Cory Morgan: Government’s Grip on the Dairy Industry Is Costing Canada Yet Another Trading Partner

Export Promotion, International Trade, and Economic Development Minister Mary Ng answers media questions in Jakarta, Indonesia, on Sept. 5, 2023. (The Canadian Press/Sean Kilpatrick)

Commentary

The United Kingdom is Canada’s third-largest trading partner, with tens of billions of dollars in goods and services being traded between the two nations each year. Therefore, it’s serious business when the UK decides to slam the brakes on trade negotiations that have been ongoing for years now.

So what was the sticking point in negotiations that led to the collapse of talks with the UK? Which Canadian product is so dear to the Canadian government that they won’t bend an inch when it comes to allowing competing imports from other nations?

The product is cheese, of course.

Yes, along with a small market for luxury car imports, the Canadian government is hung up on allowing cheese imports into the nation’s very jealously protected dairy market.

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Canada has one of the most rigid and regulated dairy markets on the planet. The dairy and poultry supply management system is estimated to cost the average Canadian household nearly $500 per year extra in grocery bills. It’s illegal for anybody to produce dairy products without being issued a government quota to do so. Even if a producer has a quota, it is illegal to sell even a drop more than the state has allotted to the farmer.

Because of those rules, tens of millions of litres of perfectly good milk are literally dumped down the drain in Canada every year. In Ontario alone, 74 million litres of milk were dumped in a one-year period between 2020 and 2021.

Due to supply management policies, Canada has some of the highest-priced dairy products on the planet along with some of the most limited product selection.

Above and beyond the direct costs to consumers from Canada’s dairy policies, the nation suffers from constant trade disputes over the protectionist policies related to dairy products. The UK trade dispute is only the latest one.

In 1997, consultations and the formation of a panel were requested of the World Trade Organization as the United States and Canada were in a trade dispute over dairy products. After years of hearings and bickering, the countries reached an agreement in 2003.

More recently, in 2020, a dispute panel found that Canada had violated the U.S.-Mexico-Canada Trade Agreement, NAFTA’s successor, by reserving dairy quotas for Canadian processors.

Although last November a dispute panel ruled that Canada was within its rights to maintain quotas and tariffs on dairy products, U.S. Agriculture Secretary Tom Vilsack has said his country will look for “creative ways” to sell American dairy products in Canada. In other words, the dispute is far from finished.

New Zealand has launched a complaint against Canada for its dairy tariffs pursuant to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). The CPTPP represents billions in potential trade agreements and it is getting hung up on dairy issues.

How many industries and how much trade is Canada willing to put at risk with its stubborn insistence on maintaining controls over the dairy market?

As with most issues emanating from Ottawa these days, politics rather than pragmatism are at the root of the problem.

Canada’s dairy cartels are very effective political lobbyists. Neither the Liberal nor the Conservative parties are willing to question the sanctity of Canada’s supply management system no matter how much it costs citizens. The dairy industry contributes far too much to the campaigns of both parties for them to risk losing those dollars.

Further, while Quebec only makes up 23 percent of Canada’s population, the province has cornered 37 percent of the country’s dairy farms while Ontario has 33 percent. With 70 percent of Canada’s dairy producers being in the two most critical provinces to win in federal elections, no major party will dare to rock the supply management boat.

Canada’s record on foreign affairs in the last few years has been abysmal, to say the least. The prime minister seems only capable of harvesting controversy when he goes overseas, and Canada is not taken seriously when it comes to multinational military actions, pacts, and deliberations.

Canada has an abundance of natural resources and refined products that could allow the nation to punch above its weight economically. To properly exploit those resources means having solid trade agreements, however, and Canada can’t reach those due to constant disputes over its dairy policies.

If the Trudeau government wants to see a fast resolution to several trade disputes, all it has to do is lighten up its grip on the dairy industry. The nation is losing untold potential billions in trade and all over something as petty as cheese.

It doesn’t get more Canadian than that.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.