Loosen grip on dairy sector to help NAFTA talks, New York Republican says

The pressure on the Liberals to loosen protections around Canada's dairy sector took new focus on Sunday as the key stumbling block in North American Free Trade Agreement talks came under scrutiny and spin on political talk shows on both sides of the border.

A member of an influential Congressional panel — and a Donald Trump supporter — said in a Canadian interview that providing American dairy farmers with more access to the Canadian market may appease the president.

To the south, Trump's agriculture secretary suggested deeper concessions would be coming from the Canadians over Canada's system of managing supply and prices in the dairy sector.

Republican Tom Reed, a member of the House ways and means committee, said Trump doesn't necessarily want the Liberals to get rid of the system, but simply to remove what the Americans see as trade barriers.

"Many have seen this market over the last few decades, from an American point of view, as just being off the table," Reed said in an interview with Global's "The West Block" that aired Sunday morning.

"We're just interested in breaking those barriers and having a solid relationship with our partners to the north."

The politically thorny issue remains an obstacle in NAFTA negotiations as discussions drag on without an agreement after 13 months of talks, started at Trump's behest.

How negotiations play out will determine the fate of numerous jobs and hundreds of billions in trade between the two nations.

Canada and the U.S. are trying to finalize a text that could be submitted to Congress by the end of the month to join the deal the Trump administration signed with Mexico.

Also unresolved are protections to Canada's cultural sector and the Chapter 19 dispute resolution mechanism.

Dairy has been singled out as a key hurdle, including on Friday when Larry Kudlow, a senior economic adviser to Trump, said in a Fox Business Network interview that what "continues to block the deal is m-i-l-k."

When asked about Kudlow's comments, Foreign Affairs Minister Chrystia Freeland said bluntly: "He's not at the negotiating table."

"We're looking for a deal which is good for Canadians, which is good for Canadian workers, which is good for Canadian families (and) good for Canadian farmers," Freeland said on "The West Block."

Canada expanded foreign access to its dairy sector in trade deals with the European Union and with 10 Pacific Rim countries. The Pacific trade pact provided those countries with access to 3.25 per cent of Canada's market, and expectations are the U.S. won't go any lower.

U.S. Agriculture Secretary Sonny Perdue said he expected Canada to also scrap a two-year-old pricing agreement that has restricted U.S. exports of ultra-filtered milk used to make dairy products.

"Our farmers don't have access to the Canadian markets the way that they have access to us," Perdue said in an interview that aired Sunday on C-SPAN.

"If they want to manage the supply, we are simply saying manage your supply for your dairy industry and let's be done with it."

Canada's dairy farmers believe they've already given enough to foreign producers in previous trade deals and aren't interested in ceding any more ground.

Former Quebec premier Jean Charest said on CTV's "Question Period" any decisions the Liberals make now will have ramifications in the 2019 federal election, particularly in vote-rich Ontario and Quebec.

"For this government to go out and be seen as giving too much to the American side on agriculture, and dairy in particular, would be ... almost suicidal politically," Charest said.

Trump is threatening to move ahead on a deal without Canada.

He is also looking for a political win ahead of November's midterm elections where members of Congress in border states, like Reed, are looking to retain their seats and calm the nerves of businesses whose biggest export customer is Canada.

The hope is for a trilateral agreement in principle that Congress can approve before Mexico's new president takes office on Dec. 1.

— With files from Mike Blanchfield