US Agricultural Policy and the WTO: A View From Canada Karl Meilke, Professor Agricultural Economics

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US Agricultural Policy and the WTO A View From
CanadaKarl Meilke, ProfessorAgricultural
Economics and BusinessUniversity of GuelphThe
Agricultural Forum 2002Ames, IowaMarch 1, 2002
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Canada is More Trade Dependent Than the United
States
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Including Agri-Food Products
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Canada is More Dependent on Trade Rules Than the
U.S.

• Mid-Sized Economy
• Gain from Specialization Need Access to Inputs
• No Bully Power
• CUSFTA
• NAFTA
• WTO

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How Far and How Fast?
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Border Protection for Agricultural Products
Remains Very High

• Border Protection for Agricultural Goods is About
  15 Times Higher than for Manufactured Goods
• Protection in Most Developed Countries
• A large number of nuisance tariffs (under 10)
• A few MegaTariffs (over 100)
• Protection in Most Developing Countries
• Higher and more uniform than in developed
  countries

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Tariffs Average 62 Percent Across Regions
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Tariffs Are High for All Commodity Groups
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Canada and the United States Have Many Common
Goals in the WTO Negotiations

• Eliminate Export Subsidies
• Lower Tariffs, Tariff Dispersion and Tariff
  Escalation
• Increase Minimum Access Commitments
• Allow Sectoral Agreements
• Keep Sanitary and Phyto-Sanitary Rules Science
  Based
• Non-Trade Concerns do not Require Border Measures

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Both Countries Have the Rice Pudding Problem
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Canada Has Concerns with US Domestic and Trade
Policy

• Rise in Level of Support for Grains and Oilseeds
• Exempt vs. Non-Exempt Support
• Trade distorting support
• Non-trade distorting support

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Over-All Support
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Wheat Support
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Corn Support
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Oilseed Support
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Ontario Corn Producers

• We need programs specifically designed to
  address GO producer needs resulting from
  targeted U.S. subsidies 95 of US direct
  payments go to their GO farmers
• Analysis shows these subsidies cost Canadian GO
  producers about 1.2 billion per year.

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Canada Has Concerns with US Domestic and Trade
Policy

• Use of Trade Remedy Laws
• Greenhouse tomatoes
• Beef
• Wheat
• State Trading Enterprises
• Canadian Wheat Board
• WTO Dairy Dispute

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US Must Abide by Its WTO Commitments

• US Must Provide Leadership for a Successful
  Conclusion to the Round
• US Has to be Careful not to Export Bad Policy

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Concerns of Developing Countries Must be Addressed

• Open, Fair, Rules-Based, Transparent Trading
  System
• Protection from Export Embargoes and Export Taxes
• Assurance that SPS Will Not Be Used to Impede
  their Exports
• Assistance to Develop Infrastructure Required to
  Export
• Assurance that Environmental and Labor Stds will
  not be used to blunt their comparative advantage
• Open our Agriculture and Textile markets

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Developing Countries Must Also Agree to
Participate in the Liberalization Exercise

• Agree to Liberalize their Own Markets
• Pursue Non-trade Concerns Using Non-border
  (domestic) Instruments

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It Will be Easy to Get Distracted