Archive for November, 2012

Canada Through The Looking Glass – 3

November 27, 2012

Migration and temporary foreign workers

Summary

Two of the opposing views on immigration policy are first to maintain or reduce current levels, and second to increase immigration flows into Canada. Those who oppose increases point to existing levels of unemployment; those favouring increases highlight the ageing of the Canadian population and the need for younger people.

Discourse which favours either increased or reduced immigration seems to ignore relevant facts and evidence when making their respective cases. My preference would be to decide what size of population the country wants, which roughly seems to be the case for the Scandinavian countries and others in Western Europe, and to work back from there regarding policies related to immigration and the use of temporary foreign workers.

Why the need for temporary foreign workers?

Unemployment in Canada is currently at 7.4 per cent which amounts to 1.4 million people. At the same time the country is host to about 350,000 temporary foreign workers. If 350,000 of the unemployed undertook the jobs of temporary foreign workers, the unemployment rate would fall to 5 percent, which is about as close to full employment that it is possible to get. (Note, a former federal labour Minister stated that there were also an estimated 500,000 illegal migrants, many of whom had jobs, in Canada. This compares with the estimated 12 million illegals in the US.)

There seems to be a labour market problem. The available supply of unemployed workers is not able or not willing to do the work of temporary foreign workers, for example in coal mining and the agricultural sector. There are a number of ways to address this problem. If training is needed, then arrange for training which may require language as well as skills training. If it is a case of unwillingness to do certain types of work, then this may be alleviated either by increasing wage rates, and/or withdrawing government support from those unwilling to do certain jobs. There is a disconnect between having people unemployed and complaining about the presence of temporary foreign workers.

Does an ageing population matter?

The ageing of the population refers to the future increase in the share of the population that is either retired or too young to be in the labour force. It happens to countries at different times, and is used by some to argue for increased immigration (permanent and/or temporary) to make up the difference. Is it a problem and are there other ways to address it?

Much research is published on this topic, including at Oxford University and the UN. It indicates that Canada is far from alone in experiencing an ageing population, and discusses what steps, aside from immigration, can be taken to address the issue.

Globally, in 1950, there were 9.3 people under 20 for every person over 65. Only 456 months from now, by 2050, the forecast is for 0.59 persons under 20 for every person over 65. A UN study for 2009 ranks 196 countries by percentage of population 60+ years. Japan ranks first at 29.7% and Quatar last at 1.9%; Canada ranks 30th at 19.5%. For developed countries as a group the figure is 21.4% and for Western Europe 23.9%.

Aside from increased immigration, the shortfall can be reduced in different ways. One is to get people to work longer by not offering state or private pensions until they reach an older age. Another is to offer higher wages to those who are willing to work longer. Subsidised childcare and homecare for the aged, part-time work and work-at-home are other alternatives to expand the size of the active labour force. Reduced communications costs make it possible for work to be sent to the home as opposed to people travelling to work. This is a form of insourcing as opposed to outsourcing.

Countries with ageing populations seem to survive. Possibly they could grow faster with more people in the active labour force, but that may pose other difficulties. For example, if Switzerland and Singapore had no restrictions on immigration and temporary foreign workers, there would be a tsunami of people flooding these countries and the lifestyles those living there would be changed drastically.

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Canada Through The Looking Glass – 2

November 25, 2012

Summary

The growth in service sector employment is due in part to the classification system used to assign employees to industries, which does not adjust for changes in industry supply chains. It is similar to the problem of deciding whether to allocate a firm to the automotive or clothing industry if it produces both products. The shift from manufacturing to services is in part a classification issue.

Outsourcing goods and services production abroad will decrease employment in Canada for that sector, but will increase employment when foreign firms buy (outsource/import) from Canadian firms as they do for Canadian wheat, energy minerals and comedians. Good paying jobs in services require education, training, and retraining for those already in the workforce. Many more goods and service activities are now tradeable as a result of lower transportation and communication costs, which alter the organization of industry supply chains.

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Are there good and bad jobs?

