Supply managed farmers to get compensation as a result of continental trade deal

By Mia Rabson   

Economy Food & Beverage Government Canada dairy NAFTA supply management tariffs Trudeau Trump US USMCA

Trudeau said conversations with the industry are already underway to determine what fair compensation will look like.

OTTAWA—Canada gave up some access to its dairy, egg and poultry industries but will keep its agricultural supply management system and avoid punishing auto tariffs under the new North American trade deal.

Prime Minister Justin Trudeau hailed the landmark agreement as a victory and U.S. President Donald Trump did a victory lap at the White House as industries across Canada took stock of the new era in continental trade.

“Today we are securing a higher standard of living far into the future for the people of Canada,” Trudeau said during a news conference Monday in Ottawa.

The revamped NAFTA deal—dubbed the United States-Mexico-Canada Agreement, or USMCA—was almost 14 months in the making and has 32 chapters, 11 annexes and 12 side letters. One letter promises Canada will be exempt from any future U.S. tariffs imposed on automobiles and auto parts as a matter of national security.


The deal includes extending the patents on biologic pharmaceuticals by two years to 10 years from eight, and increases the amount Canadians can spend online at U.S. retailers without paying duty when those goods cross into Canada.

Dairy Farmers of Canada issued a terse statement saying the deal would grant an expanded 3.6-per-cent market access to the domestic market and eliminate competitive dairy classes, which the group says will shrink the Canadian industry.

It said the measures will have “a dramatic impact not only for dairy farmers but for the whole sector.”

“This has happened, despite assurances that our government would not sign a bad deal for Canadians,” Pierre Lampron, the organization’s president, said in the statement. “We fail to see how this deal can be good for the 220,000 Canadian families that depend on dairy for their livelihood.”

Canada had previously offered the U.S. a 3.25-per-cent market share under the old Trans-Pacific Partnership agreement, which Trump also derided—and pulled the U.S. from—after he took office in 2017.

Canada also agreed to get rid of its two-year-old Class 7 pricing agreement that has restricted U.S. exports of ultra-filtered milk used to make dairy products. Dairy Farmers objected to this, too, but the once-obscure dairy classification had become a lightning rod of discontent for Trump.

Trump called dairy the “deal breaker” for him in the negotiations.

Trudeau tried to placate Canadian dairy farmers by promising compensation and said conversations with the industry are already underway to determine what fair compensation will look like. But the final details of that are likely to be kept under wraps until the new deal is ratified by all three countries.

Trudeau said he knows there is anxiety for dairy producers but also implied things could have been a lot worse.

“We know full well the American administration targeted the complete scrapping of supply management and what we did with this agreement was to protect supply management for future generations because it is a system that works,” Trudeau said.

Notably, the prime minister did not mention Trump in his opening remarks, saying only in answer to a direct question that the relationship with the president has been challenging during the course of tumultuous negotiations.

Trump acknowledged relations between himself and Trudeau have been “testy” but added that was simply because of the negotiations. The only thing wrong with Trudeau is that he “loves his people,” Trump said.

Trump and Trudeau did speak briefly about the agreement by phone Monday. Trudeau also spoke with Mexican President Enrique Pena Nieto.

Trump has been threatening for weeks to lock Canada out of a new trade deal and proceed alone with Mexico. Just six days ago he said he didn’t think Canada was negotiating fairly. But on Monday he was all smiles, calling the deal “historic.”

“This is a terrific deal for all of us,” Trump said, with his son-in-law Jared Kushner and U.S. Trade Representative Robert Lighthizer at his side.

Any hopes a new deal would lift the aluminum and steel tariffs the U.S. imposed on Canada last spring were quickly dashed. U.S. Commerce Secretary Wilbur Ross told Fox Business News Monday “there is no timeline” for lifting them, and they are a matter of national security not trade.

—With files from Mike Blanchfield, James McCarten and Kristy Kirkup


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