Efficiency - Trade

This analysis identifies several avenues for promoting local/sustainable food, presented as programme and policy design elements. These elements are structured around current rules, permitted exemptions and ambiguities in trade text language. A bundling of local and sustainable food systems is critical because it reduces the likelihood that such foods will be considered “like” with conventional foods.  Broadly speaking, the two main opportunities for supporting local/sustainable systems are targeted support programmes and procurement rules and processes.

Targeted support programmes

Canada appears to have subsidy opportunities under the WTO AoA (see Instruments, International, Trade Agreements).  The heightened scrutiny of red and amber box measures appears to create some space for environmental supports because red and amber measures are both trade distorting and they intensify conventional production and associated environmental problems. This occurs sometimes directly because of the subsidy and sometimes indirectly because the subsidy exists within a policy environment where environmental regulations are typically poorly designed, enforced or adopted (Mayrand et al., 2003).  It appears that Canadian governments could impose increasingly demanding sustainability requirements on producers and supply chain actors to protect Canadian resources, beyond current environmental programming.

To minimize the likelihood of a trade challenge, any measure would ideally have several of the following design elements.

  • It should adhere to the green box criteria, with framing based on GATT Article XX that identifies exemptions for farmer support programmes that deal with conservation of natural resources. To do this properly means linking environmental measures along the supply chain so that the product benefits are enhanced by their regionality. For example, the environmental benefits of Integrated Pest Management (IPM) or organic adoption in fruit and vegetable production are augmented by shortening supply chains with innovative distribution, reducing cooling and refrigeration requirements, and reducing supply chain waste (Lynch et al., 2011).  An integrated strategy allows for additional GHG reductions and enhttps://foodpolicyforcanada.info.yorku.ca/citations/ergy use efficiencies.  In fact, such supply chain improvements can exceed the on-farm environmental benefits and also those of longer-distance supply chains (MacRae et al., 2013).
  • If the measure is categorized as amber box, it should cost less than the de minimus threshold; however, even more expensive programmes could still be designed and counted in Canada’s permitted amber box commitment because spending is significantly below the established limit, as long as a large number of expensive measures were not adopted at the same time.
  • It should explicitly be an import substitution programme, possible because the AoA does not explicitly prevent them, likely making them permissible Amber Box measures under the AoA.
  • It should involve a wide array of state and non-state actors in programme execution, but with attention to the degree to which the state might be viewed as the facilitator of the initiative, making all other NGO activities accountable to trade disciplines. For many disciplines, sub-national governments and para-governmental agencies may be exempt, so initiatives with these organizations in the lead may be acceptable.
  • It should incorporate the additional discipline of necessity. Even when a measure is non-discriminatory, is it the most effective way to produce a desired outcome?  (Vranes, 2011).  In other words, the more effective the measure is at accomplishing its objectives, the less contested it may be.
  • It should rely on private standards to drive change, which may be more suitable than state standards, unless an international body such as Codex Alimentarius is developing an international version. Vranes (2011), from his legal analysis of relevant trade texts, advises against use of mandatory eco-labels, but suggests that voluntary ones are not per se discriminatory.

Importantly, the CETA has stronger language around sustainability than the other trade agreements, in part because the EU has many direct payment programs that support farmers during the transition to sustainable practices. Sustainable development is included in chapters 22 and 24, rather than just being part of the preamble or a side deal.  Article 22.3 states that "trade should promote sustainable development”. Such provisions mean that Canada could enact comparable direct payment problems and not likely have them contested by the EU.

Procurement

Regarding procurement, the AGP does permit tenders to outline technical specifications regarding performance (as opposed to design or descriptive characteristics), particularly when based on international standards, national technical regulations, or recognized national standards. Many EU member states support the expansion of local/sustainable food systems, and the EC appears to be supporting this through its Rural Development Strategy and other policy recommendations (European Union, 2011; Bell-Pasht, 2013). In the US, states have used language associated with exemption provisions for child feeding to favour local product in procurement contracts.  This approach is not directly linked to sustainable performance requirements, in contrast to the European approach (Bell-Pasht, 2013). Key elements of this approach include:

  • Using technical specifications of procurement contracts, related to the performance of the product or the process by which it was produced, to favour local food systems development, not broad principles and instruments, and to redefine value for money within procurement processes to include wider environmental and social benefits (Clark, 2011). For example, freshness criteria could be imposed that would make it difficult for long-distance goods to meet the requirement (Konforti, 2010). Other possibilities include specifying varieties of crops that do well regionally, or distance traveled and environmental performance.
  • Using the principles underlying an eco-label as technical specifications rather than using a label itself. European states are advised not to rely on eco-labels since they may be viewed as discriminatory.
  • Dividing food contracts into smaller lots to facilitate access by smaller producers. Certification of performance is encouraged but not the only performance measure considered (Bell-Pasht, 2013).
  • Creating procurements with set-asides for small and minority businesses or contracts for agricultural products that further agricultural support programs or human feeding programs. The AGP general exception for public interest measures to protect human, animal or plant life or health has permitted Canada to undertake such approaches.
  • Exploiting exemptions for government procurement of products for government purposes without resale. This might cover, for example, food purchased for hospitals, prisons and in some cases government employees.  However, a close reading might be required to determine how to structure the language of provisions in these cases so as not to trigger a complaint.
  • Given thresholds in many agreements, designing programmes to fall under thresholds, and paying particular attention to which units are covered by the agreements.

A further key possibility, but it requires that many provisions to advance sustainable food are implemented (see Goal 5, Sustainable Food), is to make sustainable food a certain piece of procurement regardless of whether domestic or imported.  As long as the same requirements are imposed on foods regardless or origin, it is not contestable under the trade agreements.  This is a viable strategy if the domestic sustainable food sector is relatively well advanced and competitive with international providers.