WTO Commitments and Support to Agriculture: Experience from Canada

Transcription

1 WTO Commitments and Support to Agriculture: Experience from Canada Lars Brink Workshop WTO Commitments and Support to Russian Agriculture: Issues and Possible Solutions Food and Agriculture Organization (FAO) and Ministry of Agriculture of the Russian Federation Kazan, Russia, January 2013

2 Basic data Arable land: Canada 45, Russia 122 mill. ha Grains, oilseeds: west, mostly north of 49 th parallel Dairy, beef, hogs: centre, closer to population centres 49th Source: FAO

3 Context for agricultural policy in Canada Federal state: 10 provinces, 3 territories Provinces and Canada have distinct and separate policy jurisdictions Many policy powers are significantly decentralized Agriculture is one of only two shared jurisdictions Usual tools of agricultural policy Marketing and regulation Income support and stabilization payments General services Canada ( fed ) responsible for international trade policy and agreements

4 Policy evolution 1950s, 1960s: Stabilization payments and Crop Insurance Price-based stabilization payments; small; many commodities Mostly to milk and poultry 1959: Subsidized crop insurance for yield shortfalls 1960s, 1970s: Increasing cost of payments for milk Led to dairy supply management ; later poultry and eggs Prices (two dairy products) set by agency under Minister of Agric. Control on imports : tariffs and TRQ* (quantity limits until 1995 WTO) Limit on farm production: quota 1980s, 1990s: Stabilize and support farm incomes Succession of payment programs Cost of program often shared: fed, prov, producers Concern about fed-prov policy incoherence * Tariff rate quotas

5 PSE and %PSE, CAD billion % 10 9 WTO PSE (left axis) Note: PSE = Producer Support Estimate of the OECD

6 PSE and %PSE, CAD billion % WTO PSE (left axis) Note: PSE = Producer Support Estimate of the OECD %PSE (right axis)

7 PSE and %PSE, CAD billion % WTO PSE (left axis) Note: PSE = Producer Support Estimate of the OECD %PSE trend %PSE (right axis)

8 WTO aspects of settling historical issues 1897 cap on rail freight rates from the western provinces Low freight rate and later freight subsidy raised price of grain in the west Effect: less livestock production, less processing Govm t faced severe long-term debt problem from 1995 Coincidental with start of WTO Eliminated ongoing freight subsidy Effect: lower grain prices, lower land values One-time 1995 payment to land-owners Carefully designed to fit criteria of para. 6 of WTO green box: decoupled income support

9 WTO aspects of settling historical issues Early 1900s: periodic government role in western Cdn grain marketing 1943: must sell through Canadian Wheat Board CWB Single buyer and single exporter of most western wheat and barley Pro or con for farmers: divided evidence; evolving opinions Scrutinized in WTO dispute and Doha as state-trading enterprise (STE) 2012: Monopoly powers removed Expect no longer need to notify to WTO as STE

10 Vulnerability to US trade action Integrated US-Canada markets for livestock and meat Much Cdn production exported to the US, such as hogs, pork, cattle US trend from 1984 to protect against subsidized imports Impose CVD Countervailing Duties Similar to an import tariff US law and WTO Agreement on Subsidies and Countervailing Measures Not WTO Agreement on Agriculture CVD targets specific subsidies, e.g., specific to a commodity Canadian goal to avoid threat of US CVD Shift to whole-farm support in Canada Stabilization payments based on whole-farm income Major principle for policy development from 1990s

11 Policy principles Principles in 1991 Farm Income Protection Act Indefinite duration Not unduly influence production and marketing decisions Equitable across regions Encourage social, environmental and economic sustainability Compatible with international obligations

12 WTO Total AMS commitment Base years Base Total AMS was $5.4 bill., reduced to $4.3 bill. by year 2000 Product-specific PS AMS support: 80% of Base Total AMS Many fed, fed-prov and prov payments; market price support 13 products: PS AMSs were greater than de minimis» Mainly grains, oilseeds, sugar beets, and milk 9 products (beef, pork, etc.): PS AMSs were de minimis (not in Base) Non-product-specific NPS AMS support: 20% of Base Total AMS Crop insurance, credit concessions, provincial payments Was greater than de minimis at 5.2% of sector s value of production No blue box support; Green box support is not in Base Note: AMS = Aggregate Measurement of Support

13 CAD bill. 8 7 PSE Support Measurements MPS in OECD PSE Payments in OECD PSE OECD GSSE 2 GSSE 1 0 OECD measurements Note: MPS = Market Price Support 13

14 CAD bill PSE Support Measurements MPS in OECD PSE Payments in OECD PSE OECD GSSE Payments in Base TAMS Payments in Green Box Gen. serv. in Green Box GSSE OECD measurements Green WTO measurements Note: MPS = Market Price Support 14

15 CAD bill PSE Support Measurements GSSE Base Total AMS Green MPS in OECD PSE Payments in OECD PSE OECD GSSE de mininis AMSs MPS in Base TAMS Payments in Base TAMS Payments in Green Box Gen. serv. in Green Box 1 0 OECD measurements WTO measurements Note: MPS = Market Price Support 15

