Wisconsin dairy farmers could benefit from new trade deal with Canada – By Rick Barrett (Milwaukee Journal Sentinel) / Oct 1 2018
The U.S. and Canada have reached a deal to overhaul the North American Free Trade Agreement, with Canada agreeing to eliminate restrictive policies that have hurt Wisconsin dairy farmers.
The two countries will now join Mexico in changing the 1994 accord, which will be renamed the United States-Mexico-Canada Agreement.
As part of the deal, the U.S. is getting expanded access to Canada’s protected dairy market, a contentious issue in the trade talks and one that threatened to shut down dozens of Wisconsin farms.
Canada will ease restrictions on its dairy market and allow American farmers to export about $560 million worth of dairy products. That’s roughly 3.5 percent of Canada’s total $16 billion dairy industry.
In August, President Donald Trump announced a trade agreement with Mexico that calls for zero tariffs on dairy and agricultural products. Mexico also agreed to not restrict market access for commonly named U.S. cheeses, a major point for Wisconsin producers.
“This is a very, very big deal for our farmers. Mexico and Canada will be opened up a lot more than they are now, and I think there will be a better spirit between our three countries, which is important for our farmers,” Trump said Monday in a speech at the White House in which he referenced both trade deals.
Canada will eliminate its Class 7 milk pricing system that had been a thorn in the trade negotiations and had threatened U.S. dairy farms exporting milk to make cheese.
In early 2017, dozens of Wisconsin dairy farms were nearly forced out of business when they lost their milk buyer following a trade dispute with Canada.
Grassland Dairy Products said it would no longer buy milk from those farms because it lost millions of dollars in business when the Canadian dairy industry made it harder for U.S. processors to sell ultra-filtered milk — used to make cheese — in Canada.
Trump promised to settle that fight, and other agricultural skirmishes, in the NAFTA overhaul.
“The agreement will give our farmers and ranchers far greater access to sell American-grown produce in Mexico and in Canada. The deal includes a substantial increase in our farmers’ opportunities to export American wheat, poultry, eggs and dairy, including milk, butter, cheese, yogurt and ice cream,” Trump said Monday.
“Those products were not really being treated fairly as far as those who worked so hard to produce them, and now they’re going to be treated fairly,” he added.
Canadian officials said they weren’t to blame for a slumping American dairy industry.
Instead, they faulted the U.S. for producing too much milk in a global marketplace already flooded with the commodity.
The Grassland crisis in America’s Dairy State was averted in 2017 when all but a couple of the farms that lost their milk buyer found a new home for their product.
Monday, Grassland President Trevor Wuethrich said he welcomed the trade deal with Canada, though he’s a bit leery of pursuing the Canadian dairy market again.
“It’s like your ex-wife calling back and wanting to reconcile. I don’t know if I want to take her back,” he said.
“We are doing good now. We’ve moved on.”
‘Big win’
Wisconsin still has a long-term problem of too much milk, and it won’t be easily solved despite numerous efforts at the state and federal levels.
Still, state officials praised the trade agreement.
“This is a big win for Wisconsin’s dairy farmers. This new deal will open up Canadian markets for our dairy farmers, eliminate certain tariffs, and eliminate Canada’s protectionist trade policies related to ultra-filtered milk that targeted Wisconsin dairy producers,” Gov. Scott Walker said in a statement.
Negotiators for the U.S., Canada and Mexico began talks more than a year ago to replace the 24-year-old NAFTA agreement, which Trump has repeatedly blasted as “the worst deal ever.”
Negotiations between the U.S. and Canada appeared to be hopelessly stalled last week, partly because of U.S. demands for access to Canada’s dairy market.
“Our farmers have gone through a lot. … They’ve been taken advantage of by everybody,” Trump said.
Canada’s dairy supply management system heavily influences pricing, marketing and production. To restrict dairy imports, Canada has relied on import quotas with severe penalty rates of up to 300 percent.
The National Milk Producers Federation, one of the U.S. dairy industry’s largest trade groups, called the trade agreement, which eliminates penalties, “incremental progress.”
“We appreciate that the Trump administration continually raised the profile of our issues at the negotiating table,” said NMPF President Jim Mulhern.
“Keeping Canada in the trade deal is a critical win for our dairy farmers. The partnerships built over the years with Canada and Mexico through NAFTA have been a major part of growth for our businesses,” said Brody Stapel, a dairy farmer from Cedar Grove, and president of Edge Dairy Farmer Cooperative.
Angst in Canada
Dairy Farmers of Canada said it was disappointed in the agreement.
The trade group said it “fails to see how this deal can be good for the 220,000 Canadian families that depend on dairy for their livelihood.”
“This is a bad outcome for dairy farmers and the whole dairy sector. The government has conceded access to our domestic market to the U.S., affecting our ability to produce Canadian milk. By doing so, it is slowly bleeding Canada’s dairy sector,” the group said.
The United States-Mexico-Canada Agreement, which hasn’t received final approval from Congress yet, includes new rules for the movement of products between borders.
Trump said he was pursuing other trade deals, including one with India, where Harley-Davidson motorcycles built in the U.S. face steep tariffs.
“When we send Harley-Davidson motorcycles, and other things to India, they charge very, very high tariffs. I’ve spoken to Prime Minister (Narenda) Modi, and he’s going to reduce them very substantially,” Trump said.
As Harley sets its sights on growing internationally, it faces hurdles including rising tariffs that make its bikes more expensive in some markets as well as pressure from Japanese and European motorcycle manufacturers.
To sidestep tariffs, the company assembles motorcycles in India and Brazil, though it still exports some U.S.-made bikes to those countries.
Harley is opening a factory in Thailand to produce motorcycles for the Asian market — and maybe for the European Union, should the EU continue to impose a 31 percent retaliatory tariff on U.S.-made motorcycles.
Monday, Harley-Davidson declined to answer further questions about the tariffs.
Trump’s trade war with Canada, Mexico, the European Union and China has swept across Wisconsin — with manufacturers and farmers feeling the impact.
Monday, a trade group representing beer makers said it was disappointed that Trump made no mention of lifting the tariffs on foreign steel and aluminum.
The president said those tariffs are necessary to protect the nation’s metal industries, for national security reasons.
But “aluminum used to make beer cans has nothing to do with our nation’s national security, and continuing to impose these tariffs on some of the United States’ closest allies unnecessarily increases costs on our nation’s vibrant beer industry,” Jim McGreevy, president of The Beer Institute, a Washington, D.C. trade group, said in a statement.
“These tariffs are hurting American companies while benefiting foreign-owned aluminum manufacturers. Tariffs are taxes,” McGreevy said.
