There are rumors leaking out of Ottawa that Canada is prepared to allow limited U.S. access to the Canadian dairy market to avoid dangerous auto tariffs threatened by Presi- dent Trump. He’s suggested he made his deal with Mexico and will leave Canada out if they do not want to discuss more favorable terms for the U.S. The dairy industry in Canada appears to be the ultimate lever for both sides. Many of the Republican battleground states in the upcoming mid-term US elections are farming states. The President is fast tracking the “deal” framework through government. A move that severely cuts the time for Canada to sign on. But it’s clear the feeling in the U.S. is a three-way deal is best with one official on the negotiating committee saying, “we are better off with all three coun- tries involved, and I hope we will get to that result.” Prime Minister Trudeau, whose party needs support in dairy intensive provinces like Ontario and Quebec, has promised to defend the dairy without clearly stating how. His comments to reporters were “we are better off having no NAFTA than a bad deal for Canada.” No doubt dairy farmers will resist changes to price controls and tariffs that protect them from foreign competition. Unfortunately for them, it appears Canada is contemplating concessions on dairy that resemble those in free trade deals with the European Union and Pacific Rim.
In exchange, experts say Trudeau could demand changes on on the so-called Chapter 19 dispute resolution mech- anism. This permits Canada to battle U.S. anti-dumping duties that Ottawa has long opposed. Trudeau says it is a necessity for NAFTA, but Mexico has already agreed to drop it. According to research by Angus Reid, Canadians want a firm stance on supply management with 45% expressing that opinion. The number changes slightly downward when assistance for farmers is discussed. Ironically for respondents identify- ing as Conservatives, 56% say supply management should end. Liberals are at 42% and NDP are at 40%. When asked if they think President Trump will find a way to implement huge tariffs on Canadian automobiles, 48% believe he will and fewer than 28% think he is bluffing. It will be interesting how each country plays the hand that they have been dealt over the coming days, as the Trump imposed NAFTA September 30 th deadline approach- es and all parties have to show their cards, as it looks like Trudeau is all in with the Canadian economy and waiting for the river card.
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SEPTEMBER 2018 • SPOTLIGHT ON BUSINESS MAGAZINE
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