NPPC: Canadian Pork Subsidies Distort U.S. Trade

Canadian subsidy programs are distorting North American hog markets, according to the NPPC.

Published on: Jun 18, 2012

The National Pork Producers Council asked last week that Canada stop its hog subsidy programs, which they say adversely affect the U.S. hog trade, before entering the Trans-Pacific Partnership trade talks.

The TPP, an Asia-Pacific regional trade agreement, includes the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. The original agreement was signed in 2005, and Canada is among other countries seeking entry into the agreement.

Canada's entry into the agreement has been on hold for almost seven months amid concern over its agricultural supply programs, though subsidy talks are not within the scope of the TPP negotiations.

Examining the Quebec subsidy program, Iowa State University economist Dermot Hayes estimated that a similar U.S. program would increase pork production in the United States by 8.4 percent annually. Over 10 years, an additional 140 million hogs would be marketed, with Iowa alone adding 41 million animals to that number.

Canadian subsidy programs are distorting North American hog markets, according to the NPPC.
Canadian subsidy programs are distorting North American hog markets, according to the NPPC.

Currently, about 110 million hogs a year are marketed in the United States.

"The Canadian subsidy programs distort the North American hog and pork market, limiting the growth of U.S. production, employment and profitability," said Doug Wolf, NPPC's immediate past president and chairman of its trade committee. "Canada's entry into the TPP negotiations should be contingent on renunciation of its trade-distorting subsidies."

Over five years, Hayes has calculated that Ontario's Risk Management Program, which would boost Canadian hog production by more than 606,000 animals, would also cut U.S. pork production by more than 430,000 hogs. This equates to $73 million and nearly 600 U.S. pork industry jobs.

In response to criticism of its subsidy programs, Canada has pointed to the U.S. Mandatory Country-of-Origin Labeling law, which the World Trade Organization last November said violates U.S. trade obligations. But the U.S. pork industry did not support MCOOL, and NPPC is urging the United States to comply with the upcoming WTO appellate ruling on the U.S. appeal of the earlier decision.

"You can't argue that MCOOL distorts the hog markets, then ignore the far greater impact of the Canadian subsidy programs," Wolf said.

Broad outlines for the TPP are expected by this July.