Agreement’s outcome was fairly predictable

Upon completion of the original Trans-Pacific Partnership agreement in 2015, a dairy farmer told the Western Producer, “how would you feel if you were told you were losing (3.25 percent) of your income?”

Add to that additional access to Canada’s dairy market given up in the deal between Canada and the European Union in 2014, and now the 3.6 percent thought to be given up in the new U.S.-Mexico-Canada Trade agreement and the frustration expressed Monday by the supply managed dairy sector is understandable.

Dairy farmers thought they had given enough.

In reality, it could never be: not if a new North American pact was to become a reality.

A dispassionate forecaster of where the United States-Mexico-Canada trade deal would have come pretty close based on previous agreements and public statements on current issues.

Nothing about what happened in agriculture was surprising, but that doesn’t mean it won’t be a big hurt for dairy producers.

It must be stressed that Canada was not negotiating on behalf of one sector: Prime Minister Justin Trudeau was pretty much forced to the table (while making it look agreeable), and certain issues were forced on Canada.

The outcome was always going to depend on how creative Canada could be, and how obstinate the administration of U.S. President Donald Trump would be.

The U.S. got more in each of the supply managed sectors than it would have got if it had remained in the original TPP, and while the U.S. won on the thorny issue of Class 7 filtered milk, Canada’s position was dubious because it tried to market an ingredient derived from a supply managed sector.

It’s curious that Canada will allow more tariff-free eggs, poultry and turkey across the border since these areas weren’t the focus of the U.S. — at least not publicly.

Reactions among agricultural groups were telling. The grain sector liked the deal, welcoming its stability. The meat sector is relieved considering the integration of the markets in the U.S. and Canada, and the Canadian Agri-Food Trade Alliance welcomed the agreement.

Turkey Farmers of Canada is disappointed. Egg Farmers of Canada registered measured disappointment.

But the dairy sector is angry. Dairy Farmers of Canada President Pierre Lampron said “once again that the Canadian government is willing to sacrifice our domestic dairy production when it comes time to make a deal.”

He is right. That is what happened. But the sacrifice, at first look, does not appear to be fatal to the sector.

Canada could not walk away from the table on this issue alone. Too much was at stake in the auto sector.

Foreign Minister Chrystia Freeland is promising full and fair compensation to supply managed producers. The sector was promised about $4 billion in compensation from the other trade deals.

It’s unclear whether the issue of wheat grading is resolved. The U.S. complained that its grain is graded as feed when it enters Canada.

The world has changed since NAFTA went into effect in 1994. It was hailed as a breakthrough agreement at the time and has resulted in market integration and significant increases in trade between the three countries.

Canada is now the top trading destination for 35 U.S. states.

Canada ships its agricultural products all over the world. Trade has been good for us and necessary for a country that produces far more than we can consume ourselves.

Dairy producers can fairly complain, but in the larger picture, the world won’t change that much with this deal.

Karen Briere, Bruce Dyck, Barb Glen, Brian MacLeod and Michael Raine collaborate in the writing of Western Producer editorials.

Comments

  • Monkeeworks

    Guess we will just have to borrow a few more billion from someone, anyone, to pay for the Supply Management losses.
    The government represents every Canadian on earth. When they sign a loan agreement they are signing for you. As a Canadian, your name is on that ‘I am responsible for this debt’ paper. Every Canadian child, every baby is responsible for repayment to that loan. We are all responsible, except for this government.

    • richard

      …..or a few billion more for income support and crop insurance for grain farmers?

      • Kevin Auch

        Agree, drop all “income support” for everyone, including the hundreds of dollars coming off every Canadian’s grocery bill for the trade irritant sectors.
        In addition, drop all the taxes that are added to my expenses before I make any profit at all, and we won’t need the questionable support that a highly wasteful, inefficient “subsidized”crop insurance program brings.
        The last time we had a super drought, western Canadian grain farmers divided a $billion between them to compensate for catastrophic losses. The spoiled dairy sector is getting $4 billion amongst a much smaller group of farmers for a minuscule market share loss.
        It’s more than a little annoying when $4 billion is also roughly equal to the yearly addition to our collective grocery bills to subsidize this 5% sector of Agriculture.

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