Free trade stands near the top of the Conservative government’s economic agenda for Canada, or so we were told in the recent Speech from the Throne. But, as we know only too well, “free” is a relative term. Just as “free speech” in Canada doesn’t mean we can say as we wish without penalty, so too “free trade” doesn’t mean we’ll be able to import goods from our trading partners without paying tariffs. Read the following paragraph from the throne speech:
“Our [Stephen Harper Conservative] Government will aim to complete negotiations on a free trade agreement with the European Union by 2012. It will also seek to complete negotiations on a free trade agreement with India in 2013. In all international forums and bilateral negotiations, our Government will continue to stand up for Canadian farmers and industries by defending supply management.”
So, at the same time we’re promised freer trade with the EU and later with India, Prime Minister Stephen Harper tells us that in these negotiations his Government “will continue to stand up for Canadian farmers and industries by defending supply management,” and ordinary Canadians can go suck eggs—very expensive ones at that.
Canada has already been condemned by the WTO for price-fixing practices in the dairy sector.
In other words, Canadians will be expected to continue financing our so-called “supply management” model of agricultural quotas and tariffs that cost Canadian consumers so dearly. We conservatives pride ourselves as being free-traders and the World Trade Organization (WTO) wants us to dismantle the system as part of our participation in the Doha round at the WTO. So why not do it?
Because our politicians of all political stripes cringe at the very thought of the sort of bitter reaction there’d be from the farm lobby, especially the Quebec dairy industry.
Our supply management system is much the same as us creating a government-mandated cartel for the marketing of poultry, egg and dairy products. Through import tariffs, producer pricing and quotas, it seeks to protect producers to the financial detriment of ordinary Canadian consumers.
The Organization for Economic Cooperation and Development (OECD) found that Canadian milk prices have been two to three times higher than world prices since 1986.
And the OECD estimates support to Canadian dairy producers at $2.7 billion in 2003, equal to more than 60% of the value of total dairy production that year.
It is time for Canada to scrap supply management systems and allow farmers to run their businesses on the same basis as most Canadians must, producing their products on an open, competitive basis and allowing consumers to have a choice among competing products, including those imported from trading partners.
It is time to end the insane practices that see customs tariffs reach exorbitant levels, ranging from 200 to nearly 300 per cent—specifically, about 245 per cent for cheeses and nearly 300 per cent for butter. Outrageous!
Obviously, this is too costly a burden to place on Canadian consumers, especially those who are seniors on fixed incomes and parents who struggle to make ends meet. Other countries with similar social and economic structures have deregulated agricultural markets.
In 1984, the New Zealand government eliminated most agricultural
subsidies, some of which were as high as 40 per cent of farmers’ incomes. This was followed by deregulation of its domestic market. In 2000, Australia overhauled its supply management system and compensated farmers for losses due to the elimination of quotas and lower prices by installing a “deregulation adjustment package” financed in part by a temporary tax on Australian milk consumption—their resulting fresh milk tax of 11 cents a litre was lifted February 23, 2009.
By 2003, New Zealand and Australia were among the OECD countries with the lowest agricultural supports. New Zealand’s agriculture sector adapted quickly, resulting in a significant return to organic farming and to a more diversified product range, with stronger export capability at world prices. Agriculture’s share of New Zealand’s GDP rose from 14.2 per cent in 1986-87 to 16.6 per cent in 1999-2000—a period during which agriculture experienced the greatest productivity gains of any of New Zealand’s economic sectors.
This future awaits Canadian consumers and farmers alike. Supply management should be a thing of the past, if only there was the courage and political will to make it happen.