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BLOGGING FOREIGN POLICY

Why Egypt Needs Space from Morsi

Bessma Momani | February 25, 2013
Morsi's Closing Window

As Egypt’s democratically elected president, one would hope that Mohamed Morsi would have a finger on the pulse of the Egyptian people. Unfortunately, he’s looking more and more out of touch. An online campaign has begun, with typical good Egyptian humour, to nominate Morsi to win a trip to space – a place where Egyptians hope he might gain some perspective on his role in Egypt’s earthly troubles. More …

The president has announced that the parliamentary elections originally slated for February 23 will now commence on April 22 and likely won’t be competed until June 16. Due to a shortage of election monitors, Egyptians will head to the polls in four stages. Holding elections over a number of months will improve transparency, but supervisors will still have their hands full. Egypt’s political and economic climate as of late can only be described as chaotic.

The factors behind the current impasse have grown depressingly familiar: a near-bankrupt economy; worsening political gridlock; a deeply frustrated public that is venting its anger at the ineffectiveness of the current government with increasing frequency and violence; and restless security institutions whose actions have done little to mitigate the political situation, and even less to dispel fears of what may come if the civilian-run order falls apart. President Morsi is struggling to find a way out of this mess – the delayed elections are just one indicator among many.

To be fair, Morsi inherited an economic, political, and social system in complete disarray after decades of neglect and corruption under Mubarak. After the revolution, Egyptians had high, arguably unrealistic expectations that a democratically elected government would clean up the mess – piling garbage would be removed from the sewers, the country’s infamous traffic problems would be solved, corrupt and inefficient judges would be replaced by honest, fair-minded ones, and heavy-handed police brutality would be reined in.

But when it came to designing and implementing the policies necessary to fix these problems, the democratically elected government found itself stuck with the financially and morally bankrupt institutions of the old regime. Institutional reform would have to precede many of the everyday changes demanded by Egyptians.

Morsi acknowledged that reforming the system and its core institutions – which despite their decaying state, remain key sources of national pride – was necessary, and that it would be challenging. But, as the months have passed, he has not risen to occasion. Instead, he has prioritized strengthening his own authority, supposedly to better safeguard the reform process. Whether or not this proves to have been a legitimate path to take, it has become clear that Egypt’s infrastructure, education, food and agriculture, housing, police, security, and legal systems (to name only a few) need to be overhauled completely, not merely reformed.

Unfortunately, Morsi has done much to entrench the worst of the problems that besieged the country post-Mubarak. Months of delay and political manoeuvring have led to widespread public disillusionment with the government. And not just in Egypt – in the U.S. Congress, skeptical voices are growing louder in debates over the provision of aid. Global cynicism is reflected in the dramatic decline of the country’s tourism-related income over the last two years, an industry on which a quarter of the Egyptian economy depends.

Morsi’s personal style, or lack thereof, has encouraged perceptions that Egypt is a black comedy stuck on rewind. His performances have become painfully reminiscent of Arab leaders past. When he takes the megaphone and yells at his people, telling them what they are doing wrong without suggesting how to put things right, it is boring at best. More disturbingly, he now seems content to rely on the discourse of the past – the blaming of an unknown and ominous enemy for the country’s ills – to legitimize his policies, instead of offering a vision for the future.

For many diehard revolutionaries, the solution to this uninspiring situation is “Down with the regime!” This slogan has a good track record so far – Egyptians brought down a 30-year-old autocracy in 18 days – but perpetual protests will not solve the country’s problems. Going to the polls should be the most effective way for Egyptians to bring about change, but whether or not this holds true will depend on who chooses to participate in the upcoming parliamentary elections.

Nobel laureate Mohammed El-Baradei of the National Salvation Front has called for a public boycott of the elections, and other opposition figures are now debating the option. This is the wrong path to take – a boycott would not help Egypt move forward. One can see why the NSF might prefer to derail the elections rather than face Morsi squarely. The opposition movement is fragmented, fragile, and has shown little evidence of new ideas. Its raison d’etre appears to be its leaders’ dislike of Morsi, with some going as far as to claim that Morsi has no political legitimacy. But such claims will do little to further the opposition’s goals if they are not accompanied by efforts to build up the movement’s own governance credentials.

The opposition needs to buckle down and recognize a real opportunity when it sees one. It needs to put forward future-minded candidates who will declare their determination to fix Egypt’s problems with a single voice strong enough to drown out the uninspiring messages coming from Morsi’s megaphone. If the opposition works hard to find alternative ideas that can win votes at the polls, they will do far more good for Egypt than if they harangue voters from the sidelines. The parliamentary elections could be a turning point, but not if the opposition sits back, complains, and boycotts.

Morsi is now being lambasted for having no charisma and no vision – a fairly dramatic shift from the early days of the Muslim Brotherhood’s rise to power. To be fair, he had only a small window to repair the damage wrought by Mubarak, but he failed to use it effectively. With each passing day, the public is becoming less prepared to let another window go by.

The president now has a growing number of critics who don’t want to see his party dominate the next parliament. In fact, they want him to leave, to a galaxy far, far away. A boycott will hardly make this more likely.

The Mother of All Trade Blocs

The U.S. and the EU hope their proposed trade deal will force open the emerging markets. It might have just the opposite effect.
John Hancock | February 15, 2013
The Mother of All Trade Blocs

An earthquake just hit the world trading system. The proposed U.S.-EU Transatlantic Trade and Investment Partnership unveiled this week is not simply another trade bloc but the mother of all trade blocs – an exclusive alliance representing half the world economy purposely aimed at counter-balancing China and other fast-rising trade powers. The split between the West and the rest that has paralyzed the WTO for more than a decade just burst into the open. More …

Of course, this is not how the U.S.-EU deal is being sold to the world. In his State of the Union address on Tuesday, President Obama stressed its economic advantages, arguing that “free and fair trade across the Atlantic” will support “millions of good paying American jobs.” But behind the scenes, officials are more candid about their geo-economic ambitions. Speaking to the annual U.S. conference of mayors two weeks ago, João Vale de Almeida, the EU’s ambassador to Washington, portrayed a new transatlantic trade bloc as a powerful new lever to shape globalization “according to our principles.” By joining forces in a continent-spanning trade and investment bloc, he argued, the United States and Europe would “call the shots around the world.”

This nostalgia for calling the shots is understandable. For more than half a century after 1945, the industrialized West, especially the United States, dominated the world trading system, while the vast developing world largely stood on the sidelines. Even when China and other developing countries began their vertiginous rise two decades ago, the West confidently believed they could be seamlessly and painlessly absorbed into the global trade club. In the lead-up to China joining the World Trade Organization (WTO) in 2001, then-president Bill Clinton described China’s membership as a “hundred-to-nothing deal for America” that would “increase U.S. jobs and reduce our trade deficit.”

