U.S. leadership needed to push freer agriculture trade

Glacier FarmMedia – Huge gains in freeing up global agricultural trade in the 1990s and early 2000s came about through American leadership — and it’s needed again.

So says Mike Gifford, Canada’s former chief agricultural trade negotiator who retired from that role in 2000.

Why it matters: Canadian farmers rely on exports for much of their revenue but rising protectionism and geopolitical factors, including the U.S. sabotage of the WTO, have disrupted trade. 

“I know it’s in some ways easier to do bilateral or regional trade agreements, but you’ve got to toil in the mines in Geneva to get the WTO (World Trade Organization) moving again,” Gifford told a recent online trade panel discussion organized by the North American Agricultural Journalists. “It seems once again what’s instrumental is U.S. leadership.”

Canadian farmers rely on exports for much of their revenue but rising protectionism and geopolitical factors, including U.S. sabotage of the WTO, have disrupted trade.

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

“While some people are pessimistic about the future of the WTO, it seems to me the agricultural exporters have too much at risk not to encourage a resumption of negotiations,” he said. “There was an awful lot of progress made in agricultural trade liberalization and to have it thrown away and not resurrected would be a crime.”

Panellist Gregg Doud, former U.S. chief agricultural trade negotiator, blamed Indian intransigence for the U.S. position on the WTO.

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

Ted McKinney, U.S. Department of Agriculture undersecretary for trade and foreign agricultural affairs from 2017 to 2021, agreed the world needs the WTO.

“We’ve got to bring the WTO back and get the true global look,” said McKinney, now CEO of the National Association of State Departments of Agriculture.

In the interim, bilateral and other agreements are the way to go, he said.

“But that does not mean we walk away and let the WTO blow up or just fall apart,” McKinney added. “We may have to take our two to three valiums a day and get through it because the moment you go to bilateral, (or) multilateralism it’s those who can flex their muscles the largest, who beat their chest the hardest, are the ones who are going to win and that’s not a win-win. 

“The U.S. still believes very much in win-win. (N)ever mind slogans like ‘Make America First’ or Make America Great Again.’ Those are good campaign slogans, but that’s not the practice that any of us followed in trade. We wanted to make it win-win.

“It’s going to be a little bit of a wild, woolly west until we get the WTO more fully functioning and that can take a lot of twists and turns,” said McKinney.

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

While agriculture was ostensibly part of GATT, it didn’t really come “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 on trade liberalization in general, not just on agriculture) was because the United States had clearly indicated there’s not going to be an outcome… unless there’s a deal on agriculture,” Gifford said. 

“The Europeans in the beginning didn’t believe them, but by the end they did and so did the rest of the world. And the absence of the United States in Geneva over the last several years needs to be changed. We’re not going to get any progress in the WTO unless the United States takes an aggressive leadership position. And it will find a lot of support if it does so.”

Export subsidies on agricultural goods, considered to be the most trade distorting, ended in 2015.

Part of the American strategy to force the European Union to agree to freer agricultural trade during the Uruguay Round was using billions of dollars in subsidies to export its grains. Canadian farmers were side-swiped by the resulting depressed world grain prices.

“Although we have a lot of problems with European agriculture, we cannot and we should not underestimate the significance of the changes that have happened in Europe, away from its system of variable import levies and export subsidies, a highly disruptive influence on world agricultural trade, and recognize it has made major changes,” Gifford said. 

“In some respects it can be argued that we in North America — Canada with dairy and poultry and the United States with sugar — are now behind Europe on this slow, arduous process of agricultural trade reform.”

Ideally both the U.S. and China would be members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which came into effect in 2018, Gifford said.

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

The U.S. led the initiative, but Donald Trump pulled out after being elected in 2016. Both McKinney and Doud said while the agreement was good for U.S. agriculture, it was harmful to U.S. car manufacturers, allowing foreign-made vehicles in duty free.

Doud said by reaching a bilateral trade agreement soon after with Japan, the U.S. gained almost as much as if it had been in CPTPP.

“I think most of the participants in the CPTPP would welcome the resumption of U.S. involvement in the agreement (now),” Gifford said. “It was a U.S. initiative and it’s a crying shame that they are not in it.”

However, any accord signatory can veto admission of new members, he added.

Five or six years ago Canada was keen on closer trade relations with China, but “hostage diplomacy and economic coercion have really soured relations,” Gifford said.

McKinney made the case for the U.S. to be more involved in agricultural trade and trade policy to counter the influence of the EU in global institutions such as the Food and Agriculture Organization, World Health Organization and Codex Alimentarius, which sets food standards.

McKinney also criticized the EU’s ‘Food to Fork’ strategy aimed at reducing carbon emissions from agriculture by cutting pesticide and fertilizer use.

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

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

The U.S. is pushing high-tech ag as the alternative, including genetically modified and gene-edited crops, arguing it 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 harder for developing countries to secure supplies, he said.

As for the container issue, McKinney doesn’t expect supply chains, which have in part been disrupted by COVID, to get back to normal until 2022.

“The concern is I don’t see how the situation alleviates itself for some time to come,” he said, adding the Chinese government is to blame because containers normally filled with agricultural products are being shipped back to China empty.

“When China can order empty containers to go back and then pay for it, I’ll just bet you it’s not industry paying for empty containers to ship back,” he said.

“I think it’s going to hurt a lot of things over the next 12 months, 18 months perhaps. It will get straightened out because it just has to… one way or the other.”

Allan Dawson is a reporter for the Manitoba Co-operator. His article appeared in the Nov. 18, 2021 issue.