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November 30, 2011

 

New Zealand exhorts Canada to drop dairy quotas
  

 

New Zealand's trade minister, Tim Groser, said that Canada has to remove tariffs by dropping poultry and dairy quotas if the country wants to enter an emerging Pacific trade group.

 

Groser mentioned at the opening of a dairy factory that entrance into the Trans-Pacific Partnership could be contingent on stopping the country's practice of supply management.

 

"When our leaders said 'eliminate' tariffs and other direct barriers to imports, they meant it," Groser told the audience at the factory in Dunsandel, New Zealand, about 40kilometres southwest of Christchurch.

 

According to The Vancouver Sun, Mr Groser said Canada still follows a policy that many other governments used to follow, "but most have moved forward."

 

"(Supply management) is completely inconsistent with tariff elimination," he said.

 

While he chided Canada, he said he understood the political pressure that is on the government to keep supply management, "If I were a Canadian politician or trade negotiator, I would have done exactly the same."

 

He said the TPP's initial position is not likely to change the political dynamic in Canada and drop the tariff wall immediately.

 

"The cynics, whether they are in Tokyo, Ottawa or Mexico City, have history on their side."

 

The process Mr Groser called for is a slow transition from supply management to an open system over a period of, perhaps, a decade — the amount of time it took Australia to wean itself off the practice.

 

Canada has been able to keep domestic supply management while still entering into free-trade agreements, such as NAFTA with the United States and Mexico. But New Zealand's trade minister said the TPP should hold itself to stiffer entrance requirements.

 

"We wanted to create a template for Asia-Pacific trade and investment integration that set new and higher standards," Mr Groser said.

 

Prime Minister Stephen Harper has said the practice — which imposes import tariffs of 200% or more on dairy and poultry products — would be strongly defended at the bargaining table as Canada tries to gain entry into the TPP.

 

The tariff wall is designed to protect dairy and poultry producers from wild swings in prices and demand. A national dairy board sets yearly quotas for producers to follow, as well as dairy prices.

 

Critics of the system say production limits inflate those prices -- and stifle the industry. However, dairy producers say without supply management, they would not be able to make a living and would be undercut by foreign farmers.

 

Supply management has been a sticking point on Parliament Hill with the NDP and Liberal parties demanding the government take a stronger stance and pull the practice from the bargaining table.

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