The deal has created new duty-free quotas for US chicken and turkey producers, chipping away at the Canadian tariff protection that underpins its supply management system.
And while, speaking in Ottawa, Canada’s Prime Minister Justin Trudeau, said yesterday (1 October) that supply management (which involves price setting and domestic production quotas) would remain for Canadian poultry, the US has scored real advances for its exporters.
Under the deal, which upon ratification will replace the 1994 North American Free Trade Agreement (NAFTA), a new duty-free chicken import quota will be created in Canada for American products – until now there has been a low duty quota. Under the first year of the agreement’s implementation, this will be for 47,000 tonnes; in year two, 49,000 tonnes; the third year 51,000 tonnes; the fourth 53,000 tonnes; then 55,000 tonnes in the fifth year and 57,000 tonnes in the sixth year. From that year onwards, the quota will increase by a compound annual growth rate of 1% for the next 10 years.
The products covered by these quotas include: live chickens; whole chicken; cuts and offal; poultry fat; sausages; plus prepared or preserved chicken meat and liver. Imports above these quantities will still attract Canadian duties.
While this does mean Canada’s chicken sector is giving up additional access, Benoît Fontaine, chair of Chicken Farmers of Canada, said his members “are relieved that over a year of uncertainty over the future of the agricultural landscape in Canada is over”, with the striking of the deal. He added that he would “look forward to working with the government of Canada… to implement changes that are in the best interest of Canada’s chicken farmers".
That will undoubtedly include some subsidies, with Canadian foreign affairs minister Chrystia Freeland saying yesterday that producers would be “fully compensated” for losses arising from the deal.
She added: “We want to be sure that the compensation is carefully thought through. We have begun that process.”
The chicken quota system is a change from the past NAFTA deal, where access was linked to Canadian domestic production levels – a system retained for access to Canada’s turkey market.
Here, too, there were gains for American exporters: the new quota will be duty-free rather than low duty; and the size of the quota will add an additional 1,000 tonnes to the existing quota of 3.5% of the previous year’s total Canadian turkey production.
Claiming the deal was a success, Trudeau declared: “We have protected supply management.”
US President Donald Trump was equally positive about the agreement’s impact in his country: “This is a big deal for our farmers.”