Two days after accusing Canada of stifling U.S. dairy exports, President Trump said, “what they’ve done to our dairy farm workers is a disgrace,” and added: “[W]e’re going to get to the negotiating table with Canada very, very quickly” to re-write NAFTA. In Toronto, Canadian Prime Minister Justin Trudeau said he anticipated “a thoughtful, fact-based conversation on how to move forward in a way the protects our consumers and our agricultural producers.”
The United States has a $400 million surplus in dairy trade with Canada, Trudeau told Bloomberg, “so it is not Canada that is the challenge here.” The issue highlighted by Trump involves a high-protein concentrate called ultrafiltered milk that is used in making cheese. But the United States has longstanding complaints about Canada’s supply-management system, which limits imports as a way to assure that dairy farmers have a domestic market for their milk at a remunerative price.
“Our farmers in Wisconsin and New York State are being put out of business, our dairy farmers,” Trump said during an Oval Office ceremony to initiate an investigation of steel imports. “The fact is, NAFTA — whether it’s Mexico or Canada — is a disaster for our country … And we’ll be reporting back some time over the next two weeks as to NAFTA and what we’re going to do about it.”
The president added timber and energy to his list of U.S.-Canada trade irritants. “So we’re going to have to get to the negotiating table with Canada very, very quickly. Again, just to tell you, this is another NAFTA disaster, and we’re not going to let it continue onward,” he said.
As a candidate, Trump vowed to renegotiate NAFTA to get better terms for the United States or to scrap the U.S.-Canada-Mexico trade pact. The White House was expected to trigger the new negotiations at the end of March, but has delayed action. The first step is to notify Congress, followed by a domestic consultation period, before negotiators would meet.
Until this week, Trump has blamed Mexico for NAFTA shortcomings and suggested U.S.-Canada trade terms would be tweaked rather than overhauled. “We can’t let Canada or anybody else take advantage and do what they did to our workers and to our farmers,” said Trump.
Trudeau said every nation protects its farmers. “Let’s not pretend that we’re in a global free market when it comes to agriculture,” he said in the Bloomberg interview. “We have a supply-management system that works very well here in Canada. The Americans and other countries choose to subsidize to the tunes of hundreds of millions of dollars, if not billions of dollars, their agriculture industries, including their dairy.”
The Commerce Department was expected to rule early next week on countervailing duties against softwood lumber imported from Canada, said the CBC. A NAFTA review panel ruled against the United States on Wednesday in a complaint about glossy paper produced at Canadian paper mills.
“Our dairy market is in fact more open to imports than the U.S. market is,” said Foreign Affairs Minister Chrystia Freeland, according to the CBC. “On dairy … we are fully compliant with all our NAFTA and WTO commitments.”
U.S. dairy groups say Canada unfairly modified its dairy price system so that domestically produced ultrafiltered milk is cheaper than U.S. imports. Dairy prices collapsed in 2015 for U.S. dairy farmers, who rely on exports for part of their revenue. Canadian government officials say the root problem for U.S. dairy farmers is overproduction worldwide, and the Canadian Press Baloney Meter rated the U.S. complaint as “a lot of baloney.”
“The problems this pricing policy are creating for dairy farmers in Wisconsin, New York and Minnesota are real, and they have nothing to do with U.S. ‘overproduction,’ as alleged in a recent letter from Canada’s Ambassador to the United States, David MacNaughton,” said the U.S. trade group National Milk Producers Federation.
To watch the Bloomberg interview with Trudeau, click here.
To read Trump’s comments on Canada and NAFTA, which begin halfway through his remarks on steel imports, click here.