It has not worked out that way. Far from shrinking, the U.S. trade deficit with China has exploded to more than $550 billion – a 450-per-cent rise since China joined the WTO in 2001. China has just passed the U.S. as the world’s largest exporter, and Japan as the world’s second-largest economy. Meanwhile, U.S. efforts to rebalance global trade by convincing China and other emerging economies to match its tariff reductions in the WTO’s Doha Round of trade talks have been repeatedly rebuffed – which explains why the WTO has remained deadlocked for more than a decade. Similarly, attempts to pressure China to abandon its currency peg and allow the yuan to appreciate have run into a brick wall. The basic problem is that China is benefitting enormously from the status quo, while the U.S. brings a shrinking array of carrots and sticks to the table. Suddenly, it’s the BRICS that are calling the shots.

This is where the new U.S.-EU strategy comes in. By creating a preferential bloc encompassing 700 million people and a staggering $30 trillion in output, the U.S. and the EU hope to create a lever big enough to finally force open emerging markets – in the same way that EU enlargement in the 1960s and ’70s brought the U.S. to the negotiating table, and the creation of NAFTA in the early 1990s pushed the EU to accept the Uruguay Round outcome. José Manuel Barroso, the president of the European Commission, argues that such a massive deal will “set a standard, not only for our future bilateral trade and investment, including regulatory issues, but also for the development of global trade rules.”

The risk, however, is that a new transatlantic bloc will have the opposite effect. Instead of pushing the BRICS to negotiate, it may push them further away, encouraging the formation of rival trade blocs, marginalizing the WTO, and leaving the global system even more fragmented and divided. These are not new fears. The idea of a transatlantic trade bloc has surfaced innumerable times since the Second World War, but on each occasion it was rejected by the United States and Europe as being too globally divisive and exclusionary. Until now.

Canada faces a particularly ironic dilemma. In many ways, Canada laid the groundwork for the U.S.-EU initiative. Roy MacLaren, former minister of international trade, first called for a transatlantic free-trade agreement in 1995, and successive Canadian governments have doggedly pursued the idea ever since. Indeed, it was the prospect of an early Canada-EU preferential agreement that helped persuade the U.S. exporters of the need for their own deal with Europe. But now Canada faces the prospect of exclusion from the transatlantic bloc it has advocated. The question is whether to continue on a separate bilateral track – and risk being marginalized by the U.S. and EU juggernaut – or to attempt to trilateralize the negotiations, as Canada did with NAFTA.

One thing is certain: José Manuel Barroso is not exaggerating when he describes the proposed transatlantic trade bloc as a “game changer.” But what will be the result? The revitalization of global trade co-operation, or its end?

The Surveillance Arms Race

How western technology companies are helping autocratic governments monitor and control their citizens
Taylor Owen | February 15, 2013
The Surveillance Arms Race

There is a new arms race emerging between people who want to communicate freely and securely and governments that want to monitor and limit this communication. In democratic countries, this government interference ranges from the mass monitoring of telecoms to flirtations with cutting off social media flows and shutting down cell towers in protest areas. When autocratic countries face crisis and conflict, however, the battle for control over communication is more troublesome and the risks are more acute. More …

Linking the interference being run by governments in democratic and autocratic countries is the technologies being deployed by both. And therein lies a paradox: The tools that enable autocratic governments to monitor and control their citizens are produced by western technology companies. 

Much like the arms trade, this often creates an awkward scenario in which western countries end up supporting opposition movements that are fighting against technology bought from western countries. Sometimes this collusion backfires in provocative and potentially controversial ways. For example, in Syria, American journalist Marie Colvin and French photographer Rémi Ochlik were killed by a mortar attack that was most likely carried out by targeting their satellite phones. It is widely held that this technology was provided by western companies.

There are many recent examples of this phenomenon, especially within the context of the Arab Spring. High profile technology companies such as Gamma (UK) and FinSpy offered surveillance services to regimes in Egypt, Tunisia, Libya, Bahrain, and Syria. Google Engineers discovered contract proposals between Gamma and the Mubarak regime – €250,000 worth of spy technology  that would “enable them [Egypt] to intercept dissidents’ emails, record audio and video chats, and take copies of computer hard drives.”  The SpyFiles operation by Wikileaks and Privacy International further revealed 287 documents indicating that these surveillance companies such French arms dealer, Amesys, sold both spyware and malware technologies (including Trojans) to the Gaddafi regime.

The Citizen Lab at the University of Toronto has uncovered a wide range of examples of complicity between western companies and authoritarian regimes. Most recently, it showed that devices manufactured by Blue Coat Systems, a California-based hardware company, were in use by 61 countries, with histories of human rights abuses. In 2011, it detailed how Syria used Blue Coat software to both censor the Internet and root out particular activities linked to pro-democracy activists.

Western governments use this same type of commercial filtering and monitoring technology to monitor and restrict the online behaviour of their employees. This means that western governments could very well be implicitly supporting private companies that develop technologies that assist the oppressive regimes the oppose.

Indeed, if one were to attend a trade show for such technologies, as a Washington Post journalist recently did, one would find more than 35 United States federal agencies buying the very same technologies as the autocrats. As reported in the Atlantic, Jerry Lucas, who runs a trade show called ISS world, which is known as the “Wiretapper’s Ball”  was asked by the Guardian whether he would be comfortable with Zimbabwe and North Korea buying technology at his trade shows.  He responded, “That’s just not my job to determine who’s a bad country and who’s a good country. ”That’s not our business, we’re not politicians … we’re a for-profit company. Our business is bringing governments together who want to buy this technology.”

The U.S. State Department, which has spent $70 million promoting internet freedom abroad, is part of a government that has few regulations on the trade of the technology that prevents such freedom. A bill has been before the United States Congress to prevent the sale of this technology to “Internet-restricting countries” since 2006, but the bill faces implementation challenges, as the list of countries in question now includes most nation states.  And there are other real limits to what western governments can do, due to both the scale of the industry, estimated at $5 billion a year globally, and the limits of contemporary international law.

There have been some positive steps: Last year a U.S. congressional subcommittee passed the Global Online Freedom Act (GOFA), “creating a new transparency standard for Internet companies listed on U.S. stock exchanges and operating in countries that substantially censor or control the Internet.”  The GOFA would force U.S. companies listed on the U.S. Stock exchange to release information on their human rights due diligence.