Public discourse on the labour force points to the loss of manufacturing jobs in Canada. These are considered good or well paid jobs compared to service sector jobs such as flipping hamburgers. What do the data show? What are reasons for these changes? The discourse leads (in a later posting) to topics such as immigration and integration through multicultural policies. First some facts:

  • Today Canada’s population is 34.5m of which 19m (55%) are in the labour force, 1.4m of which are unemployed, an unemployment rate of 7.4% .
  • By sector 2% of the labour force are in agriculture, 13% in manufacturing and 76% in services. In 1941, 25% of the labour force was in agriculture and 17% in manufacturing.
  • One of the biggest changes has been the fall in the share of employment in agriculture and the increase in services. At the same time agricultural output has increased as a result of vast increases in productivity associated with mechanization, fertilizers and improved seeds. (I don’t recall reading much about the loss of employment in agriculture, which in the past was much larger than the present day loss in manufacturing.)

“Manufacturing employment fell by 375,000 workers in 2010, bringing employment in the sector down to 1.7 million workers, 2.1% below its 2009 level.

Shrinking employment in manufacturing is a common trend in almost all OECD countries. From 1998 to 2008, the United States lost close to one-quarter (4.1 million) of its manufacturing jobs. Elsewhere in the OECD, from 1990 to 2003, manufacturing employment fell by 29% in the United Kingdom, 24% in Japan, 20% in Belgium and Sweden and 14% in France.

Canada’s manufacturing industry lost 278,000 jobs (1 in 6) from 2000 to 2007, which reduced the sector’s share of total employment from 16% to 12%. That share then declined to 10% in 2009 after the 2008–2009 recession, when manufacturers faced weaker demand and cuts to industrial capacity, resulting in the loss of 188,000 jobs.”

http://www.statcan.gc.ca/pub/11-402-x/2011000/chap/man-fab/man-fab-eng.htm

Good and bad jobs – a misunderstanding; and supply chains

1. Jobs classified as manufacturing have decreased in all high income countries. At the same time wage rates in some manufacturing have declined, due to a combination of decreased demand for labour in manufacturing in high income countries like Canada, the outsourcing of work to low wage countries, and the substitution of capital for labour such as the use of robots. The last means that there are now jobs in designing, operating and maintaining robots. Some may be classified as service sector jobs and others as manufacturing. Design and maintenance is a service activity.

2. Service employment embraces a myriad of job types, from low wage rate Tim Horton type employment, babysitting and homecare for the elderly, to design, operation and maintenance of the space shuttle and Canadarm. The 76% of the workforce in services includes a multitude of high and low wage occupations. The service classification is too embracing and a more detailed breakdown would show how job types and economic activity is changing. If some activities which were previously called manufacturing are now branded as services, then what is happening is a reorganization of the manufacturing process is.

3. There is a growing literature on industry “supply chains” which focuses on the way industry processes are split up, organized and located. Previously this was often described as vertical integration and diversification, as in the case of the aluminum industry which has stages from bauxite to alumina, aluminum and fabricated aluminum end products. The automobile industry requires metal, glass and upholstery inputs plus paint, tires, radios, GPS systems and many other inputs. All these are part of the industry’s supply chain which has to be set up and coordinated either through in-house production or through outsourcing in Canada and abroad. When services such as accounting, finance and marketing are done in-house by a firm, whose main business is manufacturing a product, the employment will be allocated to manufacturing. When these activities are outsourced to firms which specialize in performing these services, the employment is classified to services.

4. As industries reconfigure their supply chains, the allocation of employment to the manufacturing and service sectors changes, even though the end product remains the same. Part of the loss of manufacturing jobs is due to supply chain reorganization.  This sectoral shift in employment happened earlier on a massive scale in the agricultural sector, when employment in agriculture declined but agricultural output increased with the substitution of capital for labour, a form of supply chain reorganization.

