Latest news with #supplymanagement
Yahoo
3 days ago
- Business
- Yahoo
What the U.S. dairy industry really wants from Canada
U.S. dairy producers insist they're not looking for Canada to dismantle its supply management system, but they do want Canada to follow the letter and spirit of the existing deal that governs the dairy trade between the two countries. U.S. President Donald Trump has repeatedly blasted Canada as "unfair" and "ripping us off" with massive dairy tariffs, in a way that isn't fully accurate. However, senior figures in the U.S. dairy industry are concerned there's also some misrepresentation happening north of the border, creating a false perception of what U.S. producers are actually seeking in terms of access to the Canadian market. Shawna Morris, executive vice-president for trade policy and global affairs with the National Milk Producers Federation and the U.S. Dairy Export Council, says it's not true that her industry wants Canada to abandon its system for protecting the dairy sector. "We've never been out to eliminate Canada's supply management," said Morris in an interview from her office in Arlington, Va., just outside Washington. "It's much easier to create a boogeyman and fear-mongering around that being the goal of the Americans, but that's certainly not what our industry has advocated." Becky Rasdall Vargas, senior vice-president of trade and workforce policy at the International Dairy Foods Association lobby group, says she recognizes the Trump administration has been "fairly abrasive" in its tone toward Canada. "But at the same time, I think we feel pretty ignored by Canada in terms of our legitimate trade concerns." Two main trade irritants According to Morris and Rasdall Vargas, the U.S. industry has two main irritants with Canada: how the Canadian government allocates the existing quotas for tariff-free imports of dairy products, and how Canadian milk producers dump cheap milk protein into the international market. The import quotas negotiated under the Canada-U.S.-Mexico Agreement (CUSMA, which Americans call USMCA) are designed to give U.S. producers tariff-free access worth roughly 3.5 per cent of Canada's domestic demand for dairy products. "Three per cent is pretty limited," said Morris. "It's certainly not a situation where our industry is gonna come in and take over the Canadian dairy market." CUSMA sets import quotas for 14 categories of dairy products. That allows an annual volume of each category to enter Canada tariff-free, and any imports exceeding the quota would get hit with sky-high tariffs of 200 per cent or more. Canada's rationale for this is ensuring the domestic dairy industry thrives by effectively capping how much the U.S. can export each year, preventing cheaper American products from dominating the market. The U.S. government supports its dairy sector with hefty direct subsidies. The U.S. dairy industry says it's not asking for Canada's quotas to be increased or the tariff rates to be decreased. Rather, it wants changes to how Ottawa allocates the quotas: more specifically, who gets them. Big Canadian dairies dominate import quotas Much of the quota volume is allocated to major Canadian-owned dairy processing companies such as Saputo and Agropur. Industry analysts on both sides of the border say such companies have little incentive to import U.S. products that would compete with their own. According to the U.S. producers, this restricts their access to the Canadian market. Their evidence for that claim: Canadian trade statistics showing tariff-free imports from the U.S. have almost never reached the quota limits in any category. WATCH | What Donald Trump gets wrong (and right) about Canada's dairy tariffs: "For five years, Canada's been playing games with these tariff rate quotas," said Morris. "That's a lot of volume that should have been able to reach Canadian consumers." Despite those complaints, Canada's imports of U.S. dairy products have risen significantly since the CUSMA quotas took effect in 2020. Those imports totalled $897 million in 2024, according to Statistics Canada data, more than four times the value of imports in any year before 2020. "Trade certainly should be far higher than it is," said Morris. "That was what USMCA promised to deliver and quite frankly has fallen far short." A key change the U.S. producers would like to see is for Canada to grant retailers and the food-service sector a share of the tariff-free quotas, allowing them to import some U.S. dairy products directly. The U.S. industry also wants Canada to be far stricter in taking away allocations from importers that fail to use their full quota in a given year. While a bill that Parliament passed in June bars Ottawa from agreeing to raise the dairy import quotas or lower the tariffs, it doesn't prevent other changes to the system, leaving Canadian trade