Joe Glauber confirmed what many Canadian farmers believed during the Doha Round of World Trade Organization (WTO) talks from 2001 to 2008: the Americans were promoting farm subsidy cuts, while increasing their own.
In 2001 the United States spent $10 billion in market loans to offset low prices for U.S. wheat, corn and soybeans, Glauber, USDA’s former chief economist and now senior research fellow at the International Food Policy Research Institute in Washington, D.C. said at Fields on Wheels in Winnipeg Oct. 21.
“I think it caused a real conundrum,” Glauber said.
Canada has been accused of hypocrisy too, for promoting market access except for supply-managed products chicken, turkey and dairy.
Although trade liberalization is meeting resistance, Glauber expects it will become more popular again putting more pressure on supply management.
“It is hard to maintain supply management control if you start giving concessions,” Glauber said. “The only way to maintain those things is to keep a really high tariff wall at the border that gets harder and harder and harder. That said, I thought the U.S. sugar program (which restricts sugar imports) would be reformed by the time NAFTA was fully implemented and they found a way to renegotiate that with a nice side agreement. We just have to think over the long run that those would get undermined by market access. To me, the real tragedy is they hold us hostage.”
The results are agreements such as the Trans-Pacific Partnership that carve out certain products.
Domestic politics influences trade deals, he added. Dairy production is also sensitive in the U.S.
“You’ve got cows everywhere. But our dairy industry certainly now realizes it can export.”
While past WTO agreements helped decouple domestic farm subsidies from farm production (considered the most distorting), they are on the rise in developing countries, Glauber said.
“India and China have big domestic support programs with pretty much blank cheques to create some fairly large domestic support programs,” he said. “I really think that they’ll have to be addressed at some time.”
If they aren’t, surplus grain stocks are the likely result. Then they’ll be dumped on world markets or sold with the help of export subsidies, Glauber said. Either way means lower world prices.
While China has cut its corn production subsidy, similar support still exists for wheat and rice, he said.
Farm subsidies are also increasing in crop insurance programs, Glauber said. China has the second-largest crop insurance program in the world and 80 per cent of premiums are subsidized, he said.
“These programs are growing exponentially around the world and most aren’t yet reported,” he said. “China does not report this to the WTO at all.
“This is a big program all of a sudden. There are a lot of people concerned about, at a certain level of subsidy, what the impact on production might be. And I think most of this is coming in under the radar. I think there is a lot of reason for the WTO to be dealing with domestic support.”