Supply management has no place in the TPP

It would be madness for Australia to agree to admit Canada to the TPP “free trade” negotiations on the basis that they might keep their astronomically high barriers to some food imports.

The Canadian Trade Minister, Ed Fast, told reporters this week that he believes Canada has “public support” from six of the nine countries negotiating the Trans-Pacific Partnership to admit Canada to the group despite it’s intention to retain supply management protection for Canadian farm prices (mainly in dairy, horticulture).

The “public” Australian position is of support for Canada’s “interest” in joining the TPP but no decision on whether, or on what terms, Canada should have a seat at the table.

Canada is a substantial trading economy — one-and-a-half times the size of the Australian economy — and a strong competitor in trans-Pacific markets. Its membership of the TPP could give a big boost to the credibility of this “new frontier” agreement adding to its trade coverage and perhaps attracting other regional countries to participate despite the ambitious threshold commitment to barrier-free trade. Canada’s participation also has a strong commercial logic, given the close integration of the USA and Canadian markets.

But, thanks to the entrenchment of old-fashioned, market-rigging, supply controls (marketing quotas) for a small number of farm products from the Eastern provinces, the Canadian trade landscape is marred by some of the highest peaks of import protection to be found in any developed or developing country. Their claims for membership in an agreement intended to establish free-trade across the Pacific while holding these “sacred cows” in reserve is absurd.

Worse, it would signal to Japan — also an aspirant for TPP membership — that they need not be too concerned about removing their farm protection when negotiating to join the TPP.

We have yet to see whether the “free trade” deal to be struck among TPP participants will overturn some other historical protectionist anomalies such as the barriers to US sugar imports. But that uncertainty would only be compounded by giving Canada a seat at the table on the basis Mr Fast proposes.

There is, however, a danger that protectionist elements in the US Congress would welcome Canadian entry with high dairy protection as a stalking horse (or is that a “trojan horse”) for US farm protection. If the USA decided it wanted to admit Canada to the negotiations even with supply-management, Australia and New Zealand would find it difficult to resist the pressure.

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