Who put the boot into Canadian dairy and why?

When journalists don’t understand WTO work they jump to wrong conclusions. The questions Canada faced in the Agriculture Committee were not a geopolitical attack. They were more important than that

By Robert Wolfe and Peter Ungphakorn
POSTED JUNE 23, 2017 | UPDATED JUNE 24, 2017

Agriculture attachés from around the world may be surprised to learn that Vladimir Putin has taken an interest in their work in Geneva and is targeting Canada’s supply-managed dairy industry.

Or maybe they won’t as they realise a huge amount of journalistic licence has been injected into this account of a routine but important meeting at the World Trade Organization (WTO) on June 7 (The Globe and Mail, “Countries pile on in attack of Canada’s dairy regime”, June 18, 2017).

Dairy cow Canada
Canada has faced 156 sets of questions about its dairy policies, in almost every meeting except for a four-year lull

Does the Russian president really think the price of ultra-filtered milk is of such geopolitical significance that he ordered his agriculture officials at the WTO to intervene?

“Whoa. What? Russia — architect of central economic planning in the Soviet era — is lecturing Canada about the evils of supply management?

“That can’t be good.

“That Russian President Vladimir Putin has found common cause with some of Canada’s closest trading partners is a measure of the powerful forces lining up against this country’s embattled dairy industry.”

The Globe & Mail June 18, 2017

What really happened in that June 7 WTO meeting is much less dramatic and far more important than that. Canada should welcome Russia’s intervention, but for completely different reasons.

There were actually two separate issues in the meeting. One was an annual look at how countries are keeping their 2015 promise to scrap export subsidies. Canada still subsidises butter exports, which aroused comment from a number of countries.

But Russia “lecturing Canada about the evils of supply management” was no more withering than: “We’re interested too”, more or less.

(In fact, Russia did do a bit more than that. It joined Canada and other members of the “Cairns Group” of successful agricultural exporters in circulating a paper on export subsidies (pdf). There is no reference to anything related to supply management.)

Canada’s supply management (actually, milk classes) featured separately in 80 questions from New Zealand, Australia and the US. On this, Russia said nothing. Perhaps it should have.

Let’s take a step back. The WTO operates a system of agreements that its member countries have negotiated and signed. One of them is about reforming agricultural trade. WTO committees are where all its members can monitor how well the agreements are being implemented.

The Agriculture Committee does this three or four times a year. Questions and answers are key.

There are lots of them. Since the WTO was created in 1995, Canada alone has submitted 1,131 sets of questions on all agricultural trade issues in all but a couple of the 84 meetings. Canada did not lecture any other WTO member but occasionally asked whether a country’s policy was wise or legal.

In the same period, Canada has faced 156 sets of probing questions about its dairy policies, again in almost every meeting, except for a lull between 2000 and 2004.

And yes, the reason for those questions in both the WTO Agriculture Committee and in other meetings is surprise that a country supposedly in favour of liberalizing farm trade maintains strong protection for dairy. Such questions are not an “attack”, but Canada did have to defend the high import duties and subsidies that protect supply managed products in the stymied Doha Round negotiations.

In the June 7 meeting, the 80 questions Canada faced were grouped into 13 sets, one from New Zealand spread over five pages. Almost all were about Class 7 or other milk classes.

Canada wasn’t idle either. It asked 19 sets of questions, seeking answers from the US, EU, Ukraine, Panama, India and Turkey on a range of issues.

The meaning of questionsBack to top

A lot of these questions are just seeking information: what a new programme does, how a programme works and so on. Some focus on particular policies, such as Canada’s milk classes, because the countries asking the questions — mainly New Zealand, Australia, the US and EU — are worried that these policies are a sneaky way of hiding subsidies.

In the WTO the questions can only really be turned into an “attack” if New Zealand and co believe Canada is subsidising beyond the limits it has agreed. Canada has only ever faced two legal challenges on dairy products, both in 1997 and both involving milk classes (this and this).

This kind of work is crucial if trade negotiations are going to have any meaning. You don’t just wake up, negotiate, sign an agreement and go back to sleep.

The agreement has to be implemented and the countries that negotiated the deal have to be able to see that everyone is honouring it.

This is hard work. For agriculture, all countries have to share information with each other (technically, they “notify the WTO”) on how much they have subsidised each year, what policies they have that might affect prices, production and exports, and what has been happening with imports, particularly if quotas are involved.

Just compiling and sharing the information can be a huge task. Once it’s available it becomes an absolutely essential way for countries to ask each other about the data so they can understand better, to monitor how level the playing field is in agriculture, and for the world at large to do the same.

Treating questions as attacks is therefore about as useful as a teacher complaining about questions from the class. This is about understanding and feedback.

So Russia’s involvement should also be welcomed. Russia is a new WTO member. It only joined in 2012. It’s still learning how the WTO works. The greater the interest it pays to WTO proceedings, the more it will be able to be a responsible WTO member. If it can ask 1,131 questions in the next two decades it will be as good a world trade citizen as Canada.

Who knows? President Putin might even learn something too.

Robert Wolfe is Professor of Policy Studies at Queen’s University in Kingston, Ontario and co-editor of a new IRPP book, Redesigning Canadian Trade Policies for New Global Realities. Follow him @BobWolfeSPS

Updates: June 24, 2017 — added text and links on joint Cairns Group and Russia paper on export subsidies; added clarification that probing questions about Canada’s dairy policies do reflect concern

Photocredits: Public domain CC0 except Holstein cow in Nova Scotia 2015 by Dennis Jarvis, Halifax, Canada CC BY-SA 2.0