On the eve of a federal election call, the dairy industry that is a powerful political force in Ontario, Quebec and the Maritimes is on a collision course with the Liberal government.
The dairy farmer lobby says the federal government must announce by May 25 it will use international trade rules to limit increases in dairy substitute product imports or else.
Federal agriculture minister Andy Mitchell said it will not happen.
For the farmer lobby, the “or else” includes making the issue an election campaign concern across the country, said Dairy Farmers of Canada president Jacques Laforge during a May 11 Parliament Hill rally.
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“It’s got to be resolved by May 25. This is a deadline,” he said as dairy farmer speakers called on the government to invoke Article 28 of World Trade Organization rules to limit imports of currently unregulated dairy protein products.
“This would be an election issue across the country. We are losing $200 million a year in sales and it is growing by $2 million a month.”
But agriculture minister Mitchell said in a later interview he is not prepared to invoke Article 28 in the middle of a WTO negotiation.
“We don’t, from a strategic perspective, envision using it at the moment,” Mitchell said May 13. “We are not taking it off the table and it remains a possible tool, but we are committed in WTO talks to obtaining a deal that is in the best interests of our supply managed industries.”
In a speech to the scores of farmers gathered on Parliament Hill to demand a commitment to control dairy replacement products, the minister drew boos from the crowd. Mitchell would go no further than to promise to protect supply management in WTO negotiations and to resume monitoring how much dairy substitute is crossing the border.
It is the latest chapter in a long battle by the dairy industry to have import regulations over butteroil blends and dairy protein products such as casein that were not captured through tariffs in the last WTO deal. DFC said much of Canada’s ice cream production contains cheap imported ingredients that deny Canadian dairy producers tens of millions of dollars in sales, resulting in lower quotas.
In a recent decision, the Canadian International Trade Tribunal said unregulated milk protein concentrates cannot now be regulated. It has been appealed by the federal government.
Heading into an election campaign, it is a tricky political issue since all four major federal parties have promised to protect supply management and the sector said regulating substitute imports should be the first line of defence.
But dairy processors and exporters represented by the Canadian Agri-Food Trade Alliance insist that, while legal, any Canadian invocation of Article 28 to increase protection would undermine Canada’s credibility in a WTO negotiation aimed at reducing trade barriers.
CAFTA president Liam McCreery said in early May that Mitchell had promised privately he would not invoke Article 28. CAFTA said that to reassure other nations at the WTO bargaining table, Canada should make its position public.
Mitchell said the Liberal government continues to share the vision of supply management sectors that they have a right to organize their own marketing system free of WTO sanction.
“Article 28 is one of the tools available to us, but at this point, our focus is on getting the best deal we can out of the WTO negotiation,” said the minister.
Meanwhile, the government agreed last week to a long-standing dairy industry request for labelling rules that would make it illegal to label as a dairy product anything that does not include dairy ingredients.
However, the labelling rules would be included in a Canadian Food Inspection Agency Act, C-27, that is unlikely to be approved before this Parliament is dissolved for an election.
