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The Rural Voice, 1989-12, Page 121 1 treleaven's Iucknow feed mill limited 6y .vtift y ;7* ', k 8 ± �]` „Tit LI iff > VO LINE AND SUPPLIES COMPLETE OF ANIMAL FEED VETERINARY HOG — BROILER — LAYER TURKEY — BEEF — DAIRY VEAL — FISH — PET FOODS call LUCKNOW 519-528-3000 or 1-800-265-3006 10 THE RURAL VOICE COUNTERVAIL AND PORK PRODUCTION Adrian Vos, from Huron County, has contributed to The Rural Voice since its inception in 1975. The depression of the 1930s was caused mainly by protectionism. To protect jobs, a country imposed import tariffs. The predictable result was retaliatory tariffs by its trading partner. Before long, trade declined drastically and the fat was in the fire. After the last world war, a group of advanced nations, among them Can- ada, made a General Agreement on Tariffs and Trade (GATT) to prevent as much as possible a recurrence of the trade doldrums of the '30s. Almost 100 nations have since joined this agreement. Its main aim is to have an open trade climate with as few barriers as possible. It has worked well but, as with everything conceived by men, it has its strong points and its weaknesses. One part of the agreement allows a country to counteract another's gov- ernment subsidies with a countervail tariff if those subsidies hurt its domes- tic industry. In tum, if the exporting country believes the countervailing duty is un- just, it can protest to a GATT commit- tee and, failing that, to the plenary assembly of the GATT countries. This is happening with the dispute about pork subsidies. The U.S. has slapped on a duty of about eight dollars a hog to counteract Canadian government subsidies. At the same time, it disregarded its own subsidies which are also, according to GATT figures, eight dollars a head. Canada is protesting on two fronts, the GATT and the Free Trade Agree- ment (FTA). The lacer may drag on for another six years, as neither party to the FTA has yet agreed which subsidies are reasonable. Pork producers' only customers, the packers, are in a quandary. At present there is a countervail duty on fresh pork based on the previous half year. When that period expires, the U.S. will decide on a new level which will be retroactive and based on the present half year. No one knows what that duty will be. Packers, responsible as they are to their shareholders, can- not bet on such uncertainties. What is certain is that the next duty will be considerably higher than the present one. This is because tripartite payments have been extremely high. The Americans base their countervail on two-thirds of tripartite payments, because our governments pay two- thirds of the premium. Packers have told the Canadian Pork Council (CPC), which represents all of Canada's pork producers, that they will stop exporting fresh pork unless they get help from producers. Every economist in the country agrees that the loss of the U.S. pork market (30 per cent of Canadian production) would result in a price drop of between $10 and $12 a hog. The CPC has agreed to establish a fund to reimburse packers at $2 a hog if the expected happens. If not, farmers will get their money back. The CPC figures that not to make an investment of $2 for a return of $10 would be foolhardy. It makes so much sense that the attitude of Huron pork producers, who voted to oppose the fund, defies logic. It is easy to see why Ross Small, the OPPMB director from Wellington County, opposed the scheme. He figures that the loss of the U.S. market will open the way for supply manage- ment for hogs. He said as much at an open meeting in Huron. It is more difficult to see the rea- soning of Huron's Ron Douglas. I pushed him for his reasons in oppos- ing the scheme. After much prodding, he gave as his only argument the opposition of many Huron directors. That, in my view, is the tail wagging the dog. A director, with all the facts and figures at his disposal, should lead rather than follow.0