Recent reports on the Trans Pacific Partnership (TPP) negotiations have suggested that unless Canada makes changes to its supply management system for dairy, poultry and eggs, it will be asked to leave or will be forced out of the negotiations. U.S. Chief Agricultural Negotiator, Ambassador Darci Vedder, has been quoted as saying that Canada has to make a substantive offer on supply management to remain in the negotiations. Ambassador Vedder apparently noted, “it is difficult for me to see how we close a market access chapter with Canada that doesn’t include market access.”
The response to the apparent move to force Canada to make substantial changes to supply management as the cost of joining the TPP has been entirely predictable and underlines one of the chief problems with discussions surrounding trade policy. For the most part, public commentators can be divided into either free trade supporters or free trade opponents. The actual agreement at issue becomes largely irrelevant as these groups tend to discuss free trade from the ideological perspective of whether or not the concept is a good one. However, this dangerously narrow perspective ignores the more important question of whether a particular agreement is beneficial or not for Canada and how the Government of Canada should decide on this issue.
Free Trade Agreements are generally intended to liberalize the conditions of trade between the parties to the agreement with the objective of increasing economic benefits. The proposition that all Free Trade Agreements are good or bad is a simplistic analysis that adds no value to the dialogue. The better approach is to consider whether a specific agreement is good or bad for the parties involved – a question that can only be answered by considering the terms and conditions of the agreement, or proposed agreement, in context.
Taking the TPP and Supply Management as an example, the reports conclude that Canada is faced with the stark choice of either making concessions on supply management or withdrawing entirely from the TPP negotiations. To make this decision, Canada must weigh the potential benefit of the agreement to the overall Canadian economy against the potential negative impact of offering concessions on supply management. As an example, Canadian negotiators would likely consider the following:
- The actual potential increase in market access for Canadian exporters, bearing in mind that Canada already has preferential market access to some TPP members such as the United States;
- The potential cost of the substantive offer in terms of the economic impact on the dairy, poultry and egg sectors overall, including a consideration of the impact on Canadian producers and processors;
- The potential cost of compensating producers for lost or reduced quota value, bearing in mind that Canada allowed producers to accumulate value in their quota when Supply Management was first established; and
- The fact that Supply Management is consistent with international trade obligations and complies with the WTO Agreements. Therefore, if Canada decides to make concessions on Supply Management, it should use the offer to gain concessions in return.
In addition to these trade issues, the Government of Canada would also likely consider the political implications of a decision that would likely be perceived as abandoning Supply Management in favour of imported poultry, eggs and dairy products.
Whether Canada decides to make a substantive offer on Supply Management to satisfy its trade partners or not should be made on the basis of a proper cost-benefit analysis of that decision’s impact on the Canadian economy as a whole. The black and white discussion of trade policy engaged in by so many commentators should be discounted as it generally focuses on the philosophical question of whether free trade is a good thing overall rather than addressing the costs and benefits of a particular agreement.
