September 7, 2017

Will Canada Put Dairy Policy on the NAFTA Negotiating Table?

 |  By: Anna-Lisa Laca

One of the sticking points between Canada and the U.S. during NAFTA renegotiations is dairy trade. Canadian Foreign Minister, Chrystia Freeland, outlined her core objectives for negotiations with the U.S. and Mexico prior to the second round of negotiations, which wrapped up earlier this week in Mexico City. She says Canada is standing firm in its policy during negotiations.

According to Real Agriculture’s Shaun Haney, Canada wants dairy to be left alone.

“Expect Canada to hold firm on its sacred milk, emphasizing how Canada imports five times the amount of U.S. dairy products than it exports to the U.S.,” Haney says. “Canada will also point at U.S. programs subsidizing American dairy farmers while the global market copes with excess supply.”

He says the U.S. Dairy Export Council argues volumes of dairy moving both ways could be much higher if Canada was not so “protectionist” and “restrictive” on dairy trade, but Canadian leaders aren’t convinced.

U.S. dairy leaders consider Canada’s new ingredient strategy and pricing class for ultra-filtered milk (Class 7) unfair, making imports from Northern states less competitive. U.S. dairy officials also allege Canada pays the highest prices for milk around the world and then dumps excess milk on the global market. Jim Mulhern, president and CEO of the National Milk Producers Federation, says Canada’s policies and new milk pricing system, Class 7, hurts U.S. farmers.

Recent history has shown that Canada has the ability to complete a trade agreement with dairy included, but will they choose to with NAFTA?

“The starting point [this time] is very different,” Vetter explains. “Twenty-some years ago [when NAFTA was originally negotiated] Canada said supply management is not on the table. Since that time, it has shown that it can open in the context of TPP but of also implementing and opening into their dairy sector with their agreement with the EU.”

Canada has pushed back some and said NAFTA is not the same as the Trans-Pacific Partnership (TPP),adding that when they opened markets for TPP they were also gaining access to 11 other countries. Still, Vetter says it would be hard for the U.S. to wrap up these negotiations and say “our closest neighbor is providing less access to the U.S. than to its trading partners across the pond.”

According to Haney, President Trump “attempting to appease Wisconsin, Minnesota and New York dairy farmers” could derail the NAFTA talks. 

“In Canada, all major political parties are unified in supporting current dairy policy,” he says.