US leadership is needed to foster freer agricultural trade

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Huge gains in liberalizing world agricultural trade in the 1990s and early 2000s were achieved through American leadership – and it’s needed again.

That’s what Mike Gifford, Canada’s chief agricultural trade negotiator, said before retiring in 2000.

“I know it is in some ways easier to do bilateral or regional trade deals, but you have to work hard in the mines in Geneva to get the WTO (World Trade Organization) back in motion,” Gifford said during of a roundtable on e-commerce organized by North American agricultural journalists on November 3. “Once again, what matters is American leadership.

Canadian farmers depend on exports for much of their income, but rising protectionism and geopolitical factors, including American sabotage of the WTO, have disrupted trade.

With Canada exporting about half of its agricultural production, it is clear that reform is in Canada’s best interest, Gifford said.

“While some are pessimistic about the future of the WTO, it seems to me that agricultural exporters have too many risks not to encourage a resumption of negotiations,” he said. “There has been tremendous progress in liberalizing agricultural trade and throwing it away and not resuscitating it would be a crime. “

Panelist Gregg Doud, former US chief agricultural trade negotiator, blamed Indian intransigence for the US position on the WTO.

“By default, the way forward is bilateral,” said Doud, now vice president of global situational awareness and chief economist at Aimpoint Research.

Ted McKinney, Assistant Secretary for Trade and Foreign Agricultural Affairs at the U.S. Department of Agriculture from 2017 to 2021, agreed the world needs the WTO.

“We need to bring back the WTO and make it look truly global,” said McKinney, currently CEO of the National Association of State Departments of Agriculture.

In the meantime, bilateral and other agreements are the way forward, he said.

“But that doesn’t mean we step back and let the WTO explode or just collapse,” McKinney added. “We might have to take our two to three valiums a day and get through it because as soon as you go bilateral, (or) multilateralism, it’s the ones who can flex their biggest muscles, who hit their heads. plus the chest, are the ones who will win and it’s not a winner-take-all. The United States still believes a lot in win-win. (Pay no attention to slogans like “Make America First, or Make America Great Again” – these are good campaign slogans, but this is not the practice that any of us have followed in business. We wanted it to be a win-win.

“It will be a bit of a wild and woolly West until the WTO functions more fully and that may take a lot of twists and turns. “

The WTO began in 1947 as the General Agreement on Tariffs and Trade (GATT) – one of many international initiatives that followed the end of World War II, aimed at creating a more prosperous world. and more peaceful.

While agriculture was ostensibly part of the GATT, it did not really become “under the rule of law” until the Uruguay Round of talks, which began in 1986 and ended in 1993.

“The only reason we concluded the Uruguay Round (which was about trade liberalization in general, not just agriculture) was because the United States had made it clear that there would be no result. … unless there is an agreement on agriculture, “Gifford said. “At first the Europeans didn’t believe them, but in the end they did and so did the rest of the world. And the absence of the United States in Geneva for several years must be changed. We will not achieve any progress at the WTO unless the United States takes an aggressive leadership position. And he’ll find a lot of support if he does.

Agricultural export subsidies, considered the most trade distorting, ended in 2015.

Part of the US strategy to force the European Union (EU) to agree to freer agricultural trade during the Uruguay Round was to use billions of dollars in subsidies to export its grains. Canadian farmers were taken aback by the resulting drop in world grain prices.

“Although we have a lot of problems with European agriculture, we cannot and must not underestimate the importance of the changes that have taken place in Europe, away from its system of variable import levies and subsidies. export – a very disruptive influence on world agriculture. trade and recognize that it has brought about major changes, “said Gifford.” In some ways it can be argued that we in North America – Canada with dairy and poultry and the United States with sugar – are now behind Europe in this slow and arduous process of agricultural trade reform. ”

CPTPP

Ideally, the United States and China would both be members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which entered into force in 2018, Gifford said.

Besides Canada, the other members are Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The United States led the initiative, but Donald Trump withdrew after being elected in 2016. McKinney and Doud both said the deal was good for American agriculture, but was detrimental to US agriculture. American automakers, allowing foreign-manufactured vehicles duty-free.

Doud said that by concluding a bilateral trade deal soon after with Japan, the United States gained almost as much as if it had participated in the CPTPP.

“I think most CPTPP participants would welcome the resumption of US involvement in the deal (now),” Gifford said. “It was an American initiative and it’s a shame they weren’t there.”

However, any signatory to the agreement can veto the admission of new members, he added.

Five or six years ago Canada wanted a closer trade relationship with China, but “hostage diplomacy and economic coercion really deteriorated the relationship,” Gifford said.

McKinney advocated for the United States to become more involved in agricultural trade and trade policy to counter EU influence in global institutions such as the Food and Agriculture Organization, the World Health Organization and the Codex Alimentarius, which sets food standards.

McKinney also criticized the EU’s “Food to Fork” strategy to reduce carbon emissions from agriculture by reducing the use of pesticides and fertilizers.

The EU wants the world to adopt its model, he said.

“Well if his philosophy takes over, man oh man, we’re going to leave a lot of people hungry in the world,” McKinney said.

The United States advocates high-tech agriculture as an alternative, including genetically modified and genetically modified crops, arguing that they will produce more food and emit less carbon.

Poor nations would suffer, Doud said. The EU will produce less food, but is rich enough to import it, making it difficult to supply developing countries, he said.

Containers

McKinney does not expect supply chains, which have been partly disrupted by COVID, to return to normal until 2022.

“The problem is, I don’t see how the situation will subside for some time,” he said, adding that the Chinese government was to blame as containers normally full of agricultural products are being sent back to China. China empty.

“When China can order the return of the empty containers and then pay for it – I’m just betting you it’s not the industry that pays for the empty containers to be reshipped,” he said.

“I think it’s going to hurt a lot of things over the next 12 months, 18 months maybe.

“It’s going to straighten out because it just takes … one way or another.”


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