June 22, 2012 – In today’s National Post (copied at the end of this post), MLI’s Brian Lee Crowley and Jason Clemens discuss agricultural supply management. Crowley and Clemens say, “Supply management is becoming a painful obstacle to opening international markets for Canadian goods and services, at a time when trade liberalization is a vital part of the government’s economic strategy.” The op-ed was republished in the Calgary Herald, Vancouver Sun, Waterloo Region Record, Guelph Mercury and Windsor Star. It is based on MLI’s recently released collected essays, Milking the System: How Agricultural Supply Management Impedes Trade Opportunities and Egregiously Transfers Income.
In addition to this media coverage, the National Post’s Jonathan Kay writes a column today on “ending the milk tax” where he references MLI’s collected essays on supply management. Specifically, he quotes statistics from the report:
Statistics contained in the Macdonald-Laurier report demonstrate that low income Canadians spend about 20% of their income on food in stores. For upper-income Canadians making more than $80,000 per year, the figure is about 4%. Which means that in proportional terms, the de-facto Dairy Tax is felt five times more acutely by the impoverished Canadians who can least afford to pay it.
Kay adds that the MLI report should “become required reading in Ottawa.” To read his column, click here.
Moreover, the Toronto Star’s Peter Morton quotes MLI’s Brian Lee Crowley in his column on the “Trans-Pacific Partnership: How Canada’s inclusion changes the dynamic at the table“. In the column, Crowley says that the inclusion of Canada – the U.S. largest trading partner – would change the dynamic of the talks on several levels. He adds, “It is better that Canada is with a number of smaller countries than trying to be alone with the U.S..” On ending supply management, Crowley says, “It is too early to predict a 100 per cent demise but the odds seem to be that way and it will be a slow, messy process.”
Finally, the National Post’s Chris Selley references Crowley and Clemens’ op-ed on supply management and says, “It’s a no brainer, do it” when it comes to ending supply management. And if you want to hear more, catch MLI’s Brian Lee Crowley on CTV’s National Affairs today at 4 pm ET or tomorrow morning on CBC’s The House.
Related news: MLI’s Laura Dawson writes about the Trans-Pacific Partnership in the Financial Post today as well.
National Post op-ed by Brian Lee Crowley and Jason Clemens below:
By Brian Lee Crowley and Jason Clemens, National Post, June 22, 2012
Most Canadians do not get particularly exercised about agricultural supply management. To many observers, it seems obscure and abstract. But as recent events at the G-20 Summit in Los Cabos, Mexico demonstrate, the issue has important real-world ramifications for this country.
Supply management is becoming a painful obstacle to opening international markets for Canadian goods and services, at a time when trade liberalization is a vital part of the government’s economic strategy. Moreover, Canada is paying a high price at the trade negotiation table to protect a policy that, in effect, taxes low-income Canadians and transfers the money to a handful of relatively well-off farmers. It’s time for a reset.
What is “supply management”? It is a government scheme to raise agricultural prices and farm incomes by a strictly enforced system of licences and quotas that controls who may produce a handful of important commodities, such as milk, cheese, poultry and eggs, and how much they may produce. High tariffs also are imposed on imports of these commodities. By thus controlling both domestic and foreign supply, supply management increases the price of covered commodities. Thus do we repel potential trade partners who would like to sell those commodities to Canadians at competitive prices.
That’s exactly why Canada agonized in Los Cabos over U.S. president Barack Obama’s invitation to join negotiations for the Trans-Pacific Partnership (TPP). Our system of supply management is not acceptable to many of that trade club’s members; and while we may now be at the negotiating table, we are not in the TPP yet.
Canada is a trading nation, and joining the TPP would give us access to the fastest growing markets in the global economy. The TPP originated in 2005 with Brunei, Singapore, New Zealand and Chile. Australia, Peru, Vietnam, Malaysia, the United States, Japan and others including China may join in due course. It may well be one of the most important trade blocs in the 21st Century.
The sheer size of the countries involved represents a real opportunity for Canada to expand its opportunities for trade. If all the potential members join the TPP, it will represent $35.2-trillion in GDP and 2.7 billion people.
Many observers argue that Canada must open trade opportunities with these countries to diversify our trade and gain greater access to faster growing regions to counter-balance slow growth in the United States and Europe.
Finally, the entry of Mexico and the United States into the TPP would in many ways effectively modernize our now dated NAFTA agreement with those two countries. Canada’s interest in being part of what could well become a super-NAFTA is obvious and overwhelming.
Yet some of our closest friends, particularly New Zealand and Australia, have adamantly opposed Canada’s TPP membership unless we eliminate supply management. This is understandable, given the wrenching reforms these two countries undertook to eliminate similar programs in their own jurisdictions. We may well have to choose between TPP and supply management.
What’s at stake? Forgoing membership in the TPP to protect supply management would endanger broad economic prosperity, including job creation, investment and business development in order to keep a program that benefits just a few farmers.
Do supply management’s domestic benefits outweigh its obstruction of trade?
On the contrary, its domestic costs are high, and are borne disproportionately by low-income Canadians.
The lower a household’s income, the higher the share of their income that goes to food. In fact, lower income households spend nearly a quarter of their income on food compared to middle- and upper-income Canadians, who normally spend 5% to 10% of their income on that category.
Just as supply management disproportionately burdens lower-income families, eliminating it and lowering prices for basic food goods disproportionately benefits lower-income families. They would immediately have more disposable income for other necessities, thus increasing their standard of living.
The emerging realization that supply management also is blocking Canada’s entry into a new trade bloc that could help enrich all Canadians, provides an additional powerful reason — and, one hopes, the political will — to finally reform this obsolete element of Canadian policy.
Brian Lee Crowley and Jason Clemens are the editors of the Macdonald-Laurier Institute’s recently released collected essays, Milking the System: How Agricultural Supply Management Impedes Trade Opportunities and Egregiously Transfers Income. Available at macdonaldlaurier.ca.