1 CANADA-UNITED STATES AGRICULTURE POLICY Presented by: Chris Leggett Agriculture Counselor Canadian...
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Transcript of 1 CANADA-UNITED STATES AGRICULTURE POLICY Presented by: Chris Leggett Agriculture Counselor Canadian...
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CANADA-UNITED STATESCANADA-UNITED STATESAGRICULTURE POLICYAGRICULTURE POLICY
Presented by:Presented by:
Chris LeggettChris LeggettAgriculture CounselorAgriculture CounselorCanadian Embassy, Washington DCCanadian Embassy, Washington DC
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OVERVIEWOVERVIEW
Canadian and US agriculture policies share similar goals…
… but there are differences in approach
These differences result in Canadian concerns with US Farm Bill and certain other food policies…
… but do not overshadow the cooperation in and mutual benefits of our bilateral relationship
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Why does Canada care Why does Canada care about US farm policy?about US farm policy?
U.S. sets trends: Canadian farmers want same levels/types of support that their U.S. neighbours enjoy
Competition: domestic, U.S. and international markets
WTO negotiations
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Why should the U.S. care Why should the U.S. care about Canadian farm policy?about Canadian farm policy?
#1 trading partners
Integrated food production sector
Farmers/ranchers deal with similar challenges – can learn from each other’s best practices
Competition
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The U.S. is the 2nd largest agri-food exporter in the world, Canada is the 4th largest.
27% of US agriculture goods are exported
Over 50% of Canadian agriculture goods are exported
95% of the world’s consumers live outside our borders
Canada and the U.S. Canada and the U.S. are Major Agri-food Tradersare Major Agri-food Traders
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Trade Liberalization Benefits Trade Liberalization Benefits Exporters in the U.S. and CanadaExporters in the U.S. and Canada
Source: USDA/FAS
Total Canadian Agri-Exports to the US Total US Agri-Exports to Canada
0
5
10
15
20
25
30
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
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Where do U.S. Agri-food Exports go?
Top 5 markets for 2006
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How Canadian Agricultural How Canadian Agricultural Policy is DevelopedPolicy is Developed
Shared jurisdiction with provinces
Policies developed by government(s)
Consultation with industry and stakeholders
Process is usually via Cabinet and Treasury Board, but any changes to Acts go through Parliament
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External influencesExternal influences
International trade obligations
WTO/FTA negotiations
Other countries’ policies
Market conditions
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Agriculture Policy FrameworkAgriculture Policy Framework
APF is framework with most elements expiring at end of March 2008
Five components:• Business risk management• Food safety & quality• Environment• Science & innovation• Renewal
Plus a market development and trade aspect
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Canadian Approach to Agricultural Canadian Approach to Agricultural BRM Programs has evolvedBRM Programs has evolved
Safety Net Program 1980s:
Commodity focus
Price based
Provincial/regional
Trade distorting
Agriculture Policy Framework (APF - 2003):
Whole farm
Income/margin based
National Framework
Trade Neutral (i.e., “green”)
Policy transition
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Business Risk ManagementBusiness Risk Management
Two key programs:
Canadian Agricultural Income Stabilization (CAIS) Program
“whole-farm” margin based
Production Insurance
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CAIS: StrengthsCAIS: Strengths
Production neutral (allows market signals to prevail)
Whole-farm
Demand driven
Payments based on need - not an entitlement
Margin based – takes into account both sides of the financial equation
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CAIS: ChallengesCAIS: Challenges
In the long term, does not address declining margins
Complex to administer and understand
Lacks predictability
Timeliness – fiscal year calculation
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Growing Forward: Toward a New Growing Forward: Toward a New Agriculture Policy FrameworkAgriculture Policy Framework
Focusing on building a competitive and innovative sector
Being proactive in managing risks
Ensuring the sector contributes to society's priorities
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Proposed New Business Proposed New Business Risk Management StrategiesRisk Management Strategies
AgriInvest
AgriStability
AgriRecovery
AgriInsurance
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Context for developing new Context for developing new programs in Canadaprograms in Canada
Farm income continues to decline
The cost of inputs have gone up
Overall though, off-farm income has gone up
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Producer interests similarProducer interests similar in Canada and US in Canada and US
Canadian stakeholders have indicated that they want to see
A move to an outcome-based system
Greater focus on innovation
Programs to build on successes of food safety and environment
Flexible program design and delivery
Reduction of administrative burden and simplification of programs
Regulatory issues addressed to enable the sector to be innovative and competitive
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Common themesCommon themes
Primary producers Profitability key concern Should be paid for contributions to environment and food
safety Need to attract young farmers into the sector
Processors: Need to reduce government impediments to innovation and
growth Regulatory issues Research and development priorities
Food security
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Canadian concerns with Canadian concerns with 2007 Farm Bill2007 Farm Bill
Most proposals to date maintain the current structure of 2002 Farm Bill
US commodity programs that trigger large subsidy payments
Programs that mask market signals, distort production decisions and reduce prices
Country of Origin Labelling
Sugar provisions
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Beyond Farm PolicyBeyond Farm Policy
Food Safety• Increased inspection rates• User fees• Ports of entry
Seasonal Agricultural Workers Program
Healthcare
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Canada’s trade policy objectivesCanada’s trade policy objectives
Canada seeking a fairer international trade environment for producers and processors
elimination of all forms of export subsidies
substantial reduction of trade distorting domestic support
real and substantial improvements in market access
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Multi-track approachMulti-track approach
WTO agriculture negotiations
WTO is key forum for achieving fairer rules and enhanced trade liberalization
Canada wants an ambitious outcome
Regional and bilateral trade negotiations
Closely monitoring FTA initiatives by others, incl. USA
Advocacy initiatives
Technical trade discussions and standard-setting
Litigation
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WTO Challenge of US WTO Challenge of US Agricultural SubsidiesAgricultural Subsidies
Background:
Longstanding concerns with U.S. subsidy programs and their impacts on Canadian farmers
Consultations held on February 7
Panel requested June 7, again on November 8
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WTO Challenge of US WTO Challenge of US Agricultural SubsidiesAgricultural Subsidies
Grounds
Total US trade-distorting support (amber box) exceeds the US WTO commitment levels.
Covers wide range of products (including corn, wheat, soybeans, dairy, sugar, etc.) and dozens of U.S. subsidy programs (including DPs, CCPs, LDPs, etc.)
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WTO Panel – why now?WTO Panel – why now?
Reflects importance Canada attaches to addressing harmful effects of US agricultural subsidies
Underlines need to meet WTO commitments as US Farm Bill is drafted this year
Does not indicate that Canada has given up on WTO negotiations, which remains preferred approach to levelling international playing field for our agricultural producers
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ConclusionsConclusions
Trade is important for Canadian agricultural sector, particularly with US
Canadian agricultural policy is evolving to meet new challenges
Canada has concerns about lack of change in 2007 Farm Bill support programs
But overall, benefits of our bilateral relationship far outweigh any challenges we face
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GOT QUESTIONS?GOT QUESTIONS?