Why does this matter?
A post spreading on Twitter makes the following claim:
“Canada says it values CUSMA, yet on dairy it has been its most persistent violator. Why would President Trump believe otherwise now?”
The post was made not long after news broke that the U.S. is pushing on Canada’s supply management system as CUSMA renegotiation approaches. Since then, there has been a clear effort to cast supply management as a violation of CUSMA and as evidence that Canada is not a good-negotiator.
However, while there are legitimate criticisms of supply management, violating CUSMA is not one of them. The fact is that supply management is part of the 2018 CUSMA agreement.
For example, the Canadian government notes the following in the economic impact assessment of the agreement:
“These modernizations will make it easier for Canadian exporters to claim preferential tariff treatment under the Agreement. However, the gains will be partially offset by new market access to Canada’s supply-managed sectors and more restrictive rules of origin for automobiles and auto parts that will likely increase auto-part production in North America but also lead to higher production costs.”
In the agreement itself, Article 3.A.3: Dairy Pricing and Exports makes this direct reference to supply management:
“2. This Article applies to any milk class pricing system for dairy adopted or maintained by a Party, where for:
- (a) Canada, milk class pricing system refers to price setting under the supply management system for dairy; and
- (b) the United States, milk class pricing system refers to price setting under the federal milk marketing orders.”
Canada also made several concessions in CUSMA regarding dairy, while maintaining supply management. Canada agreed to the following:
“Provide new market access to the U.S. in the form of tariff rate quotas for dairy, poultry, and egg products;
Tariff elimination for whey powder and margarine;
Ensure the elimination of current milk classes 6 and 7; component prices for these products will be calculated based on an agreed U.S. reference price;
Establish a mechanism to monitor exports of skim milk powder, milk protein concentrate, and infant formula; above an agreed threshold these products will be subject to surcharges; and
Allow U.S. grown wheat of varieties registered in Canada to receive an official Canadian grain grade.”
It is also important to note that even with expanded quotas for U.S. dairy, they have not hit the threshold at any time since 2018, and that Canada’s tariffs on U.S. dairy products only kick in once the threshold is exceeded, meaning those tariffs have not actually been applied:
“Those high tariffs kick in only after the US has hit a certain Trump-negotiated quantity of tariff-free dairy sales to Canada each year – and as the US dairy industry acknowledges, the US is not hitting its allowed zero-tariff maximum in any category of dairy product.
In many categories, notably including milk, the US is not even at half of the zero-tariff maximum.
“In practice, these tariffs are not actually paid by anyone,” Al Mussell, an expert on Canadian agricultural trade, said in an email Friday.”
This is all in the agreement that the U.S. President negotiated in 2018, an agreement he once praised as “the best trade deal ever made.”
Canada negotiated in good faith, made concessions, and preserved supply management. The U.S. agreed to this, as did Mexico. Thus, to now claim that Canada’s supply management system violates CUSMA, or that maintaining it shows we don’t value CUSMA, is – simply based on the facts – incorrect.
Why does this matter?
This is not about the debate over supply management. Rather, it’s about the value we place on the truth. We have a choice between succumbing to false narratives because powerful people push them, or holding on to the truth, even when ‘giving in’ feels easier in the short term. I think the latter option – adhering to the truth – is the best choice.
Spencer Fernando
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