Tuesday, October 6, 2015

World's Best Lobbyists

The Trans Pacific Partnership ("TPP") trade deal has been finalized.  Canada's Supply Management ("SM") System for dairy, chicken, turkey, and eggs has dodged the bullet again.

The TPP deal will cover trade with Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and USA; all of which generate 40% of the world's GDP, and have 800 Million consumers (11.4% of the world's population).

Under TPP, Canada's SM industry will give up 3.25% of the Canadian dairy market to additional imports, 2.3% for eggs, 2.1% for chicken, 2.0% for turkey, and 1.5% for hatching eggs.  Truly trivial.

Canada's entire economy is just 3% of the world's economy, so these SM trade shifts disappear as a rounding error.

The government also negotiated the CETA trade agreement with Europe.

The EU says:
"The Comprehensive Economic and Trade Agreement (CETA) is a freshly negotiated EU-Canada treaty. Once applied, it will offer EU firms more and better business opportunities in Canada and support jobs in Europe."
CETA "removes 99% of customs duties & many other obstacles for business"
The EU Summary says:

Canada will eliminate duties for 90.9% of all its agricultural tariff lines upon entry into force of CETA.  After 7 years, the tariffs for 91.7% of agricultural lines will be eliminated.  The remainder are sensitive products, which will either be offered as a TRQ (dairy) or excluded altogether from liberalisation commitments (chicken and turkey meat, eggs and egg products). The Canadian offer on processed agricultural products (PAPs) -for example wines and spirits, soft drinks, confectionery, cereals-based  products like pasta or biscuits, fruit and vegetable preparations is of particular relevance because PAPs are among the main export interests of the EU and further market opening was one of the main EU negotiating objectives.  With all but a very limited number of the Canadian tariff lines for PAPs now to be liberalised, the EU PAPs industry is expected to gain considerably from CETA.
So what about the remaining 1% of goods that will still have custom duties & other obstacles?  My guess is this refers to the SM products of dairy, chicken, turkey, and eggs.  So close to 100% free trade, but SM wins again.

SM gave up virtually nothing for both of these trade deals, but did they get anything in return for this small concession?

Oh, YES!

The Federal Government had a solution for the SM beneficiaries even before they had a TPP deal.  As soon as the TPP deal was announced, the SM benefit package was announced, even though we are supposed to be in a "caretaker" mode due to the Federal election.  Canada's SM compensation package fully protects SM beneficiaries from any impact from both the TPP and CETA deal.

SM gets the following generous gifts from Canada:
  • $2.4 Billion to 100% protect SM farm income for the next 10 years of TPP coming into effect, and partially compensate for the following 5 years, for a total of 15 years of protection.
  • $1.5 Billion to protect the value of SM farmer's quota (the same quota that was given to SM farmers for free)
  • $450 Million for upgrading SM processing plants
  • $15 Million market development fund to develop export markets for SM goods
That's a total of $4.365 Billion to be shared by 17,000 SM farmers, so we calculate an average gift of $257,000 per SM farmer.  SM farmers are just 8% of all Canadian farmers, and 0.05% of Canadian citizens.  In spite of that, they now have guaranteed income and guaranteed investments for the next 15 years.

How many other Canadians have similar guarantees in their jobs or businesses?

The details of these two deals are yet to be released.  Some will be winners, while others will struggle under an increased burden.  Many feel (me included) that these deals will be especially beneficial for the multi-national corporations who have little or no allegiance to Canada or Canadians.  For example, starting from the signing of the Free Trade Agreement in Jan. 1988, then NAFTA in 1994, up until Aug. 2015, Canada's manufacturing sector has lost 503,000 jobs, a 25% loss in this important sector of our economy.  In our agriculture sector for the same time period, Canada has lost 340,658 jobs, which is  36.7% of all the jobs in this important sector of our economy.

My complements to SM's Mafia Dons for finding and hiring the world's best lobbyists to protect their interest by whispering in the ear of all politicians and bureaucrats.

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