Make no mistake, if there is a WTO agreement that offers up supply management like a slab of meat ready for roasting the federal government will with great reluctance light the fire.
Make no mistake, if there is a WTO agreement that offers up supply management like a slab of meat ready for roasting the federal government will with great reluctance light the fire.
This may be why many provincial annual meetings featured discussions on what happened in Australia, life after supply management and various transition possibilities.
Rightly or wrongly, I still hold the position that Canada doesn’t matter much at the WTO talks and that supply management is virtually irrelevant in the worldwide scheme of things. If the talks collapse it won’t be because of supply management and Canada. If they go forward it won’t be because countries around the world decided to ensure that supply management disappears. We simply aren’t that important.
If the talks collapse or drag on into the next decade it will be because the Chinese, Indians, Russians, Europeans, South Americans and the U.S. can’t find common ground.
And even if they do find common ground getting any deal through what is looking to be a more protectionist U.S. Senate and signed by a more protectionist U.S. president is going to be difficult. This will be particularly true if the Democrats, who are sounding more and more skeptical about the benefits of free trade and prefer to talk about fair trade, end up with more than 60 seats in the 100-seat Senate. That type of majority would allow them to override any opposition and carry out a line by line review of a WTO deal and push through a host of amendments. They would also have enough votes to override any presidential veto.
In the presidential race it is likely that McCain or Clinton would be more receptive to a WTO deal than Obama.
There is also the current U.S. farm bill. If anyone up here hasn’t noticed it is an absolute monster. Spending is pegged at $268 billion over the five years from 2008 to 2013 and that doesn’t include some other indirect subsidies – like ethanol subsidies – that also boost some crop prices.
It also doesn’t include COOL (country of origin labelling), which is set to take effect later this year and could become a major problem for Canadians and others who supply the U.S. market.
Both the new farm bill and COOL are pretty dubious even under existing WTO rules let alone the tougher ones being proposed. If the Senate and the House of Representatives find their way to agreement on the farm bill and if they allow COOL to take effect I don’t see them tossing out those politically popular babies to sign a politically unpopular WTO agreement.
There is also a wild card out there that the WTO has so far been able to pretty much ignore – the environment. But this can’t and won’t last.
Europe is already moving to restrict the importation of some vegetable oils used in the production of biodiesel. The reason is that in the entire life cycle of the vegetable oils (fertilization, transportation, processing etc.) they add more CO2 to the atmosphere than they save by replacing regular diesel.
Meanwhile, Europe and elsewhere are adopting stringent environmental policies that carry an economic cost while the U.S., China, Canada and others propose to do next to nothing in the near term and very little over the long term.
This is even unacceptable to some U.S. states like California and New York, some provinces like British Columbia and is certain to grow as an issue. At some point regions with strict environmental measures are going to support their industries with subsidies or trade barriers or likely both. When they do, life at the WTO will become even more interesting.
Bottom line, the marketing boards are doing the right thing in warning producers about the potential impact of a WTO deal. They are doing the right thing in laying the groundwork for possible policy options if a deal does go through.
They are also doing the right thing because despite the very vocal support of supply management by all the major political parties, I suspect all of them would sign any WTO deal and then ask for forgiveness.
I just don’t see any deal being reached and ratified this year or even next year. That moves us to 2010 when the environment and energy policy will loom even larger worldwide, some crucial European elections will be held and there will be U.S. mid-term elections.
By that point it’s possible just about everyone will have forgotten about the WTO and will be increasingly focused on binational or regional trade deals. That would raise a whole host of other problems and give everyone something else to worry about.
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