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

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

program through market sharing. Both models require some form of power sharing or delegation agreement, and this is accomplished through the federal-provincial agreements.

At least three factors contributed to the creation of supply management: 1) market failure in terms of persistent overproduction of dairy and poultry products coupled with an uneven distribution of bargaining powers; 2) jurisdictional disputes between federal and provincial levels of governments and among provinces; and 3) rent-seeking by industry stakeholders promoting protection from imports and domestic production control.

This chapter suggests two scenarios and/or hypotheses for further research. The first scenario is that some provincial boards may start leaving the supply management system, especially if exit costs are perceived to be less than the loss of producers' surplus from their internal adjustments to the new international trade rules ( Saint-Louis, 1994). The second scenario is that federal regulatory agencies will conclude that desirable, structural adjustments in the whole food and fiber industry in Canada must take into account issues of competitiveness. The agencies must justify preemption of such organized price-leveling mechanisms as those tolerated in the past, especially when the possibility of rent-seeking by provincial stakeholders is greater in some provinces than in others.

Supply management is about power-sharing in a national market protected by import quotas or tariffs. In the context of trade liberalization, governments and business will be less able to exercise market power in the future. Planned adjustments are needed to meet increased international competition and to prevent the destruction of supply management systems from within.


Notes
1.
Acknowledgments: Many thanks are due to Gilles Froment, graduate student at McGill, for his help in data analysis, literature review, and general preparation of this chapter. Thanks are also due to David Kirk, former Secretary General of the Canadian Federation of Agriculture, François Lemieux, legal counsel to CEMA and CCMA, the Hon. Senator H. A. Olson and the Hon. E. F. Whelan both Former Ministers of Agriculture, for sharing their knowledge and insight on the subject. Finally, the authors appreciate the helpful input and comments of Glenn Flaten, former member of the National Farm Products Council, and Dr. Yvon Proulx, economist at the Union des Producteurs Agricoles du Quebec.
2.
The task force members and their affiliations were as follows: D. R. Campbell, University of Toronto; R. Cumtois, Belanger, Sirois, Saint-Jacques, Comtois and Company, Chartered Accountants; J. C. Gilson, Dean of Graduate Studies and Chairman of Agricultural Economics, University of Manitoba; D. L. MacFarlane, Head, Agricultural Economics, McGill University; and D. H. Thain, School of Business, University of Western Ontario.

-221-

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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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