Explainer: Trump sours on Canada's sheltered dairy system
U.S. President Donald Trump renewed his complaints about Canada’s dairy system on Thursday ahead of a Group of Seven summit in Quebec that is likely to center on trade disputes.
In a tweet Trump said, Canada “doesn’t bring up the fact that they charge us up to 300 percent on dairy - hurting our Farmers, killing our Agriculture!”
HOW DOES CANADA’S DAIRY SYSTEM WORK?
Canada has managed supplies of dairy, eggs and poultry since the 1970s, restricting how much farmers can produce and limiting imports through onerous tariffs.
Quotas restrict how much farmers produce according to domestic demand.
The Canadian Dairy Commission, a government corporation, sets prices for butter and skim milk powder annually, which provincial boards use as a reference in establishing the price of milk.
DOES THE SYSTEM BREAK TRADING RULES?
Canada’s dairy system falls outside of the North American Free Trade Agreement (NAFTA).
A WTO panel ruled in 2002 that Canada breached its trade obligations through its dairy support, siding with the United States. The result of the WTO ruling is that Canada is not allowed to export much dairy.
WHY IS TRUMP UPSET?
U.S. dairy processors want to increase sales to Canada but high tariffs of nearly 300 percent stand in the way. For several years, U.S. dairies rapidly boosted shipments to Canada of milk proteins, used to make cheese and yogurt, using a loophole in Canada’s tariff system. But a 2016 deal between Canadian dairy farmer groups and processors including Saputo Inc, Agropur and Parmalat Canada [PLTPRC.UL] curbed the flow.