October 16, 2017

Canada's Supply Management Under Attack

 |  By: Mike Opperman

Negotiations on the North American Free Trade Agreement (NAFTA) continued this weekend with U.S. negotiators embarking on a full-frontal attack on Canada's dairy supply management program. According to a report in Politico, the text offered in the negotiations demands that Canada eliminate Class 7 pricing, which lowered domestic prices for certain milk protein concentrate products to the minimum of global price. As expected, this move was met with swift retribution by those who saw this move as a threat to Canada's supply management system. 

According to Politico, sources familiar with the U.S. position called the proposal a "five-page attack" on Canada's supply management system by demanding the elimination of the new price class on milk protein concentrates as well as transparency requirements for Canada to report pricing decisions. 

This aggressive positioning by the U.S. came after the third round of talks saw little negotiations on the American side. Now, according to a report in Bloomberg, the bold proposals could be politically unfeasible for Mexico and Canada while spurring warnings from U.S. lawmakers and the private sector who worry this may signal an impasse in negotiations. The Bloomberg report states that NAFTA's fate may now hand on how flexible the U.S. is about its demands heading into the fifth round of talks, scheduled for Mexico City in early November. 

Uncertain, too, is how adamant President Trump is about leaving NAFTA. Some experts feel he will give the mandatory six months' notice to leave NAFTA, but not actually back out. “He’s unpredictable, so I don’t know,” Stephen Moore, a senior economic adviser during Trump’s campaign and chief economist at the Heritage Foundation, told Bloomberg. “I do feel, though, that his bark has been worse than his bite on trade. That doesn’t mean that he’s retreating. But I think we’re going to see a NAFTA 2.0 that will find areas that will give the U.S. even greater benefits, while protecting American workers.”

Political groups and legislative bodies are preparing for a decision by Trump to leave NAFTA. Congressional representatives are warning that a decision to pull out of NAFTA will be difficult to get through Congress. The U.S. Chamber of Commerce posted a warning, saying it would "fight like hell" to keep NAFTA.