16 Policy evolution from 1995 Much free room in Total AMS commitment level Less pressure to make policies WTO green Lower prices (grains, oilseeds, hogs) in late 1990s Motivated reversal of earlier cutbacks in payments Drought in 2002 Large crop insurance indemnities: large NPS AMS element Later switch to government share of premiums BSE* in beef in 2003 Increased green box payments and AMS payments Green decoupled income support and green income insurance NPS AMS (whole-farm) and beef PS AMS * Mad cow disease

17 : new 5-year policy framework FPT federal-provincial-territorial Federal government, 10 Provinces, three Territories Cost-sharing: federal 60%, prov & terr 40% Food safety and quality Environmental performance Renewal of farmers skills Science and innovation Business risk management

18 : 5-year policy framework Aims for a sector that: Is competitive and innovative Contributes to Society s priorities (food safety, env ment, health) Is proactive in managing risks Minimize risk incidents Increase producer capacity to manage risk Increase stability of income Suite of programs Addresses whole-farm margin shortfalls of different severity Suite includes production insurance (crop insurance) International trade obligations; risk of CVD Not to distort regional or commodity-based competitive advantages

19 CAD bill. 6.5 Current Total AMS Total AMS commitment Current Total AMS? Mkt price supp Bound Total AMS

20 CAD bill. 6.5 Current Total AMS Total AMS commitment Current Total AMS? Prod spec paymt's Mkt price supp Bound Total AMS

21 CAD bill. 6.5 Current Total AMS Current Total AMS Total AMS commitment Prod spec paymt's Mkt price supp. Bound Total AMS Current Total AMS 21

22 CAD bill. 6.5 Current Total AMS Current Total AMS Total AMS commitment NPS not de min Prod spec paymt's Mkt price supp. Bound Total AMS Current Total AMS 22

23 CAD bill. 6.5 Current Total AMS Current Total AMS Total AMS commitment PS de minimis NPS de minimis NPS not de min Prod spec paymt's Mkt price supp. Bound Total AMS Current Total AMS 23

24 CAD bill Current Total AMS if Doha 2.5% de minimis Cut commitment by 45% Current Total AMS PS de minimis NPS not de min Prod spec paymt's Mkt price support Bound Total AMS Current Total AMS 24

25 CAD bill Current Total AMS if Doha 2.5% de minimis Cut commitment by 45% Current Total AMS Doha Total AMS commitment PS de minimis NPS not de min Prod spec paymt's Mkt price support Bound Total AMS Current Total AMS Doha Bound TAMS 25

26 CAD bill. 6.5 Current Total AMS Current Total AMS Total AMS commitment PS de minimis NPS de minimis NPS not de min Prod spec paymt's Mkt price supp. Bound Total AMS Current Total AMS 26

27 CAD bill. Current Total AMS and Green Box Green payments PS de minimis NPS de minimis NPS not de min Prod spec paymt's Mkt price supp. Bound Total AMS Current Total AMS 27

28 CAD bill. Current Total AMS and Green Box Green gen serv. Green payments PS de minimis NPS de minimis NPS not de min Prod spec paymt's Mkt price supp. Bound Total AMS Current Total AMS 28

29 CAD mill. 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1, Green box components: Decoupled ( 6) and Income insurance ( 7) Green: Decoupled inc. support para. 6 29

30 CAD mill. 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1, Green box components: Decoupled ( 6) and Income insurance ( 7) Green: Income insurance para. 7 Green: Decoupled inc. support para. 6 30

31 CAD mill. 1,800 Selected product-specific AMSs: Beef, pork, milk ,600 1,400 1,200 1, Milk AMS

32 CAD mill. 1,800 Selected product-specific AMSs: Beef, pork, milk ,600 1,400 1,200 1, Pork AMS Milk AMS

33 CAD mill. 1,800 Selected product-specific AMSs: Beef, pork, milk ,600 1,400 1,200 1, Beef AMS Pork AMS Milk AMS

34 CAD mill. 2,500 Selected NPS AMS components: Income policy payments ,000 1,500 1, NPS AMS: income policy payments (18 programs; author's selection) of which: Crop insurance (and later insurance programs) 34

35 Shared FPT jurisdiction and WTO rules WTO commitments Canada responsible, not provinces FPT agreement clause on International reporting requirements ensure that Canada has sufficient and timely information to meet its international obligations (including information required for OECD PSE and WTO notification.) Experience of assembling data for international reporting Each provincial government has its own accounting system Canada and provinces cooperate in generating coherent data Constant personal contact: Ottawa and provincial capitals Pay attention to vocabulary for identifying and describing policies Staff turnover can inadvertently - change understandings Circulate written rules on how to classify policies and measure support

36 : Outline of 5-year policy framework Specifics to be negotiated Some changes in risk management suite; less generous? Coordinate with provincial product-specific AMS policies? More emphasis on Innovation develop and commercialize new products and technologies Competitiveness domestic and global Market development food safety, traceability, branding, promotion Potential to meet the criteria for General Services in WTO green box?

37 What next in domestic support calculation? CWB Contributed minimally to wheat AMS 2012 reforms - government still guarantees initial payment Expect no implications for domestic support calculation Trade agreements being negotiated EU: Comprehensive Economic and Trade Agreement CETA Trans-Pacific Partnership TPP Domestic support rules do not fit in regional trade agreements Supply management: media interest and policy debate Trade agreements may touch on market access» E.g., tariffs, tariff rate quotas Focus on dairy But milk MPS in AMS calculated only from domestic parameters

38 Thank you for your attention! Спасибо!