From the Editor: Critics pounce on USMCA deal

NAFTA 2.0 chips away at supply-managed sectors.
Brett Ruffell
January 07, 2019
By
University of Waterloo's Bruce Muirhead was shocked by the extent of the poultry concessions in the revised NAFTA deal.
University of Waterloo's Bruce Muirhead was shocked by the extent of the poultry concessions in the revised NAFTA deal.
After a year of uncertainty, Canada, the U.S. and Mexico finally agreed on ‘NAFTA 2.0’. Renamed the United States-Mexico-Canada Agreement (USMCA), all three countries are expected to ratify the deal fairly soon.

The pact is a mixed bag for poultry. While supply management survives (the U.S. at one point proposed Canada phase out the system), the deal grants our American counterparts even more access to all four supply-managed poultry sectors: eggs; chicken; turkey; and broiler hatching eggs and chicks. Canada also made significant dairy concessions.

Naturally, Canadian poultry organizations panned the new agreement. For instance, Turkey Farmers of Canada called it a threat to Canadian producers. What’s more, Egg Farmers of Canada described it as concerning development that will have a negative impact on supply management as a whole.

Here’s how the numbers break down. In terms of eggs, the pact means 10 million dozen more imported in the first year. Market access will then increase one per cent each year after that for the next 10 years.

The chicken concession means an additional 57,000 metric tonnes phased in over six years. That’s more than double the access Canada granted during Trans-Pacific Partnership negotiations. Then beginning in year seven, chicken access will increase one per cent each year for the next 10 years.

USMCA also includes additional access to Canada’s turkey market. The U.S. will be allowed to export turkey duty-free into Canada at a level equal to 3.5 per cent of the previous year’s Canadian production.

Rounding things out, the deal grants generous access to Canada’s broiler hatching eggs and chicks market at 21 per cent of Canadian domestic production for that year.

Bruce Muirhead, a professor with the University of Waterloo and a historian who’s written extensively on trade and agricultural policy, followed the negotiations closely. He understands the Liberals had to grant dairy concessions for political reasons. However, he was shocked by the extent of the poultry concessions – particularly the amount of egg market access Canada gave up. “I don’t know where that came from and why government felt compelled to give that up,” Muirhead says. “I hadn’t heard about the United Egg Producers in the U.S. pushing for more access.”

The trade expert believes the new deal creates uncertainty for producers. That’s partly because, while NAFTA had no set expiry date, the USMCA expires after 16 years. It also includes a review period after six years.

“I can imagine in six years they come to us and say, ‘If you want to renew this agreement, we want more share of your supply-managed sectors,’” Muirhead says.

He feels this uncertainty puts egg producers in a particularly tough spot given the plan to phase out conventional cages. “Egg farmers will say, ‘How are we supposed to afford this when we don’t have certainty in the industry? You tell us you’re not going to give up any more access but you’ve said that all along.’”

He says continuing to give away market access is a threat to supply management and to rural communities in general. To soften the blow, agriculture minister Lawrence MacAulay says supply-managed farmers will be provided a “growth package”, and wants that in place before the deal is ratified. He also formed a poultry and egg working group to develop mitigation strategies.

In the end, Muirhead feels the government missed an opportunity to prove its commitment to supply management. “Our farmers are very resilient and they will adapt, but I can’t help but think they’ve been sold out.”

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