The current dust-up with Donald Trump siding with Wisconsin dairy farmers is so full of irony that it is laughable.
Firstly, the dispute is apparently over ultra-filtered milk, which is not protected under Canada’s supply management system, which in turn was specifically exempted from NAFTA.
Canadian processors do not produce ultra-filtered milk. Wisconsin farmers have built a huge industry based on exports to Canada as there is no market for the product in the United States and they can export it to Canada free of any tariffs. In the end the ultra-filtered milk dispute really just boils down to overproduction – basic economics of supply and demand.
The second irony is that the U.S. farm subsidies are unbelievably high; like in the multi-billion dollar range, making American dairy products half to a third of the cost of Canadian prices. The Americans subsidize dairy products while Canada through the supply management system subsidizes a select few dairy, poultry and egg farmers at the expense of the Canadian consumer. Let’s call it a reverse subsidy. Is there any rationale to subsidize dairy and poultry but not beef and grain farmers? Not that I can see, but that’s another issue.
Then there is the ongoing dispute about softwood lumber with Canada’s position being upheld by numerous international courts yet the Americans are again crying foul and have revoked the bilateral agreement to now impose heavier than ever tariffs on Canadian lumber.
Recently, Trump has thrown energy into the debate. One major issue in the original Free Trade Agreement (FTA) was that the U.S. wanted a guarantee that they would always have an open market for energy and they got it. Now Trump wants to renegotiate energy. Where is he going with this?
But in the end Donald Trump may be doing Canadians a favour by using the supply management issue as a trump card in the Wisconsin debate. Several of our other trading partners have previously raised supply management as an unfair trade practice. It’s been a controversial issue in negotiations with Australia and New Zealand as well as the European Union. Even Trump’s predecessor, Barack Obama raised the issue with our prime minister last fall. There is a lot of pressure on Canada to get rid of supply management so Canada may have to give in on this issue and use supply management as a concession in negotiations on Trump’s NAFTA realignment file.
Canada can dump supply management if the U.S. gives up on softwood lumber. Now that’s a win-win situation for everyone – especially the Canadian consumer.
Ken Allred is a former St. Albert alderman and MLA.
