Supply managed sector nervous in wake of U.S. TPP fast track

The debate over the future of Canada’s supply management system is heating up amid speculation that the Trans-Pacific Partnership trade deal could be signed this summer.

The U.S. Congress last week gave president Barack Obama fast-track authority to pass trade bills, signaling to the other 11 TPP partners that negotiations could pick up speed. Some have said the next six weeks are critical and suggested a deal by August. However, a fall election looms in Canada, Americans are gearing up for the 2016 presidential vote and outstanding issues around Canada’s dairy and poultry industries have to be resolved.

“Very few actually know what’s being negotiated,” said Sylvain Charlebois of the University of Guelph’s Food Institute. “It’s making a lot of people uncomfortable, including myself. But when you see a president being given the authority to go ahead and negotiate with partners within the Trans-Pacific Partnership, that to me is significant.”

With the TPP negotiations winning fast track approval in the U.S., will prime minister Stephen Harper try to scrap supply management before the next election?
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Federal trade minister Ed Fast told CTV’s Question Period June 28 that reports of a summer deal are speculative, as are reports that Ottawa is preparing a financial compensation package for supply managed sectors that will be affected by the deal if it grants more access to the Canadian market.

“Our government has been very clear,” he said. “We are going to continue to promote and defend the interests of our supply-managed sector.”

Chicken Farmers of Canada communications manager Lisa Bishop-Spencer said that is what the government has told the organization. She said Ottawa has signed many other trade agreements without negatively affecting chicken producers.

“We have no reason to believe it would do otherwise in this case,” she said.

The dairy sector has come under particular criticism from the United States, Australia and New Zealand for protections it enjoys under supply management. Yves Leduc, director of international trade at Dairy Farmers of Canada, said there is pressure on milk producers.

“The negotiations are moving on and obviously there is a risk, which is causing a lot of concern within the dairy farmer sector,” he said.

“However, the prime minister has given no indication of what concessions Canada might make at the talks. Obviously, if we are negatively hurt, we will be seeking the proper measures to properly mitigate any negative impact.”

Charlebois said reform is necessary and undoubtedly coming, but should be done carefully because it will affect more than just milk producers. Lenders and other industries that are built around supply management would suffer.

“There’s $30 billion worth of quota,” he said. “You can’t just overnight get rid of it and tomorrow many, many agricultural sectors would collapse. There’s a quick and dirty way to do it, like Australia, but there’s the Canadian way to do it, and I think we need to figure out what that is.”

He said it took Australia 18 years to pay farmers after dismantling its system and using a portion of existing price supports for transition funds. Europe ended its quotas in April.

“It took 12 years and many programs to compensate farmers, six of them actually,” Charlebois said.

“I suspect any reform in Canada would probably need at the very least 15 to 20 years.”

At the University of Calgary’s School of Public Policy, executive fellow and former Liberal MP Martha Hall Findlay and chair Jack Mintz called for a transition similar to Australia’s. They said removing all tariffs would drop the price Canadian farmers receive to that which U.S. farmers get, and the value of quota would disappear. It’s why compensation has to first be determined. They suggest a per litre price supplement on retail sales, known as the transition price supplement, to be paid for a limited time.

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