Agricultural economists Al Mussell and Douglas Hedley have produced a paper countering United States President Donald Trump’s attacks on Canadian dairy policy as unfair to Americans.
They show that the U.S. also protects its dairy farmers with cheese import quotas and tariffs and with direct milk-production subsidies.
For example, they counter Trump’s complaint that Canada’s dairy tariffs are 270 per cent with the fact that the U.S. charges a 240 per cent tariff on some cheeses.
The U.S. government support for dairy farmers is $4.4 billion a year, as calculated by the Organization for Economic Cooperation and Development compared with $2.79 billion for Canadian dairy farmers.
The U.S. support is mostly direct payments to farmers and tariffs to sustain milk prices. The Canadian support is almost entirely supply management and tariffs to enable dairy farmers to make their supply-management approach work to sustain their milk prices.
Mussell and Hedley have published their review on the Agri-Food Economics System website.
They focus on cheese and don't touch more complicated issues such as trade - really, the complete lack of it - in fluid milk and other dairy products such as ice cream, butter and powders.
Nor do they review the history of imports of unprotected milk components and the Canadian milk-pricing response, the likelihood that the Canadian pricing will be give rise to a U.S. complaint to the World Trade Organization, or that most of the recent international trade negotiations have involved Canadian agreements to allow more dairy products to be imported at relatively low tariff rates.
Under the Uruguay Round of world trade negotiations, in 1996 there were 123 nations who agreed to convert all of their agriculture-industry forms of trade protection into tariffs.
The idea was that in ensuing negotiations, countries could simply reach agreement on how much they would reduce tariffs.
Taking that approach to the North American Free Trade Agreement, both Canada and the United States would be negotiating the degree to which they’re willing to reduce dairy tariffs.
Mussell and Hedley don't say anything about taking this mutual tariff-reduction approach to the North American Free Trade negotiations, or the possibility that mutual reductions could be reached by using the Organization for Economic Cooperation and Development's measurements of subsidies.
The truth is that dairy farmers on both sides of the border are unwilling to yield one iota on the positions they have adopted.
And on both sides of the border, it's taxpayers and consumers who are paying to protect dairy farmers.
