On October 5th, the
government of Canada announced that the members of the Trans
Pacific Partnership (TPP) had successfully concluded
The TPP lowers or removes tariffs on a
significant number of commodities and improves market access of
Canada's good to markets such as Japan, Malaysia, Singapore,
While the full details of the
Trans-Pacific Partnership have yet to be revealed, it appears that
the three pillars of supply management (price setting; production
control; and import control) remain secure.
Canada agreed to permit limited new
access to foreign suppliers of milk, eggs, chickens and turkeys
which is to be phased in over a five year period. The amount of new
access permitted is calculated as a percentage of Canada's
current production. The following levels of imports will now be
permitted: Imports of dairy products up to 3.25 percent; imports of
eggs up to 2.3 percent; imports of chickens up to 2.1 percent;
imports of turkey up to 2 percent; and imports of broiler hatching
eggs up to 1.5 percent. Fluid milk is included in the increased
market access, however, 85 percent must be directed to Canadian
Furthermore, the government has
announced new programs to compensate producers and processors for
the new market access. The Income Guarantee Program, valued at $2.4
billion over 15 years, will provide income protection to producers.
The Quota Value Guarantee Program, valued at $1.5 billion over 10
years, will protect producers against reduction in quota value when
the quota is sold. The Processor Modernization Program, valued at
$450 million, will provide assistance to processor modernization
efforts. Finally, the Market Development Initiative, valued at $15
million, will provide assistance to supply-managed industries in
marketing and promotion activities.
Preceding the announcement, there was
much speculation regarding the impact that the TPP would have on
Canada's supply management program. In late summer, it was
reported that Canadian negotiators offered concessions in which
Canada would permit a greater amount of tariff-free imports of
fluid milk, butter, and cheese. Some commentators observed that the
U.S. and New Zealand would continue to push for greater market
access and that the days of supply management may be numbered.
However, it appears that those predictions were inaccurate. While
the increased market access for foreign suppliers has weakened
supply management to some extent, for the near term supply
management remains largely intact.
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