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FIRST READING: Why the world hates Canada for its dairy policy

National Post logo National Post 2022-05-17 Tristin Hopper
New Zealand says Canada signed a trade agreement with a promise to approve a regular quota of imported N.Z. dairy, but was now simply refusing to grant the quota. © Provided by National Post New Zealand says Canada signed a trade agreement with a promise to approve a regular quota of imported N.Z. dairy, but was now simply refusing to grant the quota.

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Two countries are separately embroiled in fights with Ottawa over its protectionist dairy policy, illustrating the steep diplomatic price that Canada pays in order to shield its milk producers from the free market.

Last week, New Zealand initiated a dispute process alleging that Canada has violated the terms of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP) through its tight controls on dairy imports. It’s the first time such proceedings have been initiated between signatories of the 2018 trade agreement.

In a statement, New Zealand’s Minister of Agriculture Damien O’Connor wrote that while Canada had signed the agreement with a promise to approve a regular quota of imported New Zealand dairy, Ottawa was simply refusing to grant the quotas.

“The value to New Zealand of this lost market access is estimated to be approximately $68 million over the first two years,” O’Connor wrote, adding that he still saw Canada as a “good friend.”

The United States just finished winning a similar dispute launched against Canada for much the same reason. Canada signed the United States-Mexico-Canada Agreement with a promise to let in increased quantities of American milk and cheese, and then simply denied import quotas to American producers.

That, too, represented the first time in the agreement’s history that a dispute had been launched between signatories.

 On Tuesday, The Prince of Wales and The Duchess of Cornwall touch down in Newfoundland for the start of their three day tour of Canada. The visit is expected to feature the royal couple smiling politely at any number of things, including this wool bust of the Prince, prepared by a team of Canadian wool enthusiasts. © The Canadian Press/HO-Valerie Wilcox On Tuesday, The Prince of Wales and The Duchess of Cornwall touch down in Newfoundland for the start of their three day tour of Canada. The visit is expected to feature the royal couple smiling politely at any number of things, including this wool bust of the Prince, prepared by a team of Canadian wool enthusiasts.

Although Canadian Trade Minister Mary Ng recently announced a revamp of the rules surrounding who is allowed to import duty-free American dairy, U.S. dairy producers are already accusing Canada of once-again skirting its trade commitments and blocking American cheese at the border.

When it comes to non-dairy commodities, Canada is an enthusiastic proponent of free trade. Global Affairs Canada boasts that the country has 15 free trade agreements with a cumulative 49 countries.


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But negotiations for almost all of those agreements have gotten hung up on the fact that while Canada wants tariff-free markets for its beef, lumber and wheat, it simultaneously wants to impose prohibitive tariffs on foreign milk and cheese.

Then-U.S. president Donald Trump repeatedly cited Canadian dairy controls as one of his reasons for re-negotiating NAFTA, calling supply management a “disgrace.”

Canadian dairy policy was also a sticking point during the negotiations that ultimately yielded the CPATPP. Ottawa was ultimately forced to make some concessions on dairy imports, for which it pledged to pay out more than $4.3 billion in federal dollars to the Canadian dairy sector.

Canadian supply management has been particularly galling for New Zealand, which counts the dairy sector as its single largest source of exports. What’s more, New Zealand only became a dairy powerhouse after dismantling its own protectionist policies, which looked remarkable similar to Canadian supply management.

“Our industry has become more efficient and larger,” New Zealand Trade Minister David Parker told Global News in a 2018 interview urging Canadian to ditch protectionist dairy policies. “Rather than being adverse to (the dairy sector’s) interests, it’s turned out the opposite way,” he added.

Supply management was first established in the 1970s, and uses a combination of production quotes and strict border controls to ensure an artificially high price for Canadian milk, cheese and eggs. Research out of the University of Manitoba has estimated that the system imposes an annual per-family cost of between $339 and $554 per year.

But with the system supported by one of the strongest lobbies in the country, supply management enjoys near-universal support among federal legislators, including explicit endorsement by all five parties in the House of Commons.

While centralized economic policy is typically something that the Conservative Party would oppose (such as in their dismantling of the Canadian Wheat Board), supply management is openly endorsed by four out of the six candidates for the party’s leadership — including the race’s two frontrunners, Pierre Poilievre and Jean Charest.

 On Monday, the Royal Canadian Air Force announced that James Francis “Stocky” Edwards, one of the world’s last surviving Second World War fighter aces, died at age 100. Flying a P-40 Kittyhawk, Edwards scored at least 20 confirmed kills against Axis aircraft in the war. © Royal Canadian Air Force On Monday, the Royal Canadian Air Force announced that James Francis “Stocky” Edwards, one of the world’s last surviving Second World War fighter aces, died at age 100. Flying a P-40 Kittyhawk, Edwards scored at least 20 confirmed kills against Axis aircraft in the war.  

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