NAFTA2 signed! Hallelujah! Now for the relief, the recovery, the resentment and dismay

For most Prairie farmers it's time to relax, it's a sad time to be a Canadian, and the future looks grim for dairy farmers without a national plan

NAFTA2 has been signed!

Hallelujah!

Now it’s time for relief, recovery, resentment and dismay.

RELIEF

The vast majority of Western Canadian farmers will be relieved by the survival of NAFTA. (Editorial note: I refuse to use the term USMCA, and I suggest you do too. It’s propaganda. For the record, I also generally refuse to use CETA for the Canada-EU deal because it is meaningless.) Most Prairie farmers grow and raise open market commodities, they have to export most of that product, and usually the U.S. is the biggest or highest-paying market. A glowering cloud has hung over all our farming industries since Donald J. Trump’s threats to kill NAFTA began and it’s great to see those clouds break and let through shafts of sunlight. Trade actions have often devastated and bled Canadian livestock and grain producers, so making future disputes less likely is a great success.

Farmers shouldn’t have to worry about their futures due to potential unjustified trade actions. They have enough to worry about with the weather, prices and management issues. It’ll be nice for most wheat, canola and soybean growers, and those who raise pigs and beef cattle, to not have to pay attention to @realDonaldJTrump’s Twitter account for more than entertainment value.

RECOVERY

Everybody has heard that business hates uncertainty. People stop investing and get very conservative in uncertain times. Every farmer is a businessperson. How many farmers have held back on new investments due to the uncertainty hanging over NAFTA and the belligerence towards Canada coming from the White House? There’s no way to quantify that. But I’d say: A bunch. Especially for livestock producers, who can’t store their commodity, border uncertainty can be fatal.

Until this deal is done, has passed through Congress, through Mexico’s system and come out the other end of the Parliament, there will still be uncertainty. But once that clears it’ll certainly feel safer to build a new hog barn or feed yard than it does today. Clearing the stink out of the air, from all of Trump’s threats and insults to Canada, will take a while too. But if he stays warm and nice towards Canada, as he was today in his NAFTA2 press conference, or – better yet – simply stops talking about Canada altogether, that stink will waft away and we’ll all get back to thinking about the U.S. as our nice and friendly next door neighbour.

RESENTMENT

English Canada’s cultural survival is an amazing phenomenon. We live beside a cultural behemoth that speaks our language, shares many of our institutions and approaches, and is 10 times our size. 90 percent of our population is spread in a thin band along the northern US border. Yet we are arguably more distinct today than in 1783, when our persecuted founders fled the American colonies and established the basics of what became Ontario. Our most important founding stock was American. How is this maintained? Having a huge area that is French helps, not just within the French-speaking areas themselves, but also in the interaction English-speaking areas have with them. That cross-cultural compromise helps create a less ideological and more practical people than I suggest exists south of the border.

But I’m going to posit another influence: sporadic and rare but ongoing harassment from the United States. There’s nothing like armed invasions (1812), threats of such (Fifty-four forty or fight!) and countless trade battles and disputes to bring Canada’s disparate people together in a sense of threatenedness. Canadians tend to relax and feel comfortable about being exposed to the U.S., then get hit with a trade dispute and the resentment begins to simmer. I’ve been at this newspaper for almost a quarter-century and I’ve covered a number of trade actions launched by the U.S. and each one seems to bring people together. This NAFTA one has been the biggest, but struggles over grain, pigs and cattle have often lingered for years and each brings on a pro-Canada sentiment. This one has done the same. And it reinforces the suspicion of the U.S. that serves as a (negative) source for Canadian identity. Maybe Trump deserves to be inducted into the Order of Canada for strengthening national unity.

DISMAY

Dairy farmers will be dismayed by the NAFTA2 deal, and with good reason. The deal appears to eliminate Class 7 milk, which has been key to returning the industry to a sustainable economic basis. Class 7 allowed the Canadian industry to both stave off U.S. imports, which were taking advantage of a loophole in regulations, and encourage processors to expand after years of stagnation. It also appeared to offer a way for Canada’s industry to export once again, regardless of a WTO deal to not do so beyond a tiny allotment. Most of that hope is gone now, although domestic use will probably still be priced at levels that will keep most U.S. milk protein products out.

Bigger than that is the slice of the Canadian market that the U.S. is being offered, which will exacerbate the problems already faced by the mostly-stagnant industry due to the Canada-EU deal and the TPP deal, both of which gave away chunks of the market to imports. The small signs of growth in domestic demand are likely to be eaten up by flood of imports, which might now make up more than 10 percent of the market. The industry can’t export, but it will be facing many more imported products. Sucks to be dairy right now.

Somebody’s got to figure out a national strategy for the dairy industry to be reformed so that it can return to long term sustainability, whether with or without supply management. Farmers themselves had seemed to do that with Class 7 milk. Now that’s gone and they’re left looking for a Plan B. They deserve to have a vision of the future that can give them hope.

 

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