Trump Says Canada Must Stop Protecting Dairy Farmers From U.S. Competition -- Update

By Paul Vieira Features Dow Jones Newswires

President Donald Trump revived his tough talk on the North American Free Trade Agreement Tuesday, warning Canada it must stop protecting its dairy farmers from U.S. competition.

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Mr. Trump previously said he was looking at only "tweaking" parts of Nafta as they pertain to Canada. On Tuesday in Wisconsin, home to more than 1 million dairy cows, his comments about Canadian dairy suggested he might have something bigger in mind.

"In Canada, some very unfair things have happened to our dairy farmers, and others, and we are going to start working on that," Mr. Trump told the crowd in Kenosha in a speech to unveil his executive order that aims to put more teeth into decades-old "Buy American" and "Hire American" directives. "What's happened to you is very, very unfair. It's another typical one-sided deal against the U.S. and it's not going to be happening for long."

At the heart of objections from Mr. Trump, and House Speaker Paul Ryan -- whose home district is in Wisconsin -- is Canada's supply-management system. Under this scheme, prices for dairy products are set based on the average costs of production. Production is controlled through a regulated quota system, and competition is thwarted through tariffs.

"We are going to call Canada and we are going to say, 'What happened?,'" Mr. Trump said. "They might give us an answer but we are going to get the solution, not just the answer, because we know what the solution is."

A representative for Canadian Foreign Minister Chrystia Freeland wasn't immediately available for comment.

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U.S. unease has been brewing for years over the dairy restrictions, and was a stumbling block toward a final deal in the negotiations toward a Trans-Pacific Partnership pact, a 12-nation trade deal of nations around the Pacific including Canada. Mr. Trump campaigned against the agreement and pulled the U.S. out of it on his first working day in office.

Over decades, Canadian governments, regardless of party stripe, have defended the practice, because it remains politically popular because of the large number of small farms in vote-rich parts of the country.

"We will protect and defend it. Canada's supply-management system is a model for the world," Canadian Agriculture Minister Lawrence MacAulay told the country's lawmakers in February during a debate in Parliament.

The Canadian dairy policy has come under criticism at home. The Conference Board of Canada, an Ottawa-based nonpartisan think tank, has estimated the average family spends an additional 280 Canadian dollars (about $209) each year to support the supply-management system, which effectively shuts out competition.

Write to Paul Vieira at paul.vieira@wsj.com

President Donald Trump revived his tough talk on the North American Free Trade Agreement Tuesday, warning Canada it must stop protecting its dairy farmers from U.S. competition.

Mr. Trump previously said he was looking at only "tweaking" parts of Nafta as they pertain to Canada. On Tuesday in Wisconsin, home to more than 1 million dairy cows, his comments about Canadian dairy suggested he might have something bigger in mind.

"In Canada, some very unfair things have happened to our dairy farmers, and others, and we are going to start working on that," Mr. Trump told the crowd in Kenosha in a speech to unveil his executive order that aims to put more teeth into decades-old "Buy American" and "Hire American" directives. "What's happened to you is very, very unfair. It's another typical one-sided deal against the U.S. and it's not going to be happening for long."

At the heart of objections from Mr. Trump, and House Speaker Paul Ryan -- whose home district is in Wisconsin -- is Canada's supply-management system. Under this scheme, prices for dairy products are set based on the average costs of production. Production is controlled through a regulated quota system, and competition is thwarted through tariffs.

"We are going to call Canada and we are going to say, 'What happened?,'" Mr. Trump said. "They might give us an answer but we are going to get the solution, not just the answer, because we know what the solution is."

In a letter issued Tuesday to Wisconsin Gov. Scott Walker and New York Gov. Andrew Cuomo, Canada's chief envoy in Washington, David MacNaughton, said the country "does not accept the contention that Canada's dairy policies are the cause of financial loss for dairy farmers in the U.S." Mr. MacNaughton responded to the two governors because of a letter they sent a letter to Mr. Trump, urging him to address Canada's "protectionist" dairy policies.

Mr. MacNaughton said trade statistics indicate U.S. dairy exports to Canada rose by a robust 17% in 2016, adding Canada has not taken "any broader measures to limit [dairy] imports from the U.S."

U.S. unease has been brewing for years over the dairy restrictions, and was a stumbling block toward a final deal in the negotiations toward a Trans-Pacific Partnership pact, a 12-nation trade deal of nations around the Pacific including Canada. Mr. Trump campaigned against the agreement and pulled the U.S. out of it on his first working day in office.

Over decades, Canadian governments, regardless of party stripe, have defended the practice, because it remains politically popular because of the large number of small farms in vote-rich parts of the country.

Mr. MacNaughton said in his letter to the governors that the Liberal government "supports Canada's supply management system, dairy farmers and the entire Canadian dairy industry."

The Canadian dairy policy has come under criticism at home. The Conference Board of Canada, an Ottawa-based nonpartisan think tank, has estimated the average family spends an additional 280 Canadian dollars (about $209) each year to support the supply-management system, which effectively shuts out competition.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

April 18, 2017 21:14 ET (01:14 GMT)