Politics

Trump demands Canada dismantle supply management or risk trading relationship

'We don't want to pay anything, why should we pay anything?' Trump says of Canadian tariffs on dairy products

John Paul Tasker - CBC News

June 09, 2018

President Donald Trump had tough words about Canada's supply management system during a news conference at the G7 summit on Saturday in La Malbaie, Que. (Evan Vucci/AP Photo)

U.S. President Donald Trump says Canada will have to dismantle its supply-managed dairy system or else Americans will dramatically curtail its trading relationship — a shot across the bow at Prime Minister Justin Trudeau, who has vocally defended the country's existing agricultural policies in the face of U.S. opposition.

"No tariffs, no barriers, that's the way it should be and no subsidies. In other words, let's say Canada, where we have tremendous tariffs. The U.S. pays tremendous tariffs on dairy, as an example, 270 per cent ... we don't want to pay anything, why should we pay anything?" Trump said, referencing the Canadian tariff imposed on U.S. and foreign milk imports.

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Canada levies a tariff of 270 per cent on milk, 245 per cent on cheese and 298 per cent on butter in an effort to keep imports out and tightly control supply.

"It's very unfair to our farmers. Our farmers, whether it's through a non-tariff trade barrier or whether it's through very high tariffs ... You can't do that. It's going to stop, or we'll stop trading," he said. "You look at our farmers. For 15 years, the graph has gone just like this, down."

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The U.S. president says if Canada doesn't dismantle their supply management for dairy, he won't hesitate to dramatically curtail the trading relationship between the two countries  2:20

As recently as Thursday Trudeau said his Liberal government will strongly support the current system that uses quotas to control the amount of dairy products produced by farmers, to ensure the national supply matches expected demand.

The Canadian Dairy Commission, which works with the provincial milk marketing boards to co-ordinate quotas and pricing, has consistently defended the system as a way to avoid surpluses and shortages — but also to help stabilize farmers' income.

We're like the piggy bank that everybody's robbing, and that ends -  U.S. President Donald Trump

"There's a reason why Donald Trump continues to write tweets on dairy products and Canada — it's because I've told him many times: 'No, he won't touch, we won't touch, our supply management system,'" Trudeau told reporters Thursday. "We will always defend our supply management system."

Canada's dairy producers introduced new prices for some products in 2016 — mainly on ingredients used in the production of cheese, yogurt and ice cream — which some U.S. producers and processors have argued puts them at a competitive disadvantage against their Canadian equivalents.

A Wisconsin milk processor blamed the price drop when it ended buying agreements with dozens of family farmers in that state, a decision that prompted the ire of Trump during the last U.S. presidential election campaign.

But others point to massive overproduction, an excess capacity, as the source of the U.S. industry's woes. The state of Wisconsin produces nearly as much milk as all of Canada — it's worth $43 billion US to the state economy — and its operations are export-oriented, while Canada produces just enough product to meet national needs.

"Canadian and U.S. dairy industries are fundamentally different. While Canadians enjoy stable prices and supply, the U.S. market is vulnerable to unexpected surplus of product, driving prices down for farmers and disrupting the market for consumers," Pierre Lampron, the president of the Dairy Farmers of Canada, said in a statement.

"President Trump seems to want nothing less than to see Canada's strong, stable and, efficient dairy farmers and sector wiped out. There is no monopoly on supporting national dairy interests. Just as President Trump is going to bat for his country's dairy sector, we call on Prime Minister Trudeau to stand up for our dairy farmers."

Treating U.S. like 'a piggy bank'

Trump said he doesn't blame foreign leaders for the state of the trading relationship, instead laying blame on past U.S. presidents who have entered into deals that, he asserts, have enriched allies while hollowing out American industry.

He said while the U.S. has kept its tariffs low to promote global free trade, other countries have left protectionist policies in place, disadvantaging the U.S.

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Trump gave a news conference before flying to Singapore to meet with Kim Jong Un. He talked about progress made at the G7 summit, his relationship with the other leaders and his demands for trade.  26:47

In a wide-ranging news conference at the G7 summit in Quebec, Trump said Canada and other G7 countries — historically his country's closest allies — have treated the U.S. like "the piggybank that everybody is robbing. And that ends.  ... You know, it's like the gig is up. It's like the gig is up. They can't believe they got away with it [for so long]. Canada can't believe it got away with it."

Trump made his comments before leaving the G7 summit in La Malbaie, Que. early Saturday — skipping an afternoon working group discussion on climate change, energy and protection of the world's oceans — where trade issues have dominated the agenda due to a protectionist push by the Trump administration.

Ahead of the meeting, some G7 leaders telegraphed they'd use the summit to have "tough and frank" conversations with Trump and argue the virtues of freer trade as he tightens the tariff noose.

Those efforts seemed to have failed, as Trump doubled down on his pledge to erect further trade barriers if he cannot extract concessions from partners.

Trump warned countries against levying retaliatory tariffs on the U.S. after his administration imposed punitive tariffs on aluminum and steel imports from Canada, Mexico, and the EU on national security grounds.

Canada has already said it will impose some $16.5 billion in new tariffs on U.S. goods ranging from lawn mowers to felt-tipped pens in response to the new 10 per cent levy on the country's aluminum and the 25 per cent tariff on Canadian steel.

"We'll win that war 1,000 times out of a 1,000," he said.

Calls for bilateral deal with Canada, Mexico

Despite the tough words, Trump said his relationship with German Chancellor Angela Merkel, French President Emmanuel Macron and Trudeau is at a "10." 

"The relationship that I've had with these leaders is great ... so you can tell that to your fake friends at CNN," he said after a reporter from that network asked about the state of the relationship with these close U.S. allies.

Donald Trump boards Air Force One Saturday at Canadian Forces Base Bagotville in Quebec, for a 20-hour trip to Singapore to meet with North Korean leader Kim Jong-un. Trump's participation in the G7 leaders summit was his first visit as president to Canada. (Evan Vucci/Associated Press)

Speaking of the stalled NAFTA negotiations, Trump again reiterated he prefers to sign a bilateral deal with Canada rather than push ahead with an agreement with the three original signatories. He has said a U.S.-Canada deal will be easier to achieve given the similarities of the two advanced economies. U.S. negotiators have frequently sparred with Mexican authorities over wages and workers' rights.

"We're either going to have NAFTA in a better negotiated form or we're going to have two [separate] deals ... it'll have a sunset. We're pretty close on the sunset division," Trump said, referencing the U.S. demand for a sunset clause in a final agreement.

Canadian negotiators have said a five-year sunset clause — which would prompt a reworking of the trade deal every five years — is a "poison pill" for trade talks. Canada and Mexico have opposed such a clause because of the economic shocks that come from uncertainty about NAFTA's future.

Trump will now begin his nearly 20-hour journey to Singapore where he is expected to meet with North Korean leader Kim Jong-un on June 12, a tête-à-tê​te designed to encourage the rogue state to end its nuclear program.

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