Linkages between Bilateral and Multilateral Negotiations in Agriculture

Abstract

At first blush, it might appear that the linkages between the negotiations on agriculture being conducted in the contexts of a bilateral CanadianAmerican Free Trade Area (CAFTA) and the Uruguay Round of multilateral trade negotiations (MTNs) would be rather tenuous. This is for several reasons. First, the primary agricultural trade interest of both countries is focused on the bigticket items of grains and oilseeds, and these are traded almost entirely off-shore. Second, the agricultural commercial diplomacy of both countries is directed primarily at Europe and Japan rather than at each other. Third, insofar as agricultural trade negotiations have become concerned with reducing and eliminating the trade-distorting subsidies provided to farmers by national agricultural policies, both countries have to use the offer to dismantle their farm programs where it will provide most negotiating leverage, which is in Geneva rather than in the bilateral trade negotiations (BTNs). These are three important reasons why early limits might be encountered to the oft-expressed hope and expectation that the BTNs will provide constructive arrangements in agriculture that can serve as models for the MTNs. However, closer examination shows that there are indeed numerous and important interfaces between the two sets of negotiations in terms both of broad common interests and in the finer detail of the ways in which particular issues might be handled. First and foremost, it is decisively important to both the United States and Canada that the agricultural BTNs send the right signals to other countries. This means that the two countries must demonstrate clearly and unequivocally that they can agree to liberalize continental trade in farm and food products, not only by removing frontier measures but, more important, also by changing those elements of national agricultural policies and programs that harm the legitimate trade interests of the negotiating partner. Furthermore, providing the right demonstration effect requires that continental agricultural trade liberalization be on the widest possible scale with few exceptions. Second, both countries have much to gain if they can adopt a common stance in the MTNs. In particular, the reality of the distribution of influence means the results for Canada of the MTNs will be augmented if Canada can support negotiating approaches favored by the United States. By the same token, U.S. negotiating proposals would be strengthened if they were supported by an important member of the Cairns Group. Thus, the BTNs provide the opportunity for seeking and evolving mutually supportive MTN negotiating positions. Third, the BTNs are throwing up all the same issues that will have to be confronted in Geneva. At a minimum, having to address them early means that both countries' negotiators will enter the agricultural component of the MTNs exceptionally well prepared. More important, the BTNs provide a testing ground for alternative approaches and prototype solutions to specific issues, some of which may be subsequently adopted multilaterally. It is to these that we now turn.