Canada’s dairy sector continues to oppose North American trade deal as Parliament debates the necessary legislation
An overwhelming majority of witnesses testifying at a recent meeting of the House of Commons agriculture committee supported the quick ratification of the “new NAFTA” trade deal, but the dairy industry continues to voice its opposition.
Parliamentarians in Ottawa represent the last of the three countries involved in the United States-Mexico-Canada Agreement to ratify the deal, with the law to do just that currently winding its way through House of Commons and Senate committees.
“It’s about time. This is about certainty, stability of trade. This is about ensuring that trade across North America is based on rules and making sure that the supply chains that have been built over 25 years remain in place and can continue to flourish,” Claire Citeau, executive director of the Canadian Agri-Food Trade Alliance, said following her testimony to the agricultural committee.
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Canada’s chief negotiator for the deal, Steve Verheul, told the agriculture committee that 55 consultations were held with the supply-management sector, alongside 230 meetings with a variety of sector players, including those in grains, oilseeds, meats and sugars, as part of the negotiations.
He made a point of reminding committee members the goal of the United States at the start of the negotiations was to rebalance trade between the three member nations rather than open up trade, marked most pointedly by a goal to completely decimate Canada’s supply-management system.
In the end, the deal maintains Canada’s $30 billion access to the North American market agricultural market, with the refined sugar market doubling and tariffs on whey products and some oilseeds products, like margarine, being eliminated.
“No trade agreement is perfect. Did we get everything we asked for? No, but we got a pretty good deal,” said Citeau.
Beyond concessions made to supply-managed dairy, some witnesses — such as those representing the grain sector — suggested they would have liked to see more work done in the negotiations to remove non-tariff trade barriers.
Brian Innes, vice-president of public affairs at the Canola Council of Canada and CAFTA vice-president, noted regulations between various sectors differ when it comes to areas such as crop protection services and feed. He said those create barriers and many barriers still remain despite the negotiation of USMCA.
But he said the deal did set up mechanisms to help resolve issues not specifically addressed within the text of USMCA, one of which is a committee on agriculture between the three countries.
“It outlines how that committee should meet annually and so we as industry look forward to working with the government on the agenda for those committees to address the barriers that are not addressed in the text,” he said.
As expected, the bulk of concerns with the trade deal were raised by the dairy industry.
Dave Taylor, chair of the British Columbia Dairy Association and owner of Viewfield Farm on Vancouver Island, gave the committee a particularly personal account of his experiences within the industry.
“Most of you all have dairy farms in your riding, and they all have a story,” he said before talking of the “real bumps as of late” resulting from the negotiation of recent trade deals resulting in the loss of market share for dairy farmers.
Verheul had previously told the committee that concessions on supply management could not have been avoided given the opening position of the United States, but Taylor said such concessions put the industry “in a vise,” resulting in farmers now being asked to make another sacrifice that will lead to a combined 18 percent loss of production by 2024.
“The government has once again weakened our Canadian dairy sector,” he told committee members.
He said one way to mitigate such losses is through increasing exports, but argued this was also impacted by USMCA because of what he called a “draconian cap on our exports” listed in a clause of the agreement.
“(USMCA) requires any exporter of skim milk powder, milk protein concentrate and infant formula beyond a predetermined threshold to be charged an export charge on each additional kilogram of product exported globally,” he said. “In other words, although (USMCA) is an agreement that should be limited to its three signatories, the cap on dairy exports extends to every country in the world. This goes well beyond what would normally be expected in a trade negotiation and sets a dangerous precedent for future agreements for, I believe, all other sectors.”
Verheul’s colleague, Aaron Fowler, the chief agriculture negotiator for Canada, called the clause an “unusual provision” put in place to address U.S. concerns over supply management. Conservative agricultural critic John Barlow said the provision threatened Canadian sovereignty.
Taylor took issue with United States having “oversight” on Canadian dairy because of a provision requiring consultations with USMCA’s signatories before domestic changes to supply management are done.
“This puts into question the independence of decision making in Canada and our sovereignty,”
Taylor also warned committee members that consumers won’t be sure the milk on the shelves at grocery stores is produced with the same high standards that producers in Canada use, citing the use of a growth hormone banned in Canada due to animal welfare, but acceptable in the United States.
He noted the federal government’s continued commitment to provide compensation for dairy producers as a result of the concessions made in USMCA and called for it to come in the form of direct payments.
“Instead of compensation, Canadian dairy farmers would have strongly preferred to see no concessions in recent trade agreements,” he said.
If ratification continues on its current schedule, USMCA will likely come into force around Aug. 1.
