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April 20, 2017

Canada's Not the Challenge for U.S. Dairy, Trudeau Says

 |  By: Bloomberg News

Canada is not the problem for U.S. dairy producers and will stick with its system of protectionist dairy quotas, Canadian Prime Minister Justin Trudeau says.

Trudeau spoke Thursday in Toronto during an interview with Bloomberg Editor-in-Chief John Micklethwait. It was his first response to President Donald Trump’s Wisconsin pledge to press Canada for changes to its dairy system as part of North American Free Trade Agreement talks.

“It’s not Canada that’s the challenge here,” Trudeau said Thursday, saying the U.S. has a large dairy trade surplus with Canada. He stood by his own system, by saying every country subsidizes agriculture. “Let’s not pretend we’re in a global free market when it comes to agriculture.”

Trudeau’s comments come two days after Trump promised U.S. dairy farmers he would intervene to restore exports of American milk to Canada. The spat was spurred by a new Canadian milk policy that U.S. producers say violates Nafta and comes at a sensitive time for U.S.-Canada trade relations. Trump, who was elected with the help of strong rural support, has pledged to renegotiate Nafta to help U.S. industry.

’What happened?’

“We’re going to call Canada and we’re going to say ‘What happened?’” Trump said during an appearance at a Snap-On Inc. tool plant in Kenosha, Wisconsin on Tuesday. “We’re going to get the solution.”

U.S. dairy groups appealed to Trump for help after Canada recently introduced a new policy that gives Canadian producers an incentive to buy domestic supplies of ultra-filtered milk, a concentrated ingredient used to boost protein content in cheese and yogurt. American producers say Canada’s policy violates trade agreements and exacerbates a glut of milk on the American side of the border.

Canada has regularly said it’s willing to renegotiate Nafta and that certain parts of the pact could use an update. Trudeau and Trump are also at odds over softwood lumber.

“We’re not going to overreact,” Trudeau said. “We’re going to lay out the facts and we’re going to have substantive conversations about how to improve the situation.”