Canadian agriculture negotiators were dealing with proposals from the United States that would end supply management into September, 2018, not long before the deal was eventually completed at the end of September.
That goes against the assurances of U.S. Agriculture Secretary Sonny Purdue while visiting Canada last summer that the Americans didn’t want an end to supply management.
Canada’s chief agriculture negotiator Aaron Fowler told the Dairy Farmers of Ontario’s recent annual meeting that The Canada U.S. Mexico Agreement (CUSMA) was far from a normal trade negotiation from the start.
Why it matters: The CUSMA deal has created more challenges for dairy farmers, by increasing market access for the United States and limiting exports of Canadian products, which has dairy farmers looking for answers.
“Preservation and maintenance of supply management in Canada was not something the U.S. indicated a high willingness to accept,” said Fowler.
Fowler tried to provide some background to several areas which had greatly concerned dairy farmers.
- Why the Canadian government said that a version of the agreement posted by the U.S. didn’t match up with its expectations – then signed an agreement that was quite similar.
- Has Canada given up control of the dairy sector to U.S. oversight?
- Why Canadian dairy farmers continue to be the sector taking the biggest losses when trade deals are signed?
- What does the trade deal mean for the difficult-to-market skim milk powder which Canada had been exporting?
Fowler, who was appointed to the role of chief agriculture negotiator in the summer addressed the concerns directly.
He said that Canada was concerned that the U.S. version, posted shortly after the deal was signed, hadn’t had a “legal scrub” and that there were points of difference. That didn’t mean that the proposed dairy areas were going to see lots of changes, as dairy farmers had hoped and were disappointed to see when the final version was signed in late November.
Fowler admitted there was a lot of noise made around how transparent Canada has to be with the U.S. about changes being made to the dairy system and milk classes.
Most of the transparency provisions are common in trade deals and is found in other trade deals signed by Canada, he said. The transparency is necessary in order for countries to make sure their trading partners are meeting their obligations under a trade deal.
Notification of the creation of new classes of milk is the type of clause that can also be found in other trade deals, he said.
Another area of concern is that the U.S. price will have to be used for the setting of prices for milk protein isolates and other products made from skim milk powder.
Fowler said that for 15 of 18 months Class 7 – the class of milk that covered products made from skim milk powder – was in existence, the U.S. non-fat dry milk price was the basis of the pricing for the class. Now, it will have to be all the time, a big advantage for the Americans as Canadian pricing for those products will never be able to undercut the U.S. price even if there’s a lower base price elsewhere in the world.
And what about supply managed sectors always being the taker of the body blow when it comes to trade?
Fowler said that when entering into negotiations, countries often aim at the most protected sectors. Often, most other agriculture sectors are tariff free or will be once a trade deal is done, so the supply managed sector tariff lines 96 of them of between 7000 and 8000 tariff lines are not negotiable.
“It’s not surprising they target them,” he said.