Trade talks change supply management debate

While change won’t come tomorrow, Canada’s supply management system is vulnerable, says professor

Supply management’s critics used to talk about the price of milk. Now they talk about the cost of trade. 

This change leaves the system that governs Canada’s dairy, poultry and egg industries vulnerable to change, says a University of Saskatchewan professor.

“Some of us were kicking around the idea last night. One guy said it’s going to be 20 years. I think we all think if it does change it could be 10 years …,” said Murray Fulton of the U of S’s Johnson-Shoyama Graduate School of Public Policy.

“But I think everybody around the table thought it’s actually going to change at some point. It’s just a question of when.”

Supply management has long taken shots from consumer groups that advocate for more competition and lower prices. In recent years, however, an increasing chorus of think-tanks and industry groups at home and government officials abroad have targeted the system of price setting and production quotas.

“This is a change of the venue where this policy issue is being discussed. That would be a worry if I was in the supply management industry,” said Fulton. 

These voices include a Conference Board of Canada report, which calls for trade reform, and the Canadian Pork Council, which left the Canadian Federation of Agriculture in 2013, citing issues with supply management groups. 

In recent months, New Zealand and American officials have targeted Canadian supply management as an obstacle in negotiations for the Trans-Pacific Partnership, a 12 country free trade deal that includes Canada. 

“Once you switch the venue and you start talking about international trade, now you get different groups (that) all of a sudden get a say in the debate. Now it’s virtually all the firms that are trading internationally,” said Fulton. 

“…It also diminishes the power, if you like, of the farm lobby, because their standard arguments don’t work any more in that venue. Things about being local and so forth don’t work if the issue is trade. What we’re seeing is a shift in the venue. This is an indicator that there’s a potential for a change down the road.”

The Dairy Farmers of Canada have supported Canada’s free trade negotiations while standing against any additional access or tariff reductions. The organization points to a history of such trade deals, which have not obstructed supply management. 

Yves Leduc, director of international trade with the Dairy Farmers of Canada, downplayed comments from American officials. 

“The U.S. is not prepared to put anything on the table until the Canadians come to the table. Why would the Canadians come to the table first? Is it purely tactical trying to put the pressure on Canada so that the attention is not being placed on some of the sensitive issues that the U.S. has?” he said.

Agriculture minister Gerry Ritz has remained optimistic about Canada’s involvement in the TPP while remaining committed to supply management.

“That’s not new. We heard that all through the (World Trade Organization trade talks). We heard it through the European free trade agreement. I can tell you it doesn’t hamstring us at all,” said Ritz. 

The Canada-European Union Comprehensive Economic and Trade Agreement, which was announced in 2013 but could take another two years to implement, will allow for more than 17,000 more tonnes of EU cheese to cross the Canadian border. 

The announcement drew criticism from dairy sector officials and calls for compensation. Those talks are underway, say officials.

“I hear this a lot from Quebec. When do I get my cheque for compensation? I say show me where you’ve lost any money. Nothing has changed until things start to get close to where we’re going to be implementing …” said Ritz.

In a paper recently published in the Canadian Journal of Agricultural Economics, Fulton writes about a growing influence of lobbyists over agricultural policy. 

“If I’m looking at what the signals are that my position isn’t as sturdy as it used to be, the fact that Canada now is particularly interested in developing trade ties with Europe and they have gone as far as to sign a free trade agreement and that as a consequence of that the debate around supply management is shifting, that’s what I would be worried about.”

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