Killing the Sacred Cows: NAFTA deal to sink supply management?

By Tim Kalinowski

Depending on who you talk to, NAFTA might be dead in the water, a near deal or a moving target with no firm deadline for completion. No one really knows, says Danny Le Roy, an economist and agricultural studies co-ordinator with the University of Lethbridge, except maybe those sitting at the negotiating table.

“There is a lot more political theatre than anything else,” Le Roy says. “There is a fog around these negotiations if you look at all the statements in the media. I think the only people who really understand what is going on at these discussion are the people who are leading the discussions themselves, and they are not talking.”

Le Roy says that fog extends to specific agriculture concerns in NAFTA as well, such as supply management.

“Depending on the source, sometimes supply management is a sticking point and other times it seems maybe automobile manufacturing is a greater sticking point,” he says. “Then the contentious issue is not so much between Canada and the United States, but Mexico and the United States.”

Le Roy says one thing is for sure though— if any agreement comes out these NAFTA negotiations it isn’t going to be a free trade agreement anymore than the last agreement was.

“The fact is all these so-called free-trade agreements are actually managed-trade agreements,” he states. “If you take NAFTA for example there are about 2,000 pages and 900 of them are tariff line items. It has very little to do with actual free trade, which is the unimpeded flow of goods and services across geo-political jurisdictions. It has much more to do with managed trade.

“From the perspective of the economist, ‘free trade’ here is probably the worst misnomer. It is like calling ‘up’ down. ‘black’ white or ‘left’ right. It is about managing trade and choreographing outcomes.”

But still there is merit in such agreements, says Le Roy, and an acceptable compromise between all parties put to paper would do much to alleviate current and future market uncertainty.

“In the absence of the rules of the game being clear, it makes it more risky for (multinational) businesses than it would be otherwise,” Le Roy states.

“And it makes it more difficult for consumers than it would be otherwise because entrepreneurs aren’t as willing to take those risks.

“When there is more at stake, then there is more at risk. One minute my business could be successful, and the next, at the stroke of a pen, a trade barrier could make my business uncompetitive and unprofitable.”

However, Le Roy expects there are parties on both sides of the border which would be just as happy to see the agreement ultimately fail if it is not in their best interests.

Case in point: Ag. industries currently protected by supply management.

“If you ask an individual who is a producer in a supply-managed commodity, they might be happy that there would be no agreement as opposed to one which concedes more market share,” he says.

Le Roy feels it is likely supply managed sectors in Canada will emerge from these negotiations with their protections still intact, no matter the ultimate outcome.

And American sacred cows on the ag. side of things will also remain unscathed; even if there is a bit of tweaking on the margins.

“If there is one thing that’s consistent about this it is the number of double standards,” he says with a chuckle. “Every geo-political jurisdiction seems to have a abundance of them.

“So on the one hand in Canada we are ardent free traders, but we celebrate the fact we can’t bring beer from one province to another.

“And that we demand access to markets and foreign jurisdiction while trying to protect our own for raw eggs, milk, turkeys and chickens.

“Double standards are everywhere.”