Winnipeg Free Press - PRINT EDITION

Supply management for livestock to end?

On the way out, trade guru says

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The supply-management systems protecting Canada's dairy and poultry industries will likely be dismantled within the next 10 to 15 years, a former federal trade negotiator predicted Friday.

Michael Hart, who worked as a federal trade negotiator from 1974 until 1995, said there's no place in an increasingly globalized trade environment for supply-management systems and other such protectionist measures.

While they guarantee Canadian producers a set price for their products and protect them from foreign competition, Hart said they also drive up the cost of imported dairy products such as cheese, as well as the price Canadian exporters must charge for the dairy and poultry products. That impedes Canada's efforts to pursue new export opportunities and boost foreign trade.

"We cut off our nose to spite our face with supply management," the Carleton University trade policy professor told delegates attending the University of Manitoba's 17th annual Fields on Wheels conference in Winnipeg.

"Over the next 10 to 15 years, we should see a transition out of these awful, awful policy decisions we made in the 1970s into a more open system."

Supply-management proponents argue it provides farmers with a fair return while supplying consumers with high-quality dairy and poultry products at fair prices. They also argue it hasn't prevented Canada from signing a free trade agreement with any country.

Hart said in an interview following his address the impetus for the government to begin phasing out supply-management systems will likely come from large, corporate-owned dairy and poultry operations that want to take advantage of new export opportunities.

"They can afford the technology that will enable them to compete."

He said the key will be to phase out the systems over a number of years, to give producers time to adjust.

"They will adjust, just like they did with a lot of other industries. Why would it be any different with this industry?"

Hart said supply-management systems aren't the only protectionist measures that need to be given the boot. The federal government should remove all remaining tariffs on imported goods.

"We live in a world where everything is globally produced, and we shouldn't be worrying about things like tariffs."

He said about three-quarters of Canadian tariffs have already been eliminated as a result of free trade agreements with countries such as the United States, Mexico and Chile.

Europe will soon be added to the list, so it's time to get rid of the rest of them, he said. Not only would that reduce the price Canadians pay for the goods still subject to tariffs, but it would make it easier for Canada to negotiate free trade agreements with other countries.

Hart and Lakehead University economics professor Livio Di Matteo said there will be a growing, long-term demand for Canadian food products and commodities as the middle-class population in countries such as China continue to expand.

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition November 10, 2012 B8

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