Exclusive US agreements unfair advantage, Emerson says
Globe and Mail, Canada
Exclusive U.S. agreements unfair advantage, Emerson says
By Barrie McKenna
3 May 2007
WASHINGTON — Canadian exporters are facing discrimination in Latin America and elsewhere because of exclusive trade pacts the United States has with those countries, Trade Minister David Emerson has complained.
Mr. Emerson cited the example of McCain Foods Ltd., the world’s largest French fry maker, which is now facing vastly higher tariffs than U.S. rivals in key Central American markets.
"No country can stay on the sidelines and see their exporters disadvantaged by what others are doing," Mr. Emerson said in speech to a conference on the Americas in Washington yesterday.
The Bush administration has signed a string of free-trade deals around the world in recent years, including the 2005 U.S.-Central American-Dominican Republic Free Trade Agreement, or CAFTA.
The U.S. is also on the verge of striking a free-trade deal with South Korea, a vital Canadian trade partner.
"There is a fair amount of protectionist sentiment in the States these days, and you constantly are having to combat it in one way or another," Mr. Emerson told reporters.
That has forced Canada to play catch-up, "both for offensive and defensive reasons," Mr. Emerson conceded.
But the deals are proving slow to come. More than two years after the U.S. signed CAFTA, Ottawa is still negotiating a free-trade deal of its own with El Salvador, Guatemala, Honduras and Nicaragua, and also expects to launch free-trade talks this year with the Dominican Republic, Colombia, Peru and some Caribbean countries.
Canada is also in talks with South Korea, but U.S. negotiators have a significant lead.
All the while, McCain is fighting to hang on to its "multimillion-dollar" business in Central America, Richard Efting, president of McCain International said in an interview. The company’s frozen fries face an average 15-per-cent tariff in the CAFTA countries, while U.S. exporters enjoy duty-free access.
"It’s been tough," Mr. Efting acknowledged. "We have two choices: We either lose sales or we suck it up and take it off the price."
Mr. Emerson said the patchwork of trade deals has created an unlevel playing field that is creating "trade diversion."
One of the foundations of the World Trade Organization is that countries typically offer "most-favoured nation" status to most trading partners, automatically matching the lowest tariff rate for everyone," Mr. Emerson said.
"What we are seeing is the erosion of the most-favoured nation principle," he said.
The solution, according to Mr. Emerson, is to make improvements to the North American free-trade agreement so that the U.S., Mexico and Canada don’t discriminate against each other in third markets. He suggested NAFTA should become a common template for regional and bilateral free trade deals.
"You try as much as possible to ... ensure that the system integrates and there aren’t anomalies," he said.
Mr. Emerson said he is trying to set up a meeting as early as next week with his U.S. counterpart, Trade Representative Susan Schwab, likely in Ottawa to discuss key trade issues, including the prospect for saving stalled global free-trade talks.
