NAFTA 2.0: Will Canada Give Up Supply Management?

September 7, 2018 01:18 PM
All eyes have been on Washington this week as trade negotiators from the U.S. and Canada work to come to a final agreement on the renegotiated North American Free Trade Agreement (NAFTA).

All eyes have been on Washington this week as trade negotiators from the U.S. and Canada work to come to a final agreement on the renegotiated North American Free Trade Agreement (NAFTA).

What’s holding up NAFTA 2.0? Dairy policy.

“I think NAFTA is down to really one to two issues: One issue for the U.S. and one issue for Canada,” Jim Wiesemeyer told AgriTalk host Chip Flory adding that Robert Lighthizer, the U.S. Trade Representative promised a handful of lawmakers that they would get Canada to make a significant give. “I think that's the only way you can pass this in Congress.”

The snag is milk, said Larry Kudlow, the National Economic Council director, last week. Will Canada be willing to budge on dairy access? Sean Haney of says that depends on what the ask is.

“If Robert Lighthizer is asking for a complete destruction of the supply management system. I would say that that that's a super tough sell, especially with a government here in Canada that is completely under siege,” he said. “If it's about Class 7, I think there is a compromise. I continue to be optimistic about it.”

According to Haney, Canada won’t be willing to compromise on cultural exemptions or the Chapter 19 dispute resolution.

“I think there's a compromise there,” he said. “I think it makes both sides look completely ridiculous that we would hold up this economic pact over milk. And I realize that it's an important issue on both sides for dairy producers, but this is a complete over promise by the Trump administration. You could open up Canadian dairy market 100% and it's like a little tick. It doesn't really make that big of a difference overall, so I think it's gonna be hard to come through some of these promises the President has made.”

The Trump administration needs movement on the dairy provision to get the trade pact passed in Congress, according to Wiesemeyer.

“Lighthizer is looking at the next step in my judgment, getting through Congress, and the only way you do that is by getting a dairy provision. Then he can get some Democrats like Collin Peterson on board,” he said. “So, I think that's the secret here now, if they get some cover with dairy then this thing can get through the U.S. Congress.”

Haney predicts the U.S will trade Chapter 19 for dairy access. Chapter 19 is another mechanism for Canada to dispute trade issues, Wiesemeyer explained.

“Like we have now relative to the International Trade Commission and other aspects, the U.S. wants to water that down because they think it gets into sovereignty issues,” Wiesemeyer said.

According to Haney, Canada wants to ensure they don’t have to settle trade disputes in U.S. courts, particularly because President Trump doesn’t follow trade rules.

“I think what we're going to see is: Canada gets to keep Chapter 19 for giving up some dairy market access,” Haney said. “That is the most likely outcome here.”

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Spell Check

Michael J Purnell
Wells Tannery, PA
9/7/2018 04:41 PM

  I hope Canada stands firm and avoids the race to bottom imposed on the U.S. dairy industry. Cheap food is a false economy that devastates rural communities and hurts the cause of environmental sustainability.

Bennett , MI
9/8/2018 11:09 AM

  Canadian Dairy farmers: if you want to experience the hell and dairy liquidations that we are here in the US, do nothing. Otherwise fight with everything you've got or else you will be forced to sell or increase in size like most here. We are polluting our groundwater and using up needed resources so fast just to supply the food giants cheap food. Where is discretion and balance? We could probably feed those "9 billion" in coming years just by what we throw away here in the US! I often wonder if we would have such a high juvenile incarceration rate and drug abuse if a decent living could be had on the farm rather than a mass exodus to the city?

Paul Wurz
Tessier, MT
9/7/2018 05:30 PM

  I love it