U.S. agriculture chief: NAFTA deal must end Canada's milk protein scheme

WASHINGTON (Reuters) – Canada must end its low-price milk proteins policy to reach a U.S.-Canadian deal to update the North American Free Trade Agreement, U.S. Agriculture Secretary Sonny Perdue said.

FILE PHOTO – U.S. Agriculture Secretary Sonny Perdue speaks to Dairy Farmers at Trinity Valley Dairy in Cortland, New York, U.S., August 23, 2018. REUTERS/Shannon Stapleton

Perdue said in an interview aired on Sunday on C-SPAN television that Canada had encouraged overproduction and flooded export markets for milk proteins used in cheese and yogurt, hurting U.S. dairy farmers.

FILE PHOTO: A dairy cow cleans her newly born calf on a dairy farm in Saint-Valerien-de-Milton, southeast of Montreal, Quebec, Canada, August 30, 2018. REUTERS/Christinne Muschi/File Photo

“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.

“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.

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.

FILE PHOTO: Dairy cows are seen on a farm in Saint-Valerien-de-Milton, southeast of Montreal, Quebec, Canada, August 30, 2018. REUTERS/Christinne Muschi/File Photo

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.

Perdue said that Lighthizer has been “very clear” about the need for the Class 7 pricing system to be repealed.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.”

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 implemented in 2017. Trump decided to renegotiate NAFTA instead.

Reporting by David Lawder; Editing by Lisa Shumaker

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