Lawrence Herman is an international lawyer with Herman & Associates and a senior fellow at the C.D. Howe Institute in Toronto.
Bill C-282 is a terrible piece of legislation. Yet it sailed through the House of Commons and is now in the Senate, the last hope for bringing some sanity to the matter.
Indications are that key senators, including Senator Peter Boehm, chair of the Senate Foreign Affairs and International Trade Committee, have serious problems with the Bill.
The Bill amends the Department of Foreign Affairs, Trade and Development Act to insert a provision that prohibits the government from concluding any trade agreement that would increase foreign access to Canada’s supply managed agriculture sector.
This is an unprecedented effort that further protects the dairy, poultry and egg producers from foreign import competition. But putting on these constraints seriously weakens Canada’s trade negotiating capacity, unlike anything we have seen before.
It means Canada comes to the negotiating table demanding that a specially favoured part of the agriculture sector is off limits. In the back and forth of offers and compromises that are part of trade negotiations, Canada will have to sacrifice positions in other areas in return for perpetuating supply-managed protectionism.
Bill C-282 was a private member’s bill, introduced in the House of Commons by Luc Thériault, the Bloc MP from Montcalm, Quebec. It has gone surprisingly far for such private members’ bills, which usually don’t go anywhere. After going through the committee stage, the Bill was reported out last May and adopted by the House – without change – at third reading on June 21, 2023, getting 262 yay and 51 nay votes, with most Conservative MPs voting against the Bill.
What is of interest, though, is how the votes broke down. A handful of Conservatives from Eastern Canada who actually supported the measure were in ridings with dairy farms. Almost every Western Canadian Conservative, on the other hand, voted against the Bill.
That is because Western Canada has few dairy producers but is dominated by the cattle industry, a sector that functions on the open market, unprotected by guarantees of price and market share, putting Western agricultural producers at odds with the protected dairy industry in Eastern Canada.
Bill C-282 shows how lobbyists for the supply managed industry, already the beneficiary of a Soviet style system, exercise undue influence over Canadian trade policy. It is one thing for interest groups to lobby the government to continue or change policy measures. Many groups do this on many different levels.
But getting an amendment inserted in the Foreign Affairs Department Act that actually prohibits Canada from agreeing to increasing foreign access to these protected sectors in future trade deals, no matter how modest, is without precedent.
Some might say C-282 is not problematic because Canada has already concluded major free-trade agreements with its most important trading partners, such as the United States, Europe and Asia-Pacific countries. Fair enough. But there are other trading partners where Canada has yet to conclude an agreement, most notably Britain, an important exporter of cheese products. If C-282 enters into force, it means Canadian negotiators will be hamstrung in negotiations with the Brits, throwing a monkey wrench into the exercise.
There is a much more critical issue when it comes to the U.S. Even though the Canada-U.S.-Mexico Agreement (CUSMA) includes a modest degree of dairy access for American exporters, U.S. exporters remain unhappy with this. It can be expected that the U.S. will push for increased dairy access when the CUSMA comes up for review in 2026.
Bill C-282 means Canada will be telling the Americans to go fly a kite when the teams sit down across the table a couple of years from now. It is not a good omen for these talks.
There is also a much broader trade policy issue in all of this. Bill C-282 reflects the power of dairy industry lobbyists in getting legislation passed that adds even more import protection for this highly protected sector. This in a Canadian market where milk consumption has declined in recent years, hitting a new low in 2022 of around 58.2 litres per capita, a decrease of over ten litres per capita since 2015. It means Canada is going to the wall to safeguard a shrinking domestic market.
But more significantly, by trying to keep supply management sacrosanct, Canadian producers are unable under our trade agreements to export their products, missing out on a huge and expanding international market. Look at the case of New Zealand, a fraction of the size of Canada, who has become a major global player.
In 30 years, New Zealand dairy exports have grown from just over $1.6-billion per year to almost $20-billion in 2022. In comparison, Canada dairy exports were a mere $500-million in all categories.
What all this shows is, thanks to political influence, Canadian agricultural trade policy is way off course, another example of poor strategic thinking, staying small instead of looking expansively to global opportunities.