Opinion: Whoever our next BFF is, we need to open up dairy

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Photo by Christinne Muschi/BloombergCanada becoming an associate member of the European Union would provide the sort of trade diversification this country sorely needs. But an agreement is unlikely as long as the dairy lobby dominates Canadian trade policy. To signal our commitment and good faith, Canada should immediately begin liberalizing supply-managed sectors for trade with Europe. And in 2029, when a new U.S. administration takes office, we should offer tariff-free access for American dairy, eggs and poultry in exchange for restoring a free trade agreement with Washington.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThis advertisement has not loaded yet, but your article continues below.The prices of Canadian milk, eggs, and poultry are artificially elevated by official production quotas and minimum pricing. The Montreal Economic Institute recently estimated the cost to Canadian consumers at $244 per year, a burden that falls much more heavily on low-income families. Many similar Canadian studies — bearing punny titles about “sacred cows” and “spilt milk” — also support abolishing the costly and inefficient quota system. The non-partisan OECD concurs, arguing in 2017 that “a phasing-out of Canadian dairy supply management policies” could “boost inclusive growth.” (Canada’s well-funded dairy and poultry lobbies naturally disagree.)Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againSupply management’s costs extend beyond Canada’s borders. Ottawa has consistently tried to force other countries to accept carve-outs for supply-managed sectors as the price of trading with Canada. Unsurprisingly, such requests do not go over well. Dairy concerns were recently responsible for holding up negotiations for the post-Brexit Canada-U.K. free trade agreement, while a decade ago, supply management nearly derailed the Canada-EU trade pact. The naïve belief that our dairy sector will now accept an even deeper agreement with Brussels is a case of hope trumping experience.This advertisement has not loaded yet, but your article continues below.Our biggest problems are south of the border, of course. Supply-managed sectors had a leading role in the collapse of this summer’s trade negotiations with Washington. To be sure, Donald Trump’s temper tantrums have been disgraceful — poisoning relations so much it is unclear how any politically acceptable deal is possible with his administration.But even while refusing to cower to Trump’s bluster, Canadians need to realize that supply management is damaging Canada’s national interests. This problem has persisted — churned, you might say — for decades and although future American presidents may be less unhinged than Trump, they will take a similarly dim view of our managed markets being largely closed to U.S. products.As a first step toward a more sensible trade policy, Canada should demonstrate the seriousness of our desire for deeper economic integration by immediately liberalizing dairy trade with the European Union. Similar liberalization should proceed with the U.K. and members of Canada’s Pacific Rim trade pact (the CPTPP), including Japan, Australia and New Zealand.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Following this strategy, by 2029 Canada would have begun opening supply-managed sectors to foreign competition, gaining valuable experience in managing the transition. Then, after the next presidential inauguration, we could offer similar liberalization to Washington — though only as part of a permanent, tariff-free, bilateral trade agreement (even if a trans-Atlantic multilateral agreement would be even better).As economists have long argued, trade liberalization creates winners and losers. In the short run, those who are harmed can be compensated, while in the long run, the rising prosperity that trade generates improves everyone’s welfare. If supply management were phased out, Canadian shoppers would enjoy cheaper milk, eggs and poultry and a much wider range of choices. Although some Canadian farmers likely would go out of business, other, nimbler ones, would thrive, finding big new markets in Europe and the U.S.This advertisement has not loaded yet, but your article continues below.Successful examples of liberalization abound. Australia liberalized its dairy industry between 2000 and 2009, while New Zealand did so from 1985 to 2003. Even more relevant, the Canadian Wheat Board was phased out almost 15 years ago. Yet there are still lots of cattle Down Under while the Canadian Prairie bursts with grain, suggesting that, despite some adjustment costs, the post-liberalization future can be bright.Aidan Wakely-Mulroney, who is not related to the late Brian Mulroney, formerly worked as an economist at the Privy Council Office and the International Trade and Finance Branch of the Department of Finance.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.