The Rural Voice, 1987-10, Page 32A
The Grey County Federation of
Agriculture, at the same task force meet-
ing, advocated dropping exports alto-
gether and giving supply management
powers to beef, pork, corn, soybeans,
and other commodities. In practice,
however, it doesn't appear that this
alternative would work. Canada's econ-
omy as it stands relies in large part on
agricultural exports.
In the end, as Wendy Dobson of the
C. D. Howe Institute notes, the prolif-
eration of countervail actions in the U.S.
makes it imperative that Canada negoti-
ate an agreement. At the institute, she
says, they believe that Canadian negoti-
ators can obtain:
• the gradual elimination of most
bilateral tariffs between the two
countries,
• the mutual clarification of bilateral
trade rules for the application of
countervailing duties and other unfair
trade laws,
• the reduction or elimination of other
non -tariff barriers such as discrimina-
tory government procurement policies.
But William Mackness, a senior
vice-president and chief economist at
the Bank of Nova Scotia, is less op-
timistic: "I would look for an initial
agreement containing very little in the
agricultural area or in services. In agri-
culture the negotiators will probably
choose to plow a shallow furrow past the
whole area. Moreover, the longer-term
prospects for a major expansion of
agricultural free trade arrangements in
North America are poor."
There is also the position of the
Minister for International Trade, Pat
Carney. Her ministry states: "Both
Canada and the U.S. have their own
unique systems for marketing farm
products in a manner that is responsive
to their domestic constituencies. Essen-
tial agricultural trade issues are global in
nature."
FACT: 40 years ago, the •
General Agreement on Tariffs
and Trade was set up to lower
tariff barriers. At the 94 -nation
GATT meeting in Uruguay last
year, members agreed to talk
about working toward an agree-
ment on agriculture. Earlier this
year, the 24 -member Organiza-
30 THE RURAL VOICE
tion for Economic Co-operation
and Development agreed that
the farm subsidy war should be
stopped. And in May this year,
the Cairns group — a 14 -nation
association only a year old —
asked that Canada take the issue
of agricultural trade to the
Group of Seven countries
meeting in Venice. Canada did,
but all the declarations don't
amount to an imminent
possibility of a binding accord.
According to a statement
from Ottawa in regard to the
Cairns group discussions, there
is disagreement about what
types of policies are most
appropriate: "Most countries
now embrace the principle of
CANADA'S RELIANCE ON TRADE
by Ken McEwan
Farm Management Specialist
Perth OMAF office
A few weeks back I saw a cartoon
that illustrates the complexity facing
farmers. The first scene takes place in
1937 and the farmers looks over at his
wife and says, "Hope it rains,
Martha." The next scene takes place
50 years later and the farmer leans
over and says, "Hope the European
agricultural economists can influ-
ence a reduction in prime sector
subsidies, allowing in turn the U.S.
senate sub -committee to recommend
a contingent reduction in rural equity
enhancement programs, easing
domestic pricing trends, Martha."
This is a mouthful that only a
Philadelphia lawyer could interpret,
but it shows how reliant we have
become on world conditions.
In Canada, agricultural exports
represent more than 50 percent of our
gross farm sales. Comparable figures
to the U.S. and the EEC have been
around 20 per cent. Grains, oil seeds,
and red meats, which account for
around 64 per cent of the gross value
of Canadian farm output are,
effectively, priced in world markets.
In 1985, the U.S. imported 27 per
cent of total Canadian agricultural
food exports. Canadian agricultural
exports to the U.S. are concentrated
in very few products: hogs, beef, and
some processed and storable fruits
and vegetables. An economist from
Missouri has estimated the impact of
Canadian pork on U.S. markets to be
a lowering of their price by $2 to $4
per hundredweight for a total of $400
million to $900 million. In total, one-
fifth of economic activity in Canada
is directly linked with the production
of goods being sold in the U.S.
Because of our large dependence
on export markets for our agricul-
tural production and our relatively
small amount of trade in relation to
world consumption, we are essen-
tially price takers. The two-way
trade between Canada and the U.S. is
the world's largest flow of mer-
chandise, but it is at risk. Most of us
are aware of the protectionist move-
ment afoot in the U.S. which
threatens to close access for a wide
variety of Canadian products.
The principal objectives in
Canada's seeking of a trade agree-
ment with the U.S. are:
1. to secure access to U.S. markets,
2. to improve access to U.S. markets,
3. to enshrine access to U.S. markets
by a treaty.
In Ontario, many of the producer
boards have been trying to assess the
effects of a trade agreement with the
U.S. Obviously, the gains and losses
vary greatly from sector to sector.
But one fact remains: the pros-
pects for our agricultural industry are
dependent on trade. Remaining
competitive and being able to trade
on an unsubsidized equal footing is
crucial. Shrinking back to Canadian
consumption would mean consider-
able adjustment beyond what is al-
ready taking place. For most sectors,
this is not an attractive avenue.0