Americans who enjoy the occasional BLT or a ham on Easter Sunday probably don't consider the humble pig as a source of serious international trade disputes. But that's exactly what has developed since last fall, when the United States slapped a 14 percent penalty on piglets coming across the border from Canada.
That decision is hurting Minnesota and Iowa, two of the nation's leading hog producers, where many farmers buy piglets, or "feeder pigs," from Canada. It's also driving up the cost of pork products for American consumers and undermining what has generally been an amiable diplomatic relationship between Canada and the United States.
The decision is up for review next week, and the U.S. Commerce Department should reverse it.
The dispute arose last year, when the National Pork Producers' Council and several state farm groups accused Canada of unfairly subsidizing its hog farmers and "dumping" piglets in American markets at below the cost of production. Last fall the Commerce Department made a preliminary ruling that added a penalty of 14 percent, or about $5 per animal, to the cost of feeder pigs shipped by Canadian suppliers.
There's no doubt that Canada has greatly expanded its export of feeder pigs to American farmers in the last several years and that the trend has put a squeeze on American farmers who are still trying to produce and sell feeder pigs.
But economists say this is mostly a result of the North American Free Trade Agreement of 1993, which greatly reduced trade barriers between Canada and the United States and has allowed each nation to specialize in what it does best. American farmers, with abundant cheap feed grains and proximity to huge, efficient packinghouses, are good at raising young hogs to maturity and shipping them off to slaughter. Canadians, who are remote from the big packinghouses but have extremely productive sow herds, have specialized in producing piglets. On balance, the symbiosis seems to work: Both nations have seen healthy growth in overall hog production and pork exports.
It's true that an American agency, the International Trade Commission, has found Canada guilty of "dumping" piglets, or selling them below the cost of production. But that was in 2003, a year when world pork prices collapsed and hog farmers in every country were probably selling below cost. Moreover, American trade law is written in such a way that the agency in charge finds dumping in almost every case put before it. American producers also accuse the Canadian government of unfairly subsidizing its hog farmers. But the Commerce Department found no significant subsidies in its own investigation, and in any case, Canadian farm subsidies are far more compliant with world free-trade rules than is U.S. agriculture policy.
Free trade certainly creates losers, in this case American farmers trying to compete at the piglet end of the production chain. But that's no reason to punish everyone else in the system or to choke off trade between two neighbors who are trying to expand it.Star Tribune
