Wheat Marketing Boards Against the Tariff!

I got a chuckle from the letter to the editor in the Globe and Mail that was a response to my recent column on the Harper government’s efforts to sign more free trade deals.

Here is the letter:

KEN RITTER

CHAIR , BOARD OF DIRECTORS and CANADIAN WHEAT BOARD

Winnipeg — Jim Stanford asks: Why The Rush To Ink More Deals? (Sept. 25) referring to bilateral trade agreements. The answer is simple. If Canada does not keep up with the United States, Australia and other countries, western Canadian farmers will lose markets and money.

The U.S. in particular has been very aggressive. It has negotiated with or is planning to negotiate with countries that account for about 40 per cent of Canada’s wheat exports. Western Canadian wheat and barley farmers cannot afford to lose these markets. Canada must urgently step up and aggressively negotiate deals that benefit our farmers.

Isn’t it ironic that the CWB would be promoting free trade so energetically? After all, the very raison d’etre of the wheat board (and other marketing boards) is precisely to restrict and constrain trade, in order to attain more socially beneficial and economically sustainable outcomes in agricultural markets. (The Americans, of course, have made this connection, which is why they have repeatedly tried — so far unsuccessfully — to dismantle our wheat board). The logical conclusion of free trade should be the abolition of the Wheat Board and Mr. Ritter’s position.

At any rate, posing the issue as one of “farmers versus the rest of us” doesn’t really bother me. It reinforces my point that the FTAs are reinforcing Canada’s role as a resource supplier (including grain). And politically, the Tories have nothing more to gain in the prairies — but a lot to lose in (And don’t get me wrong: I love letters like this. More importantly, so do my editors.)

My original column pointed out that Canada has been getting worse, not better, at free trade, the more deals we sign. (We presently have 5 FTA partners: U.S., Mexico, Israel, Chile, and Costa Rica.) In every one of the 5 cases, our share of the partner country’s import market declined after the FTA. And in 4 of the 5 cases (all but the U.S.), our imports from the partner country grew much faster in the first decade of free trade than our exports to them. (With the U.S., our imports and exports grew at the same pace.)

If a trade deal with South Korea (the government’s current top priority) follows the same average pattern as these other 5 deals, Canada will lose 33,000 jobs and our bilateral trade deficit will grow from $3 billion at present to $14 billion. If a Korean FTA follows the best pattern of the 5 deals we have signed (namely, the U.S. experience), we will still lose 14,000 jobs and the trade deficit will hit $7 billion. (Even if exports and imports grow at the same pace, as they did with the U.S., we still lose jobs, for 2 reasons: we are starting from a deficit position with Korea, and our resource-based exports to Korea have less employment content than our manufactured imports back from Korea).

The Canada-U.S. FTA has been studied to death by economists, but the next 4 deals have hardly been studied at all. I think we should shine a little more sunshine on the effects of the deals we already have. It will create powerful reasons not to sign any more.