Ending supply management: An opportunity for Canada
Montreal, October 16, 2017 – While the United States is calling for the dismantlement of our supply management system for dairy, poultry, and eggs within 10 years, the MEI invites the Canadian government to seize this opportunity to ask for full access to other markets in return.
“We cannot on the one hand defend the maintenance of tariffs of up to 300% on supply managed products, and on the other accuse the American government of being protectionist,” points out Alexandre Moreau, Public Policy Analyst at the MEI. “However, the Canadian government must make sure that the Americans also abolish their own support measures for the dairy industry, and of course we must also promise to fairly compensate farmers for the value of their quotas.”
In the current context of the renegotiation of NAFTA, the abolition of supply management would allow Canada to promote its interests in the automotive and softwood lumber sectors, where negotiations seem to be advancing with difficulty.
Supply management protects 13,500 Canadian dairy, poultry, and egg producers from foreign competition, but this represents just 8% of all farms in the country, whereas the system hurts the 35 million Canadian consumers who have to pay more for these products.
“Supply management has a disproportionate effect on the poorest Canadian families by forcing them to pay $339 more per year for food,” adds Mr. Moreau. “These measures are heavily regressive, since they hurt poor families five times more than they hurt wealthy families, relative to their income.”
Consumers are not the only losers in the current situation. Supply management also deprives Canadian farmers of access to billions of consumers around the world. Moreover, the expenditures required to purchase quotas limits their ability to invest to increase the productivity of their farms, and makes it difficult for young farmers to enter the market.
“The fact that the United States wants an end to supply management must not be seen as an attack to which we have to respond with more protectionism. On the contrary, it is an opportunity for Canada to create a level playing field for all, by eliminating trade irritants on both sides of the border for the largest possible number of industries. And by fairly compensating farmers, it is possible to get there, and to do so in a way that benefits everyone,” concludes Michel Kelly-Gagnon, President and CEO of the MEI.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
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