This blog was re-printed with some additions in the Toronto Globe & Mail’s Report on Business, 5 August, 2015. To read that op-ed commentary, click here.
The TPP talks in Hawaii last week – with much hoped-for anticipation – unfortunately didn’t reach agreement. The 12 countries were getting pretty close but some tricky issues remained unresolved – autos, patent rights, agriculture, among others.
Ministers will meet again to try to break the logjam, probably in Kuala Lumpur around the time of the APEC meeting near the end of August. It’s getting pretty close.
All eyes are on the Americans. Governments recognize that a deal has to be done by September-October to allow Obama to present it to Congress before the US election period starts in earnest.
In the Hawaii meetings, Canada came under repeated fire from the US, Australia and New Zealand because of the government’s refusal to make offers to reduce Canada’s prohibitive dairy tariffs. Canada prevents all but a very small volume of dairy imports to protect its regressive supply management system.
But at the 11th hour, Ed Fast, Canada’s trade minister, did something important. He put an offer out to those three countries to reduce Canada’s dairy tariffs and open up import quotas (called tariff-rate quotas or TRQs). This would apply to fluid milk and fluid milk equivalents with a phase-in period so that allowable duty-free dairy imports would expand over time.
Those three countries didn’t think Canada’s offer went far enough. But they didn’t reject it either. Negotiations will be continuing between now and the next ministerial meeting and Canada will be pressured to do better. So we’re now talking about numbers, not concepts.
Once an offer like this is made, the principle is established, the die is cast, and there’s no turning back. The concept of supply management (at least for dairy) is now on the table in a real sense. In the ongoing talks in TPP, Canada will be negotiating over volumes, tariff levels and timing.
The idea of Canada refusing to negotiate with trading partners over supply management has now been jettisoned. It’s just a matter of time – maybe longer or shorter – but the system’s days are numbered.