PM Trudeau defends Canadian dairy system

Trudeau defended Canada's dairy supply management system noting that every nation including the US defends its agricultural industries as much as it can.

 

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Canada has a supply management system fodairy products, poultry and eggs. It is discussed in a recent Digital Journal article. Trump recently criticized the dairy system during a speech in Wisconsin a cheese-producing state. In an interview with Bloomberg television Trudeau points out that the US actually runs a dairy surplus with Canada. Trudeau noted that the system worked quite well in Canada and said: "Let's not pretend we're in a global free market when it comes to agriculture. Every country protects, for good reason, its agricultural industries." Trudeau made his response after Trump again attacked the Canadian dairy industry as well as lumber, timber and energy sectors. It is Canada that should be complaining about the energy sector under NAFTA. If Trump's slogan is America First, under NAFTA Canada comes second.

As an article in Rabble notes:The proportionality clause says that if the government of any NAFTA member country takes action that cuts the availability of energy for export to another NAFTA member country, it must continue to export the same proportion of total "supply" that it has over the previous three years. If it cuts energy available for export to another member country, it must also cut the supply of that energy domestically to the same extent.The proportionality rule means that Canadians cannot have priority access to their own energy supplies. Richard Heinberg, a noted California energy expert said that proportionality is unique in all of the world's trade treaties. Heinberg claims that "Canada has every reason to repudiate the proportionality clause, and to do so unilaterally and immediately." With the opening of NAFTA Trudeau has every opportunity to do this. However, he has yet to reveal what he intends to change. He has not mentioned this clause, no doubt for good reason. The US would never accept it being dropped. The US wants Canada to be first and foremost a reliable source for oil and gas who will not put the needs of Canadians above those of the US.

I doubt the issue will even make it to the mainstream press. What we have instead are attacks against the management supply system by international dairy bodies that have already been captured by the neo-liberal policy agendas that will profit large corporations. A recent Globe and Mail article by Campbell Clark, takes on the task of attacking the system and predicting its demise:The end is coming for Canada’s supply managed dairy market, not immediately, but almost inevitably. That’s not because U.S. President Donald Trump has claimed the Canadian system is unfair to U.S. farmers. The hypocrisy of a President who crows about an America First trade policy while demanding access to Canada’s market makes one of the best arguments for keeping the protectionist system. But the political market for supply management is weakening. For Canadian politicians, it will soon be more valuable to give it up in trade talks than it is to use it to buy the votes of dairy farmers.The article points out that from more than 100,000 dairy farms in Canada the number had declined to 11,260 in 2014. Half of these are in the province of Quebec but even there a Conservative MP Maxine Bernier is running for his party's leadership on a pledge to eliminate supply managed. It should be noted that the Conservatives have only 5 seats in Quebec in the federal government.

Campbell notes that the US wants concessions. Canada could trade doing away with the supply management system in order for greater market access for steel pipes, lumber, or exemption from border taxes. US lumber and steel companies may object to any such deal as it conflicts with Trump's America First doctrine. However, Trump may very well abandon that as he has other campaign promises especially as Steve Bannon seems to be losing influence and Wall Street and the military appear to be winning power in his administration. While the strength of dairy farmers under the supply-management system may be waning it may still be strong enough to keep its protections under NAFTA.

Trump has said that the US will report within two weeks what it is intending to do with NAFTA, that he promised to renegotiate.

Trudeau said he planned to move the trade conversation ahead "in a way that both protects consumers and our agricultural producers". Trudeau also noted about Trump: "He has shown if he says one thing and actually hears good counter arguments or good reasons why he should shift his position, he will take a different position if it's a better one, if the arguments win him over." Trump does often flip flop but Trudeau is being overly kind in suggesting Trump's reason for doing so.

There is no sign of the renegotiation being an open transparent process, or that there will be any public consultations on this exceedingly important issue. It is likely to be done in secret behind closed doors with the most important stakeholders giant international corporations having a significant presence. A list of demands from the Council of Canadians can be found here.

Trump targets Canada's dairy farmers under NAFTA

U.S. President Donald Trump promised, during a visit to Wisconsin a cheese-making state that he will defend U.S. dairy farmers who claim they are being hurt by Canadian protectionist trade policies.

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Under the present NAFTA agreement Canada's dairy sector enjoys protection by high tariffs. There are also production controls that ensure the prices for products are sufficient for farmers to make a living. The Canadian dairy system is not a free-market system but involves supply management by the Canadian Dairy Commission(CDC):

The Canadian Dairy Commission (French: Commission canadienne du lait) is a Canadian government Crown corporation created in 1966 under the Canadian Dairy Commission Act (1966–1967). According to the Act, CDC is mandated to "provide efficient producers of milk and cream with the opportunity to obtain a fair return for their labour and investment, and to provide consumers of dairy products with a continuous and adequate supply of dairy products of high quality."The CDC also chairs the Canadian Milk Supply Management Committee that coordinates industrial milk supply in Canada. The Minister of Agriculture and Agri-food is responsible for the CDC. The U.S. and some other countries hate the system since global companies want a purely market-based system in keeping with neoliberal policies in the interests of global corporations.

Trump said in Kenosha, Wisconsin: "We’re also going to stand up for our dairy farmers. Because in Canada some very unfair things have happened to our dairy farmers and others.” While Trump did not detail his concerns he said that his administration would call the Canadian government led by PM Justin Trudeau to ask for an explanation. The explanation is that there would be no NAFTA without protections for aspects of the economy that are supply-managed such as dairy products. Negotiators worry about the political fallout from any attempt to do away with the system. The system is described here:In total, there are about 17,000 Canadian farms that operate under Supply Management; this is about 8 percent of all farms in Canada. The dairy industry is the largest of the three supply-managed industries in Canada, with 11,280 farmers operating in 2016 [6]. There are about 2,700 poultry farmers, and fewer than 1,000 egg farmers. Dairy is the largest industry of the supply-managed industries, but it is also Canada's third largest agricultural commodity in terms of farm cash receipts, making it a significant commodity for Canada [7].

Trump again threatened to eliminate the North American Free Trade Agreement (NAFTA) if it cannot be changed in the way he wishes. Trump said: "It's another typical one-sided deal against the United States and it's not going to be happening for long." Trump naturally emphasizes negative effects of NAFTA on U.S. workers but it has had negative effects in Mexico and Canada as well. The appended video from 2006 shows some of those effects. If NAFTA is reopened for negotiation then Mexico and Canada should demand changes — not just the United States.

Some of the demands that Canada should make are listed by the Council of Canadians: "... if the North American Free Trade Agreement (NAFTA) is to be renegotiated, then it must be fundamentally changed, meaning at minimum its investor-state dispute settlement (ISDS), energy proportionality, and water as a good, service and investment provisions must be removed. We also argue that the negotiation process must be done in an accountable and transparent way that includes public consultations." The proportionality provisions prevent the Canadian government from ensuring that there are sufficient supplies of goods to supply Canadians before exports of those goods are allowed. The proportionality provisions apply to oil and gas:

"The deals say that Canada must maintain at least the same level of oil and gas exports to the United States as it had supplied for the past thirty-six months. Only if Canadian consumption is cut proportionately, and then only in times of crisis, could the Canadian government claim jurisdiction over its own energy resources."

So far there has been complete silence as to what changes the Trudeau government is seeking in NAFTA. Neither the U.S. nor Canadian government have suggested that the negotiation process be transparent and accountable, or that there will be any public consultations. Usually trade deals are held behind closed doors with mainly government and corporate representatives taking part.