As the posturing and rhetorical bombast grew louder during the Canada and US NAFTA discussions it was predictable that agriculture would become a target. As the NAFTA talks deteriorated President Trump made outlandish claims that Canadian import restrictions were ruining the American farmer and had to be eliminated even though actual trade statistics show that to be a complete fabrication and nothing more than one of Trump’s rhetorical delusions. His claims were probably in reference to a comment he made months ago about US dairy exports from Wisconsin; he just couldn’t remember the context anymore so instead made a sweeping declaration that the entire American ag sector was being destroyed by Canada. Virtually every American ag producer group of any consequence roundly condemned Trump’s over-the-top allegation. All the major groups have been imploring their President to leave agriculture and food alone, as NAFTA has worked extremely well for the ag economic sector on both sides of the border. But when all else fails it seems that the ag and food industry can always be used as a bargaining chip by both sides. The problem with the Canadian side is that they seem all too willing to give up protection of ag sectors like supply management. Chipping away at that production group seems to have become the favoured Canadian way to clinch trade deals, as evidenced by the previous EU and Trans Pacific deals.
Although many of Trump’s nonsensical declarations seem utterly absurd, they do at times seem to get adversaries and even allies to change their perspectives. Trump’s bombastic falsehood about the ag trade between Canada and the US got our boy scout Prime Minister Trudeau to quickly state that we can be flexible about supply management in the NAFTA trade talks. That statement would almost guarantee that if the any trade talks are resumed, NAFTA or otherwise, Canadian dairy, egg, and poultry producers would see a good chunk of their market share given up to cheap American imports. I guess on some issues President Trump may be crazy like a fox.
When it comes to trade treaty concessions the cliché, “How is that working for you?” comes to mind. I cite for example, the conceding of more dairy import quota to the EU. Sure enough, EU cheese exports to Canada have increased along with new imports of Welsh lamb and EU veal. In return Canada has seen its durum wheat exports to Italy collapse and any new Canadian beef exports continue to be thwarted with ever inventive new EU non-tariff health barriers. I suspect once the Trans Pacific trade treaty is ratified we will see a flood of cheap New Zealand dairy product imports hitting the Canadian market to the detriment of Canadian dairy producers.
In a previous column about US dairy imports I noted that trade issue was essentially about cheap ultrafiltered milk, a dairy ingredient used to create pizza cheese, which has a market worth hundreds of millions of dollars. The US dairy industry wants unfettered access for that product in Canada and I suspect that with the flexible attitude of our Prime Minister, the Americans will get that access under any new trade agreement. If it paves the way to a larger deal on steel and autos, I guess in the minds of our trade negotiators it will be an easy price to pay for the greater good. At the end of the day there are more steel worker votes in Ontario and Quebec than all the supply management farmers in all of Canada. I can’t help but speculate on how the US will respond if a trade treaty is signed and they find in the meantime that their much-anticipated increased ultrafiltered milk export market in Canada has been taken over by even cheaper imports from New Zealand. Those new NZ dairy imports would be thanks to the Trans Pacific free trade treaty that the President refused to join.
For the supply management industry, more trade concessions at their expense should serve as an indicator of what the future holds for their sector. I expect they know this and should be looking towards developing an exit strategy that involves a quota buyout by the Canadian government. Yes, it will be costly, but that’s the price taxpayers will have to pay when our federal government is so easily prepared to sacrifice agriculture in trade negotiations. For Alberta the possible demise of supply management would present an incredible opportunity for a massive expansion of the dairy sector. email@example.com