Groups representing supply-managed industries, such as dairy, applauded the passage of Bill C-202 this week.Christinne Muschi/The Canadian Press
A new law will hamstring the federal government from making concessions during trade negotiations that affect agricultural supply management, a well-known irritant with trading partners like the United States.
The Bloc Québécois’s Bill C-202 introduced three weeks ago swiftly passed in both the House of Commons and Senate, and now awaits royal assent.
It was the Bloc’s second attempt to enshrine protection for supply-managed industries into law after the federal government gave up more access to the dairy market during trade negotiations with the United States during President Donald Trump’s first term. (The federal government compensated dairy farmers for that concession.)
Now, as Prime Minister Mark Carney strives to reach a trade and security deal with Mr. Trump within a few weeks, Canadian lawmakers have attempted to remove supply management from the table during those talks.
Bill Robson, the head of the C.D. Howe Institute, called the legislation “appalling” and lambasted the timing of its passage.
“It would have been bad legislation at any time. But it clearly waves a red flag in President Trump’s face, and we know how he reacts to red flags, particularly in this case, because the U.S. grievances are entirely legitimate,” Mr. Robson said.
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Mr. Trump has repeatedly complained about the steep tariffs Canada imposes on dairy imports that exceed a certain quota level, arguing that the protectionist system disadvantages American farmers.
Canada’s supply management system controls the production of eggs, dairy and poultry by having provincial boards responsible set quotas for farmers and prices for supply-managed goods.
The federal government also protects those farmers from foreign competition by imposing tariffs as high as 300 per cent on imports beyond an exempted level.
The agricultural policy has enjoyed support from across the political spectrum, a phenomenon that many critics attribute to the strength of lobby groups representing supply-managed industries.
Mr. Trump’s attacks on Canada appear to have pushed federal parties to double down on that support, with all of them vowing to protect it during the federal election campaign. The government’s Throne Speech even made an explicit commitment to safeguard the system.
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Lobby groups representing supply-managed industries, including Dairy Farmers of Canada and Egg Farmers of Canada, applauded the passage of Bill C-202 this week.
“Our shared priority remains to work with all MPs and Senators as they continue to support Canadian agriculture and prioritize our national food sovereignty and security by keeping supply management and any other concessions impacting our sectors off the table,” they said in a statement on Thursday.
The trading relationship with the United States is not the only one that has been strained by supply management. Trade negotiations with Britain fell apart last year in part over access to the Canadian cheese market.
Mr. Robson noted that in addition to hindering international trade, supply management also serves as an interprovincial trade barrier.
“It’s doubly unfortunate because we are trying to make our internal economy more unified, and supply management completely fragments the internal market as well,” he said.
Economists are widely critical of supply management for its effect on consumers as well, with research suggesting that the system raises food prices.
Meanwhile, proponents of supply management say it ensures stable supply and fair prices for both consumers and producers. The U.S. becoming an unreliable trading partner has only reinforced support for that system.
But Mr. Robson said it will be a “very serious blow” to Canada if it’s unable to get around the soon-to-be-law during negotiations with the United States. He said he hopes the government will still be willing to make concessions on supply management by including a clause in future legislation that allows a trade deal to supersede Bill C-202.
“Let’s just start thinking about what the clause in the future trade bills is going to be, that’ll avoid the requirement in this legislation, because we’re obviously going to be stuck with this particular act for a while,” he said.