Of course, these technologies have the potential to be used for both positive and negative impact (they are dual-use). This poses a particular challenge to governments trying to use these technologies for good. For example, the U.S. government is funding Commotion Wireless, a sophisticated hacking project that seeks to enable activists by undermining internet censorship in countries such as Syria and Iran, however the FBI recently warned that these same anonymizing and encryption tools might be “indicators of terrorist activities.”

The question for policymakers, then, is whether anything beyond challenging regulatory measures can be done to overcome the dual-use dilemma, or whether it is simply a fact of life in a radically open operating environment. Whatever the reply, a relatively simple place to start would be to support the development of technologies that empower individuals, rather than enabling the production and trade of tools used for surveillance and oppression.

For example, a Swedish research team recently developed a new tool that allows Tor communication (a tool that anonymizes internet use) to be cloaked within services like Skype in order to circumvent recent changes to the Chinese “firewall” that had compromised those who used those services. Similarly, a team at Columbia University’s Graduate School of Journalism, in partnership with Stanford Computer Science, has built an app called Dispatch that allows for secure communication between journalists and their sources in areas of conflict. Another app, Silent Circle, allows users to send encrypted files of up to 60 megabytes via text message. These are tools that our governments should support. One can even imagine a virtual embassy incentivizing such projects. Too often, however, these surveillance-evading tools ruffle the feathers of autocratic and democratic governments alike.

What we are ultimately seeing is an arms race between oppressive governments and their citizens. It is high time that our democratically elected governments cease supporting, either tacitly or explicitly, the technologies enabling government surveillance.

Third Time’s An Alarm

Why Kim Jong-un's belligerency may have cost him Xi Jinping's support
Jennifer Welsh | February 14, 2013
A man walks past a display illustrating the damage a 1MT class nuclear weapon would cause if detonated in Seoul

On Tuesday, after an emergency session convened by South Korea, the United Nations Security Council issued a unanimous condemnation of North Korea’s nuclear test – the third in a series of provocations (the first in 2006, and the second in 2009) that have entrenched the country’s isolation. South Korea’s Foreign Minister Kim Sung-hwan, who currently holds the Security Council’s rotating presidency, called the underground nuclear explosion a “clear threat to international peace and security” and warned that the council would take “appropriate measures.” Susan Rice, the U.S. ambassador to the UN, reinforced these calls for a “swift, credible and strong response” from the international community to North Korea’s increasingly bellicose stance. More …

Solemn protestations such as these have become familiar in the council chamber, as have efforts to alter Pyongyang’s behaviour through economic and technological sanctions. As a result, analysts might be tempted to conclude that this recent move – following quickly on the heels of North Korea’s successful test of a ballistic missile in December – will not generate any significant breakthroughs or policy changes.

As before, the key player on the North Korean file is China, Pyongyang’s staunch ally and provider of crucial economic goods. The Security Council can make all the pronouncements it wishes, but it is individual states that make good on that body’s resolutions, by implementing sanctions and exerting diplomatic pressure. So far, while sanctions (such as a ban on imports of missile technology and luxury goods) have been agreed on, they have not included the measures that have the best chance of making an impact – asset freezes and travel bans, interdiction of ships, and a ban on crucial high-tech inputs. As long as China continues to see its interests as firmly tied to the survival of a viable and independent North Korea, which acts as a buffer against a pro-American South Korea, the real punishments meted out against Pyongyang will continue to fall short of the rhetoric.

But perhaps this time, things will be different.

First, there is the nature of the test itself. Previously, Pyongyang has used plutonium, reprocessed from a now-defunct nuclear reactor. However, for the first time, the North Koreans may have exploded a uranium device (still to be verified). If so, this signals that the country has developed uranium enrichment capability and therefore has the potential to manufacture several bombs.

Second, the North Koreans have used a miniaturized and lighter nuclear device, with greater explosive force. Such a device, when combined with Pyongyang’s efforts to build ballistic missiles, brings the threat of a long-range nuclear strike that much closer. Many analysts claim that North Korea is still years away from having the technology to deliver a nuclear warhead on a missile. Nonetheless, the steps taken this past week make such a capability a question of “when,” rather than “if.”

And finally, the Chinese may be on the cusp of a shift in policy – an incremental shift, to be sure, but a shift nevertheless. This week has been a disaster for Chinese diplomacy. Beijing’s efforts to reign in its unpopular ally have utterly failed, and this reflects badly on perceptions of Chinese influence. A debate has raged in Chinese policy circles about the wisdom of continuing to shore up a reckless regime, and concrete recommendations have been floated about reducing the provision of both aid and trade. China’s new leader, Xi Jinping, continues to be constrained by a military committed to North Korea on strategic grounds, and a Communist Party that still sees Kim Jong-un and his colleagues as ideological brethren. (The Chinese are also worried, more pragmatically, about the spectre of a North Korean economic collapse, and an influx of refugees into China.) But as Xi Jinping becomes more established, and if a warming of U.S.-Chinese relations can be achieved, then it is not impossible to imagine a change in China’s conception of its own security, whereby the role of a communist North Korea as a buffer has to be balanced against the very real threats associated with a more heavily nuclearized region and a U.S.-North Korea showdown.

To those who disagree, I would point to the Soviet Union in the late 1980s. Against most predictions, it slowly and steadily reimagined its security needs, and concluded that they were less dependent on continued nuclear build-up and a buffer of ideological comrades in Eastern Europe. To be sure, some of the facilitating conditions for such a shift may still be lacking in the Chinese case. But the Soviet example suggests that we should “never say never.”

Of course, any shift is partially dependent on China seeing a less hostile external environment. (I have little hope that the current North Korean regime will change its perceptions.) This means that the actions of the United States, and Japan, are particularly critical.

The North Koreans have done their best to make all of this more difficult. The nuclear test this week coincided with U.S. President Barack Obama’s State of the Union address, and is therefore seen as a direct challenge to a second administration. Interestingly, Obama has responded to the test by reaffirming the “nuclear umbrella” that the U.S. provides South Korea – i.e., that an attack on South Korea will be treated as an attack on the United States. In recent years, this promise has been assumed, but largely unspoken.

Pyongyang’s third test also comes at a time of transition in South Korean politics, as the current president – Lee Myung-bak – prepares to step down at the end of this month. The new president-elect might have wanted to re-engage with the North, and reconsider the provision of humanitarian and economic aid. But Kim Jong-un’s provocations make such measures all but impossible. The losers, as always, will be the North Korean people, who continue to live in poverty, fear, and isolation.