negotiators some wiggle room. WATCH | Canada's supply management system, explained: 'An inherent mismatch' The other chief complaint from the U.S. focuses on Canada's cheap exports of milk proteins, also described as milk solids, such as skim milk powder. The Americans argue that because Canada's supply management system keeps domestic prices artificially high, Canada can sell its excess production of milk proteins internationally at artificially low prices, undercutting the competition. "It frankly makes no sense that you could have one of the highest milk prices in the world and yet be exporting dairy protein at some of the lowest prices globally," said Morris. "That's just an inherent mismatch." Canada's pricing of milk solids for the export market is currently the subject of a U.S. International Trade Commission investigation, ordered by the Trump administration, with a hearing scheduled for Monday. Dairy Farmers of Canada declined a request for comment on the case. "During the recent election, all major parties expressed support for supply management and stated that it would be off the table in upcoming trade negotiations," the organization said in a news release in June. The Trump administration is not the first to accuse Canada of breaching CUSMA terms on dairy. Joe Biden's administration twice took legal action over Canada's handling of the dairy quotas, claiming it was unfairly undermining U.S. access to the Canadian market. The U.S. won the first dispute, which it launched in 2021, but failed to win the second, in 2023. Now in 2025, Rasdall Vargas says her industry wants Canada to be willing to hear its true concerns and do something about them. "Ultimately, when we have a trading partner who isn't taking our concerns seriously until they're threatened to do so, it's also not a good feeling from our side," she said. Whatever anyone thinks about Trump's bluster on Canadian dairy, Rasdall Vargas believes it's having an impact. "I think that's the president's way of having our back, probably more abrasively than Canada would like," she said. "I will say I've never seen Canadian dairy interests take U.S. concerns about Canadian dairy policy more seriously than in the past six months."
CBC
4 days ago
- Business
- CBC
What the U.S. dairy industry really wants from Canada
U.S. dairy producers insist they're not looking for Canada to dismantle its supply management system, but they do want Canada to follow the letter and spirit of the existing deal that governs the dairy trade between the two countries. U.S. President Donald Trump has repeatedly blasted Canada as "unfair" and "ripping us off" with massive dairy tariffs, in a way that isn't fully accurate. However, senior figures in the U.S. dairy industry are concerned there's also some misrepresentation happening north of the border, creating a false perception of what U.S. producers are actually seeking in terms of access to the Canadian market. Shawna Morris, executive vice-president for trade policy and global affairs with the National Milk Producers Federation and the U.S. Dairy Export Council, says it's not true that her industry wants Canada to abandon its system for protecting the dairy sector. "We've never been out to eliminate Canada's supply management," said Morris in an interview from her office in Arlington, Va., just outside Washington. "It's much easier to create a boogeyman and fear-mongering around that being the goal of the Americans, but that's certainly not what our industry has advocated." Becky Rasdall Vargas, senior vice-president of trade and workforce policy at the International Dairy Foods Association lobby group, says she recognizes the Trump administration has been "fairly abrasive" in its tone toward Canada. "But at the same time, I think we feel pretty ignored by Canada in terms of our legitimate trade concerns." Two main trade irritants According to Morris and Rasdall Vargas, the U.S. industry has two main irritants with Canada: how the Canadian government allocates the existing quotas for tariff-free imports of dairy products, and how Canadian milk producers dump cheap milk protein into the international market. The import quotas negotiated under the Canada-U.S.