July start to new NAFTA will cost Canadian dairy $100 million: senator

Editor’s note: this story was updated on April 29 with new information and a quote from the Dairy Processors Association of Canada and Dairy Farmers of Canada.

The leader of the Opposition in the Senate of Canada is accusing the governing Liberals of breaking a promise to delay the implementation of the new North American trade deal until after August 1, 2020 — a move that he says will cost the Canadian dairy industry $100 million.

Conservative Senator Don Plett says his party’s approval of the legislation was based on the condition that the Canada-U.S.-Mexico deal — known as the CUSMA, USMCA or new NAFTA — only take effect after August 1, which marks the beginning of the dairy industry’s calendar year.

Instead, the trade deal is set to come into force on July 1, with all three countries having ratified it domestically. That means July 1 to August 1 — 31 days — will count as “year one” under the new deal, accelerating the onset of “year two” concessions made by the Canadian government, including higher import access and tighter restrictions on Canadian dairy exports.

“Seven weeks ago, the Trudeau government looked us straight in the eye and said they would not ratify this deal early. On April 3, Minister Freeland went back on her promise. Since the United States also ratified the treaty last week, the treaty will now come into force on July 1,” says Plett, in a statement issued April 28.

Dairy Farmers of Canada and the Dairy Processors Association of Canada issued a joint statement on April 29, saying they also feel misled about the implementation date.

“(The Trudeau government) told us not to worry, Canada had to send a signal to the US administration that it was committed to CUSMA, but that both the US and Mexico were nowhere close to being able to give notice, thus we shouldn’t be concerned about an early implementation date,” says Mathieu Frigon, president of Dairy Processors Association of Canada,

The deal opens up an additional 3.9 percent of Canada’s dairy market to imports, which the dairy industry says will cost producers and processors an estimated $330 million annually in lost market share. New rules regarding skim milk powder, milk protein concentrates and infant formula will also reduce export opportunities for Canadian producers.

On top of that, the dairy processor association has estimated the impact of implementing the deal on July 1 instead of August 1 at about $100 million.

“In contrast with the Trudeau government, Conservatives actually took the time to hear the concerns raised by the dairy processors. We negotiated with the Trudeau government in good faith. We insisted on the August 1 timeframe, and we received a guarantee,”continues Plett, who is from southeast Manitoba, an area with a high concentration of dairy and livestock farms.

The Liberals are denying they made any guarantee to delay the implementation of the deal until August 1 or later. U.S. Trade Representative Robert Lighthizer had set June 1 as the target start date. Canada only notified the U.S. and Mexico of its approval in early April, effectively delaying the start until July 1 as a clause in the trade text says the agreement can only take effect on the first day of the third month after all three countries have formally notified each other.

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