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Canada Must Be Cautious In Trade Talks

Canada has good reasons to be leery of the outcome of the negotiations for a new world trade agreement, says veteran trade observer Peter Clark.

“We bought and paid for in the Uruguay round better behaviour by other countries on their subsidies,” he told the Commons agriculture committee June 2. “It hasn’t been delivered. We’re in the risk of paying for the same fish twice.”

The bottom line in the protracted WTO negotiations is about protecting subsidies, he added. “There are subsidies in Europe; there are subsidies in the United States. They’re not going to go away. There are still very, very heavy subsidies to the grains and oilseeds sectors in the United States and Europe and these subsidies, in turn, promote the competitiveness of the livestock and poultry industries, the dairy industries in those countries.”

Proposals for a new trade agreement would threaten the Canadian supply management marketing boards while offering little benefit to pork and beef exporters, he said. “We are in a race for the bottom, except Canada is not in the race. We don’t have the money. We have never really dealt with export subsidies in that way and we do have serious problems.”

What Canada needs instead is “a more focused, more aggressive and more farmer-friendly farm policy. … (what’s) inhibiting a more competitive agricultural sector in Canada are: a lack of free and open markets internationally; the pervasive and extensive use of subsidies by the United States, the EU and other countries, but primarily those two; excessive interference in the market due to sanitary and phytosanitary concerns which are not based in science; the disparity in size and market power between farmers and ranchers and their suppliers and customers; and frustration with the apparently contradictory goals of competition policy in Canada.”

The Competition Bureau works on the basis of ensuring “competitiveness in our marketplace and, on the other hand, not applying the rules so tightly that the large players in essentially a rather small market are not prevented from competing internationally with much bigger players.”

The result is that farmers end up like a slice of ham in a sandwich that gets squeezed from both sides because they generally have limited choice in suppliers and customers, he says. “The disadvantages in dealing with these customers can be reduced by joint selling activities such as exist in supply-managed sectors and where there are government-mandated marketing boards.

“As for suppliers, it’s more difficult to cope with that because rationalization within North America in particular has led to consolidation which has reduced competition and that goes right across the board,” he adds. “For many farmers, this lack of competition on both ends will reduce their gross margins and incomes.”

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