-Mexico Agreement (CUSMA, which Americans call USMCA) are designed to give U.S. producers tariff-free access worth roughly 3.5 per cent of Canada's domestic demand for dairy products. "Three per cent is pretty limited," said Morris. "It's certainly not a situation where our industry is gonna come in and take over the Canadian dairy market." CUSMA sets import quotas for 14 categories of dairy products. That allows an annual volume of each category to enter Canada tariff-free, and any imports exceeding the quota would get hit with sky-high tariffs of 200 per cent or more. Canada's rationale for this is ensuring the domestic dairy industry thrives by effectively capping how much the U.S. can export each year, preventing cheaper American products from dominating the market. The U.S. government supports its dairy sector with hefty direct subsidies. The U.S. dairy industry says it's not asking for Canada's quotas to be increased or the tariff rates to be decreased. Rather, it wants changes to how Ottawa allocates the quotas: more specifically, who gets them. Big Canadian dairies dominate import quotas Much of the quota volume is allocated to major Canadian-owned dairy processing companies such as Saputo and Agropur. Industry analysts on both sides of the border say such companies have little incentive to import U.S. products that would compete with their own. According to the U.S. producers, this restricts their access to the Canadian market. Their evidence for that claim: Canadian trade statistics showing tariff-free imports from the U.S. have almost never reached the quota limits in any category. WATCH | What Donald Trump gets wrong (and right) about Canada's dairy tariffs: Is Trump right about Canada charging 250% dairy tariffs? | About That 4 months ago President Donald Trump says Canada has been ripping off the United States, imposing tariffs of up to 400 per cent on imported American dairy products. Andrew Chang breaks down Trump's claims, explaining how dairy tariffs work and how likely it is that anyone is actually paying such sky-high charges. Images supplied by Reuters, Getty Images and The Canadian Press. Additional credits (Credit: 9:17 Skotidakis/Facebook), (Credit: 9:21 Elite Dairy). "For five years, Canada's been playing games with these tariff rate quotas," said Morris. "That's a lot of volume that should have been able to reach Canadian consumers." Despite those complaints, Canada's imports of U.S. dairy products have risen significantly since the CUSMA quotas took effect in 2020. Those imports totalled $897 million in 2024, according to Statistics Canada data, more than four times the value of imports in any year before 2020. "Trade certainly should be far higher than it is," said Morris. "That was what USMCA promised to deliver and quite frankly has fallen far short." A key change the U.S. producers would like to see is for Canada to grant retailers and the food-service sector a share of the tariff-free quotas, allowing them to import some U.S. dairy products directly. The U.S. industry also wants Canada to be far stricter in taking away allocations from importers that fail to use their full quota in a given year. While a bill that Parliament passed in June bars Ottawa from agreeing to raise the dairy import quotas or lower the tariffs, it doesn't prevent other changes to the system, leaving Canadian trade negotiators some wiggle room. WATCH | Canada's supply management system, explained: How Canada's dairy supply management system works — and why Trump hates it 6 months ago 'An inherent mismatch' The other chief complaint from the U.S. focuses on Canada's cheap exports of milk proteins, also described as milk solids, such as skim milk powder. The Americans argue that because Canada's supply management system keeps domestic prices artificially high, Canada can sell its excess production of milk proteins internationally at artificially low prices, undercutting the competition. "It frankly makes no sense that you could have one of the highest milk prices in the world and yet be exporting dairy protein at some of the lowest prices globally," said Morris. "That's just an inherent mismatch." Canada's pricing of milk solids for the export market is currently the subject of a U.S. International Trade Commission investigation, ordered by the Trump administration, with a hearing scheduled for Monday. Dairy Farmers of Canada declined a request for comment on the case. "During the recent election, all major parties expressed support for supply management and stated that it would be off the table in upcoming trade negotiations," the organization said in a news release in June. The Trump administration is not the first to accuse Canada of breaching CUSMA terms on dairy. Joe Biden's administration twice took legal action over Canada's handling of the dairy quotas, claiming it was unfairly undermining U.S. access to the Canadian market. The U.S. won the first dispute, which it launched in 2021, but failed to win the second, in 2023. Now in 2025, Rasdall Vargas says her industry wants Canada to be willing to hear its true concerns and do something about them. "Ultimately, when we have a trading partner who isn't taking our concerns seriously until they're threatened to do so, it's also not a good feeling from our side," she said. Whatever anyone thinks about Trump's bluster on Canadian dairy, Rasdall Vargas believes it's having an impact. "I think that's the president's way of having our back, probably more abrasively than Canada would like," she said.