1930s Redux?

The parallels between the economy of the 30s and the economy today are becoming hard to ignore
John Hancock | February 13, 2013
1930s Redux?

History may not repeat itself, but the parallels between the world economy in the 1930s and the world economy today are becoming hard to ignore. Then, as now, the world was in the grip of a severe economic downturn and painfully high unemployment. Then, as now, governments tried to restore growth and exports by devaluing their currencies and carving out trade blocs, risking a chain reaction around the world. Then, as now, the system was rudderless, unstable, and insecure – which persuaded countries to protect their own national interests, even at the expense of the collective good. More …

The world has not yet plunged into a full-scale currency war, but the trends are not good. This fact was implicitly acknowledged by G7 finance ministers meeting on Tuesday who went out of their way to renounce “targeting exchange rates”, only to sett off a new and even larger wave of currency volatility. China continues to rebuff pressure to end the fixed and undervalued Yuan, exacerbating global imbalances and fuelling accusations of beggar-thy-neighbour trade strategies. The U.S. continues to drive down the dollar and flood the world with capital through successive rounds of quantitative easing. Brazil, Switzerland, and others continue to intervene aggressively intervene in markets to arrest their currencies from appreciation. 

The latest salvo is Japan’s decision in Decemeber to pursue a radically expansionary monetary policy, which is both pushing the yen to new lows against all major currencies and dramatically ramping up global currency tensions. Korea is threatening “an active response,” Russia is warning of reciprocal devaluations, Venezuela has just announced a massive devaluation, soon to be followed by Argentina,  while the eurozone is again split between France, which is demanding immediate action to weaken a fast-rising euro, and Germany, which is so-far resisting political interference in the European Central Bank. Not without reason, Jens Weidmann, Germany’s Bundesbank President, warned last month that the growing politicization of exchange rate policy was unleashing a global “race to the bottom”.

Recent actions on the trade front, though less volatile, are just as worrying. For the first time in history, the United States and Europe are talking seriously about forming a vast transatlantic free-trade bloc, encompassing half the world’s economic output. This follows the United States’ equally ambitious strategy to link ten or more “like-minded” Pacific Rim economies in a Trans-Pacific Partnership Agreement. Both initiatives are clearly aimed as much at restoring the West’s dwindling leverage vis-à-vis China and other recalcitrant emerging giants as at increasing intra-bloc trade. As João Vale de Almeida, the EU’s ambassador to Washington, recently put it, “if we get the [transatlantic] agreement right, we can call the shots around the world.”

These trade trends also have historical echoes. The Great Depression entered its most virulent phase not during the financial crisis of 1929, but during the trade crisis that followed, when the U.S.’s infamous Smoot-Hawley Tariff of 1930 set off an escalating global trade war and splintered the world economy into rival regional blocs. World trade collapsed, falling by an astonishing two-thirds between 1929 and 1932.

To repeat, 2013 is not 1931. Global economic integration is deeper today, trade and capital flows are greater, and governments have less scope to manipulate exchange rates or even tariffs in the face of powerful market forces. Policy-makers have also presumably learned from past mistakes. The current international economic system – composed of the International Monetary Fund, the World Bank, and the World Trade Organization (formerly the General Agreement on Tariffs and Trade) – was specifically designed to prevent a replay of the competitive devaluations and trade battles that caused the economic chaos of the 1930s and, ultimately, the outbreak of war. The fact that G7 finance ministers are clearly conscious of the currency war threat – and that the subject will also top the G20 agenda later this week – shows that the world has made progress.

Is it enough? In his seminal The World in Depression, Charles Kindleberger argued that the root problem in the 1930s lay less in countries’ “mistakes” than in their collective lack of faith in the possibility of an international solution and the absence of an actor powerful enough to provide leadership. In 1929, the old hegemon, Britain, “couldn’t” stabilize the global economy and the new hegemon, the United States “wouldn’t”, Kindleberger observed. This left countries scrambling to protect their narrow national interests, with the result that “the world public interest went down the drain, and with it the private interests of all.”

Widespread financial instability and volatility, lack of trust in international co-operation, and a diminishing global hegemon with no obvious successor…it all sounds a little too familiar.

Did Obama Just Derail the Canada-EU Trade Deal?

Danielle Goldfarb | February 13, 2013
The clock is ticking

Time is running out for Canada to complete a free-trade agreement with the European Union.

In his State of the Union address, U.S. President Barack Obama said that the U.S. would start comprehensive free-trade talks with the EU.

A deal could help revive the U.S. and European economies, but U.S.-EU negotiations could also make it difficult to get the EU to wrap up the Canadian deal, which is currently in the final stages, and is already past deadline. And that could make it harder for Ottawa to complete other free-trade deals.  More …

Now that access to the huge U.S. economy is on offer for the EU, it will become harder for Canada to get the EU’s attention. If the U.S. gets a deal but Canada does not (or Canada gets only a narrow deal), our companies will be at a disadvantage in the EU market compared with U.S. companies. And the U.S. is not the only country negotiating with the EU – Mexico already has a deal, and Japan and India have started negotiations.

Last week, the European Union trade commissioner was in Ottawa, but no deal was announced. Presumably, negotiators are hung up on some of the toughest, most controversial issues. These could include dairy imports (see “More EU cheese please”), beef exports, pharmaceutical patents, and government procurement.

The EU is a massive market – its members have a combined economy of more than $17 trillion, which is larger than the U.S. market. And the EU is an important Canadian trade and investment partner. A recent Conference Board study, “What Might Canada’s Future Exports Look Like?” estimates that Canada’s export share to the EU is likely to grow from 4.5 per cent in 2010 to six per cent by 2025.

The relationship extends beyond goods exports. Canadian companies sell more in Europe (from their investments there) than they export directly to Europe. Services trade in both directions is large and growing quickly, as the Conference Board study, “Canada’s ‘Missing’ Trade With the European Union,” shows. The deal is intended to address not just tariff barriers, but also a wider swath of commercial barriers, such as those that affect services trade. And Canadians benefit from having access to the best European technologies, goods, services, and agricultural products.

If Canada is able to wrap up a wide-ranging deal with the EU, it will show that Canada can get comprehensive trade deals done. This could lend momentum to Canada’s other trade deals that are in the works, such as the Canada-India talks, the new 21-country international services agreement negotiations, and the Trans-Pacific Partnership. An agreement with the EU signals to potential partners that it is worth putting in the effort to negotiate with Canada.

