Canada’s dairy market key target in NAFTA
WASHINGTON — A senior senator is demanding changes that would open Canada’s dairy market as part of any new NAFTA and is urging American trade negotiators to hold the line in the final stages of bargaining.
Senate Democrat Chuck Schumer has sent a letter on the issue to U.S. trade czar Robert Lighthizer amid some fears that his negotiating team may be softening. His request illustrates the ongoing differences between the countries, despite predictions about a deal being close, including from U.S. Vice-President Mike Pence, who over the weekend said an agreement could be achieved within weeks.
Schumer is urging the U.S. team to seize a rare opportunity to lower what he calls Canada’s “dairy wall,” and said opening up the market must be a top priority.
“Securing meaningful and enforceable commitments that will allow U.S. dairy producers to compete with Canada’s on a level playing field should be a top priority in NAFTA renegotiations,” Schumer wrote in the letter, which he released Monday.
“As I have expressed to you many times, I strongly believe that we should not miss this opportunity to protect our dairy producers from Canada’s recent predatory trade practices.”
Schumer isn’t the only leading legislator for whom it is a priority; the Republican Speaker of the House of Representatives, Paul Ryan, is from the dairy-producing state of Wisconsin and also considers it a key issue.
The view of American lawmakers matters in a trade negotiation.
U.S. law requires that they must eventually ratify any agreement and that they be consulted throughout the bargaining process by American trade negotiators.
Lighthizer told lawmakers at a recent hearing dairy will likely be one of the final issues to be resolved. He expressed some understanding the topic is politically sensitive in Canada, where the dairy industry is concentrated in the two most populous provinces, Ontario and Quebec.
Some of Lighthizer’s own colleagues are signalling the U.S. might not get the changes it wants.
“I’m not as optimistic as I’d like to be,” Agriculture Secretary Sonny Perdue told another congressional hearing last week when asked about dairy. “We have impressed upon Ambassador Lighthizer, almost on a weekly basis, how important it is to get the dairy situation (settled) with Canada. [But] he has some larger issues [in these negotiations].
“I think we would love to have any other help in impressing upon [Lighthizer] how important it is to make sure the dairy situation in regard to Canada is also resolved.”
A few days after that request, Schumer released his letter.
The countries do not have free trade in dairy — and the U.S. is calling for two changes.
Over the longer term, it wants the elimination of Canada’s supply-management system. The system limits competition, but guarantees stability on Canadian farms by capping imports, imposing tariffs and setting prices at the grocery store.
The shorter-term U.S. objective is to get Canada to eliminate its special rule allowing byproducts for cheese-making, skimmed off milk, to be sold at market prices.
The Canadian government’s view is that the U.S. also protects its dairy market in other ways, such as price-stabilization programs and counselling services when prices crash and farms face collapse.
Some Canadian industry defenders point to analyses that say U.S. farmers consistently sell dairy at below-market prices, because they benefit from a patchwork of policies to keep them profitable.