Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canada's Supply Management in Agricultural Sector Presents Problems for Canada-EU CETA and TransPacific Economic Partnership Agreement Accession

Jeffery Simpson of the National Post wrote a good article on April 20, 2010 about one of the Canadian thorns in world free trade, Canada's supply management laws, regulations, policies and practices in the agricultural sector. To read his article entitled "Canada's a double-dealer in world trade", please go to the following link - http://www.theglobeandmail.com/news/opinions/canadas-a-double-dealer-in-world-trade/article1540943/

The National Post article highlights the fact that Canada is not at the negotiating table for the expansion of the TransPacific Strategic Economic Partnership Agreement between Chile, New Zealand, Brunei Darussalam and Singapore, which is a well developed and moderately comprehensive association free trade agreement between developed and developing countries. When I first read and summarized this agreement as a consultant for the Asia Development Bank, I used many of the provisions as precedents in a project. It is a good template agreement. I digress ....

Four additional countries are currently at the negotiating table to expand the TransPacific Strategic Economic Partnership Agreement, including the United States, Australia, Peru and Vietnam. Canada has not been invited to sit at the table as a negotiating partner, but rather as an observer. Jeffery Simpson points out that Canada wanted to be at the negotiating table and was rebuffed by the United States and New Zealand due to Canada's agricultural policies:

"The rebuff came from some of our closest friends – the United States, Australia and New Zealand. They wanted participants who are serious about free trade. They knew that Canada wouldn't be serious, because Canadian participants would be obliged to exclude supply-managed agricultural products, just as Canada has done in every trade agreement."

Jeffery Simpson makes the following observations of facts about Canada's agricultural policies:

  • Canada's policies include high import tariffs on certain sensitive products: "consider these tariff levels for imports above the small allowed quota: chicken, 238 per cent to 253 per cent; turkey, 154 per cent to 169 per cent; fluid milk, 241 per cent; cream, 292 per cent; yogurt, 237 per cent; buttermilk, 268 per cent; butter, 298 per cent to 313 per cent; cheese, 245 per cent; ice cream, 277 per cent; eggs, 163 per cent."
  • Canada's policies include import quotas that limit quantity of imports: "Quotas for imported eggs, cheese, cream and chicken haven’t been raised since the mid-1990's, despite population and economic growth."
  • Domestic effects of border limitations: "Domestic supply-managed farmers, operating behind these tiny, static import quotas and huge tariffs on anything above the quota, have scooped up the new market, while raising domestic prices since they face no competition."

The most important fact raised in Jeffery Simpson's article is that "[j]ust before the last round of world trade negotiations, the House of Commons, whose members can seldom agree on the day of the week, unanimously passed a resolution instructing Canadian negotiators to defend supply management to their dying breath."

This insightful article could be rewritten in a slightly modified form to report on what is happening at the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) negotiations. Another large developed country trading block is demanding an end to Canada's supply management policies. Please see articles I have posted over the last two days.

Canada has successfully defended its supply management laws and policies at the World Trade Organization and before NAFTA panels. In other words, the supply management regime in Canada is legal under existing trade rules (i.e., Canada's existing international trade obligations).

What is happening is that in Canada's involvement in current multilateral and bilateral negotiations, the other side wants to change the rules so that what is legal now will be inconsistent with Canada's trade obligations in the future. We should expect this approach. Whether it is possible to convince the other side to change their negotiating strategy is a big question. Another question for Canada's trade negotiators and stakeholders is what will be required to be put on the table to cause the change in strategy to occur (and who will be willing to give up in order to maintain the supply management policies).

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