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By Colin Robertson

October 23, 2024

Is it really necessary to legislate the removal of milk and cheese, chicken and eggs from any new trade deals?

Bill C-282, which is currently under scrutiny in the Senate Foreign Affairs and International Trade committee, aims to do precisely that – to legislate an injunction on any inclusion of supply management of our dairy, poultry and egg industry from future trade negotiations.

A private member’s bill introduced in June 2022 by Bloc Québécois MP Luc Theriault, it passed a year later in the House of Commons after cursory debate and committee review with support from most MPs. The Senate committee is now giving the bill sober second thought.

Bloc Leader Yves-François Blanchet has added its passage to his list of demands in exchange for propping up the Liberal minority government. It is having effect. International Trade Minister Mary Ng joined other MPs in pressing the Senate to quickly pass the legislation. Senator Peter Boehm, a former senior diplomat and deputy minister who chairs the Senate committee, has politely and correctly rebuffed this pressure.

This domestic political gamesmanship has attracted the attention of our trading partners, including the United States, which has long defined Canadian supply management as a market-distorting subsidy. Britain suspended bilateral free trade negotiations in February over Canada’s supply management restrictions on cheese from the UK.

So, Canadian dairy, poultry and egg producers – especially in Quebec, where supply management is a sacred cow, want this legislation – but will it serve our national interests and the public good? The public good is you and me and every other consumer who has to pay considerably more for milk, yogurt, cheese and eggs in a system that is wasteful and inefficient and requires reform not permanent entrenchment.

Senator Peter Harder pointed out in his penetrating criticism during Senate debate that there are studies aplenty showing how supply management consistently keeps the costs of its products above the rate of inflation.

Nor does supply management serve the national interest, as is made clear in the testimony and statements of our farm exporters, including the Canadian Agri-Food Trade Alliance, the Business Council of Canada and many of our former trade negotiators.

In our recent Global Exchange podcast discussion (below), John Weekes, our NAFTA chief negotiator and former WTO ambassador, repeated the criticism he made in a Financial Post opinion piece saying it would enrage the Americans and could well jeopardize negotiations around extending the Canada-US-Mexico agreement beyond 2026. It will also make it almost impossible to negotiate further market access for other farm products. By tying the hand of cabinet, it will weaken our overall negotiating position.

If we satisfy supply management interests with legislation, what will parliamentarians do when other special interests demand equal treatment?

Canada depends on trade to generate two thirds of our GDP. Anything that hampers our negotiating capacity or limits our opportunity to become a global food superpower, as recently argued in these pages by Charles McMillan, makes no sense.

It is not as though the supply-managed sector is suffering. As Senator Harder, a former deputy minister of Industry and Foreign Affairs, pointed out, dairy producers cash receipts rose 40 percent between 2020 and 2021. And when, after securing gains for our beef, pork, and other farm products, we traded a marginal amount of market access to the Europeans in CETA, our CPTPP partners and the Americans in CUSMA, our dairy, poultry and egg producers were given billions in adjustment assistance while still guaranteed a monopoly over most of the Canadian market.

As to protecting jobs: when supply management was introduced in 1972, there were approximately 145,000 dairy producers. Today the figure is around 9,000 in an agri-food industry that generates approximately 2.3 million jobs, contributing 7.4% to Canada’s GDP.

Always a trading nation, we are becoming a nation of traders. Through our trade agreements we have opened doors enabling us to become an agri-food power. In the case of our grains, pulses, pork, beef and seafood, when we abandoned protectionism, our producers proved they are more than competitive.

In the case of dairy, chicken and eggs we look at things through the wrong end of the telescope. We produce quality products. Our artisanal cheeses, especially those from Quebec, are world-class. As an example, Le Cendrillon was named best cheese in the world in 2009.

So why don’t we help the industry adjust to competition and then help them to export?

Our problem is not quality, it is the confidence to compete. Yet when we do, we succeed – look at the international success of dairy producers Saputo and Agropur.

We could also do more in marketing internationally. Canadian dairy farmers are among the best in innovative marketing domestically – let them apply their ingenuity abroad. For inspiration, we need only to look at what Australia has done with their wines or New Zealand with their cheese after they embraced competition. We should and can do the same.

In its most recent Global Food Security Index, The Economist ranked Canada tops in quality and safety. This is immensely advantageous, especially with the fast-growing middle class in the Indo-Pacific, where the demand for protein products will only increase.

As we have learned with Korea, Japan and China, importers will pay more for quality. It does underline the importance of rigorous inspection within Canada, something industry associations need to prioritize. As we have seen time and again, specious criticism of our phytosanitary standards is part of China’s playbook when it comes to their trade coercion.

Rather than tying the hands of our negotiators by telling them what they cannot do, let us instead give them maximum scope to create the rules that give us more market access for our goods and services. Because Canadians farmers have demonstrated that, backed by our quality brand, they thrive in fair competition.

Contributing Writer Colin Robertson, a former career diplomat, is a fellow and host of the Global Exchange podcast with the Canadian Global Affairs Institute in Ottawa.