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By refusing to put diary on the TPP table, the PM is putting Canadians second. (Cole Burston For The Globe and Mail)
By refusing to put diary on the TPP table, the PM is putting Canadians second. (Cole Burston For The Globe and Mail)

Harper’s game risks losing billions in trade from Trans-Pacific Partnership Add to ...

Stephen Harper was in high spirits when the U.S. and the other members of the Trans-Pacific Partnership invited Canada to join the trade deal in mid-2012.

“This is a further example of our determination to diversify our exports and to create jobs, growth and long-term prosperity for Canadian families,” the Prime Minister said at the Group of 20 summit in Mexico.

Now, as the TPP talks grind toward a possible agreement this year, it’s not at all clear that Canada really wants in on the biggest trade deal going.

It all hinges on supply management, the protectionist regime that tightly regulates prices and production of dairy, poultry and eggs in Canada.

Canada has been going through the motions of negotiating, waiting in the shadows as other countries, such as Japan, deal away pieces of their own protected markets to get a deal.

Canada’s top negotiator, Kirsten Hillman, is slated to meet her TPP counterparts again next week in Hawaii, a prelude to a pivotal meeting of trade ministers set for mid-April.

But Canada is far from fully engaged in these talks. It’s not showing much evidence of Mr. Harper’s “determination” to get the best deal for exporters.

Instead, Mr. Harper has put Ms. Hillman in an impossible spot. The basic principle of the TPP is that everything is on the table, sensitive or not. And yet, for Mr. Harper, supply management has become non-negotiable, regardless of what this intransigence may cost other sectors of the Canadian economy.

Mr. Harper is apparently making the calculation that Japan will ultimately give little, providing cover for Canada to continue protecting its fewer than 15,000 dairy and poultry farmers.

The United States has been trying to drag Canada out into the open for months. Now its frustration is boiling over. Chief U.S. agricultural negotiator Darci Vetter has joined a growing list of officials in publicly chastising Canada’s stance.

“Canada was aware when they joined that we expected them to provide full market access, and that a condition of them participating was to put dairy, poultry and eggs on the table,” Ms. Vetter said last month. “We expect them to do so.”

It’s not just a case of the United States – the driving force behind the TPP – acting like a trade bully. No country gets what it wants in a trade negotiation unless it’s also willing to give something away.

And there are significant gains Canada would like, including expanded access to the massive government procurement market in the United States, particularly at the state and local level. That would help stop protectionist Buy America rules from automatically extending to federally funded state and local infrastructure projects.

Reforming supply management could also open up now off-limits export opportunities for Canadian dairy and poultry, particularly in Asia, not to mention lowering food costs at home.

U.S. Agriculture Secretary Tom Vilsack says Canada’s refusal to negotiate until every other country has finished wheeling and dealing is “unfortunate.”

“It is not necessarily conducive to getting an agreement if you’re unwilling to put serious proposals on the table … until everyone else has finished their negotiations,” Mr. Vilsack complained recently.

Rudy Husny, a spokesman for Canadian Trade Minister Ed Fast, dismissed the U.S. characterization, insisting that Canada remains a “committed and constructive” TPP partner. He added that the government would continue to “promote and defend Canada’s interests.”

The risk, however, is that Canada becomes increasingly isolated. What Mr. Harper may have seen as a clever game of hide-and-seek could prove counterproductive.

Canada could be forced to walk away from the TPP. And if the broader agreement falters, the United States and others will be quick to blame Canada, undermining the country’s reputation in future trade negotiations.

But the real tragedy here is that Mr. Harper is willing to sacrifice billions of dollars in potential economic gains because it’s an inconvenient political moment to undertake a fundamental reform of Canadian agricultural policies.

It’s not that the Conservative government is ideologically wedded to supply management. Quite the opposite. Privately, many Conservatives say they would throw Quebec and Ontario dairy farmers overboard by dismantling provincial barriers and opening the sector to more foreign competition.

A question Canadians might ask is why Mr. Harper would trade away the interests of 34 million Canadians to protect fewer than 15,000 farmers?

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