A new Conference Board report, “Walking the Silk Road: Understanding Canada’s Changing Trade Patterns,” shows that trade with the United States is stagnant but still represents the majority of Canada’s trade. Meanwhile, as the same report shows, Canada’s trade with other countries has taken off, but Canada is underexposed to these markets, including fast-growing emerging markets. To boost – or even maintain – Canadian living standards, it will therefore be critical to open doors for Canadian businesses in the EU market, as well as in other, less traditional, markets.

Getting the details right in the Canada-EU deal, and ensuring it is in the long-term public interest, is critical. But Obama’s EU trade announcement now puts pressure on Canada to get this deal done sooner, rather than later. The clock is ticking.

Promises Made

But which ones will Obama keep?
Steve Saideman | February 13, 2013
Promises Made

The U.S. Constitution requires the president to give a State of the Union speech each year, but Congress is not required to follow through on the commitments that the president makes.  Last night’s speech was striking from the start (as President Barack Obama invoked John F. Kennedy) to the end (when Obama called out the names of the towns struck by gun violence).  In between, Obama made a variety of promises that will be extraordinarily hard to keep with an incredibly hostile House of Representatives and none-too-cooperative minority in the Senate.  So, as we consider the substance of the speech, we must keep in mind two constraints that will limit Obama’s ability to meet his promises: the polarization of the parties and the budget deficits. More …

Like all second-term presidents, Obama will find far more flexibility in foreign affairs than on domestic policy.  The biggest promise Obama made last night was that the American war in Afghanistan will be over by the end of 2014.  He quite clearly said “our war,” not “the war.” He justified this by saying that al-Qaeda was broken in Afghanistan, but that actually happened before his watch.  Obama was papering over the reality that the goal of the past several years – to build an Afghanistan that could stand mostly on its own – is up for grabs.  Maybe Afghanistan will be able to fight off the Taliban without tens of thousands of American and NATO troops, or maybe not.  But after 2014, it will not be an American war.  The big question is whether Obama will be able to conclude an agreement with Afghan President Hamid Karzai to keep a smaller, residual force to train & equip the Afghans, and to engage in counter-terrorism.  This promise hinges far more on Karzai than on Congress.  Thus far, Afghanistan has looked a bit like Iraq on this question: A status of forces agreement (SOFA), which would guarantee that U.S. troops will not to be tried in Afghan courts, might not be concluded.  So, we may still see the U.S. pull out entirely.

Obama’s second big foreign policy promise was that the U.S. will engage in trade negotiations with the European Union.  While much was made of the pivot to Asia and the Trans-Pacific Partnership over the past year, the proposal to improve trade with the EU parallels Canada’s efforts ­– and may, indeed, complicate Canada’s efforts, given that the EU will focus most of its efforts on the much bigger market.  It is not clear at all what the negotiations will produce.  Unlike with other foreign policy initiatives, Obama will need Congress to go along with it, as any trade agreement will require changes in American regulations and taxation.  While the Republicans have been opposed to even the most modest of treaties for fear of sacrificing sovereignty to some international menace, it is more likely that a EU partnership will go through if big businesses favour it.

The third foreign policy promise that Obama made in last night’s speech was that the U.S. will intervene less in the world.  He held up Mali as an example of a situation in which the U.S. is helping an ally rather than taking the lead.  After a decade of war and spiralling deficits, the U.S. is exhausted.  Only obliquely did Obama refer to the suicide rate of American soldiers, but it is clear that the wars of the 2000s will continue to cost the U.S. for decades to come.  Staying out of conflicts, including that of Syria, will be controversial, but it is far easier for a second-term president to do nothing than to launch yet another war.  Indeed, the easiest way to cut the budget is to not go to war.

Canada was not mentioned in Obama’s speech.  Given the stability of the Canada-U.S. relationship, this is not surprising.  There is no new bold initiative aimed squarely at Canada.  The closest would be heaps of new spending on infrastructure, which would have implications at the border, as bridges and rail connections might be improved.  Spending money on construction is something Congresspeople can usually get behind, because it results in money and jobs flowing to their districts.  Obama also mentioned climate change, but if there is anything the Republicans will fight hard against (other than guns), it is significant legislation on climate change.  Obama can have some effect by continuing to develop regulations for cars that reduce their impact on the planet, but it is hard to imagine anything like a cap and trade bill making it through Congress.  So, the good news for Canada is that it can continue to have a partner in lagging behind the world’s expectations on climate change.

Alas, the most moving part of the speech was also the most frustrating.  The most memorable part of the speech was when Obama listed places that have experienced gun violence, and said that they deserve a vote.  That is, he wants Congress to at least vote on proposals to limit gun violence.  That’s right, he is not calling for victory – he is just calling for the bills to get out of committee and to reach the floors of the House and of the Senate.  Given that one of the Republicans invited Ted Nugent – a noted “gun rights advocate” who has at least once threatened the president’s life – as his guest to the State of the Union address, it is hard to see any such vote taking place.  That said, Obama did succeed on the health care legislation, so unlikely things have happened, and, as Obama noted in his speech, the public is squarely behind him on the subject of gun control.  The time may be ripe, due to the series of tragedies of late, for significant change. But I doubt it.

Before concluding, I want to address one of the last parts of the speech.  I am so glad Obama spent some time at the end on what I call #voterfraudfraud – the Republicans’ efforts to use the imaginary threat of voter fraud to suppress the votes of those most likely to vote for the Democrats.  Using a 102-year-old woman who had to wait six hours in line to vote (why didn’t people let her cut in line?) to illustrate the indecency of voter suppression was a powerful move.  As the Republicans realize that they might just need some minority votes in the future given the demographic changes underway, they might cease such efforts.  Or they may ramp them up and double down.  It is hard to say whether the Republicans will learn and adapt.

Anyway, Obama made a lot of promises and a few exaggerations, just like all presidents do.  Many of the promises will not be kept, but the speech does matter as it shapes the agenda of the country for at least a little while.  The next few months will determine whether Obama can get much of his domestic agenda through Congress.  The foreign policy agenda would be more under his control if it were not for the pesky events that occur on a regular basis around the world, forcing the president to respond.  So, while I have some reason to believe that Obama will be able to pursue his foreign policy initiatives, it will not be easy, as the world has a way of shaking things up.  Arab Spring, anyone?

Targeted Killing on Trial

Jennifer Welsh | February 8, 2013
Bring drone warefare out of the shadows

The past few weeks have seen a flurry of activity aimed at achieving greater transparency and accountability with respect to the U.S. government’s practice of “targeted killing” (primarily through the use of drones).

