OTTAWA – The decision of a trade disputes panel last week that Canadian supply management protections are legal was a double blow for the United States.
Blow number one came when the five-member panel of international trade lawyers were unanimous in ruling that contrary to American arguments, Canada’s system of high protective tariffs does not offend anti-tariff provisions of the North American Free Trade Agreement.
Blow number two was that the ruling wipes out the benefits of an earlier American trade win.
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In 1989, the U.S. went to the General Agreement on Tariffs and Trade to argue that supply management protection should not apply to ice cream and yogurt because they were not raw products. The U.S. said supply management protection applied only to unprocessed milk and cream.
The GATT agreed, sending shock waves through Canada’s food processing and supply managed industries.
If ice cream and yogurt imports were allowed from the U.S., could processed chicken or other value-added products also begin to flow across the border if challenged?
Negotiations on hold
Canada was supposed to negotiate increased access for American ice cream and yogurt after the GATT ruling but put those negotiations on hold while the new GATT rules were being negotiated.
There was a 1993 deal which took effect last year. Under the deal, Canada included ice cream and yogurt in the list of products protected by high tariffs.
The U.S. agreed to the details, but then challenged them under the NAFTA.
When the trade disputes panel ruled against the Americans, they lost the benefit of their earlier ice cream and yogurt ruling as well.
“The decision makes it clear that this is an all-encompassing ruling that includes ice cream and yogurt and even though there has been a previous GATT ruling against us, this ruling takes precedence,” agriculture minister Ralph Goodale said last week.
