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Fuse lit on NAFTA issues

The United States has lit the fuse on one of Canada's most politically explosive trade issues, asking in NAFTA talks for an end to the supply management system for dairy, chicken, eggs and turkey within the next decade.

With that demand, the U.S. has now adopted a highly aggressive posture on virtually all the key issues expected to arise in the current NAFTA talks: it has asked to erect trade barriers in its own politically sensitive sectors, while eliminating them north of the border.

The latest demands come near the end of a week-long round where American negotiators dropped one bombshell demand after another, leading the other countries to question whether the U.S. goal is to actually reach a deal or to blow up NAFTA altogether.

Two sources tell The Canadian Press the request came on Sunday evening, catching some on the Canadian side off-guard, since they hadn't expected the highly contentious issue to arise during the current round.

One source says the supply-management request came with an initial phase-in period of five per cent more market access per year, leading to total duty-free, quota-free trade in supply-managed areas within 10 years.

That adds dairy, poultry, and eggs to a list of irritants that includes auto parts, textiles, trade-enforcement panels, Buy American rules for public works and a proposed five-year termination clause embedded in the agreement, with the countries holding not just different positions, but sitting on opposite sides of gaping differences.

"Outrageous," said Pierre Lampron, president of the Dairy Farmers of Canada, of the latest proposal.

"It would be the end of supply management.... We are not surprised by the U.S. demands, they are in line with the demands they have made in other sectors."

The Canadian government, meanwhile, is calling the idea a non-starter.

Canada's system of protections was born from a 1960s effort to stabilize dairy prices, and was later emulated in other industries. It works by limiting imports and setting fixed prices.

Critics say the tightly controlled program stifles innovation, bars Canadian companies from selling onto international markets, limits choice at the grocery store and saddles Canadian consumers with higher prices.

Defenders of the current system say eliminating it would create new problems — starting with the billions it would cost to buy out existing quotas. They say the status quo provides stability in rural communities, allows farms to survive without boom-bust cycles, and makes taxpayer bailouts unnecessary. 



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