Trade tensions are occurring on multiple fronts, and the impacts on the overall operation of the international trading system present systemic risks, impacting how agri-food markets in Canada can operate. In an Independent Agri-Food Policy Note released June 6, 2019, Agri-Food Economic Systems finds that the agri-food policy dialogue should reflect Canada’s vulnerability to systemic shifts in trade governance, and begin the process of developing a contingent strategy.
“The global trade system under WTO has allowed small countries such as Canada to be protected from the overwhelming power of large countries, facilitating an opening up of world trade,” says Douglas Hedley, Agri-Food Economic Systems associate and co-author of the report. “Current tensions are bringing to a head issues that are of concern to many market-oriented, open-economy WTO members, including Canada. But the extent of pressure being exerted and the nature of disputes also risks the unraveling of the system.”
The policy note explains how the US-China trade tension, policy responses to it, and concerns with aspects of WTO operations may act to undermine critical international institutions, and pressure the domestic policy foundations upon which the Canadian agri-food economy is based. The U.S. is advancing issues that are of concern across market-oriented, open-economy WTO members through some of its trade policy initiatives. Canada has also worked multilaterally with the intent to update and re-invigorate the WTO. Still, potent and divisive issues are escalating that are of great significance to Canadian agri-food.
“If the largest countries begin to operate outside of WTO jurisdiction, or flaunt it, others will question why they subject themselves to the restraints of international trade rules,” says report co-author Al Mussell, Agri-Food Economic Systems research lead. “The risk of increased international transaction costs, difficulties in global agricultural market arbitrage, discrimination among national suppliers of agri-food products, and increased domestic agricultural support is very real -- and very serious for Canada.”
The report can be accessed at www.agrifoodecon.ca Agri-Food Economic Systems is an independent economic research organization dedicated to agri-food located in Guelph, Ontario.
Source: Agri-Food Economic Systems June 6, 2019 news release