Wednesday, October 14, 2015

Devil’s in the TPP details

The Harper government has said nothing about the elimination of dairy-product tariffs for two key categories, talking so far only about allowing access to another 3.25 per cent of the market as part of the Trans-Pacific Partnership trade agreement.

Al Mussel and Kamal Karunagoda of Agri-Food Economic Systems, say that they have learned from Australians that Canada has agreed to eliminate the tariffs on milk protein isolates and whey powder.

They say more details such as these may emerge when the text of the deal is revealed. The United States negotiators have said they will tell their public the details this week.

How to go, Harper! Hide the truth!

Imports of milk protein isolates have already sparked protests by Quebec dairy farmers who have watched a parade of tanker trucks crossing from the United States to deliver loads to processing plants in Quebec. There are already no tariffs on milk protein isolates from the U.S., but there are for other countries and New Zealand and Australia are eager to grab some of the Canadian market.

Whey powder would add pressure to a Canadian market already saturated with milk powders that, under international trade rules, cannot be exported because they come from highly-subsidized milk.

Mussel and Doug Hedley, a senior agricultural economist who used to advise the federal agriculture minister, say the TPP deal will pressure producers and processors to develop new policies.

They say the key issue is whether the dairy industry can continue its policy of balancing production with sales demand for butterfat. That policy results in surplus "solids, not fat," which usually means skim milk powder. The industry may choose to strike a balance based on solids, not fat.

The Harper government says it will set aside $2.4 billion to ensure that dairy farmers’ profits will not decrease over the next 10 years and $1.5 billion to ensure that if they sell quota, the realized price will be no lower than before the TPP deal was reached earlier this month.

The deal also phases in better export access to the U.S. market for Canadian specialty and artisanal cheeses.

Mussel says those exports may, however, be included in the cap on Canadian exports set under the World Trade Agreement. If so, there will be only a change in what's exported, not in total volume.

The Harper government is also promising $450 million for processors to become more competitive. Mussel says that is probably meant for plants to deal with solids, not fat and to equip themselves to make and export milk protein isolates.