It wasn’t long ago that the ag industry was engulfed in much consternation about the pros and cons of the Canada-European Union Free Trade Agreement. Government leaders were busy congratulating themselves about the benefits to their respective economies. However, much of it remains presumed as all EU members have yet to ratify the agreement and the always notorious details are still being worked out. The longer actual treaty ratification takes the more suspicious the outcome becomes. But none of that has stopped Canada from engaging in another multi-lateral trade agreement discussion that is supposed to yield, once again, countless hundreds of millions in trade benefits.
The latest trade discussions involve the Trans-Pacific Partnership (TPP), a trading group that involves 12 countries including the USA and Australia. It’s an Asia Pacific group that is trying to create a free trade zone. Canada wants to be a partner so that at the least it will have equal free trading opportunities within the group. Japan is not a member but has applied to join. Interestingly, its tariff-free access to the Japanese market that appears to be the goal of TPP partners. It would seem trade discussions are fraught with manipulations and ulterior motives. At times the point seems to be not to achieve a trade advantage, but to make sure no one else has a trade advantage. For instance the Canada-EU treaty implies billions in new trade, but that assumes present suppliers to the EU will not be demanding the same trade arrangements. That demand would cancel many of the alleged benefits to Canada, but that’s rarely mentioned.
The same benefit rationale is being applied to the TPP trade discussions, that being alleged new trade opportunities will become available if we just join this group. Free trade promoters then fearmonger that trade will collapse if we don’t join. What accompanies these talkfests are the trade concessions that Canada must make in order to gain an agreement – and supply management is always at the top of the list. The two TPP partners leading the concession charge are the USA and New Zealand. The latter wants to flood our market with cheap butter and mediocre cheese. New Zealand is only interested in acquiring hard currency at any price, being its own dollar is useless as a tradable currency. The American motive is curious as supply management wasn’t their concern when they agreed to the North American Free Trade Agreement. They are also not without their own market control schemes, the US Farm Bill provides a floor price for milk and generous milk cow buyout schemes to reduce supply. Add to that market price and import schemes for cotton, soybeans, corn, sugar and more and the Americans are far being free from protectionist sins. It’s doubtful the US will be giving up any of those vote friendly subsidy schemes. For the US it is the usual “do as I say not as I do” situation.
Invariably when Canada becomes involved in trade talks various production sectors tend to line up against each other. On one side are cereals, pulses, cattle and hogs facing off against the supply management forces made up of the poultry, egg and dairy sectors. Both spend much energy trying to get the Canadian government to favour their position. Thanks to vigorous lobbying and political pressure at every level, all major political parties have policies in place that supports maintaining supply management. It’s just their degree of support that is different – with conservatives being lukewarm to the NDP being steadfast to the death.
The question that arises in any trade agreement is will there be actual benefits to the agricultural economy. If trade (real and hoped for) with the EU is any indication the benefits may be illusionary thanks to clever EU negotiators laying traps and hooks that make more trade very difficult. In the case of a TPP deal, does anyone really believe that the Americans, with their dairy support programs in place, will allow the unfettered importation of Canadian milk. Yet they seem to imply in their TPP demands that Canada needs to abandon supply management and allow the unfettered export of American milk into Canada. Something doesn’t add up, one hopes its all a negotiating tactic.
One thing is for sure, Canada won’t be giving up supply management before the next election, as it’s a major political issue in Quebec and Ontario where the poultry and dairy industries are concentrated. A TPP trade deal is far from being a done deal for Canada.