July 1st saw the implementation of the United States-Mexico-Canada Agreement, and at the end of all the negotiations, Canada’s dairy industry has ended up as one of the largest losers of the deal.
“The USMCA has some serious repercussion for our dairy industry here in Canada where they have added an additional 3.9 per cent market access to the U.S.,” says David Wiens, vice president of Dairy Farmers of Canada and farmer from Manitoba. For Canadians, more Canadian products will be pushed off the shelves, replaced with U.S. products, he says.
One of the most unusual parts of the new agreement is an oversight clause, given to the U.S., says Wiens, where the U.S. now has the ability to make administrative changes to our domestic system, something he says that is unheard of in terms of concessions to a trade agreement. (Story continues below)
Dairy production results in two major components: milk protein products and the more desirable butter-fat component. Any dairy producing company in the world has to figure out a way to get rid of their protein component of the milk product.
In the past, Canada had been very successful in milk protein markets before this new agreement, and the U.S. didn’t want this type of competition, Wiens says. Therefore, the U.S. has included a worldwide cap on products and if Canada goes beyond that cap, an export charge will be imposed. Basically, this eliminates the ability for Canada to compete with the U.S. and other global players anywhere in the world, he says.
“This sets a dangerous precedent that could also affect other sectors,” says Wiens. The dairy sector has been hit this round, but what kinds of caps or export charges will be imposed in the future to other sectors?
“By the time that these different trade agreements are in full effect, there’s going to be 18 per cent of our dairy market that is filled by imports from other countries.” The U.S. itself limits imports to three or four per cent, says Wiens, and is very protective of the imports into their market.
Wiens says there’s a strong commitment from the federal government, from both sides of the aisle, that there would be no further access given to the dairy market in future trade deals. Both Liberal and Conservative party leaders seem to share the sentiment that Canada’s dairy can’t keep taking hit after hit in each iteration of a trade deal.
Over 20 billion dollars is contributed by the dairy industry to the GDP, with over 220,000 people employed should be a stark reminder to keep their promise to protect it, Wiens says.