President Trump puts supply management on the chopping block

It’s on.

Canada’s dairy industry has officially caught U.S. President Donald Trump’s attention.

The American president vowed to “stand up for our Wisconsin dairy farmers” during a speech in the milk-rich state April 18.

“Because in Canada some very unfair things have happened to our dairy farmers and others and we’re going to start working on that,” Trump promised.

“Yeah, we’ll get that done. We’re going to work on that very hard, we’re going to work on it immediately — in fact, starting today. It’s a terrible thing that happened to the farmers of Wisconsin.”

He doubled down on that pledge two days later from the Oval Office.

“Canada, what they’ve done to our dairy farm workers, is a disgrace. It’s a disgrace.”

Anyone who follows Canada-U.S. trade knew this day was likely coming. After all, farmers played a key role in getting Trump in the White House in the first place.

Ever since, Canada’s supply managed sectors had been watching the unpredictable president with bated breath. More than a few farmers have said they would check Twitter on a daily basis to see whether the file had made the president’s radar.

Political battles between Canada and the United States on dairy aren’t new. The Americans have been very clear that they aren’t a fan of Canada’s supply management system. They’ve long argued for more access to Canada’s dairy and poultry markets — a demand they voraciously battled for during the recent Trans-Pacific Partnership negotiations.

Under that deal, Ottawa agreed to give foreign suppliers access to 3.25 percent of Canada’s dairy industry annually. The Americans wanted 10 percent.

The Trump administration formally withdrew the U.S. from the TPP earlier this year. However, it’s expected Washington will try to recoup the previously promised Canadian market access in the pending renegotiation of the North American Free Trade Agreement.

The U.S. president’s hatred of NAFTA is well known. Trump has vowed repeatedly to “rip up” the deal, which he told the Associated Press in a recent interview is hurting American dairy farmers. Farmers in Wisconsin and New York, the president said, “are getting killed by NAFTA.”

Canada’s supply management system is largely exempted from the NAFTA trade agreement. Ottawa has vowed to defend the quota-based farming system in the pending renegotiation.

It’s worth noting the current dispute between Wisconsin, New York and Canada isn’t so much about NAFTA as it is about American diafiltered milk exports and a new pricing policy, called Class 7, which the Americans insist has cut them out of the Canadian market.

Canada vehemently disputes those claims, insisting the current financial strife facing American dairy farmers has more to do with overproduction and weakening global dairy markets.

Prime Minister Justin Trudeau, Canadian Ambassador to the United States David MacNaughton and Ontario Premier Kathleen Wynne have all publicly defended Canada’s supply management system in light of Washington’s latest remarks.

However, no Canadian official has responded to the president’s remarks directly. Instead, MacNaughton and Wynne have both written letters to New York Governor Andrew Cuomo and Wisconsin Governor Scott Walker, while the prime minister has responded to questions from the press.

One thing is certain. The president’s latest remarks have done little to ease jittery Canadians who are nervous about what a NAFTA renegotiation might entail.

And, with several Canada-U.S. trade files set to heat up in the coming weeks, including the equally controversial softwood lumber file and pending action from Washington on the tax file, it’s safe to say Canadian industry remains on edge.

Canadians have long prided themselves on having an amicable relationship with their southern neighbour — a mutual respect some fear may be upended by an unpredictable White House.

Trudeau has vowed Ottawa will not overreact. Still, now that Trump has said the words “dairy” and “Canada” in the same sentence, Canadians likely won’t be breathing easier any time soon.

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Comments

  • Harold

    Under the NAFTA agreement the flow of diafiltered milk coming into Canada from Wisconsin and New York which was sold to Canada’s cheese producers could not have tariff applied. Canada’s Supply Management responded by dropping the price of skim milk to win over Canadian cheese producers and US profit dropped 50% from 9.4 million. Perhaps Canada supply management thought the USA (Wisconsin,New York) wouldn’t notice. I guess that’s how Canadian trade works and how you get your trade partner to smile; it seems like the lights are on but nobody is at home.

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