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Trade agreement secret: Rules only apply to the little guy

by Paul Beingessner
Canadian farmer, writer

(Thursday, July 22, 2004 -- CropChoice guest commentary) -- When David Orchard was about to become the soon-jilted kingmaker at the Progressive Conservative leadership convention, he persuaded hiscourtier, Peter MacKay, that a review of the North American Free Trade Agreement (NAFTA) would be a good thing. That was about as far as Orchard, a long-time opponent of the trade deal, could have expected to move MacKay. In hindsight, MacKay might actually have agreed to anything since he didn't appear to remember any of his promises a short time later.

Trade deals, as David Orchard has been trying to tell Canadians for a long time, are often not quite what they seem. Canadian farmers know this only too well. Their current dilemma with BSE gives them a ringside seat from which to view the contradictions that pass as world trade policy.

Canada's current BSE status, and the remedies it has put in place, mean it should be able to access the U.S market in a fashion not much different than before its single case of BSE was discovered. Free trade is based on rules, and the rules would allow this. When the rules are not followed, you call in the folks who enforce the rules. But when some Canadian feedlot operators threatened to do just that, governments and industry groups recoiled in horror. Too costly, too lengthy, too dangerous. What if we made the Americans mad at us?

Forgive my naivete but I didn't realize it was supposed to work like that. So in the final analysis, we have a trade agreement with rules we can't access. That type of agreement follows the rules of the playground. The biggest guy gets to pick the game and determine the rules.

Canadian farmers built their current beef industry based on NAFTA, or so we are told. (I've never quite been able to reconcile that statement with the fact that several decades ago and long before NAFTA we had as many cattle as we do now.) At any rate, the industry evolved with NAFTA in place. Packing plants consolidated and became American owned. Canada gave up much of its cull cow and bull processing and shipped these animals to the U.S. or Mexico. A large cross-border trade in live cattle grew up, driven mainly by feed prices on each side of the border and by currency fluctuations.

Canadian farmers were secure in the notion that trade in cattle was safe because unlike grain and hogs, cattle were largely unaffected by agricultural subsidies. Cattle producers held their heads a notch higher than the rest of farmers as they proudly rejected the notion that government had to back them up.

Canadian cattle producers had yet to experience the reality that landed squarely on the backs of lumber producers. This reality dictates that trade agreements between vastly unequal participants don't really mean a thing.

Canadian farmers could be excused for asking if NAFTA benefited them much at all. In the short run, it seemed to have allowed cattle producers a few years of decent returns. In the long term, it allowed us to put all our eggs in one American basket. The memory of the good years is quickly being wiped out by the devastation of the last two.

Now Canada's Prime Minister has issued the ultimate threat to the Americans. Open the border, or we'll build our own packing capacity and compete with you in the lucrative Asian tongue-and-bung markets. And Canadian farmers are going to do this, largely unassisted since their pleas to governments in this regard have gone unheeded, after taking a kicking for almost two years. Right. Maybe we should all have listened to David Orchard.

(c) Paul Beingessner (306) 868-4734 phone 868-2009 fax