A Bill to Limit Canada’s Trade Negotiators on Farm Goods Edges Nearer to Law

A Bill to Limit Canada’s Trade Negotiators on Farm Goods Edges Nearer to Law
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Bills from private members, particularly members of the Bloc Québécois, rarely make it through the parliamentary process. But after a bill from Yves Perron, who speaks for the bloc for the agricultural bloc, passed the lower house with strong support from members of all parties, it easily found a second vote in the unelected Senate on Tuesday.

And perhaps even more surprising is that it involves a contentious issue: Canada’s supply management system, which controls production and sets minimum prices for dairy and poultry products, as well as eggs.

Many free-market economists and politicians portray the utility administration as a legalized price cartel that increases Canadians’ grocery bills. And in negotiating each of Canada’s major trade deals over the past few decades, the supply management system has emerged as one of the final sticking points.

[Read from 2016: Safe for Now, Canadian Dairy Farmers Fret Over E.U. Trade Deal]

If Mr. Perron’s bill clears the few remaining legislative hurdles and becomes law, it will prevent Canada’s trade negotiators from offering changes to supply management in future trade negotiations.

To avoid a price-destroying oversupply, the system assigns farmers a production quota – effectively a license to produce milk, chicken, turkey or eggs – which they are not allowed to exceed. Until recently, imports were effectively banned due to incredibly high import duties.

Dairy products are the largest and most controversial segment. Recent trade agreements have allowed limited quantities of dairy products to enter Canada duty-free or at low tariffs. But all imports beyond this are subject to tariffs that can be well over 200 percent.

Despite its progress in Parliament, the bill has divided both the Conservative Party and Canadian farmers.

Supply management hasn’t received as much attention as, say, grocery store profits in the recent furor over food price increases. Perhaps that’s because it’s difficult to figure out exactly how much more delivery management Canadians have to pay for milk than grocery shoppers in other countries.

No one disputes that Canadians generally pay more. An article published in 2021 by agricultural economists from the University of Guelph and Dalhousie University reported that in eastern Canada, where most of the dairy industry is located, the average milk price from 1997 to 2011 was 63.05 Canadian dollars for 100 liters. In New York and New Jersey, the price for a comparable quantity was the equivalent of 44.31 Canadian dollars during the same period.

However, the paper’s author also noted that opening the market to American imports would not guarantee lower prices for milk buyers in Canada.

“Given the distribution costs of covering the Canadian market, depending on where products come from, Canadians could well pay more for dairy products once supply management ends,” they wrote.

But economists disagreed about the impact of an open market on Canadian dairy farmers.

“If trade were liberalized tomorrow, American milk would likely flood the Canadian market,” they wrote. “Canada’s farmers would be unable to compete with the price of American milk and ultimately the entire Canadian dairy industry would be dependent on imported milk.”

All of this comes at a time when Canadians, like most people outside of Asia, continue to drink less milk each year.

With supply management, farmers trade the inability to export their products for the stability and high prices that the system brings. However, most types of agriculture in Canada are not subject to supply management and are heavily dependent on exports.

The Canadian Agri-Food Trade Alliance, a group of farmers, food processors and related businesses, said the bill in Parliament “limits Canada’s ability to provide the best free trade agreements for all sectors of the Canadian economy, both agricultural and non-agricultural alike.” , to negotiate, significantly.” .”

When the House of Commons passed the bill last June, the Conservatives split roughly in half, with 56 voting in favor. Most, if not all, of these members come from constituencies that include utility-managed farms. In contrast, only a single Liberal from central Toronto broke with his party and voted against the bill.

The proposed restrictions on trade negotiators may not be theoretical. The United States-Mexico-Canada Agreement, the revised version of NAFTA, is up for review in 2026. Given that the United States has already challenged Canada’s restrictions on dairy products twice through the USMCA dispute process, it is certain that it will again be looking for supply management changes in two years, regardless of what Parliament decides .

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    Ian Austen is a native of Windsor, Ontario, educated in Toronto, based in Ottawa, and has covered Canada for the New York Times for two decades. Follow him on Bluesky at @ianausten.bsky.social.

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2024-04-20 10:00:02