John Cruickshank, Canada’s general consul in the upper midwest, made a trip this week from Chicago to Madison to emphasize the importance of trade between Wisconsin and its biggest trading partner to the north.
“Having that relationship makes us better in Canada; I think it makes lives better in Wisconsin,” he told WisBusiness.com. “So it’s something that’s valuable, that’s historic, and something that should not be just preserved, but we want to encourage more investment on both sides of the border.”
His visit, which included a “very positive, really constructive” face-to-face with Gov. Scott Walker, comes at a time when rocky trade relations between the two countries have driven some U.S. politicians to criticize Canada.
A recent change in Canadian pricing policy that left dozens of Wisconsin farmers temporarily without buyers for their filtered skim-milk product drew the attention of President Donald Trump in April.
“What’s happened to you is very, very unfair,” Trump told a crowd in Kenosha. “It’s another typical one-sided deal against the United States and it’s not going to be happening for long.”
He said he would work with Walker and the state’s congressional delegation to help resolve the issue.
U.S. Sen. Ron Johnson spoke with reporters after Trump’s speech, saying “what they’re doing is clearly protectionist and obviously hurting Wisconsin dairy farmers.”
Cruickshank disagrees with that characterization, saying the change in pricing was not the result of government decision-making, but that of Canadian farmers and producers. As he sees it, the move simply leveled the playing field.
“The really important thing is this is a decision that was taken right at the ground level by the dairy farmers and producers,” he said. “It wasn’t a political decision; it doesn’t reflect in any way a decision by Canada to interfere with American production or any of that kind of stuff. There’s no tariff at the border, there’s no limitation on importation, and there’s still a tremendous amount of dairy trade that’s going on.”
He explained this step was taken as a result of a “worldwide glut” in dairy goods. Canadian dairy farmers simply wanted the opportunity to compete more fairly with everybody else in the world, he said.
“So the ingredient strategy changed; they created a new classification of milk to allow Ontario dairy farmers to get into this business, and a price was set at the world price,” he said.
He says there was no government involvement, either at the provincial or federal level, and the action taken “conforms in every possible way to trade obligations, because there’s no subsidy involved.”
Cruickshank says he doesn’t think the dairy issue will detract from what has been an “incredible growth” of dairy exports in Wisconsin.
The state exports $6.6 billion in goods to Canada each year; 17 percent of that number comes from agriculture. And Wisconsin exports more goods to Canada than to its next four largest foreign markets combined.
“The exports to Canada from Wisconsin in dairy in the last 10 years have increased 400 percent,” he said. “So if we’re creating impediments to trade, it’s not working.”
Though all Wisconsin farmers affected by the pricing change have now found a place for their milk, the story doesn’t end there. Trump has recently called for a 20 percent tariff on softwood lumber imported from Canada — a move which Cruickshank says will just shift costs onto the American consumer.
“In essence, you’re paying a tax if you’re buying softwood lumber,” he said. “If you’re building a house, you’re now paying a tax — the ‘Trump lumber tax,’ because basically the U.S. government will take in about $1 billion from the Canadian side, but all that cost is going to get passed along, is already being passed along to American consumers.”
Trump has also targeted NAFTA, calling it “the single worst trade deal maybe ever, but certainly ever signed in this country” and has threatened to pull the U.S. out altogether “if we do not reach a fair deal for all.”
“Trashing NAFTA at this point would create just tremendous reverberations, because you’d essentially have to rebuild big elements now of, not just of our trading system, but also of our manufacturing system, of employment” Cruickshank argues. “When you start pulling at one thread here, the fabric can unravel pretty quickly.”
–By Alex Moe