RED DEER, Alta. – If Chile joins a free trade zone with North America, the United States could use the deal as a way to demand greater access to the Canadian market, said a University of Manitoba agriculture economist.
Daryl Kraft said as Canada gains a larger share of American and other foreign markets, it will fall under increasing pressure to open its dairy and poultry markets at home. Kraft was a panel member discussing the future of the Canadian dairy industry at a seminar in Red Deer.
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“It’s very difficult for the Canadian government to hold firm either when they sign the new agreement with Chile or when the existing agreements we have now must be renegotiated,” he said.
With such a high dependence on foreign markets, Canada has to reciprocate with its trading partners by allowing their products in.
Kraft warned that without exports, two out of three Canadian farmers will be driven out of business.
In 1994, this country had a $1 billion trade surplus in bulk and intermediate agriculture products with the U.S. Most of the surplus came from live cattle and boxed beef exports, canola seeds and oil.
However, the Americans sold Canada more finished products, said Kraft.
Under the new world trade agreement, Canada is permitted to charge high tariffs to protect its dairy and feather industries. However, the North American Free Trade Agreement calls for all tariffs among the three signatories – Canada, Mexico and the U.S. – to be gone by 1998.
Legal opinions suggest Canada could go before the World Trade Organization and win the right to maintain its tariff rate quotas if the Americans press the issue, said Kraft.
Processor David Coe of Dairyworld Foods said an open border in three years is the worst case scenario. His sector would prefer a 10-year phase-in period.
Bruce Beattie, a dairy producer from Sundre, Alta., and president of Alberta Milk Producers, worries Canada will never be on an equal footing with the Americans.
“As far as bilateral trade is concerned, the United States has a very selfish view of trade,” said Beattie.
