Canadian Envoy Fires Back at Trump Over Dairy Spat

Criticism not based on facts, says Ambassador David MacNaughton
April 19, 2017 10:28 pm Last Updated: April 19, 2017 10:30 pm

OTTAWA—Canada’s envoy to Washington has shot back at criticism by President Donald Trump and U.S. milk producers, saying the facts don’t support a charge that the Canadian dairy industry is to blame for the woes of some American farmers.

“Canada does not accept the contention that Canada’s dairy policies are the cause of financial loss for dairy farmers in the United States. The facts do not bear this out,” Ambassador David MacNaughton said in a letter to the governors of Wisconsin and New York.

The letter was released on the night of April 18 in rebuttal to Trump’s criticism of Canada earlier in the day.  The U.S. president’s surprise decision to call out Canada by name put dairy farmers north of the border on notice that they are in America’s fair-trade sights.

Trump launched his broadside after a brewing trade spat that has seen the U.S. dairy lobby accuse Canada of “systemic disregard” of its trade obligations, while the Canadian industry accused its American rival of “scapegoating.”

Trump also signalled he wants to do more than simply tweak the North American Free Trade Agreement, saying he is looking for “very big changes” to the trilateral pact that includes Mexico, or else he will scrap it once and for all.

Trump’s surprise decision to call out Canada by name put dairy farmers north of the border on notice that they are in America’s fair-trade sights.

Trump levelled the threats—some of his strongest-ever anti-Canadian rhetoric—during an event at a Wisconsin factory where he unveiled his “Buy American-Hire American” executive order.

After what has been a relatively warm beginning in relations with Canada, which included what was seen by many as a positive trip to Washington by Prime Minister Justin Trudeau, Trump dropped the gloves on Canada’s well-guarded dairy sector.

He appeared to be taking dead aim at the industry, its coveted supply-management system long a sacred political cow in Canada, during his appearance in Wisconsin, a state he took from the Democrats with his “America First” anti-trade message.

It is also a state that is feeling the effects of Canada’s decision to impose import taxes on ultra-filtered milk, a protein liquid concentrate used to make cheese. It had been duty-free but Canada changed course after its milk producers complained.

About 70 dairy producers in both Wisconsin and New York are affected by the decision. Trump promised to work with Wisconsin’s congressional delegation to get a solution after the governors of Wisconsin and New York urged him to take action.

Last week, Trump received a letter from four U.S. dairy industry groups—the National Milk Producers Federation, the U.S. Dairy Export Council, the International Dairy Foods Association and the National Association of State Departments of Agriculture—that accused Canada of violating its trade commitments to the United States.

“Time and again Canada has demonstrated its disregard of its dairy commitments to the United States—hampering America’s exports to Canada—while pursuing ways to use its government-controlled system to unfairly dump greater Canadian exports in global markets,” the letter said.

An over-saturated market

The Dairy Farmers of Canada, which has previously denounced the complaints as “falsehoods and half-truths,” said April 18 it was confident the federal government would continue to defend the dairy industry.

MacNaughton backed the organization’s position that Canada has done nothing to block U.S. imports, and that the predicament is the result of an “over-saturated” market that has led to lower prices.

MacNaughton attached a report from the U.S. Department of Agriculture that he said “indicates that poor results in the U.S. sector are due to U.S. and global overproduction. As made clear in the report, Canada is not a contributor to the overproduction problem.”

He said the trade balance on dairy “massively” favours the United States by a five-to-one margin.

MacNaughton called Canada-U.S. relations a model for the world, “but it is important that we work together to grow middle-class jobs and not lay blame where it does not belong.”

Trump, however, blamed Canada for “some very unfair things have happened to our dairy farmers and others and we’re going to start working on that.”

Standing up for dairy farmers in Wisconsin “demands fair trade with all of our trading partners, and that includes Canada,” he said.

The work would start immediately, he added.

Meanwhile, Conservative leadership candidate Maxime Bernier has welcomed Trump’s swipe at the Canadian dairy industry, saying that it’s not just American farmers who are losing out.

Bernier says Canadians suffer more under supply management—which he calls a cartel—than Americans and if elected leader he promises to abolish the system.

Supply management has long vexed conservatives because it stands in sharp contrast to their belief in free markets, but most refuse to suggest dismantling the system as there is support for it in key constituencies.

Among them is Quebec, but that hasn’t stopped Bernier from lashing out against the farms in his home province that are part of the system, making him the lone leadership contender to do so.

From The Canadian Press