Could dairy market access be the ‘bargaining chip’ Canada needs to lock in new NAFTA deal?

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On Wednesday, Chrystia Freeland said NAFTA talks continue to proceed in a constructive atmosphere and both Canada and the United States are working very hard – Sep 5, 2018

They say you have to give a little to get a little.

Now, the question before Canadian NAFTA negotiators may be whether that give could come in the form of greater market access for American dairy producers and whether doing so would be enough to secure a new deal before the end of the month.

READ MORE: As NAFTA talks set to resume, Americans appear split on moving forward without Canada

“Canada has a gun to its head and we’re trying to figure out a way to come up with a deal,” said Sylvain Charlebois, a professor with the Rowe School of Business at Dalhousie University and who specializes in food distribution and food policy.

“The one bargaining chip that could come up is dairy.”

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Chrystia Freeland says still looking for ‘win-win’ with NAFTA – Aug 31, 2018

Currently, American dairy producers have access to less than five per cent of the Canadian dairy market, Charlebois said.

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American negotiators want to see that increased to about 10 per cent through NAFTA.

That 10 per cent number was what had been on the table when the U.S. was party to negotiations over what was then known as the Trans-Pacific Partnership.

READ MORE: Agreement on 16-nation trade deal, the world’s biggest, set for November

However, U.S. President Donald Trump yanked the U.S. out of those negotiations in 2016 and now wants the same increased access through a different vehicle.

But Canada has already increased market access to European and Pacific nations in recent years.

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The question is whether the government will lower the access it is willing to offer the Americans in light of the concessions made in other deals.

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CETA, the trade deal between Canada and European countries, will let them access three per cent of the Canadian dairy market.

The CPTPP, which is the adjusted Trans-Pacific Partnership without the U.S., gives member states around the Pacific region access to 3.25 per cent of the Canadian dairy market.

READ MORE: Experts say dairy prices could drop if Canada loosened supply management terms

Earlier Wednesday morning, one of the federal government’s Quebec cabinet members hinted dairy discussions were underway.

“The Quebec Liberal Caucus discussed with the Quebec milk producers this morning,” tweeted National Revenue Minister Diane Lehouthillier.

“We will continue to defend our supply management system and our milk producers that provide Canadians with good quality jobs.”

That came on the heels of comments by Prime Minister Justin Trudeau Tuesday evening in response to questions from reporters about whether he was willing to budge on the need for a dispute resolution mechanism or cultural exemption provisions for Canadian media producers.

Trudeau shot down both, saying any renegotiated NAFTA must include both measures.

He did not mention the issue of dairy market access in his response to either question.

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WATCH BELOW: Trudeau on NAFTA talks with the U.S.

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Trudeau on NAFTA talks with the U.S – Sep 4, 2018

“I suspect the low hanging fruit is market access,” Charlebois said.

He also pointed to options for how the government might attempt to negotiate any increased market access such as doing so over a schedule of 15 to 20 years.

“I’m not sure the Trump administration is as patient as that though,” he noted.

As of early Wednesday afternoon, Foreign Affairs Minister Chrystia Freeland had spoken briefly twice with reporters gathered outside the office of U.S. Trade Representative Robert Lighthizer, where she is working on negotiations with officials.

She described negotiations as “intense” but said there was “good faith” among all parties at the table.

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Freeland also supported the comments by Trudeau defending the need for both a dispute resolution mechanism as well as cultural exemptions, making specific mention of the need to protect the Canadian identity.

“We’re going to stand up for our national interest and our national identity,” she said.

Negotiations will continue through Wednesday afternoon.

The new deadline to reach a revised deal is Sept. 30.