Media attention on corn and tortillas prices in Mexico has abated, but little has changed in the economics and public policy of corn production in Mexico. On January 1, 2008 NAFTA will be fully implemented and free trade in corn will occur among the three countries, and government officials all three countries must be prepared to deal with the next crisis in corn trade.
The announcement by Pascal Lamy, Director-General of the WTO, that the Trade Ministers of the 150 member nations backed a full resumption of the Doha Round of WTO trade talks ends a six month suspension of the talks. The challenge now is to break the logjam over agricultural issues.
Biotech crops are a new industry with eleven year of commercial production around the globe. They have proven to be relatively scale neutral. They are planted on large North American, South American and European farms using the world’s most modern equipment and on small, resource-poor farms in developing countries like China, India, South Africa and the Philippines where improved incomes directly result in reduced poverty. Private companies and public institutions have applied the technology to crop varieties that meet the specific needs of local farmers.
When agricultural groups in the U.S. talk about NAFTA they usually focus on selling agricultural products to buyers in Canada and Mexico or agricultural products entering the U.S. from Canada and Mexico. Little thought is given to trade in input supplies like fertilizer, petroleum products and equipment. U.S. farmers have not been able to buy labeled agricultural pesticides in Canada for use on U.S. farms. In December of last year representatives of the Montana Grain Growers Association were the first to buy and bring to the U.S. under an “own-use import” program a herbicide called Far-GO distributed by Gowan Company LLC of Yuma, Arizona.
On January 8th the Canadian government asked the U.S. government for consultations at the World Trade Organization (WTO) on subsidies provided to U.S. corn growers and the total level of U.S. trade-distorting agricultural support. After 18 years of the U.S.-Canadian Free Trade Agreement and much economic integration, it is clearly a trade policy failure for either country to use the blunt instrument of WTO consultations on a trade issue.