WASHINGTON, June 5, 2017 – U.S. Agriculture Secretary Sonny Perdue today said he made it clear to Canada that the Trump administration wants the country to drop key trade barriers to U.S. dairy and wheat.
The discussion between Perdue and Canadian Agriculture Minister Lawrence MacAulay in Toronto was centered around efforts to lay down a framework for the renegotiation of the North American Free Trade Agreement, but the USDA chief said he would like to see the dairy and wheat issues resolved first.
“Well, I’m a sooner-rather-than-later guy,” Perdue told reporters after the meeting. “I would love the negotiations ahead of NAFTA. I think it could set a great tone for NAFTA, both on dairy and wheat."
However, Perdue stressed that Canada may not be willing to give up the protections for Canadian dairy and wheat outside of NAFTA because they could be used as leverage during talks to redo the 23-year-old trade pact between the U.S. Canada and Mexico.
Dairy is likely to be the toughest of the issues to resolve. It was in April that Wisconsin dairies began feeling the impact of Canada’s Class 7 pricing policy, which ensures that the prices of U.S. product – primarily ultra-filtered milk used to make cheese – will always be undercut by domestic Canadian product. As Class 7 was implemented, some U.S. dairies that sell the ultra-filtered product were shut out of Canada and the reaction in the U.S. was swift.
President Donald Trump denounced the policy and pledged to fight it.
And the damage to the U.S. dairy sector is wider than just shutting out some U.S. producers from Canada, Perdue said.
Class 7, he said, is a “very unfair, underhanded circumvention of the WTO” that allows Canadian producers “to over-produce and then to blend-out their high-price milk with low-quality milk solids on the world market.”
That practice, he said, pushes down world prices for milk powder and hurts U.S. producers and exporters.
The U.S. Dairy Export Council sait it is grateful for Perdue’s pressure on Canada.
“We appreciate Secretary’s Purdue attention to the Canadian dairy issue,” said Jaime Castaneda, the group’s senior vice president for trade policy. “It flies in the face of common sense that a country with one of the world’s highest milk prices would be offering a commodity product at levels far below those offered by all other major dairy suppliers, including New Zealand, Australia, Europe and the United States. Canada must eliminate this class immediately to stop hurting US exports around the world as well as into Canada.”
Canada’s prejudicial policy on U.S. wheat imports may be an easier task for U.S. negotiators to tackle, Perdue said.
When the U.S. exports wheat to Canada, it is automatically designated as the lowest quality and lowest price grain.
“Here in the U.S. all wheat, regardless of origin, is graded using identical grading factors,” according to a statement from Gordon Stoner, president of the North America Wheat Growers. “Canada’s discriminatory treatment of imported wheat is taking away opportunities for all American wheat growers, like me.”
It’s an unfair policy that needs to change, Perdue said, but he stressed that he doesn’t believe that maintaining it is a priority for the current Trudeau administration.