Everybody’s gotta win something – during NAFTA talksPublished on 1 October 2017 Publications by Senator Colin Kenny (retired)
The Prime Minister has been clear – his government will do whatever it takes to support middle class Canadians and those who aspire to be.
As we head into the third round of NAFTA talks, it is an opportune time for Canada to give consideration to whether we should maintain our reliance on supply management to the benefit of 14,000 producers or embrace a modern trade agreement that will benefit 13,000,000 families.
According to various studies conducted by the Conference Board of Canada, the Montreal Economic Institute and researchers from the University of Manitoba, transitioning away from supply management will save Canadian households between $300 and $500 annually.
Designed as a scheme to provide a small group of producers in five sectors including dairy, turkey, chicken, and eggs with stable prices and profits, supply management forces all Canadian families to pay significantly higher prices for everyday food products.
The system can only work if the government imposes high import tariffs, while domestic marketing boards control production and set the wholesale price.
Producers like to brag that supply management is not costing any tax dollars. However, by all accounts, they have found a way to cut out the government middle man and pick the pockets of middle class families directly.
Additionally, as part of the implementation of the Canada European Free Trade Agreement, just this August, these lucky producers were provided with $350 million from the federal government to help them modernize their facilities and introduce new products and processes.
Had the Trans Pacific Partnership Agreement been concluded, further support was on offer to these producers, including a $2.4 billion Income Guarantee Program for 100 per cent income protection over a full 10 year period, as well as a $1.5 billion Quota Value Guarantee Program when producers sold their quotas.
Let’s be clear: price protection, income guarantees and modernization funding is not available to most Canadian farmers including those who produce beef, pork, lamb, broccoli, turnips, celery, strawberries, and cauliflower. They have found a way to compete without federal tariffs, price gouging, and government largesse.
When it comes to finding a balance during the NAFTA talks, we should remember that the “T” in NAFTA stands for trade. Canada is a trading nation.
If we are to agree to ease our dependence on supply management over a number of years and open the Canadian market to more imported eggs, dairy, chicken and turkey products, our negotiators should make it conditional on a formula to resolve the long standing soft wood lumber dispute with the United States which has impacted exports for over 20 years.
If successful, the Prime Minister will be able to announce to Canadians that he has acted on behalf of Canada’s middle class to lower prices on key household products, including milk, cheese, eggs, and even pizza, while protecting thousands of Canadian jobs in the forestry sector.
But Canadians will not be the only winners.
US President Donald Trump will be able to announce a major trade success by getting Canada to relax supply management – a demand made by farmers in Wisconsin, a key electoral state, and the home of the Speaker of the US House of Representatives, Congressman Paul Ryan.
Additionally, all Americans will gain access to lumber from Canada which is less expensive compared to other jurisdictions, especially at a time when the housing market is expanding and Americans are trying to rebuild following the tragic hurricanes that devastated Texas and Florida.
Moving to reduce and ultimately end supply management will see winners on both sides of the border:
- US farmers will improve their access to the Canadian market;
- Canadian consumers will see the price of groceries fall significantly;
- Soft wood lumber producers in both Canada and the United States will see a long standing and pointless dispute resolved;
- Canadian jobs in the forestry sector will increase;
- US consumers will find home building products more affordable; and
- Canadian producers who have profited from supply management for the last 60 years will receive a significant financial package, as good as, or better than, what was proposed during the Trans Pacific Partnership.
[Colin Kenny is a former member of the Senate Standing Committee on Banking, Trade, and Commerce and also served as Chair of Internal Economy, Budgets, and Administration]