Canada urged to stop subsidies before TPP entry
Canada’s entry into the TPP – which currently includes the USA, Australia, NZ, Brunei Darussalam, Chile, Malaysia, Peru, Singapore and Vietnam – was announced at the G20 summit. Mexico is also due to join the partnership, which will bring the 11-member TPP group to nearly 30% of global GDP.
However, pork representatives from existing member countries have warned that Canada’s agricultural subidisation schemes – particularly those for pork production – cause “significant distortions” to overseas markets and have called for them to be removed as be part of the TPP negotiations.
Andrew Spencer, CEO of Australian Pork, said: “Domestic subsidy programmes are generally not within the scope of free trade agreements. However, in this case, Canadian agricultural subsidies are so wide-ranging and have such a broad and far-reaching impact on overseas markets. It is on these grounds that we, along with the US and NZ, urge the TPP negotiators and governments to deal with these issues fairly as part of the process.”
New Zealand Pork CEO Owen Symmans said that both federal and provincial government subsidies were a concern, giving the example of the Province of Ontario’s new countervailable subsidy programme, the Risk Management Programme, which gives Canadian pork producers a guaranteed return.
“This sort of blatant subsidisation places competing pork producers, who do not subsidise their production, at a distinctive disadvantage,” he said.
Distorting markets
A study by Dermot Hayes, an economist at Iowa State University, recently found that the Ontario Risk Management Programme would cut US pork production by more than 430,000 animals over five years, amounting to losses of more than $73m and costing nearly 600 pork industry jobs.
It also found that if the US were to introduce a system similar to the Quebec subsidy programme, it would increase pork production by 8.4% annually.
President of the US National Pork Producers Council (NPPC) RC Hunt said: “Canada needs to end its federal and provincial hog subsidy programmes, which are distorting the North American and world pork markets.
“If the US had a subsidy programme similar to Quebec’s, for example, we would double pork production in 10 years, to the severe detriment of our Canadian counterparts. Subsidy programmes are antithetical to free trade and to the spirit of the TPP negotiations that Canada is entering.”
In the past, Canada has deflected criticism of its subsidy programmes by pointing to the US Mandatory Country of Origin Labelling law (MCOOL). However, US pork producers have insisted that they are not in favour of MCOOL and are urging the US government to comply with the WTO’s recent ruling that the laws violate US trade obligations.
“You cannot argue that MCOOL distorts the hog markets, then ignore the far greater impact of the Canadian subsidy programmes,” said Doug Wolf, NPPC’s immediate past-president and chairman of its trade committee.
