Saturday, December 19, 2015

World Trade deal finally reached

A much-reduced trade deal has been brokered in Nairobi, Kenya, by members of the World Trade Organization.

The biggest issue for Canada is an end to all export subsidies within three years.

That will hit Canadian dairy exports hard, but also chicken if the Americans catch on to the “market development” program tjhey run.

The office of the United States Trade Representative has outlined some points of agreement in a public memorandum.

It says the end of export subsidies "ensures an end to Canadian dairy and Indian sugar export subsidies, while also preventing export-oriented countries like Brazil from taking advantage of such measures going forward."

That blows a huge hole in the Canadian dairy farmers' proposals to lower milk prices so it can develop a domestic processing industry to both end imports of milk components and go after export markets.

As with Country of Origin Labeling (COOL) in the U.S., Canadian supply management has so deeply offended our trading partners that they will not likely settle for anything less than a complete end to the system.

The WTO agreement requires developed countries to immediately eliminate export subsidies and gives developing countries three years to phase them out, according to the agency.

Developing countries will be allowed to use limited export subsidies for transportation and marketing until 2023, subject to certain conditions.

WTO members committed to new disciplines regarding agricultural export financing, including export credits, direct financing and interest rate support.

The deal also includes new disciplines on food aid, but "ensures the United States is able to continue to provide recipient countries with food assistance through programs currently operated," USTR said.

Years ago the negotiators working on a new World Trade Agreement had agreed to adopt voluntary guidelines already followed by many nations, including Canada.

Bringing them into the WTO would make them mandatory disciplines with the normal WTO sanctions available as remedies.

The United States has consistently violated the voluntary guidelines, particularly in requiring that its food aid move on U.S. ships and be handled by union workers. It has also used food aid to dump its surpluses in ways that have disrupted markets and made life more difficult for poor farmers in poor countries.

WTO members will "enhance transparency and monitoring in relation to trade-related aspects of cotton in the WTO," USTR said.

That is an issue of particular interest to impoverished farmers in countries such as Mali, Africa. Again, the U.S. is the culprit.

That agreement is outlined in a separate fact sheet on outcomes to help the WTO's Least Developed Countries.

Members will continue to meet twice each year to study the latest information and to discuss the latest developments on market access, domestic support and export subsidies for cotton.