Media

It’s back to the future on free trade

0 Comments 21 June 2017

The reality for both countries is that a seamless North American border is a sine quae non to confront the onslaught of Asia-Pacific competition. From China to India, the world economic poles of influence are changing. Like it or not, Europe and North America are no longer privileged players.

By SHEILA COPPS

First published on Monday, May 22, 2017 in The Hill Times.

OTTAWA—Like it or not, we are back in the free trade debate.

But chances are, it won’t be as divisive as the one we experienced in the election of 1988.

This time, there will be a fair bit of unanimity around the big issues. But be prepared for a few Canadian sacred cows to be sacrificed in the process. When I speak of sacred cows, I am of course not referring to the beasts themselves, but rather what they produce.

U.S. President Donald Trump has his sights squarely set on the abolition of the supply-managed Canadian dairy system.

Trump believes that Wisconsin carried him to the White House, and in so doing, it brokered a favour and secured a champion to open northern borders to state milk.

Canada can trot out all the data it wants to prove that the United States is getting as good as it gives in the North American Free Trade Agreement. The figures prove it.

But in the alternative Trump truth, what matters is politics. And he has supply management in his crosshairs.

It is also true that support for this unique made-in-Canada solution to dairy productions has been facing mixed reviews at home for years.
 
The latest politician to line up against the dairy farmers is none other that the likely future leader of the Conservative Party, Beauce Member of Parliament Maxime Bernier.

The strongest political support for the existing system comes from Quebec, but the loudest voice to kill it belongs to Bernier.

Ontario dairy farmers are not as vocal but they are equally political, with strong lobbying efforts in Ottawa, and direct contact with every Member of Parliament in rural Canada.

Those members punch above their weight. But given the vocal opposition of Bernier, if the government is forced to sacrifice supply management, it will be less politically damaging.
 
Most Canadians are too young to remember when supply management was introduced into Parliament. The system was the brainchild of a former minister in the Pierre Trudeau government, colourful Windsor-area Eugene Whelan, whose signature green Stetson was recognizable across the country.

Whelan left politics after an unsuccessful run against John Turner for the Liberal leadership back in 1984.

But his unique contribution remains to this day, and the beauty of the system is that the government offers no direct subsidies but, instead, controls the supply of milk to secure better financial yields for farmers.

The unique process drives most economists crazy and opponents often cite the high cost of Canadian milk to justify eliminating the tool in every international trade negotiation.

It survived several rounds of the General Agreement on Tariffs and Trade (GATT) negotiation, it survived the Free Trade Agreement and its’ successor NAFTA. It survived the Trans Pacific Partnership, despite fierce opposition from dairy-rich New Zealand. It even survived the recent Comprehensive Economic Trade Agreement (CETA) signed with the European Union.

But it may not survive Trump’s bombast. Dairy farmers and their cooperatives have been preparing for the end for years. They have been economically savvy in developing and marketing their own value-added milk products, through companies like Agropur, which is tapping into the burgeoning yoghurt market, and producing other dairy-based foods.

If the Canadian government is forced to put supply management on the chopping block, the blow could be softened with some value-added transformation financing, like that offered to the grape growers during the first round of bilateral trade agreements almost 30 years ago.

The reopening of NAFTA may offer opportunities in other sectors.

With the United States facing a world backlash based on some of Trump’s protectionist, wall-building pronouncements, Canada can actually become a stronger North American business hub.

In the growing fin-tech, creative and service sectors, our country could pick up where the United States is leaving off.

Certainly, Trump’s diminishing political capital in Washington may blunt his negotiating force.

As we saw during the recent British Columbia election, Canada has a few weapons of our own, when it comes to Canada-United States trade disputes.

Any border blockage of resource-rich materials actually wreaks havoc with manufacturing facilities down south that are dependent on raw product for transformation.

The reality for both countries is that a seamless North American border is a sine quae non to confront the onslaught of Asia-Pacific competition. From China to India, the world economic poles of influence are changing. Like it or not, Europe and North America are no longer privileged players.

America needs seamless northern borders as much as we do.

Sheila Copps is a former Jean Chrétien-era cabinet minister and a former deputy prime minister. Follow her on Twitter at @Sheila_Copps.

Share your view

Post a comment

World Design Summit in Montreal

Follow Sheila

Connect With Sheila Facebook Twitter

Sheila on Instagram

About Sheila

© 2017 Sheila Copps.