Canada’s dairy processors to lose $100M if USMCA takes effect in July: Plett

Canada’s dairy processors to lose $100M if USMCA takes effect in July: Plett

WASHINGTON — The federal government has betrayed Canada’s dairy processors by allowing the United States to activate the new North American trade deal on July 1 — a month earlier than the industry was expecting, the Opposition leader in the Senate said Tuesday.

Sen. Don Plett warned the country’s 470 processing facilities, an industry that employs more than 24,000 people and contributes $18 billion annually to the Canadian economy, stand to lose upwards of $100 million if the U.S.-Mexico-Canada Agreement takes effect as scheduled.

That’s because the dairy industry’s “quota year” for a number of key products begins in August, and many of the terms of the agreement are tied directly to the production calendar. Enacting the deal in July would mean that Year 1 — a 12-month period the industry was counting on to adjust to the new landscape — only lasts 31 days.

“We’re not talking small adjustments,” said Mathieu Frigon, president and CEO of the Dairy Processors Association of Canada.

“We’re talking adjustment to products, portfolios — the product mix of my members, so that means that requires often plants retooling, new products, you have to find a new market. Now we’re left to do all of this basically within 30 days.”

The new USMCA opens up to U.S. producers some 3.6 per cent of a Canadian dairy market that had previously been exclusively available to domestic producers — a change that some producers have predicted will carve a $240-million chunk off the industry’s bottom line.

It also requires the elimination of a pricing system that restricted American imports of certain products, including skim milk powder, milk protein isolates and infant formula, while at the same time restricting Canada’s ability to export those same products into the U.S. market.

Adding insult to injury, Frigon added, is that all of this comes at a time when both processors and dairy producers are already feeling the brunt of the impact from the COVID-19 pandemic.

“It has a multiplier effect, you know, in the current business environment.”

In exchange for agreeing to fast-track the government’s implementation bill last month, with COVID-19 bearing down on North America, Plett said Conservatives in the Senate received a “guarantee” from the governing Liberals that the USMCA, which is also known as CUSMA north of the border, would not go into effect before August.

But late last week, U.S. Trade Representative Robert Lighthizer served notice to Canada, Mexico and Congress that all three parties to the deal had finished their necessary domestic housekeeping, starting a clock that makes the deal the law of the land on the first day of the third month after the final country provides notice that its internal processes are complete.

By giving its own notice on April 2, Canada gave the U.S. the power to decide when the agreement would take effect, Plett said.

“The government’s latest decision to move ahead with CUSMA on the backs of our dairy processors in the middle of a global pandemic is completely inexcusable,” he said in a statement.

“How can Canadians trust that the government is doing everything it can to protect and defend the Canadian economy when they are willing to give up on one of the founding industries in our country?”

Plett called the change in timing, particularly in the throes of the pandemic, a betrayal of the Canadian dairy industry. And he suggested that tensions between Ottawa and Donald Trump’s White House forced the government to make concessions.

“One has to wonder if the government was forced into this weakened position with our biggest trading partner as a result of the prime minister’s overall mismanagement of this crisis, and his strained relationship with the Trump administration.”

In a statement late Tuesday, the office of Deputy Prime Minister Chrystia Freeland defended the government’s handling of the agreement, reiterated a promise to compensate the dairy sector and denied Plett’s claim that the government ever promised a specific timeline for the deal taking effect.

“Amid the COVID-19 pandemic, it is essential that we preserve and position our economy for the recovery — including our essential and privileged access to the U.S. market. We preserved and protected supply management in the face of U.S. demands to fully dismantle it,” said Katherine Cuplinskas, Freeland’s press secretary.

“Any assertion that there was a guaranteed entry-into-force date is incorrect; the agreement states it will enter into force on the first day of the third month after all three countries ratify it.”

Dan Ujczo, a lawyer who specializes in Canada-U.S. trade issues at the firm Dickinson Wright in Columbus, Ohio, pointed out that the federal government bought Canada an extra month of time by waiting until early April to serve notice to the U.S. and Mexico, making it impossible to meet Lighthizer’s own preferred timetable of June 1.

“I thought Canada actually played it masterfully by issuing its certification on April 2, because that addressed the issue of making sure it was July 1, not June 1 … and combated USTR concerns that Canada was dragging its feet,” Ujczo said.

“I think Canada had always kind of indicated that it was going to push this as far as it could, but I don’t think there was ever a direct commitment that Aug. 1 will be the date. I think it was more, ‘We’ll give it the old college try.’”

