Despite rhetoric from U.S. President Donald Trump, tough talk on supply management doesn’t mean the system has to go in order to get a NAFTA deal.
Rather, Canada needs to look at “the bigger picture” and move to open up its market, one Republican representative suggests.
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“We have to look at the long term. I don’t think price fixing, price control, setting prices by government fiat, is good sound policy long-term.”
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Canada maintains tight controls on its domestic dairy market, strictly limiting the amount of foreign product allowed on shelves and slapping steep tariffs on the ones it does allow in.
The use of import controls and price management is known as supply management.
That system has been a frequent target of Trump’s over the last two years.
He has repeatedly demanded Canada get rid of supply management and allow U.S. dairy into the market.
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Part of his political base includes American dairy farmers in regions like the Midwest.
Many of them have struggled in recent years as consumer demand for milk shifts to alternative products and as milk processors hit capacity when it comes to being able to handle the record high amounts of milk that are being produced.
“They’re struggling to keep these family farms together and that’s where we need to look at the big picture,” Reed said.
“What we need to do is stabilize the market both on the demand side, which trade negotiations are all about, but also on the supply side. We need to get our dairy policy in the right position in order to address that supply issue.”
While Prime Minister Justin Trudeau has vowed to defend supply management, he has not ruled out the possibility of offering Americans access to up to 10 per cent of the Canadian market — in effect, doubling the amount of access they have now.
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Dairy Farmers of Canada, the lobby group representing Canadian milk producers, says that would put thousands of farmers out of business.
But the Canadian and American sides remain mired in NAFTA sticking points, among them the need for a dispute resolution mechanism and cultural protections.
Experts say dairy market access could be a low-hanging fruit to offer up as a bargaining chip to get a deal.
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American negotiators are keeping their cards close to their chest in the latest round of discussions, which aim to reach a deal by the end of the month.
Those have been dogged by questions over an anonymous op-ed in the New York Times earlier this week that described a “resistance” movement among senior aides in the White House who are working to thwart some of his more radical ideas.
A preview of a new book by Pulitzer Prize-winning journalist Bob Woodward also described aides removing an executive order to withdraw from NAFTA from Trump’s desk.
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When asked whether the discord depicted in those reports may be impacting NAFTA negotiations, Reed offered some advice for the Canadian team.
“Stay at the table. Stay at the table. I know it may be difficult,” he urged.
“Take on these political concerns head on, stay at the table and realize we have a shared common interest in settling this together.”
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