U.S. IS STILL PUSHING FOR END TO DAIRY SUPPLY MANAGEMENT AS PART OF A NAFTA DEAL.

End to supply management part of NAFTA negotiations

WASHINGTON •Despiterecent suggestions to the contrary, U.S officials negotiating a new NAFTA trade deal have demanded that Canada end its supply-management system for dairy and egg products, Ottawa’s deputy ambassador to the United States said Tuesday.

And that request is a nonstarter for Canada, Kirsten Hillman stressed to a conference here.

The dairy sector has been a surprisingly hot-button issue in wrangling over a new North American Free Trade Agreement, with President Donald Trump repeatedly complaining about protection of the Canadian industry.

Yet just last month, Agriculture Secretary Sonny Perdue said the U.S. is not trying to get Canada to “ditch its supply management system,” only to manage it better so over-supply doesn’t flood the world market.

A senior Agriculture Department official with ties to the White House reiterated that position later, focusing his critique on a specific Canadian subsidy program.

But it’s a different matter in the actual talks over NAFTA, said Hillman.

“He (Perdue) did say that, but the truth is that at the negotiating table, the U.S. demand hasn’t changed, and we have to work with what they’re putting on the table,” she said in an interview after speaking on a panel organized by the Politico news agency.

“At this point in time, the request that has been put on the table is that we get rid of what’s called supply management,” she told the audience earlier. “And that’s an unacceptable request for us. The demand … is to get rid of a domestic program we’re not prepared to get rid of.”

Trump has complained repeatedly on Twitter and in public appearances about what he terms tariffs of almost 300 per cent on U.S. dairy exports to Canada.

Without mentioning the president, Hillman said she wanted to address “misunderstandings” about the issue, citing a limited quota that allows U.S. farmers to sell over Us$500-million worth of milk and other products into Canada yearly without duties — four or five times more than what goes the other direction.

“There is a misconception, I think, out there that Canada has in place tariffs in the dairy sector that do not allow for trade in this area, which is just not true,” she said. “Canada is actually the United States’ secondlargest export market for dairy products … And those dairy exports coming into our country from the United States are coming duty-free.”

Moderator Doug Palmer, a Politico journalist, noted that U.S. dairy farmers feel they could and should be able to sell more but cannot because of the barriers that do exist.

And Ted Mckinney, the undersecretary of agriculture for trade, said recently that Canada’s “class-seven” milk management system, which provides discounted ingredients to Canadian makers of processed dairy products, was a major obstacle to a NAFTA deal. U.S. farmers say it curbs their access to Canada and lowers world prices.

Meanwhile, the U.S. government financially supports its own dairy industry, though there is debate about the extent of subsidies.