“The Council of Supply Chain Management Professionals (CSCMP) defines supply chain management as follows: “Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.”

http://en.wikipedia.org/wiki/Supply_chain

5. Technological change affecting transportation and communications, for example, are two reasons for the reorganization of supply chains and the need for people to be retrained to manage certain activities. Where the end result is the employment of people in firms specializing in new activities such as programming, computer maintenance and operation, the number of service sector jobs will increase at the expense of manufacturing jobs. Training may be required but the resulting service job may be well paid. This is not to deny the existence and growth of lower paid jobs in the retail sector for example, but it is not as extreme as the 76% service sector share of employment implies. (Those more familiar with Canadian labour force statistics than myself can state whether this conclusion is correct.)

What does outsourcing mean?

  1. A firm’s purchase of inputs for its supply chain can take place from another part of the firm either in Canada or abroad; or it can involve a purchase from an independent firm in Canada or abroad. There are four possibilities: from an independent firm in Canada, from an independent firm abroad, from another part of the same firm in Canada or from another part of the same firm abroad. Each firm decides which alternative provides the cheapest and most reliable course of action for the firm.
  2. Employment in Canada will be affected by the choice made by firms as will export and import data for goods and services. Wage rates in Canada versus those abroad will be one factor determining the location of operations and where purchasing occurs. The choice of whether to outsource or insource is not new. It is in part a result of where labour and other costs are lower.

In a subsequent entry, I will discuss the ageing Canadian population, the impact for immigration, and the integration of newcomers to Canada as permanent residents and temporary foreign workers.

Canada Through The Looking Glass

November 24, 2012

Today’s public discourse about Canada’s future includes the following: China in particular and Asia in general are the growth areas of the future; add Brazil and Russia and you have the BRIC countries. Over the past two decades these countries experienced substantial economic growth at home, and gained a larger share of world exports. Other features of the recent past include an increase in foreign direct investment flows, large crossborder movements of people, the introduction of the internet and its growing use publicly and privately (including social media, if you call this private).

Each country looking backward sees these forces at work and tries to project its future. For Canada, the flavors of the month for public discourse is the need to focus more on trade and other relations with the BRIC countries; to imitate the policies of Australia; to address the declining share of younger people in the Canadian population (the ageing of the population), and to diversify trade away from the US. Canada has tried the last repeatedly, with little success, and when it does occur, as is happening now, the cry is that Canada is becoming less competitive in its main foreign market.

Driving a car, while looking in the rearview mirror, is liable to result in an accident. This is what many are doing with economic and political policy making for the future. There is little other choice, but there is a choice about deciding what factors, from the recent and distant past, assist in deciding which policies make the most sense. The following views are at odds with the majority of those engaged in Canada’s public discourse, and include the following, with reasons given below:

  1. Current evidence suggests that economic growth of the BRICs is not sustainable at the present levels. The forecast that China will      have a larger economy (GDP) than the US by about 2035 is of limited relevance for policy purposes.
  2. The Canadian economy has lost manufacturing jobs and this is a bad thing which needs correction by introducing policies to promote and protect these industries. The loss is correct, the rest misleading.
  3. There is no need to increase immigration because there are other ways to address an ageing population with a declining share of the active labour force.
  4.  While integration follows immigration (permanent or temporary), multiculturalism policies have failed to aid integration and should be phased out.
  5. Australia is of limited use as a role model for Canada to follow re economic growth and policies to assimilate foreigners in Canada.
  6. Energy and other natural resources will continue to make up the bulk of Canadian exports.

How to assess the composition of bricks.

  1. China will soon have a GDP greater than the US leads to the question, so what? The statement is probably correct – some suggest China is already larger – but this is like saying a child is smaller than her mother, but one day will be larger. In the future, the mother may continue to be smarter, stronger and richer than the daughter, but may weigh less and be shorter. The metric chosen for comparison needs to reflect what is being studied.
  2. Many countries with small economies and populations are magnets for people trying to migrate to them – Norway, Switzerland, and New Zealand for example. These countries have remained small demographically and sustained a high living standard. I don’t read of many migrating to China, although within China people are migrating from the countryside to the cities. It is doubtful if these three countries could maintain their growth rates and quality of life if they permitted unlimited immigration. The same is true for Canada.
  3. A more interesting metric from the viewpoint of economic development is GDP per capita, where China is far behind that of the US and smaller high income countries, and will remain behind even though its economy is growing fast. The following quote is from Timothy Taylor whose blog, The Conversable Economist, provides much useful information, but may have a different take on the past and future:

