NAFTA: U.S. demands end to supply management in Canadian dairy, poultry, eggs

ARLINGTON, Va. – The United States has requested a complete end to Canada’s supply management system for dairy, poultry, eggs and turkey within a decade, touching on one of the most politically explosive trade issues in Canada.

Two sources tell The Canadian Press the request came at the NAFTA talks on Sunday evening, catching some on the Canadian side off-guard, since they hadn’t expected the highly contentious demand to come during the current round.

The issue’s arrival now means American demands have landed in virtually all the most contentious areas at the soon-to-conclude round of talks outside Washington: in auto parts, Buy American and dispute-resolution systems, the U.S. has taken an extremely aggressive stance.

One source says the supply-management request came with an initial phase-in period of five per cent more market access per year, leading to total duty-free, quota-free trade in the protected supply-managed areas within 10 years.

“Outrageous,” said Pierre Lampron, president of the Dairy Farmers of Canada.

“It would be the end of supply management…. We are not surprised by the U.S. demands, they are in line with the demands they have made in other sectors.”

The Canadian government, meanwhile, is calling the idea a non-starter.

The federal Liberal government had said entering the talks it did not want to even discuss supply management. It has promised to maintain the protected system for supply-managed products, arguing that the U.S. maintains numerous support programs to prop up its farmers.

The U.S. has now tabled a series of positions far outside the realm of what Canada says it’s prepared to negotiate. The yawning gaps in positions have raised questions about whether a deal is attainable.

Already there’s talk that the goal of a deal by year’s end may be slipping away.

The U.S. has introduced aggressive demands in virtually every major area:

—Auto parts. The U.S. wants all cars to comprise 50 per cent U.S. content to avoid a tariff. The U.S. has requested this policy be phased in within one year — which automakers call impossible.

—Dispute-resolution. The U.S. wants to gut the enforcement systems of NAFTA, making the panels for Chapter 11, 19 and 20 disputes either non-binding, or voluntary.

—Buy American. The U.S. wants to severely curb other countries’ access to public works contracts.

—Sunset clause. The U.S. has requested a termination clause that would end NAFTA after five years, unless all parties agree to extend the agreement.

—Dairy. The supply management request follows an earlier request for a de-facto veto over Canadian milk-classification decisions, which in the case of diafiltered cheese-making products has advantaged Canadian producers.