WASHINGTON, April 27, 2017 – Now that U.S. efforts to renegotiate the North American Free Trade Agreement are ramping up, lawmakers are asking President Donald Trump to focus on what they call Canada’s increasingly protectionist dairy policies.
A bipartisan group of 68 House members signed on to a letter to Trump, insisting that a priority in NAFTA negotiations should be demanding that Canada do away with pricing policy that’s blocking some U.S. exports.
“Please stand with us in enforcing current law and opposing Canadian policies that disrupt global milk powder markets and directly hurt American exports,” the House members said in the letter they sent to Trump on Wednesday.
A separate letter from five Democratic senators, including Minority Leader Charles Schumer of New York -- a major dairy state -- is urging newly sworn-in USDA Secretary Sonny Perdue to help out U.S. dairy farmers who have been hurt by Canada’s policies.
“We look forward to working with you to end Canada’s unfair dairy policy," the senators said. “In the meantime, we ask that you act immediately to assist the farmers whose lives have been upended and whose farms are in jeopardy because of the ripple effects of this unfair trade scheme. Without immediate action and support from the Department of Agriculture, many dairy farms may be forced to close within a few weeks.”
Part of that help, the senators said, should come in the form of USDA buying up surplus milk on the U.S. market in order to push up domestic prices for farmers.
USDA agreed twice last year to make emergency purchases of $20 million worth of cheese – once in August and again in October - to bring relief to the industry.
Earlier this month, Wisconsin dairies began seeing the effects of Canada’s Class 7 pricing policy after Canadian buyers began halting imports. Class 7, according to the National Milk Producers Federation, is a scheme that effectively ensures that the prices of U.S. product – primarily ultra-filtered milk used to make cheese – will always be undercut by domestic, Canadian product.
But it’s not just U.S. exports to Canada that will be impacted by Class 7, according to NMPF. The policy also threatens to undercutting U.S. sales of milk powder and other dairy products around the world, the group says.
News of the effects on Wisconsin farmers broke just before a trip to the state by Trump, who sharply criticized the Canadian policy and promised to fight it.
“What's happened to you is very, very unfair,” Trump said in his Wisconsin speech earlier this month. “It's another typical one-sided deal against the United States. And it's not going to be happening for long.”
But the prospects of a NAFTA renegotiation that would address the Canadian dairy schemes are unclear. The farm sector reacted sharply to press reports on Wednesday that the White House was preparing an executive order to pull the U.S. out of NAFTA, but that didn’t last long. Wednesday evening the White House released a statement, saying that Trump had talked to Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau and agreed to start negotiations.
Trump, in the statement said it was his “privilege to bring NAFTA up to date through renegotiation. It is an honor to deal with both President Peña Nieto and Prime Minister Trudeau, and I believe that the end result will make all three countries stronger and better.”
That’s welcome news for the U.S. farm sector. U.S. exports to Mexico of pork, beef, rice, wheat, corn, dairy and other farm goods have skyrocketed over the years thanks to the reduction of tariffs under NAFTA.
While the U.S. dairy farmers are focused on fighting Canadian barriers, industry representatives are also concerned with keeping the gains on trade to Mexico under NAFTA.
“As the U.S. reviews the value of NAFTA, it’s essential that our trade negotiators focus on preserving dairy trade with Mexico and other key markets, while challenging barriers such as Canada’s systematic abuse of trade rules and tools,” NMPF President Jim Mulhern said today.
