January 2007 - Monthly Trade Commentary

The new year of trade has brought attention to trade actions and further uncertainty of where the WTO negotiations are going.  Both issues can have serious impacts on Canadian agriculture and more directly primary producers.

On January 8th, the Canadian government requested consultations with the United States at the WTO and brought up three serious claims against American programs.  The first claim was that current corn subsidies given to U.S. producers are inconsistent with the Agreement on Agriculture and that, “These measures cause adverse effects in the form of serious prejudice and threat of serious prejudice to the interests of Canada.”  The second claim centres on the area of export subsidies given to the corn industry where the U.S. makes available to its exporters premium rates and other terms more favourable than those which the market would otherwise provide.  The last claim states that the U.S. has misrepresented the classification of certain programs and as a result they have exceeded their level of allowable support.  The first meeting between the two countries is scheduled to on February 8th.  If consultations do not yield a positive result Canada can request a WTO panel where the European Union, Argentina, Brazil, Guatemala and Australia have publicly indicated that would be willing to join Canada on the panel.
 
Doha Round negotiations at the WTO seem to be going no where fast.  The Davos mini-ministerial meeting has resulted in more talk and little to no progress.  Deadlines continue to be made, passed and then re-made.  The deadline for a substantive agreement was March, 2007 however as we approach March the word is that the “new” deadline is June/July (although no formal deadline has been made).  A lot rests on the American Farm Bill discussion and what level of reduction of domestic support will be allowed by the U.S. Congress.  This being said, if there is no substantive agreement between countries at the WTO it seems unlikely that the U.S. Congress will extend their Trade Promotion Authority (TPA).  Either way it sounds a lot like the chicken and the egg discussion and we may enter into another round of circular discussions!

Clinton Monchuk