Is Canada getting milked on the TPP?

By Tom Collins
GUELPH — The Trans-Pacific Partnership (TPP) deal could lead to as much as four per cent tariff-free access to Canada’s dairy market, higher than the original 3.25 per cent many believed two months ago.
The TPP is a 12-country trade deal that was signed Oct. 5 that amounts to nearly 40 per cent of the global economy and will affect 800 million people.
Dairy Farmers of Canada (DFC) spokesperson Therese Beaulieu said after calculating the numbers when the TPP became public on Nov. 5, the percentage of market access lost will range from 3.3 to 3.9 per cent based on butterfat.
She explained it is difficult to determine exact market access for some products as they could have different butterfat percentages. For example, cream market access will be 580 metric tonnes by the beginning of year six and 734 metric tonnes as of year 14.
But different creams have different butterfat percentages, and until it is known how much of each is brought into Canada, it is difficult to get an exact number, she said.
The DFC estimated the TPP will allow 50,000 metric tonnes of fluid milk into Canada by the beginning of year six and as much as 56,905 metric tonnes by the beginning of year 19. Up to 85 per cent of imported fluid milk is to be processed into ingredients for further food processing.
While the TPP was easy to read, it was hard to find the section on agriculture, said Sylvain Charlebois, a professor with the Food Institute at the University of Guelph. The main section was about 600 pages and included sections such as telecommunications and intellectual property, but agriculture was included in an appendix that grouped all tariffs together in 290 pages. Include all the appendices and you get a document that no one has read at more than 5,000 pages long.
The impact on the dairy industry was tough to figure out, said Charlebois. For example, one can’t compare a metric tonne of fluid milk to a metric tonne of mozzarella because it takes eight litres of milk to make one kilogram of mozzarella.
“When I ended up looking at the numbers, I came up with a very different conclusion” than an increase of imported milk into Canada that equals 3.25 per cent of the Canadian market, he said, believing the number is 4 per cent. “It could actually be higher than that. I would say nobody really knows for sure.”
Charlebois said farmers should be asking the DFC if it is comfortable with higher market access.
“Trade groups were in Atlanta, including DFC and the Dairy Farmers of Ontario,” he said. “They all said they were comfortable with the deal. My question to them is, they were comfortable based on what? Why do you support it when right now we’re unsure exactly how much will be coming into the country?”
When you combine a potential four per cent dairy market loss from the TPP and 2 per cent loss from the Comprehensive Economic and Trade Agreement between Canada and the European Union signed in 2013, things start to add up, said Charlebois, adding that it might be tough to make changes to the TPP at this point.
“Trade agreements tend to be intricate entities as all elements are often extremely intertwined,” he said. “So it’s possible (to change), but difficult.”
Overall, the TPP is a good deal as it can allow more trade for agriculture, he said. “Canada desperately needs to become a global player and we are simply not.”
Cornell University economist Andrew Novakovi also weighed in on the TPP. He told the Western Producer that dairy farmers need to realize that “a crack has been opened for supply management. It’s small, but cracks only get bigger.”
He added that farmers worried about the next generation need to “start thinking about a world without supply management.”
Back home, speaking on the TPP, Ontario Premier Kathleen Wynne hinted to the Ontario Chamber of Commerce last month that the TPP does not end the concessions. Supply management “has to evolve, has to change,” she said and added, “But I don’t want to kneecap our dairy and poultry processors in the process.”
She added: “We will be talking about what the compensation is.”