Protecting the Canadian Dairy Cartel

Canada might not be playing fair under the CPTPP. 

Here's Farmer's Weekly:

In the two years since the agreement came into force low-tariff and tariff-free quota created to open their markets to more imports of dairy products have gone largely unfilled.

Canada has been the worst offender, with just 12% of quota for dairy imports from CPTPP countries filled last year and just 4% so far this year.

In Japan just 40% of dairy quotas have been filled while fill rates have also disappointed in Mexico.

Dairy Companies Association of NZ executive director Kimberly Crewther said administrative foot-dragging by the three countries’ governments, along with President Donald Trump’s withdrawal of the United States from the agreement in 2017, meant the $96m of annual gains predicted for the industry once CPTPP was fully implemented now looked unachievable.

Not a particular surprise that the Canadian government would pull whatever tricks it could to support the dairy cartel.

The Ministry of Foreign Affairs and Trade was aware of the problem and raised it with Canadian, Mexican and Japanese counterparts and was due to do so again at an online meeting of CPTPP officials last week.

Crewther said it was disappointing but not unusual for countries to use quota administration to protect local industries from the increase in imported competition that followed free trade agreements.

“The agreement of new access in FTAs is great but it is the implementation around that access that is really crucial to whether it is usable or not.”

In the case of Canada up to 85% of quota was allocated to local processors who sourced subsidised raw milk from the country’s farmers and tended not to import dearer foreign dairy products.

Only 10% was for importers, who were also prevented from getting their hands on quota allocated to local processors but not used.

Canada’s chronic underutilisation of its CPTPP import quotas was reinforced by its Milk Class 7 milk payments system, which subsidised prices paid to local farmers and undercut imports and has long been a bugbear of the NZ industry and other exporters.