National Post
17-07-2025
- Business
- National Post
Danielle Smith says pulling Alberta out of supply management is worth considering
OTTAWA — Canada's dairy and poultry supply management regime could face a major challenge from within with Alberta Premier Danielle Smith saying she could consider the province exiting the quota system. Article content Smith said at a town hall in Red Deer, Alta., that she found the idea of the province opting out of supply management intriguing. Article content Article content '(C)reating our own Alberta version of supply management, maybe as a pathway to a market system and maybe just because it would stick our finger in the eye of Quebec … might be (something) we want to do a little consultation on,' said Smith. Article content Article content Smith noted that Alberta's share of the Canada-wide quotas for dairy and egg production allotted under supply management falls below its share of the population. Article content Her comments came after one of the attendees, Lee Eddy, a resident of Red Deer County, said earlier in the evening that pulling out of the system would be one way for Alberta to grab the attention of Laurentian power brokers. The town hall was being held as part of Smith's Alberta Next panel, struck to consider tactics for enhancing Alberta's sovereignty. Article content 'If we really want to make the eastern politicians … change their underwear, we should remove our supply management from the Canadian system,' said Eddy. Article content Quebec producers hold roughly 37 per cent of Canada's total milk quota, with Ontario producers holding 32 per cent, according to Agriculture and Agri-Foods Canada. Producers in the two provinces have exerted considerable clout over politicians, given their concentration in certain ridings. Article content Alberta producers hold just short of nine per cent, despite the province representing more than 11 per cent of the national population. Article content Article content Eddy suggested that Alberta move first to a transitional provincial quota system and eventually to a market-based system. Article content Supply management has emerged as a major trade irritant with the U.S., further complicating already delicate cross-border trade negotiations. Article content During the recent federal election, Carney promised to keep supply management 'off the table' in new trade negotiations with the U.S. Federal Conservative Leader Pierre Poilievre has also said he supports supply management. Article content Sylvain Charlebois, director of the Agri-Foods Analytics Lab at Dalhousie University, says that Alberta's relative lack of skin in the dairy-quota game gives it a freer hand to take on supply management.
CBC
11-07-2025
- Business
- CBC
'It's like Groundhog Day': Canadian dairy producers are used to Trump calling them out, but worry remains
Social Sharing Dairy producers say they're used to U.S. President Donald Trump's jabs at their industry, as he threatens yet another round of tariffs on Canada. But they're still worried about what the continued threats could mean for the supply management system that protects them. In a letter posted to Truth Social last night, Trump threatened Canada with a 35 per cent blanket tariff starting Aug. 1. The letter also specifically called out the dairy industry. "Canada charges extraordinary tariffs to our dairy farmers — up to 400 per cent — and that is even assuming our dairy farmers even have access to sell their products to the people of Canada." The claims — though not entirely accurate — refer to Canada's supply management system, with which Trump has long taken issue. In short, Canada controls imports across a few sectors including dairy, poultry and eggs. There are also limits to how much Canadian producers can make of a given product, and how much U.S. producers can send here. Is Trump right about Canada charging 250% dairy tariffs? | About That 3 months ago Duration 12:49 President Donald Trump says Canada has been ripping off the United States, imposing tariffs of up to 400 per cent on imported American dairy products. Andrew Chang breaks down Trump's claims, explaining how dairy tariffs work and how likely it is that anyone is actually paying such sky-high charges. Images supplied by Reuters, Getty Images and The Canadian Press. Additional credits (Credit: 9:17 Skotidakis/Facebook), (Credit: 9:21 Elite Dairy). American dairy producers' exports are allowed to make up about 3.5 per cent of Canada's dairy market right now, though the rates vary depending on the exact product. If they go over that quota, then they're tariffed at a high rate. Those rates also depend on the product, but for butter, for example, a 298.5 per cent levy applies for 2025, while the figure for cheddar cheese is 245.5 per cent. None of the surplus dairy tariff rates go as high as 400 per cent, however, as the president said. The cap is in place to ensure American dairy, which its government heavily subsidizes, doesn't flood the Canadian market. Dairy producers worry about supply management Philip Armstrong, partner at Armstrong Manor Farm in Caledon, Ont., says the threats against dairy feel like Groundhog Day, given how often Trump brings them up. "Dairy seems to sit in his brain," Armstrong said. "So we've kind of got immune to it.