“Mark A. Wynne of the Dallas Fed asks: “Will China Ever Become as Rich as the U.S.?” The standard answer here is that the total size of China’s economy may well exceed the total size of the U.S. economy within a couple of decades, but because China has nearly four times the U.S. population, it will take much longer for China to catch up in per capita terms.

Wynne writes: “The simplest approach is to measure GDP in U.S. dollars at 2005 prices and use 2005 exchange rates. Doing so results in estimated 2010 Chinese GDP of $3.88 trillion in 2005 dollars, or just less than 30 percent of U.S. GDP. China’s economy will exceed that of the U.S. in 2025 if it continues expanding at its past-decade rate of just more than 10 percent a year and the U.S. keeps growing at the 1.7 percent annual rate it experienced during the period. Per capita GDP allows us to compare the relative well-being of residents of the two nations. Based on the 2010 U.S. population of 309 million, per capita GDP was $42,874 last year. China, with a 2010 population of 1.34 billion, had per capita GDP of $2,893 last year, or 6.7 percent of the U.S. figure.”

“Of course, it is not inevitable that China will continue at this rapid rate of growth for the next several decades. Wynne points out that on average, countries with lower per capita GDP have faster growth rates. However, it also seems to be true that as countries reach some level of middle-income, their growth rates slow down. One explanation for this “middle income trap” is that the growth policies that help in catch-up growth do not work as well as an economy reaches higher-income levels.  Wynne offers a nice figure to illustrate how the G-7 economies caught up to the U.S. economy since 1950, at least to some extent, but then seemed to stop catching up when they hit (very roughly) 80% of U.S. per capita GDP. The figure also puts China’s growth path in perspective.”

Source: http://conversableeconomist.blogspot.ca/2011/06/will-china-catch-up-to-us-economy.html

My concern here would be that by studying Chinese economic performance for the past twenty years some have concluded that this will continue into the future. If this is not the case, then tying policies today to certain aspects of past experience may lead policy makers astray. In particular China, and other BRIC countries may have hit the “middle income trap” and/or picked the “low hanging fruit.”

The “low hanging fruit” refers to things which are easy (cheap) to do, like fruit picking from the ground without having to use a ladder (I think  this phrase was coined by Tyler Cowen.) In China’s case the emphasis has been on bringing cheap labour from rural to urban areas, emphasizing exports, and making capital expenditures on factories and public infrastructure like roads, railways, ports and airports. Domestic wage rates have now risen so that export prices are not as competitive, economic downturns in North America and Europe have shrunk export sales, and domestic consumer expenditures have not risen as yet to fill the gap.

  1. The foregoing gives rise to questions about the implications for Canada of existing Chinese growth projections. These and other concerns, but for different reasons occur in the cases of Brazil, Russia and India (to be discussed in a later posting.)
  2. The growth rate of China’s GDP is claimed by its government to be around 7.4%. The actual growth rate is probably close to zero according to China watchers. The lower estimates are based on data of electricity consumption, maritime freight shipments in and out, a recent 25% fall in Australian mineral shipments to China and increased inventories of these materials in Oz. While unemployment in China is reported at just above 4%, China watchers report that this does not include massive numbers of workers in rural areas.

In future postings about Canada Through The Looking Glass I will comment on labour, migration and multicultural issues plus the case of Australia. As always, comments are appreciated.

