The Canadian dairy industry is working against its own self-interest when it urges the federal government to use trade rules to impose limits on unregulated dairy substitute imports, two ministers warned last week.
Dairy Farmers of Canada, with support from New Democrat and Bloc Québecois MPs, are demanding that Ottawa use Article 28 of the World Trade Organization agreement to control imports of dairy substitutes that are taking tens of millions of dollars in domestic market share.
In a special House of Commons debate on supply management June 7, agriculture minister Andy Mitchell warned that imposing new import restrictions in the midst of WTO trade liberalization negotiations would sour the talks and hurt Canada’s chances of winning a deal that preserves supply management protections.
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“My bottom line objective, what I am trying to achieve, is to ensure that the outcome of the WTO is a favourable one in respect of maintaining and enhancing the supply managed industries here in Canada,” Mitchell said.
“In my view, taking an Article 28 action at this particular time does not assist in achieving that goal.”
The same day at the Commons foreign affairs and international trade committee, trade minister Jim Peterson made the same point. He said no action should be taken that would undermine Canada’s supply management defence in WTO talks.
“On supply management, I see the biggest risk to it being what happens in the next six months in the WTO,” he said in reply to a question of using Article 28 to control dairy protein and butteroil imports that are now unregulated.
“This is where I think we have to concentrate our efforts because if the over-quota tariffs require a significant reduction, supply management in all five sectors will be dead. This is what Mitchell and I are working very hard for.”
The dairy farmer lobby was not persuaded, insisting Ottawa should impose import controls as one way to signal to the world it is serious about defending farm interests.
In the Commons, New Democrat Charlie Angus argued the government must act after nine years of unregulated product imports. Other countries, including the United States and the European Union, have used the article to control imports of products not covered by general world trade agreements.
“We are losing up to $182 million of our market every year to this flood of unregulated milk products,” he said. “This is equivalent to the entire milk production of Manitoba. We have just given it away, lost it, left it out there.”
Mitchell said the government reserves the right to invoke Article 28 later if it cannot win the point at WTO talks, but this is not the time to send a protectionist signal.
Exporter interests, including the Canadian Agri-Food Trade Alliance, have been urging the government to send a strong signal to other WTO members that Canada will resist more protectionism, including this demand from dairy farmers.