… There's not much you can do about [the threats]." However, it's still troubling, Armstrong says, because he fears that Canada will make concessions on the supply management system in trade negotiations. WATCH | Why Trump hates Canada's dairy system: How Canada's dairy supply management system works — and why Trump hates it 6 months ago Duration 8:11 Despite what some critics of the program say, Armstrong says supply management helps support the dairy industry. The U.S. government directly subsidizes its dairy producers — supply management is simply Canada's way of supporting its own industry. "Every country in the world has a scheme or a program or something to support and protect their own industries." Given the size and subsidies of the U.S. dairy industry, Armstrong says if there were no import controls at all, "they'd just swamp us" with their exported dairy. Ottawa has been steadfast in saying the supply management system is not up for negotiation, either. "I think the fact that the prime minister is so clear offers some reassurance," said Tyler McCann, managing director at the Canadian Agri-Food Policy Institute. But that doesn't necessarily put dairy farmers in a comfortable position, he says, as producers worry that any increased access to the Canadian market for American companies could hurt their businesses. Should supply management — and dairy — be on the negotiating table? Colin Mang, an economist at McMaster University, says that protecting Canada's dairy industry requires some kind of boost. And Canada simply can't afford to heavily subsidize farmers like the U.S. does, which means supply management is our only option, he says. Still, it's likely the government will need to make some kind of concessions. "The hope has always been that we could protect certain bits of [industries] without compromising the others," Mang said. "This American administration does not seem to be willing to accept that. And as a result, the Canadian government is going to have some very difficult decisions to make." He says the best option might be allowing a bit more American dairy onto Canadian shelves, while still protecting Canadian dairy farmers. The government did sign a bill into law in late June meant to protect supply management from becoming a pawn in trade negotiations. But Mang says the text doesn't have much protection power because any new trade deal with the U.S. will have to be put to Parliament, overriding past legislation. Carlo Dade, director of international policy at the University of Calgary's School of Public Policy, agrees that concessions on supply management might need to be made. While every country has certain industries it protects, Canada is more dependent on imports than many other nations.
CBC
03-07-2025
- Business
- CBC
New supply management law won't save the system from Trump, experts say
A new law meant to protect supply management might not be enough to shield the system in trade talks with a Trump administration bent on eliminating it, trade experts say. "It's certainly more difficult to strike a deal with the United States now with the passage of this bill that basically forces Canada to negotiate with one hand tied behind its back," said William Pellerin, a trade lawyer and partner at the firm McMillan LLP. "Now that we've removed the digital service tax, dairy and supply management is probably the No. 1 trade irritant that we have with the United States. That remains very much unresolved." When U.S. President Donald Trump briefly paused trade talks with Canada on June 27 over the digital services tax — shortly before Ottawa capitulated by dropping the tax — he zeroed in on Canada's system of supply management. In a social media post, Trump called Canada a "very difficult country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products." Canada can charge about 250 per cent tariffs on U.S. dairy imports over a set quota established by the Canada-U.S.