Experts should forget ending supply management and determine best options

With the prospect of a Canada-European Union trade deal this year and Canada’s entry into the Trans-Pacific Partnership facing critics like New Zealand, the drumbeat against Canadian supply management grows.


Columnists, economists and traders hold the drumsticks.


Tariff protections for dairy, poultry and eggs must go if Canada is to have a deal with Europe! 


Canada must sacrifice its protectionism if it is ever to be part of a TPP deal!


Supply management offends free trade principles and as a relic of the protectionist past must go!


So go the arguments.


The evidence, of course, is that virtually every other country has its protectionism in one form or another.


Are Europeans offended by Canada’s protectionism? Snort.


Trade negotiators have spent years trying to peel away the onionskins of European protectionism for many products and sectors, agriculture prominent among them.


Is the United States offended by Canadian protectionism? Snort.


Shall we discuss sugar, peanuts, cotton and yes, dairy?


At an agricultural economists’ meeting in Ottawa last week, Mike Gifford, former agriculture trade negotiator and prominent critic of the dairy industry’s refusal to approve any reduction in protections, had unusual advice for his fellow agricultural economists — quit obsessing about ending supply management.


There were the usual studies about how supply management tariffs, production controls and price setting are an economic abomination denying Canadian producers the right to give up financial security for the joys of exporting more product into volatile export markets.


Canadian agricultural exporters were there and their criticism is that product access is undermined by Canada’s refusal to open its dairy and poultry markets. To date, though, there is little evidence that Canadian exports have been blocked because of supply management — lots of rhetoric from countries opposed to Canadian tariffs but little indication that a concession by Canada would lead other countries to stop supporting their sectors.


For Gifford, this was no ‘road to Damascus’ moment of unqualified support for supply management rules.


His speech to the conference was simply an acknowledgement that as much as liberal market economists like to make arguments in favour of abolishing the system, that is not going to happen.


“It would be political suicide.”


Instead of their utopian dreams of free markets, economists should design models about how supply management can evolve to allow more imports without destroying the stability of the current system.


Gifford argued that supply management can evolve, perhaps through increased minimum tariff rate quotas, without undermining the over-quota tariffs that give the system stability.


He said a rigid ‘no change’ position for the supply-managed sector is not sustainable in the long term, as long as Canada is negotiating trade deals. “If you want more access to other people’s markets, you have to open up your own markets.”


But economists and critics should climb down from their “utopian” free market point of view and help figure out how the least disruptive adjustment can happen.


It sounds like a sensible proposal for a roadmap in turbulent times.

  • Brandt Chu

    The only ‘sensible’ proposal is the dismantling of supply management – a process that worked very well in our sister nations of New Zealand and Australia.

    Maybe it shouldn’t be economist who need to change their tone, but your industry that punitively hurts every citizen in this country’s bottom line through higher prices to basic food stuffs.