Canada key reason for ‘hold-up’ to NAFTA deal, U.S. trade official says
A top U.S. trade official says Canada is the stumbling block to a speedy NAFTA agreement, accusing this country of being “dug in” over protections for the dairy industry even as a deal with Mexico appears close.
Canadians should not blame U.S. President Donald Trump for their trade woes but allow more open competition with the United States in the milk-products market, said Ted McKinney, the undersecretary of agriculture for trade.
“I tell our Canadian friends, ‘Do not lay frustrations with NAFTA at the feet of our president,’ ” McKinney said at a farm conference in Michigan this week.
“You ... decided to dump dried milk powder on the world market at half to two-thirds of world price … Not fair. Not fair,” he said. “It is actually surprising that our friends in Canada are exhibiting this behaviour.”
His comments were more indication of the dairy industry’s importance as a battleground in the stalled NAFTA talks, with Trump repeatedly complaining about Canada’s supply management system for milk and eggs and steep barriers to U.S. exports.
Trump has even mentioned the issue in defending his tariffs on steel and aluminum, and a proposal to slap similar tariffs on imported autos.
Spokespeople for International Trade Minister François-Philippe Champagne and the milk industry could not be reached for comment Wednesday.
But Canadian farmers have said the chief problem facing their U.S. counterparts is an oversupply of milk that drives down prices, and argue that output from Canada barely makes a dent in the U.S. market.
They also note that American farmers already export five times as much dairy product to Canada — under tariff-free quotas worth over $550 million a year — as flows in the other direction.
“These attacks, whether on Prime Minister Trudeau, or dairy farmers in Canada, are founded more on rhetoric than fact,” the Dairy Farmers of Canada said in a recent statement.
Meanwhile, complaints such as McKinney’s have been addressed in other free trade deals struck by Canada recently, with the Trans Pacific Partnership (TPP), for instance, granting member countries a greater foothold in the Canadian dairy market. Trump pulled the U.S. out of the TPP shortly after taking power.
North American Free Trade Agreement negotiations have been dormant the past few months, but are expected to begin again after the Mexican presidential election on July 1.
McKinney, who worked under Vice-President Mike Pence when Pence was governor of Indiana, took pains to describe Canada and Mexico as friends and great trading partners, and said renegotiating NAFTA is “incredibly important” to all three nations.
The U.S. is “very near” to a deal with Mexico, he told the conference in Grand Rapids, Mich.
The problem is with Canada, which seems to be “dug in on this class-7 managed milk supply,” McKinney said. That system provides discounted ingredients to Canadian makers of processed dairy products, like skim-milk powder, helping them compete better against imports to Canada and in the export world.
American farmers in states such as Wisconsin complain the program has seriously curbed their access to Canada.
“I hear and I see and I feel their pain,” said McKinney. “It’s not all because of NAFTA and class-seven but, by golly, recently a good deal of it is.”
He reiterated recent comments by agriculture secretary Sonny Perdue that the U.S. is not demanding Canada dismantle its supplymanagement system, only design it in a way that is fairer to trading partners.
“If you’re going to have a managed milk supply, manage it. Manage it,” McKinney said. “That doesn’t mean you have the freedom to create these new classes every time you have the need, and then take all your excess and dump it on the world market.”
He urged audience members to contact friends across the border and ask them to lobby the Canadian government to settle the dispute because “that’s where the hold-up is.”