Trade Agreement, Milk sector

There was an earlier related thread that is a little challenging to follow now that the first post was deleted by the OP (Adrian). Still, here it is for reference.

Now comes news of the coming effects of the Trans-Pacific Partnership trade deal the Conservatives will try to bring into force before the election lands...

Trans-Pacific Partnership could include big dairy concession

Canada is preparing to open the border to more American milk, without getting reciprocal access for Canadian dairy farmers in the United States, CBC News has learned.

Trade Minister Ed Fast will leave the campaign trail to join his counterparts in Atlanta on Wednesday, intent on concluding the Trans-Pacific Partnership trade talks. Chief negotiators from the 12 Pacific Rim member countries meet starting Saturday.

Conservatives want to conclude a deal before the Oct. 19 election and cast it as a win for consumers. But what Fast offers could seriously disrupt the supply-managed dairy sector.

If that happens, "there's going to be a war," says Yves Leduc from the Dairy Farmers of Canada. "The industry will never accept that."

The list of outstanding issues is now very short: rules of origin for the automotive sector, which are also sensitive in Canada, as well as intellectual property protections for pharmaceuticals. The deal is portrayed as "98 per cent done."

The short strokes on dairy come down to how much of Canada's domestic market would be opened up to American products to compensate U.S. dairy producers for opening up their market to TPP partners such as New Zealand, an aggressive and competitive dairy exporter.

CBC News has learned Canada is prepared to offer up a significant share of its domestic market (as defined by consumption levels), including not only fluid milk, but also possibly butter, cheese, yogurt or the milk powders and proteins used to make other foods.

The American goal for dairy market access was nine or 10 per cent, a figure that prompts dairy industry folk to use words like "enormous" and "annihilation." But even if Canadian negotiators successfully push back, an offer of even half that would be huge.

It's far more than the concession made in the 2013 Canada-Europe Comprehensive Economic Trade Agreement, which was roughly two per cent. That more than doubled the previously tiny amount of European cheese allowed into Canada tariff-free. That deal, however, still protected other Canadian dairy products, including milk. (The EU deal has not yet been ratified by either side.)

* * *

Then there's the dairy processors: would they need transition assistance too? They're struggling to be competitive in an uncertain trade climate.

Ten per cent less domestic milk would destabilize the supply chain and potentially increase the consumer price of domestically processed dairy, if fixed costs remain the same with lower volumes. Alternatively, local plants may close.

In some places, Quebec and Atlantic Canada especially, competitive American dairies are only a few hours' drive away.

* * *

The U.S. industry, anxious about its losses under the Trans-Pacific Partnership in competitive global dairy markets, was pressuring for up to 15 per cent additional market access in Canada.

"They don't want to be a dumping ground," Leduc says. "Why should we open our markets for dumped products from the U.S., or anywhere else?"

American negotiators favour a "tonne for tonne" approach: each tonne given up to new imports would require a tonne of exports to somewhere else; in this case, Canada.

But the U.S. industry is about 10 times the size of Canada's. A tonne there is less significant to the overall U.S. picture than a tonne in Canada.

"To me, that's not a level playing field," Leduc says.

(CBC)

via ehMac.ca http://ift.tt/1NSsp4i