the Regulators and the Regulated
K. A. Rosaasen, J. S. Lokken, and T. J. Richards
It is no longer "business as usual" in Canadian supply-managed industries since Canada signed the General Agreement on Tariffs and Trade (GATT). The tariffs, which replace import controls, effectively maintain international barriers, but they are not contingent on the maintenance of supply management in Canada as were import controls. This difference changes the dynamics of interprovincial negotiation for market share within Canada. Formerly, political power was extremely important, but economics may soon become the key factor. The current disarray in the sector arises from provincial jockeying for position in the new "game" including an attempt by some provinces to have current shares legislated into the future.
This chapter provides examples of allocational problems in the "regulatory playing field." It dispels the myth that current quota values and industry size and distribution accurately reflect relative regional profitability, and it outlines the problems of political economic-seeking transfers (PESTS) in regulation, including the capture of regulators by the industry. Divisive issues such as import quota rights, interprovincial quota trading and provincial quota allocation are also discussed. This chapter leads to the conclusions that there is a need for the supply-managed system to define goals and priorities and that regulators need to adjust the system to make it more consistent with economic criteria. This may prevent system collapse and high adjustment costs. A move to include more economic principles in the regulation of supply management is a prerequisite for system survival.