Government officials told MPs last week that there is no simple or cost-free way to stop imports of dairy-displacing milk protein products, despite demands from dairy farmers that the government do something.
Opposition MPs suggested the bureaucrats were simply creating arguments that would give the government cover when it avoids taking action.
“Action is possible. It just takes political will,” Bloc Québecois agriculture critic André Bellavance said.
Action is possible, agreed Agriculture Canada director of multilateral trade policy Graham Barr. “But there are implications.”
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The sometimes-tense June 1 Parliament Hill meeting of the House of Commons agriculture committee followed a ruling by the Canadian International Trade Tribunal that milk protein concentrate products above 85 percent concentration are not “dairy products,” which are protected by high supply management tariffs.
A Federal Court ruling upheld that opinion.
Dairy Farmers of Canada argues the ruling opens the floodgates for the import of milk protein by food product manufacturers that will displace hundreds of millions of dollars in milk sales and ultimately will kill the supply management system.
With the support of opposition MPs, the farmers have demanded that the government take action to limit milk protein concentrate imports. They asked Ottawa to consider the possibility of invoking a World Trade Organization rule that allows a new tariff protection to be imposed under article 28 but with the right of affected exporters to retaliate.
The government’s response is that even if new tariff protections were invoked, they would not apply to the United States and Mexico under the North American Free Trade Agreement, so product that now comes from offshore would be routed through the U.S.
DFC has presented to the Commons committee a legal opinion disputing the claim that NAFTA would supersede regulation changes made under the WTO.
Last week, Barr told the committee that even if true, using Article 28 to block imports from the U.S. would have implications that could be harmful to Canada.
“The implications are that the U.S. could do the same to us,” said the senior bureaucrat. He suggested the Americans could retaliate against imports of Canadian wheat, cattle and hogs.
In a testy exchange, Liberal MP Wayne Easter suggested the bureaucracy is insensitive to supply management.
Meanwhile, representatives of dairy farmers and the Dairy Processors’ Association of Canada started meeting last week to try to resolve some of the issues troubling the industry, including declining demand and a structural surplus of solid non-fat material that is a byproduct of milk processing.
