Tasha Kheiriddin: Quebec the fly in the ointment to new U.S. trade deal

Tick, tick, tick. That’s the sound of the timer counting down to Aug. 19, the date on which U.S. President Donald Trump’s 50 per cent tariffs on Canada will kick in. Or not. Already one former Trump advisor is predicting that Trump will TACO (Trump always chickens out), but in the unpredictable world we live in, there’s no guarantee.

Faced with this deadline, the pressure is on Prime Minister Mark Carney to get a deal with the Americans. Businesses and investors are worried. Conservative Leader Pierre Poilievre is demanding action. Dominic LeBlanc, the minister responsible for Canada-U.S. trade, and Janice Charette, our chief trade negotiator, are spending their summer in Washington boardrooms, but there’s still no sense of progress.

As Carney has pointed out, he wants a good deal, not a fast deal. A good deal would presumably mean that Canada doesn’t have to make any major concessions — or at least not ones with major domestic blowback. Like, for instance, giving up supply management.

Canada’s supply management system provides stable income to the country’s 9,000 dairy farms, but at a cost to Canada’s 40-million consumers. Canadian households pay an average of $244 more per year for dairy products, with the burden falling heaviest on low-income families. The system imposes production and import quotas and allows marketing boards to set prices, making it difficult for new dairy producers to compete and limiting product choice. It’s been the bane of economists for decades, with many calling for it to be phased out.

Supply management is also one of Trump’s biggest pet peeves. While the president may not always get his facts straight, it is true that supply management rules discourage selling large quantities of American dairy products in Canada. It’s not clear whether we’d swap Oka cheese for Wisconsin cheddar if these rules were lifted, but Trump voters in that state would probably be very happy.

You would think, then, that supply management would be a concession Canada would be prepared to make, both for its benefit and to help secure a deal. But you would be wrong. The dairy lobby is one of the most powerful in the country. Seventy-four per cent of Canadians say they support supply management to some degree, according to a recent poll. And over a third of Canada’s dairy production comes from Quebec.

Quebec is a political hot spot this year. On Aug. 31, voters will go to the polls in a federal byelection in Chicoutimi—Le Fjord. The riding was Conservative until earlier this summer, when Carney appointed MP Richard Martel to the Senate. The Liberals want to flip the seat and are running Daniel Gobeil, former chair of the Quebec Milk Producers.

After that, Carney will have to call byelections in two other soon-to-be vacant Quebec ridings, Laurier—Sainte-Marie and Rosemont—La Petite-Patrie, both of which his party would like to keep out of the hands of the Bloc Québécois. On top of that, Quebecers will go to the polls in a general election no later than Oct. 5 — a contest in which the separatist Parti Québécois is on track to form a minority government.

Sacrificing supply management to get a trade deal would put wind in the Bloc’s sails and jeopardize Liberal chances in those ridings. It would boost PQ Leader Paul St-Pierre Plamondon, who has promised to hold a referendum if he takes power. With a majority, he could do that, plunging Canada into a state of political and economic uncertainty.

In other words, Carney must weigh the implications of not getting a trade deal if he clings to supply management, against the costs to his party and the country if he does. But as long as Canadians consider him their preferred prime minister, he’s got some breathing room. So expect him to rag the puck on a deal as long as he can, to avoid facing that painful choice.

Postmedia Network

Tasha Kheiriddin is Postmedia’s national politics columnist.