October 5, 2015 / 1:36 PM / 4 years ago

Canada says Pacific trade deal offers limited access to dairy market

OTTAWA (Reuters) - Canada said on Monday that a major trade deal agreed by 12 Pacific nations would only allow limited access to protected Canadian domestic dairy and poultry markets, a politically sensitive issue ahead of the Oct. 19 election.

Officials said the Trans-Pacific Partnership (TPP) would offer up just 3.25 percent of the Canadian dairy market and around 2 percent of the poultry market over five years.

Farmers said during the negotiations they could be crippled if Canada gave up too much of its supply management system, which imposes strict production quotas and export tariffs to keep domestic dairy and poultry prices high.

Canada’s ruling Conservatives, locked in a tight election race, rely heavily on the rural vote. The main opposition New Democrats say if they form the next government, they will not feel bound by the terms of TPP.

Ottawa will also make available a total of C$4.3 billion ($3.28 billion) over 15 years to compensate dairy and poultry farmers for losses they might suffer under TPP and an earlier free trade deal negotiated with the European Union.

“Despite significant and broad demands from several of our TPP negotiating partners, Canada has only offered limited new access for supply-managed products,” the Canadian government said in a statement.

Canada’s International Trade Minister Ed Fast said TPP preserves the main pillars of the supply-managed system, namely controls over imports, prices and supply.

The deal will mean lost revenue, Dairy Farmers of Canada said in a statement. But the politically influential group said losses are mitigated by a “fair compensation package.”

“We have come a long way from the threat of eliminating supply management,” Dairy Farmers President Wally Smith said.

The deal is popular with farmers who sell beef, pork, wheat and canola on the open market to countries such as Japan.

“Canada simply could not have afforded to have been left out of this agreement,” said Cam Dahl, president of Cereals Canada.

Another area of contention is rules of origin for autos sold in Canada. Under TPP, the total cost of a vehicle sold in Canada must contain 45 percent of content from TPP nations.

Canada, along with Mexico and the United States, is a member of the North American Free Trade Agreement. The equivalent NAFTA rule of origin for cars sold in Canada is 62.5 percent.

Reporting by David Ljunggren in Ottawa; additional reporting by Rod Nickel in Winnipeg; Editing by Meredith Mazzilli

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