While dairy producers are obviously a vital component of the industry, the processing side of the equation is often overlooked — and continues to be, Frigon said.

“As I always say, a viable, sustainable supply management system needs both a viable farming sector, and a processing sector. And we often forget about the latter part, and that’s really unfortunate.”

This report by The Canadian Press was first published April 28, 2020.

— Follow James McCarten on Twitter @CdnPressStyle

James McCarten , The Canadian Press

Dairy Farmers

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta has 3,651 active cases of COVID-19. (File photo)
432 new COVID cases sets another record Friday

Central zone holds steady at 126 active cases

The future site of the Rimbey Travel Centre. Web photo
New Rimbey development aims to capitalize on highway traffic

Phase I of the Rimbey Travel Centre would be along Hwy. 20, if approved

"We are looking seriously at the spread and determining what our next steps should be," says Alberta’s chief medical officer of health, Dr. Deena Hinshaw, as the daily number of COVID-19 cases continues to climb.
427 new COVID cases is highest in Alberta ever

Central zone has 126 active cases of COVID-19

soup
Rimbey FCSS to introduce the Cultural Community Kitchen

The Cultural Community Kitchen sessions will be held at the Rimbey Co-op

robbery
UPDATE: Shooting suspect arrested by Wetaskiwin/Camrose RCMP

Rimbey RCMP had responded to a complaint of an armed robbery at the Bluffton City General Store

B.C. Liberal leader Andrew Wilkinson, B.C. NDP leader John Horgan and B.C. Greens leader Sonia Furstenau. (Black Press Media)
VIDEO: One day until B.C. voters go to the polls in snap election defined by pandemic

NDP Leader John Horgan’s decision to call an election comes more than a year ahead of schedule and during a pandemic

Ryen Williams, 11, with a lost miniature horse at JJ Collett Oct. 23. Photo by Don Williams
UPDATE: Owners found

Father and son found him while out for a walk at JJ Collett

A Le Chateau retail store is shown in Montreal on Wednesday July 13, 2016. Le Chateau Inc. says it is seeking court protection from creditors under the Companies’ Creditors Arrangement Act to allow it to liquidate its assets and wind down its operations.THE CANADIAN PRESS/Ryan Remiorz
Clothing retailer Le Chateau plans to close its doors, files for CCAA protection

Le Chateau said it intends to remain fully operational as it liquidates its 123 stores

U.S. border officers at the Peace Arch crossing arrested two men on California warrants this week. (File photo)
Ottawa predicts system delays, backlogs unless court extends life of refugee pact

Canada and the United States recognize each other as safe places to seek protection

Conservative member of Parliament Michelle Rempel Garner, left to right, Conservative Leader Erin O’Toole and Conservative Deputy Leader Candice Bergen arrive to hold a press conference in Ottawa on Thursday, Oct. 22, 2020. THE CANADIAN PRESS/Sean Kilpatrick
No-confidence showdown over sweeping Tory motion on government handling of pandemic

The Conservative motion is to be put to a vote Monday and has the support of both the Bloc Québécois and NDP

From l-r., first lady Melania Trump, President Donald Trump, moderator Kristen Welker of NBC News, Democratic presidential candidate former Vice President Joe Biden and his wife Jill Biden on stage at the conclusion of the second and final presidential debate Thursday, Oct. 22, 2020, at Belmont University in Nashville, Tenn. (AP Photo/Patrick Semansky)
Trump, Biden fight over the raging virus, climate and race

Republican president declared the virus, which killed more than 1,000 Americans on Thursday alone, will “go away.”

JJ Collett Natural Area Foundation held its AGM on Oct. 19 at the Ponoka Legion. (Emily Jaycox/Ponoka News)
De-listing Alberta parks creates ‘risk’ for coal mining: CPAWS

Canadian Parks and Wilderness Society speaks at JJ Collett AGM

COVID-19. (Image courtesy CDC)
Temporary COVID-19 testing sites coming to Wetaskiwin and Ponoka

The Wetaskiwin location will open Oct. 23, 2020 and the Ponoka location will open Oct. 29.

ACC President and CEO Ken Kobly spoke to Ponoka Chamber of Commerce members over Zoom on Oct. 20. (Image: screenshot)
Alberta chambers are ‘411’ to members, government: ACC president

Changes to government supports, second wave and snap election

Most Read