NAFTA and Domestic Policy Reform: Observations from Canada .


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19.01.04 . Silverado Symposium. 2. Presentation. Canada consented to 3 noteworthy exchange arrangements since 1988, CUSTA, NAFTA and URAAlthough exchange imperative to Canadian economy (~40% of GDP), exchange approach still auxiliary to household policySome see these exchange assentions as encouraging undesirable strategy transforms, others consider them to be encouraging required arrangement reformsOur center: what impact has these exchange agr
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NAFTA and Domestic Policy Reform: Observations from Canada Rick Barichello University of British Columbia Presented at University of California Silverado Symposium on Agricultural Policy, Napa CA, January 19-20, 2004

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Introduction Canada consented to 3 noteworthy exchange arrangements since 1988, CUSTA, NAFTA and URA Although exchange critical to Canadian economy (~40% of GDP), exchange approach still optional to household strategy Some observe these exchange assentions as encouraging undesirable arrangement transforms, others consider them to be encouraging required strategy changes Our concentration: what impact has these exchange understandings, especially NAFTA, had on residential arrangement change? Has NAFTA truly brought on much change in residential arrangement? Silverado Symposium

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Outline What are the ag approach changes Canada has really embraced since 1988 What are obvious reasons for this change? Bits of knowledge from Canada-U.S. Facilitated commerce Agreement (CUSTA) and NAFTA arrangements Reviewing the changes Details of test of exchange question amongst Canada and U.S. since 1988 Long term question Anti-dumping and Countervail debate Dairy Policy Reform Prospects? Conclusions Silverado Symposium

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Ag Policy Reforms since 1988 Significant move in ag strategies amid 1990s Movement to considerably less financed position Somewhat more open exchange condition Canada\'s PSE as percent of aggregate homestead receipts: Fell from 34% to 18% more than 13 years from 1986-88 to 1999-2000 Major part of outskirt security due to exceedingly prohibitive TRQs which did not change fundamentally Therefore, a large portion of PSE decrease because of cuts in government appropriation bolster Result: dichotomous arrangement condition today 80% of ag segment has little government spending backing and practically zero fringe assurance Remaining 20% (dairy, poultry generation) vigorously ensured by means of ware showcasing sheets utilizing household and import standards Silverado Symposium

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Actual Policy Changes 1 Major spending cuts in 1995/96 Crow Rate cargo rate sponsorship dispensed with: $800 M/yr Direct dairy endowment eliminated, 1996-2002: $300 M/yr Now, no item strategy, no immediate installments and no administration ware buys Stabilization Policy development Process of progress from conventional value underpins started in 1970s; pace proceeded in 1990s Now adjustment approach is cross-ware, protection style plans, concentrate on total ranch net edges (income less bought information sources) and harvest protection, with direct level of endowment (moving toward C$1B) Silverado Symposium

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Actual Policy Changes 2 Centerpiece of new rural arrangement administration: Agricultural Policy Framework (APF) Key elements delineated by its "5 columns" Food quality and wellbeing nature Science and advancement Sectoral reestablishment Business hazard administration Focus on "specialty markets, marking remarkable Canadian item, controlling traits all through evolved way of life" Environmental projects: diminishing keep running off, giving wetlands and biodiversity Research spending kept up in genuine terms; expansion bolster under common subsidizing has fallen generously Silverado Symposium

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Balance of Agricultural Policy Supply Management Largely kept up unaltered since mid-1970s Farm-level advertising amounts set: Prodn + Impts = Cons TRQs @ 5-8% of residential utilization Over-TRQ levies {100-250%}; much water in taxes Economic leases high: Dairy shares normal $1M/cultivate; poultry cultivate quantities comparable (eggs, $2-2.5M/cultivate) Lobby quality unbelievable; division greatly impervious to approach change Canadian Wheat Board: - substantial STE No supply control, no huge continuous sponsorship Monopoly send out rights; local +international face off regarding Silverado Symposium

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Evidence from CUSTA Negotiations What hastened this real lessening in sponsorship? Because of responsibilities in exchange assentions? NAFTA or URA? Different weights? CUSTA arrangements (1985-87) No significant strategy change choices grasped in those transactions "both Canada and the U.S. made it completely clear that they were continuing on the preface that while their shared target was to take out every single agrarian tax, the most touchy existing quantitative import limitations would remain. This is in truth what at long last happened." (Mike Gifford, 2001) Could contend CUSTA drove Canada to direct further its dairy industry… it forced import shares on frozen yogurt and yogurt where before there were levies Silverado Symposium

