Dairy supply management could sour Canada-US trade talks

Winnipeg | Reuters — Canada canceled a digital service tax on U.S. expertise firms this week so as to protect commerce talks with U.S. President Donald Trump, however an agricultural irritant could possibly be a much bigger thorn within the ongoing negotiations.

Analysts stated ditching the digital companies tax was politically straightforward for Prime Minister Mark Carney in comparison with even discussing Canada’s provide administration system that because the Seventies has tightly managed provides of dairy, eggs and poultry by limiting manufacturing and limiting imports by onerous tariffs.

When Carney met with Trump in mid-June, he stated the 2 leaders have been aiming for a brand new financial settlement by July 21.

Trump, nonetheless, threatened in a Fact Social put up on Friday to derail talks and impose new tariffs as a result of digital service tax, which had been scheduled to take impact on Monday.

Provide administration an previous sticking level

In the identical put up, Trump additionally attacked tariffs on dairy merchandise.

Carney and Trump each confirmed negotiations had restarted with the removing of the tax.

“Trump is mainly one Fact Social put up away from creating political chaos in Canada,” stated Sylvain Charlebois, a meals trade analyst and professor at Dalhousie College.

Canada’s provide administration system was a sticking level in commerce negotiations throughout Trump’s first time period, however withstood the U.S.-Mexico-Canada Settlement (USMCA) in 2020. By March in his second time period, Trump threatened reciprocal U.S. tariffs on dairy on account of what he referred to as tremendously excessive Canadian tariffs.

The USMCA supplied restricted duty-free quotas for U.S. dairy merchandise, however for something above these ranges, tariffs on particular merchandise can exceed 200 per cent. Washington for years has unsuccessfully challenged the way in which that Ottawa has allotted the USMCA dairy quotas.

Whereas some stated dropping the digital companies tax made Canada look weak, it has not been politically explosive and the tax was a little-known measure for a lot of Canadians.

However, parliament amended legislation shortly earlier than beginning summer season break to stop provide administration from being placed on the desk throughout commerce talks, with unanimous assist from all political events within the Home of Commons.

Provide administration will not be off the desk

Nonetheless, commerce consultants say the current laws wouldn’t cease Canada’s negotiators from discussing it.

“On the finish of the day, a Canadian authorities goes to do what it must do with provide administration to get a deal,” stated Tyler McCann, the managing director of the Canadian Agri-Meals Coverage Institute, who thinks many farmers have a false perception that the laws is binding.

The U.S. Commerce Division and the White Home didn’t instantly reply to requests for remark. A spokesperson for the U.S. ambassador in Ottawa declined to touch upon commerce talks.

Gabriel Brunet, spokesperson for Canada-U.S. Commerce Minister Dominic LeBlanc, stated in a press release the federal authorities “will at all times rise up for the Canadian dairy trade.”

“Our provide administration system won’t ever be on the desk,” the assertion stated.

Canada’s dairy trade is especially influential in Ottawa, with nearly all of the nation’s dairy farms positioned within the most-populous provinces of Quebec and Ontario, provinces seen as important to successful any federal election.

Regardless of concessions to Trump throughout his first time period, provide administration survived the USMCA, survives inside the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and operates inside the Canada-EU deal, McCann famous.

Dairy Farmers of Canada, a foyer group, stated that Trump’s Friday assertion was “not supported by the info,” noting the U.S. dairy trade ships extra American dairy products to Canada than go the opposite manner.

— Further reporting by Anna Mehler Paperny

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