07/13/2015 01:11 EDT | Updated 07/13/2015 03:59 EDT

Obama Urged To Toss Canada Out Of TPP Trade Talks Over Dairy Supply Management: Reports


U.S. politicians are pressuring the Obama administration to leave Canada out of a major and controversial trade deal, if Canada doesn't agree to deregulate its dairy and poultry industries and open them up to foreign competition.

Reuters news service cites “two sources” close to the issue as saying the U.S. may go forward with the Trans-Pacific Partnership (TPP) without Canada if the Harper government refuses to dismantle the supply management system that governs the country’s dairy.

Canada is under pressure from places as far away as Australia to open up the dairy industry to foreign competition, and closer to home from Washington politicians who urged U.S. Trade Representative Michael Froman to move forward on the TPP without Canada unless a "serious offer" is made on dairy and poultry, the Wall Street Journal reports.

The Harper government has broken up supply management systems before, dismantling the Canadian Wheat Board in the years after winning a majority government in 2011, but it has been reluctant to do the same with the dairy industry. A spokesperson for Trade Minister Ed Fast last month said Canada would defend dairy supply management in negotiations.

Some observers say the Conservatives are loath to upset dairy farmers ahead of this year’s federal election. Fast suggested Friday that making the dispute public is a U.S. strategy that Canada won’t follow.

“I think the Americans prefer to negotiate this agreement through the media,” he told the Globe and Mail. “That is something we will not do. It is not in Canada’s interest to do so.”

Canada is negotiating the TPP with 11 other countries, including the U.S., Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The countries represent an economy with 800 million people and a GDP of more than $28 trillion.

Following the Obama administration’s securing of fast-track authority for the TPP last month, negotiators are optimistic a deal can be reached soon, after years of delays. The next round of negotiations is to take place in Hawaii this month.

But as talks head to the finish line, Canada has found itself at odds with negotiating partners over some of its protectionist practices. Besides dairy, lumber is a sticking point in the negotiations as well, with Japan pressuring Canada to remove export controls on B.C. forestry products.

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