Paper suggests Can-U.S. lumber-for-dairy deal

Paper suggests Can-U.S. lumber-for-dairy deal

A free-market think-tank suggests offering American negotiators in upcoming NAFTA talks more open trade in dairy, in exchange for more predictable trade in softwood lumber to secure long-term peace in that perennially problematic file. A Holstein cow stands in a pasture at a dairyfarm near Calgary in an August 31, 2016, file photo. THE CANADIAN PRESS/Jeff McIntosh

Paper suggests Can-U.S. lumber-for-dairy deal

WASHINGTON — The most common uses of Canadian dairy normally include milk, cream, yogurt, butter and cheese. But a new report suggests an altogether different application: use it as a bargaining chip.

A free-market think tank suggests offering American negotiators in upcoming NAFTA talks more open trade in dairy, in exchange for more stable trade in softwood lumber to secure long-term peace on that perennially problematic file. Squeezing some protectionism out of both industries would be good for consumers, spur economic productivity, and ultimately result in more successful businesses in both countries, says the report from the Montreal Economic Institute.

“Trade barriers have never made more than a small minority of people richer, at the expense of the vast majority,” says the paper, released Thursday.

“Eliminating those that persist in the agricultural sectors under supply management and in the softwood lumber sector … would be good both for consumers and for producers….

“That opportunity should be seized without hesitation.”

Both industries face a critical moment. For dairy, the Trump administration is being pressed to include the issue in NAFTA talks by U.S. lawmakers, just as softwood lumber experiences its latest round of once-a-decade lawsuits and tariff threats.

The industries share similarities.

Both are shielded from open trade in the old NAFTA, employ more than 200,000 people in Canada, and claim a similar economic value of $14-15 billion to Canada’s GDP. The paper suggests achieving freer trade in both industries by giving up supply management in dairy.

The current system limits the amount of dairy and poultry Canada can import before a tariff kicks in. Dismantling it would mean lower prices at the supermarket, and a more internationally competitive industry, says the paper.

It points to New Zealand’s experience: dairy production nearly tripled after liberalization, and the country became a global player.

But Canada’s dairy lobby vigorously disputes the promised benefits.

Dairy Farmers of Canada says supply management’s critics get several things wrong — starting with the price of milk. It cites statistics showing Canada in the middle of the international price range on milk, lower than New Zealand and France and higher than the U.S. and Germany.

The system also keeps prices stable, the group notes.

It also says free trade in agriculture would cease to exist if Canada ended supply management. In the U.S. alone, research by the Congressional Budget Office has calculated that country will provide tens of billions in federal support for farm programs over the coming decade.

But the Montreal Economic Institute’s paper says the industry could use a jolt.

It says dairy production levels compare to those of the 1960s; that the industry is slow to innovate, and failing to tap the growing international demand for dairy; and that it’s being propped up by inflated prices that cost Canadian households $258 a year.

There are two major obstacles to this idea ever happening.

One is that all major Canadian political parties support supply management, which has vocal backing in rural areas, especially in Ontario and Quebec. There was noisy opposition when Canada agreed to merely open the system up a bit in trade deals with Europe and Asia.

The second obstacle: there’s no guarantee U.S. negotiators would go for a logs-for-cheese deal.

The idea has old roots.

A senior negotiator from the original 1987 Canada-U.S. free-trade agreement said he would have loved to trade away supply management.

In his memoir on the negotiations, Gordon Ritchie said the dairy system hurts Canadians at grocery stores, protects inefficient producers, and keeps the industry from becoming an international player — like Canada’s vineyards did, after liquor trade liberalized.

So what happened?

The Americans never made a big offer, Ritchie says, and Canada held on to its cheese chit.

“We were, regrettably, successful in protecting those (dairy and poultry) restrictions,” he wrote in his memoir, “Wrestling With The Elephant.”

“I for one would welcome the removal of these restrictions,” he wrote. ”As a negotiator, however, I did not feel the Americans had paid us enough to be entitled to their removal.”

Alexander Panetta, The Canadian Press

Note to readers: This is a corrected story. An earlier version said the paper pegged the cost of supply management at $258 per individual, rather than household.

Just Posted

Christmas season in Red Deer begins with Festival of Trees

The kickoff to the Christmas season in Red Deer is upon us.… Continue reading

Judge allows Mr. Big evidence in murder trial

Two men accused of triple-murder admitted their involvement to undercover police

Red Deer agency supporting for LGBTQ2S+ youth

New report on LGBTQ2S+ youth from the Office of the Child and Youth Advocate

Four people arrested after gas and dash

Four people were arrested after an alleged gas and dash in two… Continue reading

VIDEO: Replay Red Deer: Nov. 19

Watch news highlights from the week of Nov. 13

Red Deer Christmas Bureau to help 1,300 children this year

Demand is high, but Red Deer always provides

CP Holiday train to stop in Ponoka for another year

The popular train will feature entertainment from Colin James and Emma-Lee

Kittens rescued after allegedly being tossed from vehicle

Couple finds abandoned kittens new home through Facebook

VIDEO: ‘Party bus’ goes up in flames in Vancouver

Fire crews responded to the late night blaze

Chicken crosses B.C. road, stops traffic

Rooster makes early morning commuters wait in Maple Ridge

Red Deerian honours her brother who died in a motorcycle collision

Houaida Haddad is encouraging Red Deer residents to donate blood

Red Deer County firefighters to be recognized for Waterton help

RCMP brass will give formal recognition Monday

Ron James tries to lighten humanity’s load through humour

The comedian returns to Red Deer for shows Dec. 1 and 2

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month