COLUMNS

AS THE WORLD TURNS

With most tariffs on the way out, it’s time to focus on removing other trade barriers

Mary Janigan June 6 2005
COLUMNS

AS THE WORLD TURNS

With most tariffs on the way out, it’s time to focus on removing other trade barriers

Mary Janigan June 6 2005

AS THE WORLD TURNS

ON THE ISSUES

Mary Janigan

With most tariffs on the way out, it’s time to focus on removing other trade barriers

THERE ARE TWO trends that capture the peculiar plight of the fabled World Trade Organization—and how the world has changed under our very noses. First, there has been no let-up in the number of acrimonious disputes trundled before it: in a mere decade, it has handled 330 cases, ranging from Mexican objections to Panamanian milk tariffs to Indonesian complaints about Korean anti-dumping duties on paper. But turn to what is forlornly hailed as a huge breakthrough in its current round: the recent agreement on a technical formula to convert so-called specific tariff rates like three cents a kilo into percentages. That may allow officials to chat sensibly about agricultural tariffs but, after almost four years of talks, this is a snail’s advance toward freer trade. “The framework for dispute settlement is working: a huge body of jurisprudence is developing,” says Toronto trade lawyer Larry Lierman. “But they are not making a helluva lot of progress in getting a new deal.”

This logjam in the search for a new deal has huge implications for the WTO’s 148 members—including Canada. After eight successful rounds to lower trade barriers, the current talks may eventually grope their way to a deal on an agenda that includes more open markets for the Third World’s agricultural products.

But the real trade action has moved elsewhere—to regional and bilateral treaties. The WTO itself has fretfully counted 312 such current or pending pacts. (In fact, Mongolia is the only WTO member without one.)

Those deals tackle issues like investment that seemingly elude

We need a working Canada-U.S. border. A car made here and sent there may contain parts that have crossed the border five times.

WTO consensus. Perhaps 148 cooks will never be able to expand the broth. So Canada has been realistic. While supporting the WTO, it has inked four regional deals, including the groundbreaking 11-year-old NAFTA with the U.S. and Mexico. And it is negotiating pacts with six other parties, including that economic powerhouse Korea.

But that is only half of the story. In a coming study, Carleton University trade experts Bill Dymond and Michael Hart argue that we have gained virtually everything we needed from traditional trade deals: most tariffs have almost disappeared. Meanwhile, the world that those deals was designed to handle is disappearing. Today’s transnational firms—there were 63,000 in 2000 with 800,000 affiliates—move investment and production where they please, bypassing barriers. And, although most trade pacts deal with goods, fewer than one in five Canadians now work in manufacturing. Most deliver services. “The world has grown beyond its economic institutions,” says Dymond. “The powers of government over international trade are steadily declining.”

What does this mean for us? We should pursue WTO talks. We should keep signing bilateral pacts. And we should ensure the Canada-U.S. border works. This is no small thing. A car made here and sent there may contain parts that have already crossed the border five times. “Governments should focus on what they can do, such as managing the border,” Dymond says.

The timing may be right. After his recent reprieve, Paul Martin vowed to improve our relationship with the U.S. There’s plenty to do—ranging from an easier dispute settlement mechanism to better border infrastructure. The WTO may take years to clarify its current rules—before it can agree on more. It is in our interests not to wait around. !?1

Mary Janigan is a political and policy writer. mary.janigan@macleans.rogers.com