To begin, the UN special rapporteur on counter-terrorism and human rights, Ben Emmerson, announced in late January the launch of an investigation into the “civilian impact” and “human rights implications” of drone attacks and other targeted killings by the U.S. and other states. The rapporteur claimed that such attacks pose a serious challenge to the existing framework of international law, and therefore require the development of new legal mechanisms to regulate use and ensure accountability. He also warned that if states engaged in drone attacks do not establish effective, independent, and impartial investigations of their actions, it might be necessary for the United Nations to do so. (Note: The UN investigation will examine 25 different cases of drone attacks, not all directed by the U.S. However, it remains the case that U.S. policy is a main focus of attention, particularly for China, Russia, and Pakistan, the three states that called for the investigation within the Human Rights Council). More …

There is little prospect that Emmerson’s announcement will lead the Obama administration to make significant efforts to provide greater transparency. When the UN special rapporteur on extrajudicial, summary, or arbitrary executions made inquiries into drone attacks in 2002, and again in 2005, the U.S. responded by claiming that such incidents do not fall within the jurisdiction of the rapporteur, given that the applicable law is the international law of armed conflict. Thus, while there are legitimate and important questions to be asked about which body of law applies in the area of counter-terrorism, U.S. lawyers are likely to continue to contest the application of human rights principles to what they contend is a “war context.” In addition, the U.S. will no doubt be suspicious of the motives of those states that have called for the investigation.

But while these international calls for more openness and oversight are likely, at least in the short term, to have little impact on U.S. practices, domestic calls to provide more detail on the processes by which targets are selected and killed are more serious for the Obama administration. Earlier this week, NBC News leaked an unclassified white paper, drafted by the U.S. Justice Department, outlining the legal arguments in favour of the U.S. government’s right to engage in targeted killing of U.S. citizens abroad when such citizens are deemed to be actively involved in plotting terrorist attacks against the United States.

The white paper was meant to quench the thirst of U.S. lawmakers, particularly those on the Senate Intelligence Committee, for more information about how the CIA and the Pentagon define a legitimate target for counter-terrorist strikes – particularly when aimed at American citizens who have firm rights under the Constitution. However, the release only whetted their appetite (to continue the metaphor) and intensified the call for the release of the full, classified Justice Department documents that address the question of when the executive can order the killing of a citizen based on secret intelligence and without trial. Yesterday, U.S. President Barack Obama bowed under the pressure, and agreed to make the documents available to the committee (a move that will help to address cries of hypocrisy, since Obama had called for the Bush administration to publish its classified memos relating to torture).

Meanwhile, on Tuesday, in a federal district court in Washington, D.C., the American Civil Liberties Union (ACLU) and the Center for Constitutional Rights filed a brief requesting that a federal judge not dismiss a case of litigation against senior CIA and military officials for the 2011 targeted killing of Anwar al-Awlaki (a suspected al-Qaeda leader) and his 16-year-old son, both U.S. citizens. The case would bring out into the open many of the U.S. government’s current assumptions and arguments about the legitimacy of drone attacks. The defendant (effectively the Obama administration) has asked for dismissal on the grounds that the court has no jurisdiction over acts that occur in the conduct of armed conflict, and that are therefore regulated by the laws of war. The plaintiff, however, is arguing that the strikes violate the U.S. Constitution (by failing to provide due process to U.S. citizens before their execution) and the international law of armed conflict (by failing to observe principles of distinction (i.e., civilian immunity) and proportionality).

Finally, there was the spectre, on Thursday, of John Brennan, Obama’s high-ranking counter-terrorism adviser and one of the primary architects of the administration’s policy on drone attacks, being grilled by the Senate during the confirmation hearings for his appointment as the new director of the CIA. Brennan could barely get out the words of his opening statement, as protestors against U.S. drone attacks disrupted the hearings. In rare public statements prior to yesterday, Brennan has insisted that the administration’s practices related to targeted killing are “ethical” and “just.” When senators questioned him yesterday on current policy, Brennan reiterated this defence of the drone program, insisting that lethal force was a last resort and that the president himself is ensuring that “any actions we take will be legally grounded, will be thoroughly anchored in intelligence” and will have “the appropriate approval before any action is contemplated.” When pressed on how targets for drone attacks are selected, he responded that they are analyzed on a “case by case basis” as part of a process involving co-ordination with other agencies of the U.S. government.

Such practices of selection are decidedly not, as Brennan’s testimony implies, seen as subject to any kind of judicial review. This stance was pronounced loudly and clearly in the leaked white paper, which insisted that there is “no appropriate judicial forum” in which to evaluate these issues. U.S. courts should not play a role in reviewing or restraining targeted killings, argues the Justice Department lawyers, since it would effectively enable them to “supervise inherently predictive judgments” by the president and his national security advisers “as to when and how to use force against an enemy against which Congress has already authorized the use of force.” The white paper also draws (selectively) on earlier judicial statements to argue that in matters of foreign policy and national security, a certain level of discretion is to be given to the executive. In short, the Justice Department believes that “due process” (a right of all U.S. citizens) does not mean “judicial process” in situations of national security. Instead, we are to trust the decision-making processes and judgments of the executive branch.

In what the ACLU calls a “stunning overreach of executive authority,” the Justice Department concludes that it is lawful for the U.S. government to kill a U.S. citizen if “an informed, high-level official” decides that 1) the target is a ranking figure in al-Qaeda that poses an “imminent threat” of violent attack against the United States; and 2) the capture of such a figure is not feasible (because such a capture cannot “be physically effectuated during the relevant window of opportunity,” because the “host country” where the figure is operating does not give its consent for the killing, or because capture would pose “undue risk” to U.S. personnel).

According to the white paper, the president has authority to respond, through targeted killings, to the threat posed by al-Qaeda in light of a variety of legal sources:

  • His constitutional responsibility to protect the country;
  • The “inherent right” of the U.S. to national self-defence under international law;
  • The existence of a non-international armed conflict with al-Qaeda (which U.S. officials insist legitimizes the use of force not only in “hot” places like Afghanistan, but also in countries outside the area of “active hostilities,” such as Pakistan and Yemen); and
  • Congress’ authorization of the use of force against terrorists as part of this non-international armed conflict.

Thus, it seems, U.S. citizenship does not “immunize” a senior operational leader of al-Qaeda from “a use of force in national self-defence.”

