TPP the end of supply management?

Trade experts expect Canada will face pressure to get rid of supply management under terms of the Trans-Pacific Partnership

The supply management debate is reaching a tipping point as Trans-Pacific Partnership (TPP) negotiations heat up, says a policy analyst.

Protection of Canada’s dairy, poultry and egg sectors is under increased scrutiny as the centrepiece of the TPP deal nears completion, said Brian Crowley, managing director of the Macdonald-Laurier Institute.

Australia, New Zealand and the United States want to see an end to supply management. They’re three of the 12 countries attempting to negotiate an Asia-Pacific trade pact that includes Canada.

Canada has negotiated 12 free trade agreements with 43 countries since 1989 without sacrificing supply management, but this time is different, said Crowley.

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Many of the previous agreements were bilateral pacts, which gave Canada considerable negotiating clout. If it wasn’t satisfied with an aspect of the deal, it could refuse to sign the agreement and it would die on the table.

With the TPP, there are 12 countries at the table, so any country that draws a line in the sand, could be at risk of being excluded.

TPP discussions have been ongoing since 2005, but there are signs that momentum is building.

“The central relationship in the TPP is really between the United States and Japan. Everybody else is along for the ride,” said Crowley.

“The Japanese and the Americans are signaling that they’re pretty close to a deal.”

Crowley expects there will be substantial pressure on Canada to get rid of supply management if it wants to be part of the trade pact.

“I’m not saying that supply management is dead or anything like that. All I’m saying is that Canada’s negotiating power is weak and the stakes are very high,” he said.

“Canada is very anxious not to be left out of this agreement and this is a price that a lot of people at the table are going to be asking Canada to pay.”

Federal agriculture minister Gerry Ritz recently told the House of Commons agriculture committee that his government wants to keep supply management “as workable as we absolutely can.”

“I can tell you this government is unequivocal in our support for supply management,” he said.

Ritz said all political parties recognize the value that supply management brings to Canadian agriculture.

“We as a government take that very seriously in the negotiations,” he said.

Mike Dungate, executive director of Chicken Farmers of Canada, said there is no doubt that supply management is under the gun.

“When we joined (TPP) in 2012, the U.S. said you have to agree up front to get rid of supply management or we won’t let you in,” he said.

Canada held its ground and pointed out nobody else was paying a price to be in the negotiations.

The U.S. is once again applying pressure on Canadian negotiators as it tries to convince Congress to give it Trade Promotion Authority, which gives U.S. negotiators the ability to make a deal that Congress can approve or reject but can’t amend.

“I have no doubt the U.S. will come back at the end of the day and say you’ve got to open up your market on dairy and poultry for us to conclude this deal,” said Dungate.

Meanwhile, New Zealand is conducting a media blitz designed to put pressure on Canada’s supply managed sector.

“Sorry New Zealand. Who are you? What clout do you have? You’ve got four million people 14,000 kilometres away from anybody that produces anything,” said Dungate.

Crowley said if Canada is left out of the TPP the impact on the livestock sector will dwarf the impact of U.S. country-of-origin labelling laws.

“(TPP) is absolutely vital to Canada’s interest and we simply cannot allow supply management to stop it,” he said.

Dungate said chicken is the No. 1 meat in Canada and it continues to grow while the cattle sector is shrinking. He doesn’t want to see the supply management sector sacrificed for a cattle industry that may not take advantage of the expanded market access.

“What I would absolutely detest is if we got traded off for nothing,” he said.

There has traditionally been little political will to end supply management because Canada’s 18,000 supply managed farms have plenty of political clout.

“They are fairly highly concentrated and they’re in a lot of swing constituencies,” said Crowley.

However, their political influence is waning as the number of supply managed farms continues to shrink.

“We’re going to reach a tipping point. The question is, is TPP going to be that tipping point at which we finally say, ‘look, we just can’t afford this anymore,’ ” he said.

Crowley said this is the worst time to be having this debate because Canada is heading into a fall election and no political party is about to take on supply management at that time.

RELATED STORY: TPP deal good for Canadian economy: cattle group

Contact sean.pratt@producer.com

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