WTO UPDATE

by Cam Dahl, Executive Director, Grain Growers of Canada

By now many of you will have heard and read that the recent WTO meetings in Cancun, Mexico, ended in failure. This is not accurate.
It is important to note that while the talks did break down, agriculture issues did not generate the impasse. The talks fell apart because of a failure to come to an understanding on the four "other" or "Singapore" issues (Investment, Government Procurement, Trade Facilitation, and Competition), particularly discussions on investment.
It is in the best interest of Canadian farm families that the world reaches an agreement that will liberalize agriculture trade. Grains and oilseed producers must obtain the following three key concessions from our trading partners:
(a) significant increases in market access for grains, oilseed, and their value added products;
(b) the elimination of export subsidies; and
(c) significant reductions in distorting domestic support.

The Grain Growers of Canada (GGC) are disappointed that there was no agreement in Cancun on a framework that would define future agriculture negotiations. However, we are encouraged by the progress that was made during the week of negotiations. The draft agriculture text that emerged at the end of the week was clearly an improvement over the document that was prepared for the beginning of the ministerial meeting. We believe that if adopted, the framework text could allow us to move closer to our goals.
The discussions surrounding trade liberalization are often impassioned. A number of misconceptions have resulted from this level of debate.
One of these misunderstandings is that the framework text would require an end to Canadian income stabilization programs or production insurance. This is incorrect and misleading. The Cancun framework text would still allow Canada to offer these important programs to our farmers. Furthermore, there are provisions within the WTO that specifically allow for programs like production insurance and income stabilization. Moreover, during the negotiations over the last year, recommendations have been brought forward from the WTO that would strengthen and improve these clauses (e.g., allowing for an extended reference margin for production insurance).
The draft framework text does include terms that would significantly corral the ability of the United States to provide product specific support to its grains and oilseed producers, or to expand its trade distorting programs to other areas. You will recall that this was done in the most recent Farm Bill when the Loan Deficiency Program was expanded to cover additional commodities.
Provisions in the text would also make it more difficult for the EU and the US to shift product specific funding from one sector to another from year to year. The US Loan Deficiency Program, which can provide high levels of support to wheat farmers one year and high levels of support to corn farmers the next, is an example of this type of fluidity in program spending. It would be of significant benefit to Canadian grains and oilseed producers if this practice could be curtailed.
We are also very pleased that the draft framework text included provisions that would allow for a better definition of non-trade or production distorting ("green") support programs. This is a key gain for the grains and oilseed sector as many of the programs listed as green by the US or the EU clearly distort production and trade and should be subjected to WTO disciplines.
There were also significant improvements for grains and oilseed producers to the market access portion of the final draft framework agreement coming out of Cancun. In particular was the strengthening of the clause that would require reductions to the gap between tariffs on processed products and tariffs on raw products (tariff escalation). A reduction in tariff escalation would allow for increased value added processing in Canada, putting increased money into the hands of farmers and create more jobs within our rural communities.
We are very disappointed that the draft framework text does not mandate an aggressive program to eliminate export subsidies. The subsidization of exports is one of the most trade distorting practices and has been eliminated from virtually every industry but agriculture. However, even in this case, the final draft framework is an improvement over the text that was on the negotiating table at the beginning of the week, as it specified that a date for the elimination of export subsidies would be subject to negotiations.
We do not want to leave the impression that we are comfortable with all aspects of the draft framework text. We are not. However, the WTO has taken small steps down the road towards this goal of a less distorted world market for agriculture products. The GGC will continue to encourage our government to aggressively build on the progress that was made.
It is for this reason that the GGC continues to fight to have trade made the sixth pillar of the Agriculture Policy Framework (APF).
The GGC fully understands the length of time it will take to reach our goals of more liberalized agriculture trade. We also know that instead of contracting, the subsidy gap between our trade competitors and Canada has continued to grow. The GGC estimates that this subsidy gap costs grains and oilseed farmers at least $1.3 billion each year.
This is why we continue to fight for a Trade Injury Compensation Program that would protect Canadian farm families from the trade and production distorting practices of our competitors. This program should be in place until we reach a meaningful agreement at the WTO. The GGC has pushed for the inclusion of a trade injury program in the APF since the beginning of the discussions on the new program. We note that farmers in the US can access the "Trade Adjustment Assistance Program." This is the right program, but in the wrong country. We continue to fight for this critical, but missing, portion of Canada's farm safety net.
Discussion on international trade often become quite technical in nature and cannot be completely addressed in a short article. The GGC would be happy to answer any questions you have on this very important subject.