Regulation and Protectionism under GATT: Case Studies in North American Agriculture

By Andrew Schmitz; Garth Coffin et al. | Go to book overview

barriers into the United States and it is uncertain what portion of the EU market is available. Firms pursuing a niche marketing strategy into the United States, however, may be constrained by the Canadian system. If these firms want to import US raw product, process it to the specifications demanded by buyers in that niche market and then reexport it to the United States, there may continue to be bureaucratic obstacles to developing the US portion of a niche market that exists in North America. In the past, such problems have existed for firms producing further processed poultry products such as seasoned and tipped chicken wings and chicken that is produced entirely with organic inputs and processes ( McKay, 1993).

Another problem facing Canada's supply-managed industries has to do with the regulations put into place at the inception of these programs that carved the domestic market into provincial production shares. These provincial shares proved politically impossible to change and resulted in higher-cost structures and lower-than-optimum processing-plant volumes, even with raw product output controls. These regulations make it more difficult for a firm to follow a "scope" strategy that is facilitated by a large supply of raw product from which market niches can be served. While it seems clear that the provincial market share regulations will be difficult to enforce in the post-Article XI trade environment, it will take several years for national production and processing patterns to be rationalized.

For the dairy industry, the obstacle to accessing the EU and US markets may well be the proportion of quota that will be locked into traditional exporters over the next six years. For example, it appears that Canada's cheese firms, at best, will obtain a proportional increase in their approximate 11% of US import quota from 1995 to 2001. There is also mounting anecdotal evidence that Australia, New Zealand and certain EU countries have locked in significant shares of tariff-rate quota for other products, as well as other countries.

Lack of access to the US and EU markets, as well as the need to develop better knowledge of markets with more demanding consumers and improve marketing abilities, suggests that multinational organizations, strategic alliances or joint ventures between Canadian firms and counterparts in these markets should be seriously considered. Three decades of supply management may well have destroyed our ability to "go it alone" in the twenty-first century.


Notes
1
Throughout this chapter we use the term product to refer to any physical, product, its associated services or only a service.
2
Only Marxists, who developed the labor theory of value into a theory of profit or surplus value, retain the separation of "value in use" and "value in exchange" for price determination.

-145-

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Regulation and Protectionism under GATT: Case Studies in North American Agriculture
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Acknowledgments vii
  • About the Editors and Contributors ix
  • Section One - Overview of the Effects of Gatt 1
  • 1 - Itroduction: Trade and Regulations in Transition 3
  • References 18
  • 2 - Post-Gatt Assessment of the World Marketplace 20
  • Notes 35
  • 3 - Consequences of Tariffication 37
  • References 50
  • 4 - Supply Management Under Minimum Import Access Requirements 51
  • Notes 62
  • References 62
  • 5 - Imports into Canada: Why Have They Remained Low? 64
  • Notes 76
  • References 77
  • Section Two - Case Studies of Gatt's Effects 79
  • 6 - Regulation -- the Us Dairy Industry 81
  • References 94
  • 7 - Cost Competitiveness in the Canadian and Us Dairy Industries 96
  • Notes 115
  • References 116
  • 8 - Supply Management and Vertical Coordination: the Role of Cooperatives 118
  • Notes 126
  • References 127
  • 9 - Value-Added Economic Potential 128
  • Notes 145
  • References 146
  • 10 - Tobacco Supply Management: Examples from the United States and Australia 147
  • References 158
  • 11 - Gatt and the Us Peanut Market 160
  • Notes 178
  • References 179
  • 12 - The Us Sugar Industry: the Free Trade Debate 180
  • Notes 199
  • References 201
  • Section Three - Regulation and Supply Management 203
  • 13 - Supply Management Canadian Style 205
  • Notes 221
  • References 223
  • 14 - Power Relationships in the Political Process 226
  • Notes 241
  • References 244
  • 15 - Provincialism: Problems for the Regulators and the Regulated 245
  • References 267
  • 16 - Provmcial Versus Centralized Pricing: Protectionism and Institutional Design 269
  • References 283
  • 17 - Venturing into the Political Market 284
  • Notes 296
  • 18 - Vertical and Horizontal Coordination 299
  • Notes 312
  • References 313
  • 19 - Will the Supply Management Cartel Stand? 314
  • Notes 330
  • References 330
  • About the Book 332
  • Index 333
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