As the U.S. and Canada trade verbal shots over supply management and protectionism while dairy groups in New Zealand and Australia say they’ll support any U.S. WTO actions, Manitoba dairy producers are standing pat.
The Dairy Farmers of Manitoba (DFM) says it is still confidant that the federal government is behind it despite the fierce rhetoric.
David Wiens, chair of the DFM, said that similar tones were struck during Trans-Pacific Partnership talks.
“It was the same thing,” he said. “Australia, New Zealand, the United States were wanting Canada to get rid of its supply management. We’ve heard that rhetoric before and what it comes down to is Canada is a sovereign nation and we have the right to determine our own domestic policies. What we’re doing here in Canada is directed to our Canadian domestic market, so we feel, and obviously the Canadian government feels as well, that is consistent with Canada’s trade rights and obligations.”
In a recent interview with Reuters, New Zealand Trade Minister Todd McClay said his government had expressed concern about dairy trade to the Canadian government, while the Dairy Companies Association of New Zealand has said it is exploring the possibility of a WTO complaint.
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At the same time, Jukka Likitalo, head of Eucolait, which represents dairy producers in the European Union, has called Canada, “one of the most protectionist countries in the world for dairy,” according to Reuters.
That issue grew in importance after a July 2016 agreement between Canadian dairy farmers and processors that included milk ingredient pricing, an issue that had previously plagued the industry and sparked protests.
Internationally, however, dairy groups argued that the deal unfairly favoured Canadian products and subsidized dairy product Canadian exports. In September 2016, dairy groups in the European Union, United States, Mexico, Australia and New Zealand signed a letter requesting WTO action.
Most recent tensions with the U.S. dairy industry stemmed from a lobby letter by dairy farmers in Wisconsin, who criticized the creation of a lower-priced class of milk in Canada and accused Ontario’s similar Class 6 implementation for restricting Wisconsin dairy exports.
The issue came to head April 18 after U.S. President Donald Trump accused the Canadian dairy industry of disadvantaging American dairy farmers at a Wisconsin rally.
Trump repeated the criticism two days later during an Oval Office memorandum signing, singling out harm to producers in Wisconsin and New York along with issues in the lumber and energy sectors.
The increasing tensions have been tied to U.S. efforts to renegotiate the North American Free Trade Agreement.
Wiens says that most dairy produced in Manitoba is consumed domestically and trade balances currently favour the United States.
According to Canadian government data, Canada imported $475 million in dairy products from the U.S. in 2015, compared to $104.2 million exported. In 2016, those numbers jumped to $557.3 million in dairy imports and $112.6 million in exports to the U.S.
“What we’re seeing is a year-over-year significant increase in imports of 15 per cent, so the milk products and substances which can be imported into Canada from the U.S. have actually gone up very, very aggressively,” Wiens said.
Canada’s supply management system has, likewise, drawn ire from domestic trade proponents and critics, including the Canada West Foundation, who says it inflates prices and hinders trade.
Martha Hall Findlay, president of the Canada West Foundation, told CBC April 19 that the current system may hobble Canada when it comes to U.S. trade negotiations.
Wiens, however, says the system is invaluable to the Canadian dairy industry and has allowed it to avoid supply issues seen in other countries, including the U.S.
“It is difficult,” he said. “In the U.S. and in other jurisdictions, there is an oversupply of milk and particularly in terms of the ingredients and that is creating havoc in their marketplace. That is not very attractive to us at all. Why would we ever want to become part of something like that? Dairy is actually one of the most volatile commodities out there worldwide and in Canada, under supply management, we’re able to supply the right amount of milk for domestic demand here and it creates a very stable environment for us.”
Prime Minister Justin Trudeau defended the Canadian dairy industry and its supply management system April 20, also pointing to the U.S. trade surplus on dairy.
“The numbers speak for themselves,” Wiens said. “The U.S., clearly they’re experiencing some difficulties in their own markets and those are issues that they have to resolve for themselves in a constructive way domestically rather than trying to blame other countries for their problems.”