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Evidence from NAFTA Negotiations Canada\'s arranging position with Mexico comparable Willing to arrange duty diminishments however not NTBs on dairy, poultry and eggs (potential picks up in different regions not worth the hazard) URA transactions were in mid-stream and Canada needed no hazard to its position in those transactions concerning GATT Art.11 which allowed Canada to force import quantities for supply oversaw commods Canada obviously put its real approach regions (supply administration, CWB) on the arranging table just in the GATT transactions (as slightest re showcase get to) Same position in FTAA: TRQ levels, over-TRQ duties, and STEs are matters just for the Doha Round Silverado Symposium

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Contrast with U.S. Position Bilateral between U.S. what\'s more, Mexico in NAFTA was altogether different US and Mexico consented to tariffy all import quantities and in addition eliminate every single standard tax and levy reciprocals Result: outskirt assurance for even touchy wares was to be evacuated Why? Gifford contends, the estimation of market get to increased, in addition to the more noteworthy simplicity politically of offering a no-special cases approach, was justified regardless of the dangers of harm from the more prominent rivalry that would be felt in sugar and dairy Conclusion: it was basically a figuring of political expenses and advantages, not more broad perspective of two-sided versus multi-horizontal transactions, and these would fluctuate case by case Silverado Symposium

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Apparent Causes of 1990s Reforms Main components of changes : expulsion of fare grain cargo sponsorship and dairy coordinate appropriation, changing of ware based adjustment projects, and decrease of assortment of littler endowments Federal govt spending cutting weights plainly essential purpose behind the arrangement changes, especially extensive costly strategies Reform of Crow cargo sponsorship likewise impacted by URA Export endowment responsibilities including reducing Crow, however this required just 36% more than 5 years, not 100% in 2 years Dairy endowment: some cut would meet local bolster duties yet real cut well past least req\'d So solid impression that these two cuts were principally spending weight instigated Silverado Symposium

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Causes of Earlier Reforms Changes in adjustment programs prior in decade have nearer association with exchange strategy Change not for a NAFTA or URA duty Rather because of exchange cure law, countervail arrangements Canada defenseless against countervails because of past outline of adjustment projects Shift to entire homestead, cross-ware,, protection style program was significantly a reaction to U.S. countervail methodology in push to evade US CV obligations These worries were talked about generally since mid-1980s when swines and pork were liable to a progression of CVD examinations Silverado Symposium

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Other Causes of Policy Changes The changing part of ranch anterooms could likewise be contended to be a vital calculate in any event some approach changes in the 1990s More sub-gatherings of makers started to apply freedom from the solid places of the key homestead entryways Farm campaign bunches turned out to be more divided by product, locale, between various homestead segments, and amongst agriculturists and processors With makers holding more blended positions, the hall position for specific strategies debilitated, and the administration was left with more scope to cut projects without clear and reliable resistance, including cuts that would not have been plausible 10 years or two prior Silverado Symposium

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Negotiations and Reforms: Summary Role of exchange strategy gives off an impression of being auxiliary in changes embraced by Canada since mid-1980s In those situations where exchange arrangement was critical, it creates the impression that NAFTA was considerably less essential than URA Same perception holds for Canada\'s CUSTA, NAFTA, UR and FTAA transactions: key approach zones where changes may be major have kept off the table in the CUSTA, NAFTA and FTAA transactions U.S. transaction technique very unique in NAFTA (Mex) Exception in prior adjustment program changes where key goal unmistakably to diminish the powerlessness of new projects from countervailing obligation claims. Here exchange strategy contemplations were basic in program change. Silverado Symposium

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Selected Dispute Studies: Dairy 1 Series of outskirt question in dairy since CUSTA all brought by US, on issues of one-sided inconvenience of import standards, the legitimacy of tariffication as done to actualize URAA, and fare appropriations 1988 dessert and yogurt case brought by US after Canada forced frozen yogurt and yogurt import amounts singularly after CUSTA arranged US won this case; Canada reacted by means of Uruguay Round execution in 1995 1996: Did Canada\'s tariffication for URA disregard NAFTA rules? Which assention overwhelms? Administering bolstered Canada; URA arrangements had need over NAFTA Silverado Symposium

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Dairy 2 Late 1997, mid 1998: US (and New Zealand) conveyed grumbling to WTO against Canada for sponsoring milk fares Canada\'s drain item fares to US developed considerably in period after 1995 execution of URA 5 years of claims and difficulties, demands for consistence board, requirement for new information; just settled in Dec 2002 US/NZ win case with real repercussions for Canada\'s supply administration segment: all fares over 1995 levels are esteemed to be financed and should be halted Silverado Symposium

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Dairy 3: Lessons Reasons for debate? Canada\'s high over-TRQ levies upon URA usage welcomed challenges Milk income pooling was halfway opportuni

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