By Tim Kalinowski
Signs are showing positive that Canada, the U.S and Mexico are close to wrapping up their NAFTA differences, with only one thorny issue remaining from the Canadian perspective, says Carlos Dade, director of the Centre of Trade and Investment Policy at the Canada West Foundation— supply management.
“If Mexico and the U.S. have worked out all their issues with seasonal agriculture, autos and there is a path forward on the sunset clause, that leaves only three issues on the table,” says Dade: “Intellectual property, government procurement, and those issues are easy to do a backdoor deal no one will care about.
“That leaves only one issue that is a Canada-U.S. issue, and that issue Donald Trump has said a lot about— supply management. So you have one issue left holding up the entire NAFTA agreement.”
Dade predicts Canada will make major concessions on that front to get the deal wrapped up, but it should not be cause for undue alarm from Canada’s dairy, cheese and egg sectors.
“For those producers who are content with just the Canadian market it is a bad deal,” he admits, “but for those producers who want to do what the Americans are doing, and take advantage of growing global demand, it is a win.
“It will be a win for the majority of the dairy industry and the dairy farmers. They get access to the global market, and that’s where the growth and the real money is.
“For companies like Saputo, who want to sell,” he adds, “they can actually open plants in Canada as opposed to opening plants in Argentina to sell dairy and cheese abroad.”
Dade says President Trump needs significant supply management concessions from Canada to proclaim a win to his base, even if the Americans only succeeded in obtaining modest gains in other areas of the NAFTA agreement.
Trump’s ongoing trade disputes with other nations are of a much more serious nature than those he has with Canada and Mexico, Dade says, and Trump needs to have something to bring to his own farmers after putting them in a “world of hurt” as retaliatory tariffs have bitten deeply into the U.S. agriculture sector.
“U.S. farmers don’t have jack all if they lose NAFTA,” Dade states bluntly. “They don’t have Europe, and they don’t have the TPP.
“As an example, you have the Brazilians coming up to the U.S. buying soybeans at rock bottom prices because the Americans have no place to sell theirs, and the Brazilians are selling theirs to China at higher prices.
“You can see how badly off the Americans are by losing preferential market access that we now have.”
Dade says Canada’s free trade agreement with Europe, and even moreso our preferential market access gained through the TPP should help offset Canadian concessions on supply management.
“It should be a golden age of agriculture,” he states. “We are talking about growth in trade, and yes we are talking about introducing ourselves to new markets. “But what’s rare for us is we are already talking about consumers who are already buying things we sell where they have been buying them from the U.S,” explains Dade. “We suddenly have a huge price advantage over the U.S., and I think your readers can draw the conclusion to where that road leads.
“In fact, it is the same road we saw in U.S./ South Korea trade agreement where the U.S. signed ahead of us, and we suddenly saw our (pork and other) sales to Korea go through the floor. The shoe is now on the other foot with the TPP.”
Dade expects at the end of the day the U.S. will sign back on to the TPP, and it’s something Canadians should encourage for the long term benefit of both our economies.
“The Americans will come in, but it is a question of when,” says Dade. “The new agreement is actually designed to have the Americans come back in, but a couple things the Americans really wanted in the agreement, that nobody else wanted, were kicked out to get the 11 remaining countries to go ahead with it. …
“And even though our TPP partners are shoving market share across the table at us, and forcing us to take it, we still want the Americans back in because it is so much easier to have them there with our integrated supply and production chains into the U.S.”
At the end of the day, Dade predicts our current problems with the U.S. will be sorted out to the mutual advantage of both our nations.
“The U.S is enormously important for us, but we are not as important to the Americans; so we really have to look after that market. And let’s face it, the U.S. remains, despite all its problems, the fattest, richest and easiest market in the world.
“Even if the Americans are giving us a hard time at the moment, it is still easier than trying to get into a country like Honduras with a trade agreement. Do Canadian exporters really want to work twice as hard for half the money someplace else?”