special concessions will undoubtedly lead to demands by others to seek more trade distorting protection.”

CAFTA said more than 90 per cent of Canadian farm families are in the export- oriented sector that would benefit from lower tariff and non-tariff barriers.

But the heavily-protected Canadian milk, egg and poultry farmers, located mostly in Ontario and Quebec, say even the modest proposed tariff cuts being advanced here in one draft proposal spell disaster.

“For the supply-managed commodities it’s a real bad deal,” Jacques Laforge, chairman of the Dairy Farmers of Canada, told Canwest News Service Monday.

“If the text stays the way it is then our estimate for dairy is a billion- dollar loss. That’s the equivalent of $70,000 for the average farm.”

The Quebec-based Union des producteurs agricoles (UPA) has also denounced the proposed deal, and last week asked Canada to reject it.

“The Canadian government has formally pledged that it would not sign any agreement jeopardizing Canadian agricultural products under supply management, ” said UPA president Christian Lacasse.

“It must honour that pledge, walk the talk and clearly indicate to its commercial partners that the draft agreement is unacceptable in its present form.”

Laforge said the federal government has to weigh the certain losses he predicts in the dairy sector against only potential gains for the export- oriented farmers.

“Is what is on the table is a real positive gain for Canada’s export commodities, or are they just opportunities?” he said.

“You still have to go get the market and there are a lot of competitors out there. But for us if we ever give something in this process it’s a clear loss.”

He said the average tariff in the dairy sector would drop from 275 per cent to 200 per cent. He argued that the high Canadian dollar, and direct and indirect subsidies for foreign competitors, will guarantee that the 200-per- cent barrier will easily be breached.

Peter Holle, of the Western Canada-based Frontier Centre for Public Policy, argued in the Saskatoon StarPhoenix newspaper last week that successive Canadian governments have been driven by misguided protectionism.

He said a successful WTO agreement that opens up markets could generate billions of dollars in new wealth that would certainly trickle down to Canada, among the world’s top five exporters of agriculture products.

“Bad politics has trumped good policies,” he wrote.

“The very effective lobbying by the few farmers opposed to reform – remember, less than 10 per cent of Canadian farmers are in supply management – has moved the government to profess a position that is bad for Canadian agriculture as a whole, bad for the Canadian manufacturing sector and bad for Canadian consumers.”

Saskatchewan Agriculture Minister Bob Bjornerud told reporters last week he’s concerned that Canada’s refusal to make concessions on supply management could hurt western Canadian interests.

Agriculture ministers from B.C. and the three Prairie provinces issued a joint statement saying Canada benefits from “a strong, rules-based world trading system.”

Failure to reach agreement will result on worsening “trade distortion and protectionism,” according to the four ministers.

“It’s not a deal stopper, but I don’t think it certainly helps our cause,” Bjornerud said of the pressure put on Canadian negotiators by the dairy, poultry and egg producers.

Farm groups in Western Canada, meanwhile, are divided over the Canadian Wheat Board’s monopoly on foreign sales of western wheat and barley.

The Western Canadian Wheat Growers Association has advocated an end to the monopoly if it leads to deeper cuts to farm subsidies in the U.S. and Europe, a position endorsed by the Alberta and Saskatchewan governments. But Manitoba supports the CWB’s powers.