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Angry mob goes after the supply management boogeyman

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Free-market think tanks, their ideological friends in the media and Liberal party leadership hopefuls have fixated on supply management as the next big economic boogeyman (after the Wheat Board) to banish from this land. Torches had been lit months ago but the opportunity for the angry mob to finally march against Canada's dairy, egg and poultry farmers came only this week when Prime Minister Harper announced Canada's invitation into U.S.-led Trans-Pacific Partnership trade talks, which include big dairy exporters like Australia, New Zealand and, yes, the United States.

Canada doesn't export much dairy (with exceptions for ice cream and some cheese), chicken or eggs. We produce enough for what we consume and prices are carefully controlled so that farmers in these sectors can make a living off their work and plan production levels accordingly. Imports are controlled, with the European Union holding the majority quota for cheese into Canada. People like European cheese. I'm one of them, and I find the selection at many grocery stores to be pretty good. Consumers pay slightly more for their Canadian milk, butter and cheese than U.S. consumers do, but then everything in Canada is more expensive. A Senate committee is looking into why that's the case.

The reason the U.S. wants to dismantle supply management, with its tariff walls on dairy and chicken imports, is obvious. U.S. producers of these foods are always looking for new markets. With almost all of Canada's population a mere 100 km from the border, we could be drinking a lot more U.S. milk. New Zealand and Australia, as well as the EU, see more of a market for cheese, milk by-products, like powdered milk, and other milk proteins that processed food makers in Canada can use as an alternative to Canadian dairy products, which lets them increase profits. Canada already has a consistent trade deficit in milk products (we imported $418 million more than we exported in 2011, according to Statistics Canada). The TPP would worsen that.

Critics of supply management argue it hurts lower income Canadians most but this is a truism - everything costs more as a percentage of income for lower-income families. The price differential is also not as pronounced as critics claim, and there is no guarantee that producers and retailers would pass the savings on to consumers if we did lose supply management. Once again - everything is more expensive in Canada and those other prices (for cars, books, underwear, etc) are supposed to be based on the market. It's lose-lose. (It's also the case that supply management is not on the shit lists of any of the poverty or development organizations I know of. It is on the hit-list of free-market think tanks like C.D. Howe and the libertarians at the Macdonald-Laurier Institute.)

My favourite argument is that supply management is a barrier to Canada's full participation in TPP talks, as if this is anything to scream about. If we think about the TPP on strictly trade terms, the export potential is tiny. Canada's exports to TPP countries where we don't already have a free trade deal in place (outside the WTO that is) amounts to less than 1 per cent of total exports. So we pick up a few extra jobs in some export sectors. We also stand to lose thousands more in sectors that rely on the domestic market (and domestic protections).

I understand that Canada's agricultural exporters (canola and other grains, pork, beef) are always looking for new markets. I understand why the forest products sector would want tariffs as high as 10 per cent on wood products removed from some TPP countries. I don't understand why we have to throw dairy and chicken farmers under the bus to marginally improve the fortunes of big corporate players in these export sectors... AND change our drug patent regime in a way that increase Big Pharma's profits... AND make the Internet a less free, more corporate place to roam... AND expand the number of countries whose corporations can sue Canada when public policy lowers profits...

And this is why we shouldn't think of the TPP as just about market opening. When we do, we see the gains are miniscule. When we take a look at the other changes Canada will be asked to make to public policies that should be decided after a long, internal public debate, we see a bigger picture emerging -- one that protects mostly large U.S. intellectual property owners.

The Liberal party, traditional supporters of supply management, is splitting in half on this issue. Strategists like Rob Silver (a frequent commentator on CBC's Power and Politics) and former MPs like Findlay have grabbed their pitchforks and torches, rallying perhaps behind colleague and former Liberal deputy prime minister John Manley, now at the Canadian Council of Chief Executives, which rails against protectionism for farmers (but not intellectual property protectionism for brand name pharmaceutical firms or the mega entertainment industry).

Other Liberals including Wayne Easter and Frank Valeriote, who actually come from farming communities, as well as Liberal bloggers like Far and Wide or Impolitical are asking why this one issue has become such a fundamental one for the future of the party. The internal Liberal dispute gives the NDP an opportunity to stand squarely with dairy, poultry and egg farmers in support of supply management. NDP Trade Critic Don Davies appears to be holding firm on that position so far but the pressure will surely mount as Canada eventually joins other TPP countries at the bargaining table and details of the trade-offs emerge.

Harper's ideologically driven murder of the Canadian Wheat Board was already too much to take. Supply management is, in my opinion, another of those important Canadian institutions that strikes a balance between what's best for farmers and producers, on the one hand, and the consumer on the other. It fits somewhere between the kind of policy (or absence of) free-market fundamentalists would want and what pinko commies like myself can imagine. Eliminating balance in favour of the extremes... that doesn't sound like Harper at all, does it?

It doesn't, or didn't sound like the Liberal party until a few days ago.

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