Mike Gifford, who once represented Canada in international agricultural trade negotiations, argues that Canada’s poultry and dairy producers could be in for some disruptive shocks as the next round of international trade talks concludes.
The Doha Round of global trade talks [came] to an important juncture in December as trade and agriculture ministers [met] in Hong Kong. Agricultural subsidies have long been a sore point between the United States and Europe, while for Canada the most
politically sensitive issue is supply management in dairy and poultry. Canada's dairy and poultry farmers want supply management maintained at current levels, which subsidize production while slapping prohibitive tariffs on imports. But it is not a very realisitic position for Canada and other countries at the negotiating table. While the general incidence of agricultural export subsidies has declined significantly since the end of the Uruguay Round, trade in dairy products remains heavily distorted by export subsidies. It is clear that the dairy sector will not be excluded from the Doha Round results. It is equally clear that Canada will have to open its market to the same extent as other developed countries . . . the negotiations will conclude by late 2006 or early 2007, with the new rules and reductions in trade barriers starting to be implemented in 2008. While full agreement may not be reached in Hong Kong, it is nevertheless possible to discern the general outline of the likely results in agriculture. Trade in agriculture is the pivot point around which the negotiations will succeed or fail. Many countries, including the United States and the European Union, will face difficult decisions. For Canada, the dairy and poultry sectors are the most difficult because the more successful the negotiations, the greater the adjustment implications for these supply managed sectors, which, in the case of dairy, have been operating under supply controls for almost 40 years.Canada’s dairy and poultry farmers are calling for Canada to walk away from the negotiations unless the current system of supply management can continue largely unchanged. All major political parties support Canada’s supply management system. The dilemma for the government is that Canada cannot walk away from the negotiations, which cover international trade in all goods and services. Moreover, successful negotiations will bring major benefits to Canada’s grain, oilseed, beef, and pork farmers, who depend upon export markets.