While this lack of oversight or review is the aspect of the white paper that is garnering the most attention, the other troubling part of the memo is its conception of what constitutes an “imminent threat.” In contrast to the traditional conception of imminence in international law, which usually requires evidence of a specific attack in the immediate future, the Justice Department claims that it is sufficient for a target to be “generally engaged” in terrorist activities aimed at the United States. So, why is the imminence restriction relaxed? The document claims that terrorism is not marked by one “massive attack” or “one isolated incident,” but, rather, is “drawn out,” “patient,” and “sporadic.” Moreover, to wait for firm evidence of an attack in the immediate future would leave no time for the U.S. to defend itself  – or, at the very least, would greatly reduce its “defensive options.”

The Justice Department’s core argument is that the U.S. is likely to have only “a limited window of opportunity within which to defend Americans in a manner that has both a likelihood of success and sufficiently reduces the probabilities of civilian casualties.” As a result, the test for selecting a target has to be broader: Was the target a senior operational leader in al-Qaeda or “an associated force”? Is he/she personally and continually involved in planning attacks against the U.S.? And is there any evidence that he/she has renounced association with al-Qaeda? It is the answers to these questions, says the Justice Department, that determine whether a drone should be sent.

While parts of this logic make sense in the abstract, and do make an attempt to come to grips with the unusual nature of the threat posed by terrorism, the rationale conforms neither to the experience with drone attacks to date (which have incurred heavy civilian casualties) or to the efforts of other countries, such as Israel (more on this below), to respect the imminence restraint. In sum, the definition of imminence that the Obama administration is promoting is extraordinarily broad, opening the door to killings in cases where there is no evidence of a specific attack being planned in the immediate future, and – by implication (since more attacks would be made possible) – to a higher risk of civilian casualties.

Finally, there are probing questions to be asked about how seriously the U.S. contemplates the option of capture. In press reports this week coinciding with John Brennan’s testimony, officials in Yemen have been quoted as saying that they believe they are not being given sufficient opportunities for their own counter-terrorism squads (trained by the U.S., by the way) to go after al-Qaeda operatives. In addition, by arguing that capture cannot be pursued when there is “undue risk” to American personnel, the U.S. is making a moral judgment about whose lives should be prioritized. This judgment becomes all the more important when the deaths resulting from drone attacks are also civilian ones. Ethical debates about the conduct of war have long questioned the legitimacy of “force protection” as an operating principle for those engaged in armed conflict. Both law and morality call upon military (and civilian) leaders to take civilian protection seriously.

Many may argue that a lack of judicial review and an elastic interpretation of imminence are necessary in the murky world of counter-terrorism, where democratic governments need to fight ruthless enemies without one hand tied behind their back. But there is evidence from Israel that this need not be the case. As noted by Amos Guiora, former legal advisor to the Israeli Defence Forces on targeted killing, the Israeli Supreme Court has ruled on two occasions that while targeted killing in the context of counter-terrorism is legal, it must be limited and subject both to rigorous criteria and – because target selection inevitably relies heavily on intelligence – judicial review. The court itself was instrumental in helping to refine the definition of a legitimate target, insisting that there needed to be a specific and immediate threat posed by a specific individual.

There is an argument, which Andrew Cohen hints at in a blog post for The Atlantic that this is also where the U.S. will ultimately end up. Cohen contends that the white paper should be seen not as actual U.S. policy, but rather as a kind of “trial balloon” that the executive branch is floating to assert more power for itself, and to which other branches of the U.S. government will rightly respond. “It’s a pitch,” he writes, “the staking out of a position in advance of a Washington battle yet to come.” As Cohen notes, it is frequently the case that the executive branch gets out ahead of the judicial branch when it comes to interpreting the power it has been given by the legislative branch (in this case, the Authorization for Use of Military Force, a resolution that Congress passed in September 2001, in the context of the “war on terror”). But the courts will eventually catch up, and the legislature will demand refinement and parameters on what it has agreed to.

This interpretation would put a positive spin on the events we have seen over the past few weeks. The push for transparency will lead to better arguments, and therefore better policy. The full U.S. system is “doing its thing,” and the result of that decentralized, bottom-up – and sometimes chaotic – process, which involves not only the three branches of judiciary, legislature, and executive, but also civil society, will ultimately result in a correction of draconian policy. As one Canadian diplomat once said to me, “The U.S. always does the right thing – eventually.”

But many will be less inclined to have this level of faith in a long-run correction. There are several chilling aspects to the white paper, not least of which is the broad use of a “public authority justification” for what many analysts believe is effectively a practice of murder (especially when meted out against U.S. citizens). After all, as John Maynard Keynes once said, “In the long run we are all dead.”

Oversight Overboard

Steve Saideman | February 6, 2013
Oversight Overboard

In the course of researching Canada’s efforts in Afghanistan as part of a larger project on NATO in Afghanistan, I was stunned to find out that Canadian members of Parliament (MPs), even those on the defence committee, do not have security clearances.  This means that they were ignorant of the rules of engagement that Canadian Forces followed in Afghanistan, among other things.  I was interviewing  former Canadian prime minister Paul Martin on a related topic, and he chided me, saying that I shouldn’t compare the Canadian system to the American one.  Other MPs repeatedly told me that the job of Parliament is not to conduct oversight but to hold the minister accountable, and that it is the minister’s job to oversee the Canadian Forces.  Given the stories of the past few weeks, it is not clear that process works so well.

More …

On the other hand, the past few weeks of American oversight are enough to make Canadians feel better about their largely blind and toothless Parliament.  First, outgoing Secretary of State Hillary Clinton testified before both Senate and House committees about the events in Benghazi last fall.  The hearing was mostly a show – an opportunity for the Republicans to take Clinton and U.S. President Barack Obama to task for failing to protect four diplomats.  Given that Clinton was days away from leaving office, this was more about signalling to one’s constituents that one can be strident than about actually trying to force changes in how the State Department operates. 1

Clinton pushed back, saying that Congress failed to fund diplomats’ security. As a result, her successor will receive that funding.

^

This horror show was repeated when Chuck Hagel went before the Senate Armed Services Committee, where the Republicans focused mostly on issues way outside the domain of the Secretary of Defense, who ordinarily does not determine U.S.-Israeli relations.  Afghanistan, drone strikes, and other topics more solidly in the Secretary of Defense’s area of responsibility got much less play.  Again, this was position-taking/grand-standing for select audiences in the U.S. – mostly those who vote in primaries, as Republican senators have learned that they are most vulnerable on the right flank from Tea Party-supported candidates.  And what better way to demonstrate one’s fealty to the hard right than to haze a Republican nominated to serve in a Democrat’s cabinet?

