Business & Policy
All Things Considered: August 2007
By Jim Knisley
No Cheap Talk Please. It’s time for the politicians to understand that when it comes to the WTO and supply management talk doesn’t come cheap.
As this is written the WTO talks have collapsed again. How long they will remain prone is anybody’s guess. The WTO has so many lives, it rebounds so often for frequently futile talks a cat should feel slighted to have only nine lives.
This time all attention was focused on the so-called G4. India, Brazil, the U.S. and the E.U. were attempting to break the dual impasses of farm subsidies in the rich world and manufacturing and service industry protection among developing nations.
Simply put, the breakdown came because both sides wanted to give up less and get more than the others were offering.
Perhaps, this is the end. But as Yogi Berra said: “It ain’t over until it’s over.” Maybe it ain’t over.
If it isn’t then maybe Canada’s supply managed industries should try adding an extra layer of defence.
To date they’ve done a brilliant job with the politicians. The unanimous motion of the House of Commons supporting supply management and instructing Canada’s negotiators not to bargain it away seems particularly potent given the gyrations in Geneva.
That the negotiators have taken the motion to mean that they can’t negotiate has so far been irritating but not fatal.
If, however, the WTO does manage to cobble together a deal (which the international trade and agriculture ministers say Canada will have to sign) then supply management is – to put it nicely – toast.
There will probably be a phase-in period and perhaps some sensitive product protection, but neither will be close to what is in place now.
Under any conceivable deal Canada would have to offer more tariff-free access, lower tariffs or both.
This would put supply-managed industries under extreme pressure. More imported product would roll in. Markets and production could be constrained and prices could weaken.
None of this would be good for quota values or producers.
There likely isn’t much Canadian producers can do if the WTO rises Lazarus-like and marches to a deal. They probably won’t be able to convince this, or any other, federal government not to sign whatever deal is reached.
So just in case there is a trade deal that is bad for their economic health, producers might consider using their well-honed lobbying skills to convince the governing and opposition parties to support a quota compensation policy.
Such a policy would likely be complicated, technical and contain numbingly complex calculations. In all probability, it would have a provincial as well as federal component, which would make for all kinds of wrangling.
It might even be illegal under the WTO. But that should concern no one because, as they say, it is easier to beg forgiveness than ask permission. It’s a strategy that has worked well for The U.S. and Europe and should be quite effective for Canada.
The bottom line in this whole thing would be to ensure a financial future. To date supply management has done a wonderful job. If supply management disappears then something else would have to replace it and because nothing else springs quickly to mind, that something might as well be government cash.
This whole approach might be considered by some to be defeatist or to open the door to bargaining away supply management. But the government has already indicated that if push comes to shove at the WTO it will fold like a cheap suit.
Perhaps the government would show a little reluctance to signing if it carried a price tag that would cost them, not just dairy and poultry producers. With a big bill at the end of the road they might even try a little harder to convince others that allowing a little bit of supply management might just open the door to deals in other areas.
Why would this government or any other agree to compensate producers if there is an agreement with the WTO?
For the most compelling of reasons. They are politicians and this is a minority government. A few votes here or there could be vital to the government and the opposition parties in any future election.
It would be crass and certainly mercenary to suggest that the supply managed industries, which represent a few votes, and have shown the ability to swing a few others, take advantage of the politics of the moment. But why not?
Make parliamentarians put money where their mouths were when they voted in the House of Commons to support supply management. Making them see the sense of walking the walk and not just talking the talk would be good politics and, more to the point, it would be good for producers.
It’s time for the politicians to understand that when it comes to the WTO and supply management talk doesn’t come cheap. n