Dairy sector stability being milked: Official

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New Delhi, September 13, 2018: Whether or not the federal Liberals will heed a call to loosen the state’s control of Canada’s protected dairy sector in order to help smooth North American Free Trade Agreement talks is “hard to say,” says Canadian Federation of Agriculture president Ron Bonnett.

“At this point, it’s basically one of the issues on the table,” Bonnett told The Sault Star Tuesday, as trade talks resumed at the decision-maker level.

Canada’s dairy farmers would argue they’ve already catered enough to foreign producers in previous trade deals and aren’t prepared to give up further ground, said the Bruce Mines beef farmer, who has served as an adviser to Canadian NAFTA negotiators and has been virtually on the front lines of what have often been chilly exchanges.

Canada expanded foreign access to its dairy sector in trade deals with the European Union and with 10 Pacific Rim countries. The Pacific trade pact provided those countries with access to 3.25 per cent of Canada’s market, and expectations are the U.S. won’t go any lower.

“It just keeps needling away, pulling away some of the stability from the sector,” said Bonnett, who was in Washington last week and plans to return as negotiations continue. “That’s what the concern is with all of the supply management sector.”

Late last week, Republican Tom Reed, a member of the House ways and means committee, said that providing American dairy farmers with more access to the Canadian market may mollify President Donald Trump.

Bonnett said what’s often “lost in the discussion,” despite high tariffs of nearly 300 per cent that the U.S. contend are blocking sales to Canada, is the amount of dairy shipped north, nearly $600 million worth in 2016, five times greater than Canadian sales south.

“There is a certain amount of trade that does take place, even if they did pull open access to Canadian markets, that’s not going to solve their problem,” said Bonnett.
There appears to be a “disconnect” between Washington and the country’s dairy farmers when it come so oversupply, he added.

“They have a huge surplus problem,” Bonnett said. “A real look at their own system has to take place in the U.S according to saultstar.com

“They recognize that you can’t keep putting out milk and putting out milk and hope it’s just going to be resolved.”

Bonnett saw this “disconnect” firsthand when he was part of a delegation that travelled south of the border last year, discussing trade issues with farming groups in California, Iowa, Kansas and Wisconsin, hoping to relay a message that trade between the two nations, as well as with Mexico, has benefitted producers in all of these jurisdictions.
Bonnett said producers to whom he spoke, many of whom supported Trump in 2016, accepted a “glut of milk on the market” has driven down prices for them, not Canada’s supply management system, which, according to Dairy Farmers of Canada, provides “balance” by enabling Canadian farmers to act collectively to negotiate price and adjust milk production to meet consumer demand.

Canada and the U.S. are trying to finalize a text that could be submitted to Congress by the end of the month to join the deal the Trump administration signed with Mexico. Also unresolved are protections to Canada’s cultural sector and the Chapter 19 dispute resolution mechanism.

“Those may be some hot-button topics, but with any trade deal, there’s going to be a lot of details that need to be worked out behind the scenes,” Bonnett said, adding many elements still “have to be finalized” in the U.S., Mexico pact.

Trump, who has threatened to move ahead on a deal without Canada, also seeks a political win ahead of November’s midterm elections where members of Congress in border states, such as Reed, look to retain their seats and pacify businesses whose biggest export customer is Canada.

The hope is for a trilateral agreement in principle that Congress can approve before Mexico’s new president takes office on Dec. 1.
“I think that’s the hope,” Bonnett said. “I think the wild card in that is what Congress is going to do.”

And Congress may not cozy up to a bilateral deal, he added.

“I think there’s still a lot of people coming out vocally saying they want Canada at the table,” Bonnett said.

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