-Mexico Agreement (CUSMA). The International Dairy Foods Association, which represents the U.S. dairy industry, said in March that the U.S. has never come close to reaching those quotas, though the association also said that's because of other barriers Canada has erected. When Bill C-202 passed through Parliament last month, Bloc Quebecois MPs hailed it as a clear win protecting Quebec farmers from American trade demands. The Bloc's bill, which received royal assent on June 26, prevents the foreign affairs minister from making commitments in trade negotiations to either increase the tariff rate quota or reduce tariffs for imports over a set threshold. Employing the 'royal prerogative' On its face, that rule would prevent Canadian trade negotiators from offering to drop the import barriers that shield dairy and egg producers in Canada from price shocks. But while the law appears to rule out using supply management as a bargaining chip in trade talks with the U.S., it doesn't completely constrain the government. Pellerin said that if Prime Minister Mark Carney is seeking a way around C-202, he might start by looking into conducting the trade talks personally, instead of leaving them to Foreign Affairs Minister Anita Anand. Carney dismissed the need for the new law during the recent election but vowed to keep supply management off the table in negotiations with the U.S. Pellerin said the government could also address the trade irritant by expanding the number of players who can access dairy quotas beyond "processors." WATCH | PM says scrapping digital services tax is part of negotiations: Scrapping digital service tax is part of U.S. negotiations, Carney says 2 days ago Duration 2:53 Prime Minister Mark Carney said on Monday that scrapping the digital services tax was one part of the bigger trade negotiation with the U.S., though the White House said Carney 'caved' when trade talks were cancelled. Talks have since resumed. "[C-202] doesn't expressly talk about changing or modifying who would be able to access the quota," he said. Expanding access to quota, he said, would likely "lead to companies like grocery stores being able to import U.S. cheeses, and that would probably please the United States to a significant degree." Carleton University associate professor Philippe Lagassé, an expert on Parliament and the Crown, said the new law doesn't extend past something called the "royal prerogative" — the ability of the executive branch of government to carry out certain actions in, for example, the conduct of foreign affairs. That suggests the government isn't constrained by the law, he said. "I have doubts that the royal prerogative has been displaced by the law. There is no specific language binding the Crown and it would appear to run contrary to the wider intent of the [law that it modifies]," he said by email. "That said, if the government believes that the law is binding, then it effectively is. As defenders of the bill insisted, it gives the government leverage in negotiation by giving the impression that Parliament has bound it on this issue." He said a trade treaty requires enabling legislation, so a new bill could remove the supply management constraints. "The bill adds an extra step and some constraints, but doesn't prevent supply management from eventually being removed or weakened," he said. Killing system a non-starter in Canadian politics Trade lawyer Mark Warner, a principal at MAAW Law, said Canada could simply dispense with the law through Parliament if it decides it needs to make concessions to, for example, preserve the auto industry. "The argument for me that the government of Canada sits down with another country, particularly the United States, and says, 'We can't negotiate that because Parliament has passed a bill,' — I have to tell you, I've never met an American trade official or lawyer who would take that seriously," Warner said. "My sense of this is it would just go through Parliament, unless you think other opposition parties would bring down the government over it." While supply management has long been a target for U.S. trade negotiators, the idea of killing it has been a non-starter in Canadian politics for at least as long. Warner said any attempt to do away with it would be swiftly met with litigation, Charter challenges and provinces stepping up to fill a federal void. "The real cost of that sort of thing is political, so if you try to take it away, people are screaming and they're blocking the highways and they are calling you names, and the Bloc is blocking anything through Parliament — you pay a cost that way," he said. But a compromise on supply management might not be that far-fetched. "The system itself won't be dismantled. I don't think that's anywhere near happening in the coming years and even decades," said Pellerin. "But I think that there are changes that could be made, particularly through the trade agreements, including by way of kind of further quotas. Further reduction in the tariffs for outside quota amounts and also in terms of who can actually bring in product." The United States trade representative raised specific concerns about supply management in the spring, citing quota rules established under the CUSMA trade pact that are not being applied as the U.S. expected and ongoing frustration with the pricing of certain types of milk products. Former Canadian diplomat Louise Blais said that if Canada were to "respect the spirit" of CUSMA as the Americans understand it, the problem might actually solve itself.
