OTTAWA – Canada scored a clean victory this week in the attempt by the United States to use free trade laws as a weapon to blast Canada’s supply management protective tariffs.
Trade minister Art Eggleton said a trade disputes panel report presented to governments in Washington and Ottawa Dec. 2 gave Canada a unanimous win.
“All five panelists, including two Americans, signed off, all in agreement and completely supportive of Canada’s position,” Eggleton told reporters.
It means Canada’s 30,000 dairy, poultry and egg producers, who work under supply management rules and are protected from cheaper imports by tariffs, can breathe easy for the first time in more than a year.
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Since July 1995, the Americans have been claiming Canada’s tariffs, created to accommodate a world trade deal and ranging between 25 and 351 percent, violate the anti-tariff terms of the North American Free Trade Agreement.
The NAFTA panel said Canada was within its rights to replace quantitative import restrictions with tariffs, once the General Agreement on Tariffs and Trade took effect last year.
The Americans had hoped the NAFTA prohibition on new tariffs would take precedent but the panel sided with Canada that GATT rules apply.
In Washington Monday, a spokesperson for dairy products exporters said the result was disappointing but not final.
Jerry Kozak, senior vice-president of the International Dairy Foods Association, said the focus of U.S. exporters with their eyes on the Canadian market now will turn to politics.
“I don’t think it really brings to closure the issue of free trade between Canada and the U.S.,” he said in a Dec. 2 interview. “I believe we will seek escalated discussions between our government and Canada on how we can best work co-operatively to open up this area.”
No bargain
In Ottawa, Eggleton said Canada will not be interested in giving the Americans politically what they could not gain legally.
“I expect them to honor the decision of the panel,” said Eggleton. “We followed the proper process and that’s the end of it.”
Agriculture minister Ralph Goodale said he expects the Americans to keep the issue alive.
“But the fact of the matter is that the Canadian position has been proven to be correct in trade policy and in trade law,” he said. “We have no intention of sacrificing that through some other process.”
The supply managed sectors account for more than $6 billion in farm cash receipts each year.
From the industry, there were warnings an American victory leading to a flood of cheaper American product moving north would result in falling quota values, lower prices, an unworkable production control system and farm bankruptcies.
