Canada’s dairy farmer lobby has stirred up a political controversy by proposing that Canada impose import barriers on some unregulated dairy products.
Dairy Farmers of Canada has been urging federal agriculture and trade ministers to invoke Article 28 of the General Agreement on Tariffs and Trade.
Article 28 is a little-used international trade rule that would impose limits on a variety of imports such as butteroil, used in ice cream making, and casein, a milk protein product.
The Dairy Processors Association of Canada has objected to the proposal and in Geneva, New Zealand WTO ambassador Tim Groser, chair of the World Trade Organization agriculture negotiations, said any move to invoke new dairy protectionism would undermine Canada’s credibility in the talks aimed at reducing trade protectionism.
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A newsletter published from Geneva by Canada’s supply managed agencies reported that Australia, Brazil and the European Union agreed with Groser.
DFC communications official Therese Beaulieu said the federal government seems cool to the idea of invoking GATT Article 28.
“I would say it doesn’t look promising (that the government will take up the cause),” she said March 30.
“They argue that with negotiations under way, it is not the right time.”
But dairy farmer leaders will continue to press the case, she said.
“The European Union has done this several times and use of Article 28 is legal and that’s why it was put in the GATT in the first place.”
Dairy farmers say the trade agreement is flawed because while most dairy products are subject to import controls, some were missed when quantitative controls were replaced with tariffs in 1994.
Butteroil, imported in a sugar mix and then used in Canada to replace more expensive butterfat in cheaper ice cream varieties, is one of them.
In 2004, imports of butteroil increased by 48 percent to more than 16 million kilograms.
“That means 48 percent of the butterfat market in ice cream making is being taken by imports,” said Beaulieu.
Invoking Article 28 would mean the import quota would be set at the 2004 import level plus 10 percent.
“It would not stop imports but it would cap them,” she said. “We need predictability in imports to operate supply management.”
At the dairy processors’ association, president Don Jarvis said more protectionism is not the way to deal with cheaper imports.
“They could create a special class and lower cream prices for the ice cream industry,” he said.
Jarvis said processors believe the dairy farmer proposal could undermine Canadian WTO negotiators in their efforts to defend tariff protections within the supply management system.
“Our main concern is that it is a very radical or unused instrument to be proposed at this time during WTO negotiations,” he said.
“We are concerned it would jeopardize or erode the defence of supply management in this round.”
Beaulieu said DFC will continue its Parliament Hill lobby, since the government has not offered any other way to protect the dairy industry from unregulated dairy product imports such as butteroil.