So, is the lesson that Canada cannot learn much from the American system of oversight?  I am not quite so sure, as I am just at the very beginning stages of an effort to compare the impact of legislatures on defence policy across the democracies of the world.  But my initial hunch is that it is not just about the institutions that empower some legislatures (members of the Bundestag’s defence committee meet with the minister of defence every week in closed sessions to get the classified updates), but also about the maturity of the parties.

Historically, in the U.S., House and Senate Armed Services committees were constructively critical of presidents, even when the same party controlled the presidency and either or both of the Houses.  Generals, admirals, their staffs, and the civilians in the Pentagon knew that their feet would be held to the fire in committees on the Hill.  This does not mean that the U.S. military and its civilian overseers were always transparent, but their anticipation of a potential grilling in front of Congress served as a critical means by which civilians controlled the military.

These days, I am not so sure the system operates effectively.  The two parties are now so polarized that neither is very critical when its nominee holds the presidency, and each goes way over the top when the other party controls the presidency.  So, in the Hagel hearings, the Democrats did not really ask any tough questions, while the Republicans asked very few relevant ones. 

This leads back to Canada: Can the defence committee in Parliament have any relevancy, given the constraints of the parliamentary system?  If the parties can be mature enough to focus on the more important issues, where the Canadian Forces and the Department of National Defence fall short, then they can create the pressure needed to induce the government to change its policies (for instance, Parliament ultimately did compel the government to reconsider the F-35).  On the other hand, when MPs get sucked into other, less central issues, the more important ones get crowded off the agenda.  The focus on Defence Minister Peter MacKay’s infamous helicopter ride, for instance, draws attention away from his more serious failings in this position ­– namely, his systematic denial of procurement problems.  When the Official Opposition uses its time to attack the governing party instead of using its time to criticize government performance, the public and, ultimately, Parliament lose.  

Sure, the job of the opposition is to oppose, but, as an old Monty Python sketch reminds us, an argument involves more than just one side saying “it is” and the other saying “it isn’t.”  Being critical and being opposed are not identical.  The American parties have lost sight of this, so oversight is not nearly as effective as it once was.  The Canadian parties seem blind to this distinction, so accountability is pretty flawed these days.  So, while the institutions in the two countries vary, right now, the parties in Canada and the U.S. seem to have the same level of maturity – which leaves both countries far worse off.

More Cheese, Please

Danielle Goldfarb | February 6, 2013
More cheese please

Last Friday’s episode of CSI: NY was called “White Gold,” and featured a man smuggling cheese from the U.S. into Canada. Sound familiar? In this case, truth informed fiction. Last year, three men were arrested as part of a massive cheese-smuggling ring – they allegedly smuggled U.S. cheese across the border and sold it to Canadian restaurants at a six-figure profit. And Canadian restaurateurs regularly call mozzarella cheese “white gold.” More …

Canada’s more-than-40-year-old policy of dairy “supply management” is responsible for these drama-worthy activities. But this week, Canada may move closer to taking actions that would start to reform this long-standing policy. According to today’s Globe and Mail, the Canadian government is prepared to admit more European cheese into this country in return for greater access to EU markets for Canada’s beef and pork.

The European Union Trade Commissioner is now in Ottawa to hopefully complete Canada’s most significant free-trade deal since the Canada-U.S. agreement in the late 1980s. Negotiators are now getting into the toughest issues, one of which is cheese.

Canada applies 200-300 per cent tariffs on dairy products (see Table). Aside from cheese smuggling, holding “import quota” is currently the only way to import dairy products into Canada duty-free. The EU wants, at a minimum, to increase the amount of cheese it can export to Canada duty-free.

Why wouldn’t Canadians welcome more, say, French cheese? Many consumers no doubt would, but cheaper European cheese imports undercut farmers’ milk prices, so Ottawa has prohibitively high tariffs to keep imports out. If Canada allows more cheese imports, it will be hard to sustain farmers’ milk prices without having to limit production more and more each year. (For those that want to understand how the system works in more detail, see the Conference Board of Canada’s 2009 study, “Making Milk.”)

This trend could erode Canada’s long-standing system of dairy supply management over time, especially if it sets a precedent for other trade negotiations, such as the Transpacific Partnership trade talks, which Canada recently joined. Participants in those talks, such as Australia and the U.S., have long been pushing for more access to Canada’s dairy market.

Opening doors to EU cheese could pose complications. For one thing, the EU subsidizes its dairy farmers. However, EU subsidies have been cut back, and EU dairy policy is becoming more market-oriented. For another thing, if Canada were to offer the EU a greater share of imports, it would risk irritating partners in its other trade negotiations, such as the TPP. 

So, should Canada’s policy-makers continue to support this policy, or should they welcome greater openness, starting with the EU?

All political parties in Canada have traditionally supported supply management (though Liberal leadership candidate Martha Hall Findley has proposed getting rid of it). Recently, Quebec Premier Pauline Marois reiterated how vital supply management was for Quebec in the context of the Canada-EU talks.

To be clear, the policy has largely succeeded at its initial goal: boosting traditionally low farmer incomes. But a 2012 Conference Board study, “Canada’s Supply-Managed Dairy Policy: How Do We Compare?” shows that Canada is the only country among its peers that has stagnating dairy production – and the only one with dairy supply management policies. Farmers are unprepared for even a partial opening of Canada’s dairy market, and are unable to seize opportunities in fast-growing markets.

Much more than the dairy industry’s well-being is at stake. Buyers of dairy products – processors, restaurants, retailers, and consumers – effectively subsidize dairy producers by paying higher prices. The Organisation for Economic Co-operation and Development estimates the subsidy at $175,000 per dairy farm. The poorest in our society are the hardest hit, as dairy products form a larger share of their budget.

The EU deal is an opportunity for Canada to embark on reform of a policy that doesn’t meet the interests of the broader public or, arguably, even the dairy sector.

Lowering dairy tariffs, or raising our import quota for dairy from all countries, could allow the industry to gradually adapt to increased competition. At the same time, doors would be opened for Canadian businesses to sell in, and from, the EU, and to have freer access to the best EU technologies, goods, and services.

Canada should take this opportunity to say, “More cheese, please.”

 

Table: Tariffs for Selected Canadian Dairy Products

 

 

Tariff* (per cent)

 

 

 

Fluid milk

241

 

 

 

 

Yogurt

238

 

 

 

 

Butter

299

 

 

 

 

Cheese

246

 

 

 

 

Ice cream

277

 

 

 

 

Skim milk powder

270

 

 

 

 

*Tariff applied to quantities that exceed import quota.

 

Import quota is equal to less than 5% of Canadian dairy consumption.

Sources: World Trade Organization, Conference Board of Canada.

 

 

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