By Brian Doidge, Market Analyst, Ridgetown College/University of Guelph December 8, 1999U.S. and WORLD:
WTO negotiations ended in Seattle with no progress, even on such a basic thing as agreeing on an agenda outlining what is “on” or “off” the table. The U.S. wants a narrowly defined agenda, where discussions are limited to continuing trade liberalization started under the Uruguay Round in a core agenda of agriculture, industrial tariffs, and services. Additionally, the U.S. wants to add monitoring of environmental impacts of any trade deals, and a working group to assess the links between trade and labour laws. This last item, designed to impose sanctions on what organized labour in America sees as foreign “sweat-shop” competition, is a Democratic sop to American unions. The U.S. itself does not abide by all core labour rights as defined by the International Labour Organization. Developing nations oppose including labour rights in discussions; they view this as a disguise for developed-nation protectionism.
The Europeans agree with the U.S. on labour rights (of course), but oppose the U.S. on all other items. Europe wants a broader agenda for discussions including investment and competition policy (which the U.S. opposes as a threat to its historic use of unilateral prerogatives), but is very reluctant to discuss further liberalization of agriculture. If pressed on agriculture, Europe wants to add discussion of export credit programs, and also wants a new category of permissible subsidization it calls “multifunctionality.” This term is meant to permit subsidies paid to producers for their role in things other than agricultural production. This might include such government policy initiatives as environmental stewardship, food safety, tourism (i.e., in Norway and Switzerland among other European nations, producers are supported to maintain small, rustic, “picturesque” life-style houses and farms for their tourism value), animal welfare, maintenance of the rural population to restrain movement to urban centres, etc. The U.S. views this as a cover for EU agricultural protectionism, but was prepared to discuss it. However, the Cairns Group – of which Canada is a member – is opposed to multifunctionality subsidies.
Canada’s stance on multifunctionality subsidies is a mystery to me. I do not recall Ontario grain and oilseed groups ever being consulted by the federal government on whether Canada should be opposed to producers receiving a stipend for these other functions. I suspect many cash crop farmers in Ontario might appreciate additional support in whatever guise. After all, a recent OECD report estimates support per farmer (in U.S. dollars, in 1998) was approximately:
Norway
$33,500
Switzerland
$33,100
Japan
$20,200
EU
$19,500
U.S.
$19,400
Canada
$7,500
Australia
$3,000
(Source: The Economist, November 27, 1999)
This same November issue of the Economist magazine contains an unusually clear assessment of trade negotiating positions relating to income support and genetically enhanced crops. “Optimists point out that the looming expiry (at the end of 2003) of the “peace clause,” a moratorium on challenging many illegal farm-support programs at the WTO may spur the EU to make further concessions. Perhaps. But by then the EU may have found a new way to keep out American farm products: health scares.
American farmers are rapidly switching to genetically modified (GM) crops. But European consumers are paranoid about their dangers. That is convenient for uncompetitive European farmers. The EU wants WTO rules to give greater weight to the “precautionary principle,” which would allow countries to restrict imports until GM technology could be shown to be safe. But America insists that the burden of proof must lie with those who want to ban it.
Canada, Japan, and Australia are pushing for a working group on biotechnology to examine how WTO rules apply to GM products. America broadly supports their proposal, but is also considering taking the EU to the WTO over its sluggish and opaque GM-product licensing scheme.” It is enlightening to note that in Seattle, this working group proposal had a very short life when the U.S. realized the EU wanted to limit its scope to a focus on consumer and environmental issues and not include discussion on genetically enhanced crop issues or food safety science at all. I suggest this illustrates that in reality the EU stance on genetically enhanced crops is driven by trade and economics (i.e., a new form of non-tariff trade barrier) more than by bona fide scientific or consumer concerns.
