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Canada's supply management system shields fewer than 20,000 farmers behind a massive tariff wall and forces millions of Canadian consumers to pay inflated prices for milk, cheese, eggs and chicken. (JENNIFER ROBERTS/JENNIFER ROBERTS FOR THE GLOBE AND MAIL)
Canada's supply management system shields fewer than 20,000 farmers behind a massive tariff wall and forces millions of Canadian consumers to pay inflated prices for milk, cheese, eggs and chicken. (JENNIFER ROBERTS/JENNIFER ROBERTS FOR THE GLOBE AND MAIL)

Economy Lab

Japan joining trade talks bad news to Canadian exporters Add to ...

After months of angst and debate, Japan confirmed it’s ready to embrace a nascent Pacific free trade area.



Friday’s decision is a huge boost for the Trans-Pacific Partnership (TPP), which among other things will tackle lingering protectionism in agriculture.



It’s also bad news for Canada, which has been involved in virtually every major global effort to break down trade barriers in recent decades. Not this round.

Canada isn’t welcome at these talks because the Harper government won’t put Canada’s highly protected dairy and poultry sector on the table. The supply management system shields fewer than 20,000 farmers behind a massive tariff wall and forces millions of Canadian consumers to pay inflated prices for milk, cheese, eggs and chicken.



Japan, on the other hand, made the economic calculation that some pain for its rice and wheat farmers is worth the far greater gains that its export-oriented manufacturers can expect. And with the country’s economy stagnating, Japanese Prime Minister Yoshihiko Noda wisely sees trade as a way out.



In the absence of any movement on the Doha round of global free trade talks, the TPP is pretty much the only deal going these days. The talks are tackling many of the thorny problems that have plagued Doha, most notably in agriculture.



With Japan on board, the TPP now includes the United States, Australia, New Zealand, Brunei, Chile, Malaysia, Peru, Singapore and Vietnam.



Canada’s absence isn’t just a matter of lost prestige and influence in the international trade arena. Many of the TPP countries are direct rivals to Canada in this growing part of the world.



For example, once the TPP deal is done, U.S. and Australian beef producers will have a massive advantage over Canada in the lucrative Japanese market. Ditto for pork, perhaps lumber as well.



It is a lose-lose for Canada. We all pay way too much for vital food items at the grocery store. And exporters who generate wealth for Canada are shut out of key markets.



The next time Prime Minister Stephen Harper vows to protect supply management, maybe a few more Canadians will understand they are the ones paying the price of his politically calculated pledge.





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