Monday, October 16, 2017

U.S. targets milk at NAFTA talks

The United States negotiating team has, as expected, put a target on Canada’s new milk pricing for diafiltered milk proteins.

And the Canadian dairy lobby has, also as expected, resisted the U.S. proposals which call for limits on Canadian production.

And late Sunday, the Americans are rumoured to have tabled new demands seeking about a 30 per cent increase in access to the Canadian dairy market and an end to supply management within 10 years.

The Globe and Mail says the U.S. wants 17 per cent of the Canadian market, including for poultry.

Both the CBC and the Globe and Mail report that the U.S. wants an end to supply management within 10 years for both the dairy and poultry industries.

The access proposal in the Trans-Pacific Partnership deal is an increase of 3.2 per cent. President Donald Trump pulled the U.S. out of the TPP.

This demand, as with a number of others put forward by the U.S., has no chance of winning Canadian acceptance.

The background on the milk pricing issue is that the U.S. found a tariff-free loophole for diafiltered milk, which was not produced when the North American Free Trade Agreement and the World Trade Agreement were last negotiated.

Canadian processors quickly took advantage of the cheaper millk protein to incorporate it into production of cheeses and yogourts.

Seeing market losses for Canadian-produced milk, the marketing boards, led by Ontario, created a new classification at low enough prices to persuade processors to use it instead of imports from the U.S.

The loss of the new Canadian market prompted strong political reactions in the U.S., and landed the issue on the NAFTA negotiating table.