Politics

Liberals waver on trade deal compensation Tories negotiated with farmers

A $4.3-billion trade deal compensation package negotiated with Canadian farm groups by Stephen Harper's former Conservative government appears in jeopardy. Justin Trudeau's Liberal government is reviewing what it will offer instead.

'If that deal doesn't exist, then they should be upfront about that,' NDP trade critic argues

Trade Minister Chrystia Freeland and Prime Minister Justin Trudeau are both keen to show their government is "pro-trade." But they don't appear to be interested in following through on a $4.3-billion compensation package that the Conservatives previously negotiated with farm groups. (Sean Kilpatrick/Canadian Press)

A $4.3-billion compensation package negotiated with Canadian farm groups before the Trans-Pacific Partnership trade agreement was announced appears to be in jeopardy.

The deal was negotiated under Stephen Harper's former Conservative government, who called it "cabinet approved" last October.

But shortly after ministers signed off last July — amid the heat of the 12-country Pacific Rim trade talks — an election was called. The $4.3 billion was never approved by Treasury Board.

The new Liberal government's spending estimates and first budget don't include even a portion of the previous pledge.

International Trade Minister Chrystia Freeland signed the TPP in February but the Trudeau government is undecided about its ratification. In the meantime, extensive consultations are underway.

"We're going to first wait and see if we ratify the agreement," Freeland's parliamentary secretary, David Lametti, said at a consultation session in New Brunswick last week. "If we do make a decision to ratify, then we will sit down with these groups."

But the compensation package announced last October wasn't only for the TPP. The measures also intended to mitigate potential losses from the Canada-EU Comprehensive Economic Trade Agreement (CETA).

The Liberals are keen on CETA, saying they hope the deal will be ratified later this year — which is why farmers' eyebrows shot up when last month's budget offered nothing.

Pressed to explain, Agriculture Minister Lawrence MacAulay's office told CBC News that "since CETA is not yet ratified, it would have been premature to have compensation in the budget … Discussions on compensation will be part of the process to ratify CETA."

Hundreds of millions in losses

The farm package announced last October was intended to help Canada's supply-managed sectors cope with competition from new imports once new deals take hold.

Five commodities in Canada — dairy, eggs, chicken, turkey and broiler hatching eggs — have marketing-board systems that use strict production quotas and import controls to stabilize domestic prices. 

CETA would give European cheeses (both fine cheeses and industrial grades) an additional two per cent of the Canadian market.

The TPP affects all five commodities, allowing foreign imports access that ranges from 1.5 per cent of the domestic market for broiler hatching eggs, to nearly four per cent of the Canadian dairy market, according to industry calculations. 

The shares might sound small, but they're disruptive to a system built on stability.

Dairy farmers hit the streets of Ottawa last fall to make their concerns clear as the Trans-Pacific Partnership negotiations concluded in the middle of the federal election campaign. A week later, a compensation deal was announced. (Sean Kilpatrick/Canadian Press)

Figures supplied by the Chicken Farmers of Canada to the Commons trade committee pegged the hit to Canada's GDP from the new chicken imports at about $150 million annually.

The Dairy Farmers of Canada said its combined impact from both deals is between $282 million and $357 million in annual lost revenue. New export opportunities won't offset this, the group said.

"The TPP trade agreement goes with a mitigation and a compensation package. That was the way it was built and negotiated," the DFC's Caroline Emond told MPs, calling it a "critical" part of Canada's compromise to get a deal.

Without it, she said, farmers pay the price for the gains other industries hope to achieve.

What comes first?

A chicken-and-egg argument emerges over the Liberal approach of deciding to ratify before deciding on compensation.

Farm groups say the compensation should be sorted out first.

"I understand that you wouldn't [pay] compensation until ratification. I get that," Mike Dungate, from Chicken Farmers of Canada, told CBC News. But starting to debate back and forth after ratification is too late, he said. 

One component of the Conservative-negotiated deal, a $450-million modernization fund for food processors, was already supposed be rolling out to help upgrade aging plants.

Recent job losses resulting from dairy-plant closures could suggest an industry already bracing itself.

While the Liberal election platform included a $160-million fund for food processors, that money wasn't in the budget either.

Chicken farmers are also upset that import control measures negotiated nearly a year ago — not part of TPP per se, but part of the political quid pro quo domestically to mitigate Canada's losses — were also missing from the budget.

Until they're in place, the group says fraudulent labelling and classification lets in millions of kilograms of extra imports.

Cabinet split?

So what are the Liberals — a party that has included prominent voices critical of supply-managed agriculture in the past — planning?

MacAulay told reporters in Montreal last week that what he wants his government to do isn't much different from the Conservative announcement, but the Liberals would like their own opportunity to discuss it.

"There could be areas in the compensation programs that the sectors would want to be handled a little different," he suggested.

Agriculture Minister Lawrence MacAulay is under pressure to explain what compensation, if any, will be available when the CETA and TPP trade deals come into effect. Last month's federal budget offered nothing. (Adrian Wyld/Canadian Press)

Conservative agriculture critic Chris Warkentin says it's concerning that the Liberals seem to be throwing everything out and renegotiating. He suggests they could be betraying a commitment made to farmers.

"We heard Chrystia Freeland talk early in their mandate about the fact that this was being reviewed. Obviously the ag minister has tried to pour cold water on those comments … to reduce the tension within the dairy community. But then every other minister piles on and reinforces this concern." 

The Liberals talked about supporting it during the election, Warkentin said, but with nothing in the budget, "they've clearly changed their mind."

NDP trade critic Tracey Ramsey called the Liberals disingenuous in the face of the party's pledge to be open and transparent.

"If that deal doesn't exist, then they should be upfront about that. If it does exist, then they should be coming forward with money in the budget," she said.

The Conservative offer arrived as that party faced potentially angry farmers in key rural constituencies. But the Liberals are in a different situation, as next election is years away. 

Dairy Farmers of Canada spokesperson Isabelle Bouchard said she doesn't know why the Liberals are being so reticent, saying her organization is ready to meet anytime.

"We do expect the government to modify, to put their colours on the compensation package," she said. "It's partisan politics, right?"

About the Author

Janyce McGregor

Parliamentary Bureau

Janyce McGregor has covered Canadian politics for CBC News since 2001. Send news tips to: Janyce.McGregor@cbc.ca

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