Except for the most important stuff, last week the legacy media covered fairly well the “pausing” of talks by the UK with Canada over free trade in selected agricultural products.Negotiations had been going on for a couple of years with the aim of replacing an interim agreement that came into effect after Brexit. That agreement expired at the end of last year. The notable features were that it allowed the British to export cheese to Canada under the same low tariff rates as other members of the European Union such as France and Italy.In exchange Canada sought to get the British to import more Canadian beef and pork. But the Brits said Canadian beef did not meet their “food safety standards.” One reason was that years of negotiations to establish equivalence between North American and the European regulations had not met with success. Canada said, somewhat undiplomatically, the British argument was nonsense. British regulatory roadblocks against Canadian beef, Canada said, were simply non-tariff barriers designed to protect British Herefords and Angus from competition from their offspring and descendants in the New World. It had nothing to do with biology or safety.British politicians gave credence to the Canadian interpretation by claiming they had a duty to “deliver” on behalf of British beef producers in negotiations with Canada.Canada said more or less the same thing, at least when it came to cheese. “We will sign a trade deal that is good for Canadian farmers,” said Agriculture Minister Lawrence MacAulay, and that meant protecting “the supply management sector.”Aha! A clue to what was really going on.Supply management, as most Canadians know, covers dairy (milk and cheese) and poultry (eggs, chickens and turkeys) by allocating quotas to producers and prices to consumers. The result, as economists have agreed for many years, is to protect producers and extort the protection money from consumers. A 2021 study, for example, showed American milk was about 25% lower in price than Canadian.Protecting supply management has regularly been identified as a major impediment to flexibility in international trade negotiations, whether with the UK or the Americans. A decade ago, it was a major obstacle to negotiating an agricultural agreement with the European Union.On the surface the dispute looks to be about bovines: dairy cattle versus beef cattle. But this is where matters get interesting.Here are some statistics: 83% of beef cattle are born in the prairie west, of which half are Albertan; 11% come from Laurentian Canada. 80% of Canadian cheese comes from Laurentian cows, with at least half of it coming from Quebec.For the record, I am a great fan of Quebec-produced cheddar. I also like British Cheddar, Stilton, Wensleydale and even Stinking Bishop, which reminds me of Quebec’s stinky Oka. If Quebec’s soft cheeses can compete with Brie and Camembert, why not Cheddar?Because the dispute on the Canadian side is not about food, but politics.That the interests of Laurentian dairy famers are not those of beef producers is shown as clearly as possible in responses to the end of negotiations by the leaders of the two bovine industries.Jacques Lefebvre, CEO of Les Producteurs Laitier du Canada (Dairy Farmers of Canada), was pleased that British dairy products were kept out and helpfully advised the Brits to start negotiating with the EU. The message was clear: the less British cheese in Canada the better. Thank you supply management.Nathan Phinney, president of the Canadian Cattle Association (and a New Brunswicker, not an Albertan), said the Canadian beef industry “is a strong advocate to free and open trade” and needs to deal with countries that share their views, which clearly the British cattlemen did not.British beef producers didn’t want to compete with Western ranchers. Laurentian cheese producers didn’t want to compete with their British counterparts. That much is obvious.There are, however, some additional complexities. Darren Larvin, managing director of Coombe Castle International, a large British cheese exporting firm, said it would have been “nice” if the Brits could still send cheese to Canada “while a sensible agreement is found for both parties.” Instead, negotiations have “come to the end of the road” for reasons that have nothing to do with cheese, he added.He didn’t elaborate, but his meaning was clear: supply management, which benefits Laurentian dairy farmers won the domestic political contest with Western free-market ranchers.More starkly: excluding Western beef from the UK market was, for Canadian negotiators, a small price to pay to exclude British cheese from Canada. Westerners paid the price; Laurentians reaped the benefits.Have we seen this movie before?
Except for the most important stuff, last week the legacy media covered fairly well the “pausing” of talks by the UK with Canada over free trade in selected agricultural products.Negotiations had been going on for a couple of years with the aim of replacing an interim agreement that came into effect after Brexit. That agreement expired at the end of last year. The notable features were that it allowed the British to export cheese to Canada under the same low tariff rates as other members of the European Union such as France and Italy.In exchange Canada sought to get the British to import more Canadian beef and pork. But the Brits said Canadian beef did not meet their “food safety standards.” One reason was that years of negotiations to establish equivalence between North American and the European regulations had not met with success. Canada said, somewhat undiplomatically, the British argument was nonsense. British regulatory roadblocks against Canadian beef, Canada said, were simply non-tariff barriers designed to protect British Herefords and Angus from competition from their offspring and descendants in the New World. It had nothing to do with biology or safety.British politicians gave credence to the Canadian interpretation by claiming they had a duty to “deliver” on behalf of British beef producers in negotiations with Canada.Canada said more or less the same thing, at least when it came to cheese. “We will sign a trade deal that is good for Canadian farmers,” said Agriculture Minister Lawrence MacAulay, and that meant protecting “the supply management sector.”Aha! A clue to what was really going on.Supply management, as most Canadians know, covers dairy (milk and cheese) and poultry (eggs, chickens and turkeys) by allocating quotas to producers and prices to consumers. The result, as economists have agreed for many years, is to protect producers and extort the protection money from consumers. A 2021 study, for example, showed American milk was about 25% lower in price than Canadian.Protecting supply management has regularly been identified as a major impediment to flexibility in international trade negotiations, whether with the UK or the Americans. A decade ago, it was a major obstacle to negotiating an agricultural agreement with the European Union.On the surface the dispute looks to be about bovines: dairy cattle versus beef cattle. But this is where matters get interesting.Here are some statistics: 83% of beef cattle are born in the prairie west, of which half are Albertan; 11% come from Laurentian Canada. 80% of Canadian cheese comes from Laurentian cows, with at least half of it coming from Quebec.For the record, I am a great fan of Quebec-produced cheddar. I also like British Cheddar, Stilton, Wensleydale and even Stinking Bishop, which reminds me of Quebec’s stinky Oka. If Quebec’s soft cheeses can compete with Brie and Camembert, why not Cheddar?Because the dispute on the Canadian side is not about food, but politics.That the interests of Laurentian dairy famers are not those of beef producers is shown as clearly as possible in responses to the end of negotiations by the leaders of the two bovine industries.Jacques Lefebvre, CEO of Les Producteurs Laitier du Canada (Dairy Farmers of Canada), was pleased that British dairy products were kept out and helpfully advised the Brits to start negotiating with the EU. The message was clear: the less British cheese in Canada the better. Thank you supply management.Nathan Phinney, president of the Canadian Cattle Association (and a New Brunswicker, not an Albertan), said the Canadian beef industry “is a strong advocate to free and open trade” and needs to deal with countries that share their views, which clearly the British cattlemen did not.British beef producers didn’t want to compete with Western ranchers. Laurentian cheese producers didn’t want to compete with their British counterparts. That much is obvious.There are, however, some additional complexities. Darren Larvin, managing director of Coombe Castle International, a large British cheese exporting firm, said it would have been “nice” if the Brits could still send cheese to Canada “while a sensible agreement is found for both parties.” Instead, negotiations have “come to the end of the road” for reasons that have nothing to do with cheese, he added.He didn’t elaborate, but his meaning was clear: supply management, which benefits Laurentian dairy farmers won the domestic political contest with Western free-market ranchers.More starkly: excluding Western beef from the UK market was, for Canadian negotiators, a small price to pay to exclude British cheese from Canada. Westerners paid the price; Laurentians reaped the benefits.Have we seen this movie before?
