October 26, 2018

As Federal government consider compensation for CPTPP losses

For the dairy sector as a whole, there’s a lot at stake with Canada signing on to the CPTPP. As it is implemented, the additional market access granted to 10 Trans-Pacific countries will result in more than $700 million in losses for Canada’s dairy processors. When you add in the impacts of CETA and the new United States-Mexico-Canada Agreement (USMCA, formerly NAFTA), these losses total more than $2 billion. The billions of dollars in investments that they have made could be for not if they don’t get a fair return. It’s hard to be a business that is faces significant losses because of your government’s decisions.

But, this is about more than just profits and investments; this is about people. The dairy processing industry employs some 24,500 Canadians at more than 470 facilities across the country. These operations support 12,000 dairy farms, many of them multi-generation family operations that are an integral part of rural life in Canada. If the dairy processors that support these milk producers are not growing and thriving, the impact will be felt by everyone, dairy farmers, our employees and Canadian consumers alike.

For the sake of Canada’s dairy farmers, dairy processors and the thousands of middle-class Canadians the dairy sector supports, the federal government must provide compensation to help offset the negative impacts that CPTPP will have on the country’s dairy sector. The Government of Canada’s dairy sector working groups are a good first step, but need to be followed by meaningful action.

When CETA came to be, the federal government compensated industries that were not hurt by the trade agreement. In the end, many of those sectors that received compensation in the form of import licences, known as tariff rate quotas or TRQs, used to import products that are already made here at home: Parmesan, Cheddar and Feta cheeses for the most part. The promised increased variety of European specialized products remain just that, an empty promise.

Meanwhile, European cheese makers, who had high hopes for the benefits that CETA would generate, have expressed disappointment that their specialized soft cheeses which require special care when importing and have a short shelf-life, are not making it to Canadian stores. As we enter fall, many of the quotas that were allocated to these entities remain unfulfilled. This could have a destabilizing effect on the dairy marketplace in the next few months if there is a sudden flood of European products onto the Canada dairy marketplace.

TRQs will once again be used with CPTPP to allow for the duty-free importation of foreign dairy products, and it is anticipated that it will be used with the application of the USMCA. And, the federal government will need to decide how it will dole these out. In our view, the solution is simple and logical. Give all the TRQs to Canada’s dairy processors. They have the experience and the expertise to import a wide variety of dairy products in a manageable way that won’t upset Canada’s domestic dairy market. This is the easiest and most effective way to keep Canadian plants open, farms running and thousands of middle-class Canadians the dairy sector employs in every province on the job.

To paraphrase some sage advice from years past, ‘Those who do not learn from the past are doomed to repeat it.’ If the unsettling experiences with CETA’s application during its first year are any guide, the federal government cannot continue to compensate industries not hurt by a trade deal and unfairly treat a key industry—Canada’s dairy processors—that has helped strengthen and grow Canada’s domestic dairy market over the last 10 years.

If it does, the federal government will be telling the thousands of people working at dairy processing plants and farms across the country that their families aren’t worth fighting for.

Want to know more about CPTPP and its impact on dairy?

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

With CPTPP, compensation needs to go to those negatively impacted.