Ashley Metzger, Centretown News
Dairy farmers protest the TPP deal on Wellington Street along with their cows and tractors.After public protests followed the controversial Trans-Pacific Partnership agreement, Canadian dairy farmers and processors are now confident in the deal reached by the Canadian government.
The deal makes 3.25 per cent of the Canadian dairy market accessible to the other countries in the partnership, particularly the U.S. and New Zealand.
Representatives from the Canadian dairy industry say they are pleased with the results, considering the last number on the table was 10 per cent, which would allow that percentage of the market to be dominated by imported products.
“Given the pressures that the government was under, we’re appreciative that they resisted giving up more than they did,” says Graham Lloyd, general counsel and director of communications for Dairy Farmers of Ontario.
“No party on any industry wants to give up access, but in the circumstances we take it as a strong signal that the government appreciates the importance of the Canadian dairy system,” he adds.
Rosemary MacLellan is the senior director of strategy for Gay Lea Foods Co-operative Ltd., an Ontario based dairy processor whose members produce 35 per cent of the province’s milk.
She says the percentage of the dairy sector offered in the deal is understandable, as it would have been difficult to secure the partnership with any less.
“They were really strategic and shrewd to ensure that they manage this in a way that still kept us in very strong footing,” she says. “But also still gave something that they could secure the deal in the end.”
The closing of the free trade deal appears to be good news for the dairy processing industry.
A significant amount of the dairy that will be imported will be sent for value-added processing in Canada.
“These are not just finished goods coming into our marketplace, competing with our products and taking a piece of what we’ve had of that market,” says MacLellan.
“It means jobs in Canada, it means us still being masters of destiny here in Canada, and managing, building and modernizing the Canadian dairy industry,” she adds.
To make up for the added competition, which will be phased in over the next five years, the government has promised $4.3 billion in compensation to dairy and poultry farmers over the next 15 years.
However, some suggest this may be difficult in practice.
In these kinds of trade deals, there will be both success and loss within each industry, says University of Ottawa economics professor Jason Garred.
He says some companies may take advantage of new export opportunities, while others may suffer from the new import competition.
In the case of the dairy sector, it may be difficult to compensate only those who have lost income.
“The perfect situation economically is that the country as a whole gains from the trade deal, and the farmers who end up losing from this deal are compensated to the extent that they lose,” he says. “It’s pretty hard to imagine that kind of targeting can be accomplished in practice.”
However, Garred says it is too early to determine how the compensation will be distributed, and whether it will be only directed to the dairy farmers who need it.
In this partnership, the requirements for farmers to receive compensation appear to be different from previous trade deals says John Curtis, senior fellow at the Centre for International Trade and Sustainable Development and former chief economist at the Department of Foreign Affairs.
Various industries were previously promised compensation for the impacts of the Canada-EU Comprehensive Economic and Trade Agreement, under the condition that a loss of income was demonstrated.
The same proof of damage is not being asked for with this new monetary offer, and it is unclear how the government plans to allocate those funds.
“This is going to be a huge dent in our Canadian taxation system. Yes, you pay off the dairy farmers, but who pays? You and me. Taxpayers,” says Curtis.
“Everyone loses a bit. Although the price of milk or cheese might be a bit less because of the deal, we’re all going to pay more through our taxes to pay off the compensation.”
Lloyd says there will need to be further research into the funds promised to see if it will be effective and sufficient, but that he is pleased with the overall response from the government.
“The dairy industry in Canada can have some comfort in knowing it’s continued to survive because of its importance.”
The exact wording for the Trans-Pacific Partnership agreement will not be finalized until after the federal election.