Any trade agreement between the U.S. and Canada will have to address dairy market access and Canada’s Class 7 pricing says Sonny Perdue, US Secretary of Agriculture.
Perdue told C-SPAN, “Class 7 has to go. It can’t be renamed something. It can’t be called something else. It’s just if they want to manage the supply, we’re simply saying manage your supply for your dairy industry and let’s be done with it.”
“Our farmers don’t have access to the Canadian markets the way that they have access to us. Class 7 has to go. It can’t be renamed something or called something else,” Perdue said when asked about dairy concessions needed to reach a NAFTA deal, referring to a new milk class created last year by Canada to price milk ingredients such as protein concentrates, skim milk and whole milk powder.
“It allowed them to export milk solids on the world market and below prices that cut into our opportunity for our dairy people to have access to that world market,” Perdue said.
According to Reuters, Canada’s closed, $16 billion dairy market is among the last sticking points in talks between U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland, which broke up on Friday without a deal.
In an interview with Canada’s Global News network published on Sunday, Freeland declined to discuss specific issues in the talks and noted that Kudlow is “not at the negotiating table.” Freeland added that to achieve a NAFTA deal, “It’s going to take flexibility on all sides.”
Freeland said on Friday she and Lighthizer were making “very good progress” in talks to save NAFTA amid increasing Canadian optimism that a deal can be reached. President Donald Trump has struck a trade deal with Mexico and threatened to push ahead without Canada, a move that would kill NAFTA, which covers $1.2 trillion in trade between the three countries, and further spook financial markets.
Perdue said on C-SPAN that Lighthizer has been “very clear” about the need for the Class 7 pricing system to be repealed.
Asked if it would be gone from a NAFTA deal, he said, “I think it should be. I think it will be gone.”
Talks are expected to resume after Lighthizer travels to Brussels for trade talks with European Union trade commissioner Cecilia Malmstrom on Monday.
A spokesman for Freeland could not immediately be reached for comment on Perdue’s remarks.
White House economic adviser Larry Kudlow last week said milk was the main issue standing in the way of a NAFTA deal.
In April 2017, Trump nearly withdrew from NAFTA after becoming angered by the plight of Wisconsin dairy farmers whose milk protein exports to Canada had been cut off by the Class 7 pricing scheme. Trump decided to renegotiate NAFTA instead.