June 16, 2005
Who Speaks For Free Trade?
On June 7, 2005, the House of Commons debated supply management, specifically the apparatus of compulsory marketing boards for dairy and poultry production. In a depressing display of consensus, our political representatives fell over each other in their rush to put distance between themselves and World Trade Organization negotiations intended to deal with such barriers. Nobody had the courage to mention that our farm economy depends on exports, and that our protections for these commodities invite retaliation against the whole sector.
Supporters of the Conservative Party of Canada should be doubly depressed. That party’s agriculture critic, Diane Finley, had the temerity to suggest that the government of Canada walk away from the negotiating table if Canada’s prohibitive tariffs on dairy products were touched in any way. Although all parties lack knowledge and understanding of this issue, the Conservative position is most frustrating because they received more votes from rural Canada than any other party. Why have they abandoned farmers? Where are the champions of free trade?
The Conservatives claim to be speaking for producers, but their declarations ring as hollow as their commitment to fiscal responsibility. The price for over 90% of Canada's farm products comes from the world market, where the prices for our export commodities are at historic lows. This is not a consequence of anything our farmers have done. World markets are distorted by government interference. Quite simply, foreign tariff barriers and subsidies are choking the life out of our agricultural sector.
Less than 10% of our farmers are sheltered by the massive tariff walls that prop up supply management and impose higher prices on Canadian consumers. The rest of our farmers need open borders to prosper. All Canadians should care deeply about the problem, since agriculture and agri-food represents almost nine per cent of Canada's gross domestic product and thousands of jobs. These jobs and that important salient of our economy are under attack.
Agriculture Canada's own research shows that European and American subsidies take $1.3 billion out of the pockets of our grain farmers every year. The elimination of tariff barriers for Canadian beef alone could increase our national income by more than $1 billion every year. Tariff barriers have closed India to our canola oil exports. The correction of this problem would give us a market for at least 500,000 tonnes more canola every year and probably more.
These are not just numbers on a page. They represent real dollars and cents for farmers. Were tariffs eliminated, the average wheat producer could see annual cash receipts increase by as much as $27,000. The average grains and oilseeds farmer would benefit by $14,000 a year. That potential, though, depends on the elimination of export subsidies and trade-distorting supports. If the world agreed to substantial trade liberalization, most farmers would profit substantially.
You would think our political leaders ought to fight to level the international trading field and support the nine out of ten of farmers who are trying to get away from government support programs. You would be wrong. Members of Parliament feel it is more important to buy a few votes by protecting excessive Canadian tariff barriers for a few commodities. They should be ashamed of themselves.
It is time for all politicians to do the right thing for the country and support the WTO’s efforts to liberalize trade. Stephen Harper and his caucus should remember that they are Conservatives, who should be able to recall the fundamentally sound reasons for supporting free trade and the benefits that will accrue to all Canadians, including the farm families who voted them into office.
The Frontier Centre for Public Policy
is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."