The Full Nelson
by Nelson Zandbergen
This week, Canada’s supply-managed dairy sector appears to face an existential threat the likes of which hasn’t been seen since supply-management came into being half a century ago to protect domestic milk producers from competition both internal and external, allowing them to set their own prices as a collective. It’s crunch time as Canadian trade negotiators have returned to Washington to talk turkey with their American counterparts, a Friday deadline hanging over their heads and supply management a lynchpin issue.
That’s a scary thing for rural Eastern Ontario’s dairy country, where agribusinesses, farmers and the general population would rather not contemplate the end of a system whose stability has no doubt helped build prosperity in this and other important milk-producing regions of the country. Ditto for the other supply-managed farming sectors — eggs and poultry meat — but it’s dairy that gets all the press, thanks to the tweeter in chief at the White House these days.
Through the years and decades, supply management has run the gauntlet of all sorts of challenges and uncertainties on the international trade front, an alphabet soup ranging from the GATT to the successor WTO, CETA and TPP. Supply management has been the Indiana Jones of Canadian policies, ever escaping and fighting off what seems like certain death to the doomsayers, right into old age. Canadian negotiators have always found a compromise, policy tweak or workaround to mostly preserve the three-legged milk-maid’s “stool” on which supply-management rests (to use a popular metaphor in the industry). Kick out any of these three vital policy legs — keeping a very tight lid on imports being one of them (currently accomplished with high tariffs that replaced aggressive import quotas after a pivotal 1990’s concession at the WTO) — and the whole works comes crashing down. The other two legs — enforced production limits at the farm level and outright price-setting power over the raw product (at the Canadian Dairy Commission) — can’t stand in the absence of the third.Enter Donald Trump. As Canada embarrassingly tries to play catchup with Mexico on an agreement with our biggest trading partner, the U.S. president continues to give every indication that curtailing imports of American milk into Canada through high tariffs isn’t acceptable. Trump wants the tariffs gone. He wants the whole enchilada. It’s clear his goal is to see milk and dairy products flowing across the border the way non-supply-managed pork, beef and commodity crops do. It would take a miracle at this point for the Americans to show any appetite for a modest upward — but limited — blip in the ceiling of U.S. milk, cream, butter and cheese allowed into Canada tariff-free — a la the CETA agreement with Europe. We’re a far cry from Ronald Reagan’s friendly administration, which gave Canada a pass on supply management as part of the original free trade negotiations.
Today, Trump aims to take out the supply-management stool with the enraged swing of a steel-toed boot. He’s imposed punishing tariffs on our aluminum and steel and threatening to do the same on our auto exports. Does anyone not believe now that those actions are linked with Canada’s position on supply management? The president just keeps chirping about it as Foreign Affairs Minister Chrystia Freeland arrives in the beltway to see what her team can salvage, after being sidelined during the Mexico-U.S. talks.
Supply management is potentially on the ropes this week to a degree not seen in our lifetimes. Farmers should take some solace in Prime Minister Justin Trudeau’s restated support for the system, but then, he has previously surprised supporters by jettisoning at least one other sacred cow of his (e.g. electoral reform).
If the Trudeau government lives up to its word and refuses to swallow the free exchange of milk across the border, to the point of walking away from a new NAFTA (or whatever they call it now), they can expect the wrath and fury of the penalized industries and the Canadians working in them. (“Mr. Prime Minister, Frank Stronach is on the line.”) But then the alternative looks to be the sacrifice of supply management if a deal is to be reached with Trump’s America. This week in Washington is, indeed, a cliffhanger worthy of Doctor Jones, but with zero entertainment value. There are too many serious implications for real people in the real world, most especially our local farmers.
Dairy industry anxiety about the NAFTA negotiations has been percolating for months, and locals are very clear in their support for supply management. A non-scientific Facebook poll conducted by Nation Valley News in June asked if the Trudeau government should deal away Canada’s dairy tariffs if that’s what it takes to secure a new NAFTA, the rollback of recent U.S. steel tariffs and general economic peace with our most vital trading partner. (Also click the image below to see the original poll, now closed, and associated comments on Facebook.)
Out of 144 publicly cast votes, a whopping 87 percent chose the “No way, Donald” option. Only 13 percent selected “Yes, it’s a deal.”
Comments overwhelmingly reflected a hardened position against the Trump administration but also some criticism of the Trudeau government’s handling of the situation. See a selection below.