Is Canada betting the farm on Asia?
November 17, 2011
Would you be willing to trade away the ability to eat local chicken if it meant your cousin's job at a manufacturing plant was more secure?
As Stephen Harper shifts his gaze to a new Pacific Rim trade agreement, experts say Canada's system of dairy and poultry quotas could be at risk, but Canadian manufacturers could get more access to hard-to-crack Asian markets.
While Canada has long expressed a general interest in joining the four-country Trans Pacific Partnership, this weekend's announcement by the Prime Minister made it clear this country will be applying formally.
What Harper didn't make clear, said trade lawyer John Boscariol, is exactly what would be on the table in negotiations to join. One of the sticking points that kept Canada from applying before was the import and production quotas in our poultry and dairy industry. In the poultry, dairy and egg industries, industry associations and marketing boards set quotas for how much of our eggs, chicken and milk is produced here and how much is imported. Critics have charged this keeps prices artificially high for consumers.
"Up until now, they've made it very clear they won't be changing the system, which particularly protects the dairy industry in Quebec, which is why it's a bit confusing now," said Boscariol, head of the international trade practice at McCarthy Tetrault law firm.
Given the federal government's ongoing attempt to dismantle the Canadian Wheat Board, it wouldn't be a huge philosophical leap for them to agree to change the way the dairy and poultry industries work.
"The Harper government has made it clear with the Canadian Wheat Board that they don't like these types of quotas and boards, this government interference in the market," Boscariol said.
Brian Masse, international trade critic for the federal NDP, says any reassurance the government won't change the dairy and poultry system in this country must be taken with a grain of salt.
"They don't care about supply management in the Canadian Wheat Board. . . . I can see them pulling the plug on these industries in a minute," Masse said.
If protected industries like dairy and poultry are the most vulnerable to more trade negotiations, Canada's beleaguered manufacturing sector could be the big winner.
"We think it's great news. … These negotiations are shaping up to be the agreement for the Asia-Pacific region," said Jean-Michel Laurin, vice president of global business affairs for Canadian Manufacturers and Exporters. "Canada being out would mean we run the risk of giving U.S. exporters privileged market access into other TPP countries while Canada would be on the sidelines."
The TPP was founded by Chile, Brunei, Singapore and New Zealand in 2005. Five other countries, including the U.S., are negotiating to join. Japan and Canada recently requested formal negotiations.
Speaking in Honolulu Sunday, Harper said there would be no pre-conditions to Canadian negotiations.
"For the question of specific sectors, whenever we enter negotiations as we've done in the past with other countries, as we're doing right now with Europe, we always say that all matters are on the table," Harper said. "But of course Canada will seek to defend and promote our specific interests in every single sector of the economy."
Boscariol said there's no question that other countries, particularly New Zealand and the U.S., will be targeting Canada's "supply management" system of quotas.
"Whether or not it's in their rules, certainly it's been made clear to Canada 'you're going to have to liberalize agriculture.' This is going to be the number one issue in the negotiations for Canada," said Boscariol.
Without the supply management system, Canada's entire poultry industry would be at risk of collapse, said Mike Dungate, executive director of the Chicken Farmers of Canada.
"It would exist as a shadow of what it is. . . . What you would see is a whole lot of farmers going out of business," said Dungate, who argued consumers wouldn't see any cost savings from potentially-cheaper imported chicken as a result. Instead, the savings would be eaten up by retailers and poultry processors eager to boost their own bottom lines, he suggested.
Dungate, however, is optimistic that Canada's track record of protecting its supply management industries in trade agreements won't change, as is Yves Leduc, director of international trade at the Dairy Farmers of Canada.
"Canada has negotiated 10 or 12 free trade agreements over the last 20 years, and all of them have excluded the supply management sector," said Leduc, who also dismissed suggestions Canadian consumers are paying too much for milk and cheese.
"I think Canadian consumers pay a fair price for their dairy products. Don't go and compare it to lower prices in countries where the dairy industry is heavily subsidized," said Leduc, referring to both the U.S. and Europe.
Queen's University professor Robert Wolfe says even if Canada does get into the TPP, it likely wouldn't be at the expense of our dairy and poultry industries.
"Anything you put in there that changes supply management in a meaningful way would open up the Americans' own agricultural industries in a way that they don't want," said Wolfe, adding that the U.S. likely doesn't even want Canada or Japan to join. The U.S. has already entered into negotiations to join, while both Canada and Japan have expressed formal interest.
- Source: Josh Rubin, The Star
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