Even­tu­ally, dairy mar­ket com­pro­mise in NAFTA in­evitable

The Peterborough Examiner - - Opinion -

Com­mon wis­dom has it that if Canada hopes to get a deal on NAFTA, it will need to make sig­nif­i­cant con­ces­sions. What might those look like?

First, let’s con­sider the state of ne­go­ti­a­tions. The Trump ad­min­is­tra­tion has set an ar­ti­fi­cial dead­line of Fri­day, but no one, least of all Cana­dian ne­go­tia­tors, is overly con­cerned by that. The dead­line, and the pres­sure be­ing ex­erted on Canada, are widely and rightly seen to be po­lit­i­cal the­atre.

This is how Don­ald Trump works. He went af­ter Mex­ico first, be­cause it was in the most vul­ner­a­ble po­si­tion. Canada has stood up to his bul­ly­ing, so it was cut out un­til the last minute and given the high-pres­sure threat­en­ing treat­ment.

So be it. A deal will be done when it’s done. It took Mex­ico and the U.S. five weeks of ne­go­ti­a­tions. To de­mand Canada do the same amount of work in five days is lu­di­crous, as many Amer­i­can leg­is­la­tors have pointed out. They also note that the U.S. pres­i­dent had ap­proval to ne­go­ti­ate a re­vised and mod­ern­ized three­party agree­ment, not a bi­lat­eral one.

So let’s as­sume For­eign Af­fairs Min­is­ter Chrys­tia Free­land and her team do their jobs. What might they have to com­pro­mise on?

Canada is not happy with the rene­go­ti­ated dis­pute res­o­lu­tion chap­ter of the agree­ment worked out by the U.S. and Mex­ico. But what­ever ex­ists in the pre­lim­i­nary deal is an im­prove­ment over what the U.S. wanted in the first place, which is elim­i­na­tion of that chap­ter en­tirely.

Sim­i­larly, there is lan­guage on in­tel­lec­tual prop­erty rights that Canada isn’t crazy about. The same is­sue was con­tentious dur­ing talks for the Euro­pean trade agree­ment, but even­tu­ally a com­pro­mise was achieved and can be here as well. This should not be a deal-breaker.

Orig­i­nally the U.S. wanted a five-year sun­set clause, which was ruled out by Prime Min­is­ter Justin Trudeau for good rea­son. A trade agree­ment that only pro­vides in­vestor sta­bil­ity in five-year in­cre­ments is not a good deal. But in the U.S.-Mex­ico pact, a re­view would come ev­ery six years, with the over­all agree­ment in place for 16 years.

So what will Canada have to give up? Some pre­dict the sup­ply-man­age­ment sys­tem in the dairy sec­tor, but that seems ex­treme. Some mea­sures giv­ing U.S. pro­duc­ers more ac­cess to the Cana­dian mar­ket seem more likely. That, in it­self, will lead to rocky times in the sec­tor and po­lit­i­cal tur­bu­lence for the gov­ern­ment — and also for the Con­ser­va­tives, who also sup­port sup­ply man­age­ment.

The fact is, nearly all other coun­tries have given up on dairy sec­tor sup­ply man­age­ment. Canada al­ready gave more ac­cess to Euro­pean pro­duc­ers as part of the Com­pre­hen­sive Eco­nomic and Trade Agree­ment (CETA). We may need to do the same thing to se­cure a re­newed NAFTA.

It’s not a per­fect out­come, but there are up­sides, the pri­mary one be­ing that more com­pe­ti­tion will lead to lower prices for con­sumers.

Canada needs to re­tain a strong trade re­la­tion­ship with the U.S. And part of that is part­ner­ing on key trade agree­ments, this one be­ing the most sig­nif­i­cant. Com­pro­mises are rarely ap­peal­ing to those who must sac­ri­fice, but this one ap­pears nec­es­sary in the over­all na­tional in­ter­est.

It took Mex­ico and the U.S. five weeks of ne­go­ti­a­tions. To de­mand Canada do the same amount of work in five days is lu­di­crous, as many Amer­i­can leg­is­la­tors have pointed out.

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