A dairy for lumber deal? Report says swap

WASHINGTON • The most common uses of Canadian dairy normally include milk, cream, yogurt, butter and cheese. Yet a new report suggests an altogether different purpose.

The idea — use it as a bargaining chip.

A free- market think- tank suggests offering American negotiators i n upcoming NAFTA talks more open trade in dairy, in exchange for more predictable trade in softwood lumber to secure long- term peace in that perennially problematic file.

Squeezing some protectionism out of both industries would be good for consumers in the two countries, spur economic productivity and ultimately result in more successful businesses, says the report from the Montreal Economic Institute.

“Trade barriers have never made more than a small minority of people richer, at the expense of the vast majority,” says the paper, released Thursday.

“Eliminating those that persist in the agricultural sectors under supply- management and in the softwood lumber sector ... would be good both for consumers and for producers. ...

“That opportunity should be seized without hesitation.”

U. S. lawmakers have already indicated they will press the Trump administration to gain more dairy trade — while at the same time softwood experiences its latest round of once-a-decade lawsuits and tariff threats.

The industries share similarities. Both are shielded from open trade in the old NAFTA. Both employ more than 200,000 people in Canada. Both claim a similar economic value of $14-15 billion to Canada’s GDP. However, one industry — softwood — is heavily reliant on exports, and the other isn’t.

The paper proposes tossing them both open by dismantling the supply- management system.

Supply- management limits the amount of dairy and poultry Canada imports before a tariff kicks in. Thursday’s report says dismantling the system would mean lower prices at the store, and a more internationally competitive, innovative industry.

It points to New Zealand’s experience with dairy liberalization, which nearly tripled production and made the country a global player.

But Canada’s dairy lobby vigorously disputes the supposed benefits of changing.

Dairy Farmers of Canada says supply- management’s critics get several things wrong — starting with the price of milk. It cites statistics showing Canada in the middle of the price range on milk, lower than New Zealand and France and higher than the U.S. and Germany.

It notes the system also keeps prices stable.

As for lumber, the paper says the benefits of a deal are obvious — preserving 24,300 direct and indirect forestry jobs, bolstering exports and avoiding a t ariff- caused spike of $ 1,300 in the average price of a U.S. home.