Friday 16 April 2010

Costs of dairy protectionism

We previously noted that Canada's intransigence on supply management hurts its position at WTO.

Supply management now is shutting Canada out of a trans-Pacific free trade deal: New Zealand isn't interested in letting Canada come to the table if the Canadians rule out trade in dairy.

The Canadians know it's hurting them:
“We are at a time in our international trade policy that we have to weigh the costs and benefits of maintaining supply management when it is clear that this system of protection is jeopardizing our access to a number of trade agreements, not only bilaterally but also regionally and globally,” said Yuen Pau Woo, head of the Asia Pacific Foundation of Canada.
The Kiwis are surprised the Canadians still have in place systems we abandoned more than 20 years ago.

Either buy out the quota holders or start eroding quota value. Not only will you start seeming sensible in trade negotiations - damning tariff barriers elsewhere while defending supply management is an asinine bargaining position - but you'll also start getting much better ice cream. The cheapest store-brand ice cream here is on par with premium brands in Canada - seriously.

Not making efficient moves makes Baby Pareto cry. Stop poking thorns into Baby Pareto's heart, Canada! Follow CD Howe's plan, and you get to remove a thorn from Baby Kaldor-Hicks's heart; follow mine, and you get to remove a thorn both from Baby Kaldor-Hicks's heart AND from Baby Pareto's heart. Happy baby giggles and good ice cream ensue.


  1. I think that last paragraph might just have to be quote of the week!

  2. Mumbledy pumbledy, my red cow,
    She’s cooperating now.
    At first she didn’t understand
    That milk production must be planned;
    She didn’t understand at first
    She either had to plan or burst,
    But now the government reports
    She’s giving pints instead of quarts.

    - Ogden Nash

  3. Ah, but baby Machiavelli is very happy, becuase of a uniquely Canadian piece of politics. The big beneficiaries from the dairy quotas are Quebec dairy farmers, who, despite being major beneficiaries of this federal programme are strongly separatist. Maintain the dairy quotas and a federal government has leverage over Quebec. Threaten to get rid of them, even with full (Pareto-is-happy) compensation, and watch the Parti Quebecois manufacture the proposal into another "humiliation" for Quebec. Suggest getting rid of supply management in other areas but not dairy, and watch Western Canadian anti-Quebec activists manufacture this into another case of central Canada screwing over the West to appease Quebec.

  4. Quebec would lose quota access to the Canadian market if they left, so I don't see any particular reason that the bonds would need to continue to pay out to those recipients if Quebec did leave....

    You're probably right though - it's been depressing here watching how the folks who'd be fully compensated for a GST increase whine about how GST is regressive....

  5. "Not making efficient moves makes Baby Pareto cry"

    Hey, c'mon! Don't forget your position on land tax...

  6. Ah yes, but there's a difference between moves that make Baby Pareto smile for the longer term and ones that make him laugh for a minute before you snatch the lolly away and tease him with it.... If we could wholescale replace income tax with land tax, with automatic death penalty for anyone trying to add an income tax back onto the land tax, I'd be happy with land tax. I'm worried that we wind up with both instead.