Is the Harper government willing to dismantle the supply management system that protects poultry and dairy farmers from competition? You should bet that it is.
The Conservatives’ trade agenda requires it. Domestic politics permits it. And although Stephen Harper is keeping his own counsel on the issue, those watching Canada’s trade negotiations are convinced the Prime Minister will act when the time comes.
There would be plenty of support – billions of dollars-worth – for farmers during a lengthy transition. But the end to protection from foreign imports for dairy and eggs appears inevitable.
Diversifying trade is Mr. Harper’s highest priority. If this Conservative majority government is known for only one thing, the Prime Minister wants that one thing to be trade.
This is why the Conservatives are putting so much emphasis on a free-trade agreement with Europe, why the government is working hard at concluding an agreement with India, why Mr. Harper has visited China twice in less than three years, why feelers are out to see if Japan or Thailand are interested.
And it is why Canada is determined to get a seat at the table where the Trans-Pacific Partnership is being negotiated. This ambitious new agreement would open markets among nine Pacific nations –including the United States, Malaysia, Australia and Chile – representing a quarter of the world’s GDP.
Japan, Canada and Mexico have asked to join the talks. Bringing them in would expand the consortium’s size to a third of global GDP.
But to join, applicants must be prepared to abandon agricultural subsidies. For Canada, that means surrendering the supply management system that protects dairy and poultry farmers. Refusal to accept that condition kept Canada from joining the talks at an earlier stage.
All nine current member countries must approve before a new country can join the talks, but really it’s about securing approval from Washington. International Trade Minister Ed Fast was in the American capital in recent days and is in New York Monday to push for acceptance. Canada is promising to bring “a very high level of ambition” to the talks, said Mr. Fast last week. He is arguing that the Canada-U.S. supply chains are so integrated that it makes sense for both countries to be at the TPP table together.
He is also apparently arguing that most Pacific countries have agricultural subsidies of one sort or another that could be exempted from a final agreement. But the Americans (and the Australians and the New Zealanders) are adamant: if Canada wants in, it must be prepared to dismantle supply management.
If it comes down to joining what could be the world’s most important new trade bloc, or protecting butter and eggs, don’t bet on Mr. Harper to side with butter and eggs.
After all, although the dairy lobby is among the most powerful in the country, its members are largely centred in Quebec ridings where the Conservatives have been shut out and in Eastern Ontario, where support for the Tories is so deep that the party might even hold some of the ridings in the next election despite the outrage of farmers.
The political costs, in short, are containable, while the economic benefits of opening Canada to trade in the Pacific are potentially enormous.
There are those who doubt the Trans-Pacific Partnership will ever be signed and ratified. Hopes for an agreement in 2012 are already fading, as the American electoral cycle effectively shuts down Washington. But others believe that the imperative of finding an economic counterbalance to the Chinese colossus will force the other Pacific nations to come together.
If so, no one should expect this Prime Minister to keep Canada outside a new Pacific trade bloc in order to protect poultry and dairy farmers. Which is why the days of supply management are most likely numbered.