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1 1 (September 27, 2018)

handle is hein.crs/govcixp0001 and id is 1 raw text is: Researh Sevice Canada's Dairy Supply Management System Updated September 27, 2018 On August 31, 2018, President Donald Trump notified Congress that he intended to sign a new trade agreement with Mexico in 90 days, and with Canada if it is willing. Since then, United States and Canada have been negotiating to bring Canada into the agreement. Both sides have signaled that dairy, and, in particular, Canada's Class 7 milk category, remains one of the toughest obstacles to overcome. As both sides continue negotiations, this product provides a brief overview of how the Canadian government manages its dairy industry supply chains-as well as of the controversy surrounding the Class 7 category. Canada's Supply Management System In Canada, supply management is a government mechanism that provides stability to dairy farmers through production control and minimum support prices for their commercial products. While supply management applies to dairy, chicken and turkey products, table eggs, and broiler hatching eggs, the Canadian dairy system has proved to be one of the most contentious issues in the North American Free Trade Agreement (NAFTA) renegotiations. The system developed primarily at the provincial level in the 1960s to counter price instability, supply uncertainty, and producers' revenue fluctuations. It was implemented nationally in the 1970s. The United States has dairy safety-net programs for its producers, but they do not include a supply management system. This system has long been a source of concern for the U.S. dairy industry. A certain amount of U.S. dairy products receive duty-free tariff treatment in Canada. However, U.S. dairy exporters face entry barriers, mostly in the form of tariff-rate quotas (TRQ), with over-quota tariffs as high as 313.5%, depending on the product. Nevertheless, despite its highly restrictive dairy market, in 2017 Canada remained the second-largest foreign market for U.S. dairy products, after Mexico. That year, Canada bought S750 million worth of U.S. milk, cheese and other dairy products, while Canada exported much less-$189 million-to the United States. In recent years, the United States consistently ran trade surpluses with Canada in dairy, amounting to $561 million in 2017 (Figure I). Without the restrictive TRQs, however, many dairy analysts believe U.S. exports would be higher. Congressional Research Service https://crsreports.congress.gov IN10973 CRS }NStGHT Prepaed for Membeivs and Cornm ittees o4 Corq ess ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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