Changes in Canadian Agricultural Marketing and Trade Policy: The Impacts of New Trade Rules and New Institutions

Abstract

The Canada-United States Free Trade Agreement (CUSTA) and the subsequent North American Free Trade Agreement (NAFTA) have contributed to increasing concentration of agricultural trade between the United States and Canada. This has heightened bilateral trade tensions and trade conflicts for numbers of Canadian farm products. These conflicts, and the need to accommodate domestic marketing policies to the obligations of the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), have encouraged changes in Canadian agricultural marketing policies. Pressures to reduce government expenditures have also provided a compelling reinforcing impetus to changes in numbers of Canada's agricultural marketing programs. However, despite some changes in the ways that the programs for the Canadian supply-managed farm products are organized and administered, there has been no reduction in the levels of policy-induced support provided to this group of producers. Indeed, adjustments in marketing and trade policy for dairy, poultry and eggs have increased the levels of protection for these sectors. High levels of protection for supply-managed farm products reflect the strong influences of regional political pressures in Canada; this is an influence that is expected to continue in the future. In contrast to the supply-managed dairy and poultry sectors, major changes have been made in marketing programs for the export-oriented Canadian grains and red meats sectors in response to trade and budgetary pressures. These have involved the removal of longstanding rail freight subsidies for grains and the phasing down or termination of several stabilization and safety net programs.