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No. 39  of 2015 

TUESDAY, JUNE 9, 2015      

 

   

Filed from Portland, Oregon  

     

Click here for last Friday's quote from Canadian and Mexican officials on COOL.

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TPP AND AGRICULTURE: COLLIN PETERSON'S AGENDA 

"I've been working with [Ambassador] Froman and the Administration to make sure that ... we get the Canadians on a path to phase out their supply management system in dairy and poultry."

Collin Peterson (D-MN)
May 10, 2015
CONTEXT
In last Friday's entry on COOL, we made a reference to something Representative Peterson said about that issue in his May 10 interview with the agricultural publication, AgriPulse.  In fact, Mr. Peterson talked about a lot of issues in that interview, which is well worth listening to in its entirety.  Among other things, he connected some big dots in the evolving picture of global trade, including Mr. Peterson's position on TPA on the one hand and the agricultural component of TPP on the other, with a special emphasis on Canada's supply management system. 

To show you what we mean, we have transcribed a fair chunk of his AgriPulse interview.  Asked about his position on Trade Promotion Authority, Congressman Peterson said:

 "Well, I'm officially on the fence, which I am not usually in that position.  But, I've been working with [Ambassador] Froman and the Administration to make sure that, if I vote to give them TPA authority that the Japanese will agree to open up their rice and beef markets more than they have been in the past, number one.

"But more importantly that we get the Canadians on a path to phase out their supply management system in dairy and poultry. ... You know, in the NAFTA we allowed them to keep the supply management system. And that's fine.  You know, they manage it within their own system.

"We got rid of the dairy tariffs in the United States. So they can sell their products into the U.S. with no tariffs, but we can't sell our products into Canada.  You know, some tariffs [in Canada] are 450 percent.  ... So, that was a bad deal.  So, we [have got to] get the tariffs gone.  And in order for them to be able to get rid of the tariffs, they're going to have to get rid of their supply management system or put it on a system to phase out.  It's very hard to do for them politically.  I understand that. 

"But my concern: The number 1 and number 3 processors of dairy products in the United States are now Canadian coops from Quebec.  So you have Canadian dairy farmers that are the biggest processors of milk in the United States.  And the reason is, they make a lot of money in their system, and they can't invest [it] in their own industry.  So they come down here and invest it in ours.  ...  I suppose some people will say, we'll that's a good thing.  But I just don't think that it's good that we have the Canadians in charge of our processing. 

"So, bottom line: there [has got to] be a way forward that [is going to] resolve this in this agreement [TPP].  Because if we don't get it done in this deal, it'll never get done."

COMMENT
Congressman Peterson is the Dean of Minnesota's Congressional delegation as well as the Ranking Member and former Chairman of the House Agriculture Committee.  He grew up on a Minnesota farm, and there are some 48,910 farm operators in the district he represents, the 7th.  The Administration may get TPA through the House without his support, but they are going to need it when TPP comes up.  That alone would seem reason enough to hope for new thinking in Canada about supply management.

We'll return to the issue of Canada's supply management for dairy and poultry in a minute, particularly dairy.  First, let's step back, way back.  Matthew, Chapter 7, is probably not included in the trade negotiator's bible.  If it once was, it has doubtless been removed.  That is the chapter which begins: "Judge not that ye be not judged" and continues, "And why beholdest the mote [speck, particle] that is in thy brother's eye but considerest not the beam that is in thine own eye?" [King James Version]

Not to worry, the theme is picked up by countless others.  To take one example, consider this lead from recent piece in Australia's Financial Review:

"The Obama administration is refusing to slash agriculture tariffs and import quotas in a mooted Pacific Rim free-trade deal, frustrating other trade negotiators and leaving Australia facing an uphill battle for its sugar growers and cattle farmers ...  ."

We doubt that the U.S. sugar situation will change much between now and the time that the long-lasting but critical TPP negotiations come to a close.   Yes, there would be a benefit to U.S. consumers - and perhaps to the U.S. economy - to reforming America's sugar program, but there is no upside for U.S. sugar producers.

Canada's supply management system may be different.  As the Conference Board of Canada argued in a paper published in March of 2014, reforming the supply management system could well be a boon to Canada's dairy farmers.  Freed from the system's constraints, Canada might well become a powerhouse in dairy.  In any case, the possibility of reform in the supply management system is a reality that Canadian publications are talking about even as the Canadian government underscores its defense of the status quo.  A May 7 article in the Saskatoon publication, The Western Producer, carried the headline "TPP the end of supply management," and suggested that "The supply management debate is reaching a tipping point as Trans-Pacific Partnership negotiations heat up... ."

Our impression is that there are two big arguments for reform.  The first is that saving supply management may be too high a price to pay for losing the perceived benefits of TPP.  The second is that reforming it (getting rid of it) might be good for Canada's industry.  Congressman Peterson himself seemed to be suggesting as much, that is, that reform would mean more investment in Canada's dairy sector. 

"Gaiatsu" is the Japanese word for foreign pressure or guidance.  And Japan recognizes the need to bend to it on occasion.  Unfortunately, gaiatsu isn't something that comes easily to Canada, especially when the pressure is coming from the United States.  But in this case, it could be just one of the more felicitous meanings of the phrase win-win: "I'll get what I want, which is good for me; and I'll give you what you want, which will also be good for me."

Of course, for any of that to happen, Congress first needs to pass the Trade Promotion Authority legislation.  Soon, we are told.  Soon. 
SOURCES & LINKS

A Collin Peterson interview is a link to Mr. Peterson's May 10 interview with AgriPulse, which was the source for today's quote. 


Representative Peterson on the Web is a link to the page on the Congressman's website with information on the 7th Congressional District of Minnesota. 


Obama Resisting Sugar Deal is a link to the article from Australia's Financial Review with this story. 


Reforming Dairy Supply Management is a link to the website of the Conference Board of Canada and in particular to the page with information on this report. 


TPP and the Supply Management Tipping Point takes you to the story from the Western Producer quoted above. 


A TPA Resource is a link to a materials on this issue prepared by the U.S. Chamber of Commerce.  


 

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