FDI – Do As You Would Be Done By

November 12, 2012

Mrs Doasyouwouldbedoneby is a character in Charles Kingsley’s fairytale,The Waterbabies, as is Mrs Bedonebyasyoudid. The former suggests that good things happen to those who treat others the way they would like to be treated; the latter provides a warning. This is a focus missing from the current discussion of foreign direct investment and Canada. This investment has two components, investment in Canada (FDI), and investment by Canadian firms abroad (CDIA). In the neighbouring arena of trade policy, discussion concerns exports as well as imports. Trade negotiations and agreements, such as the WTO, NAFTA and bilateral agreements, deal with the conditions for each country’s exports as well as imports. When debate turns to foreign investment policy, the focus becomes inward to the exclusion of outward investment, as though what Canada does regarding inward investment has little or no impact on CDIA.

Stocks and flows

The stock of CDIA is currently $684 bn, while the stock of FDI in Canada is $607bn. These result from investment flows from previous years including earnings reinvested by firms which are already foreign owned either in Canada, or by Canadian owned firms abroad. The annual inward and outward flows of FDI fluctuate yearly. For 2000 to 2009,

“Outward FDI flows were $66.4 billion in 2000, gradually declined to $32.1 billion in 2003, rebounded to $82.9 billion in 2008 before slumping to $46.3 billion in 2009. Inward FDI flows were $99.2 billion in 2000, tumbled to negative $0.6 billion in 2004, reached a peak of $116.4 billion in 2007 before falling back to $47.7 billion in 2008 and to $22.1 billion in 2009.”  Source: Statistics Canada.

Often, FDI flows into Canada have exceeded CDIA, but in some recent years the opposite has occurred. At present, the stock of Canadian FDI in China is $4.5bn and Chinese investment in Canada $10bn (a Chinese source quotes $20bn – this may be due to the inclusion of portfolio as well as direct investment).

FIPAs  

Canada has Foreign Investment Protection Agreements (FIPAs) with a number of countries. These do for investment what bilateral and other trade agreements do for trade, namely state the conditions under which inward and outward investment occur, and how disputes will be settled.

FIPAs tend to be signed with countries where Canadian investors may not get a fair deal from the judicial system in the foreign country. Thus there is no FIPA with the UK, although there is something similar to a FIPA embedded in the NAFTA with the US and Mexico. Canada has 24 FIPAs in effect, the earliest being signed with the former USSR in 1991; 7 FIPAs have negotiations concluded, one of which is with Mali; and in 13 cases there are ongoing negotiations, such as with Burkina Faso and Mongolia.

Canadian firms do invest in risky countries where there is no FIPA, and a former graduate student of mine found that many firms with investments abroad were unaware of the existence of FIPAs and had invested anyway. (This may be the strongest argument for not signing further FIPAs.) The firms made these investments in the absence of a FIPA, and that is the case for the $4.5bn Canadian investment already in China and the $10bn Chinese investment in Canada. Would the inward and outward flows have been greater with a Canada-China FIPA? Possibly, but we will never know.

To argue that Canada should not sign a FIPA with another country because that country does things domestically and internationally that we don’t like, suggests to me that Canada should withdraw from UN membership and from many other bilateral and multilateral agreements, and should cancel diplomatic representation with certain countries. When a Canadian travels to risky countries, the exchange of diplomats means that Canadians have a better chance of being treated fairly, than if there is no representation. A FIPA has the same effect for investors.

China is now a member of the WTO, a multilateral agreement with a dispute resolution mechanism. The country wants to and has already become a force in the international economic community. Involving countries in international agreements is more not less likely to get them to play by the rules of the game agreed to by an increasing number of nations. If Canada wants to diversify its economic relations away from North America, as it has repeatedly tried to do, with limited success, then it needs to engage China and other Asian countries.

Arguing against negotiating a FIPA is like refusing to have a flu shot because there is a small probability that you will contract flu, while there is a much higher probability that protection will be provided. Arguing for a debate on the proposal is reasonable, but to my knowledge was not done for the existing 24 FIPAs signed by Canada.

Note:

“The global stock of outward foreign direct investment (FDI) has experienced phenomenal growth over the past two decades, increasing more than tenfold from US$600.2 billion in 1982 to US$9.7 trillion in 2004. Throughout most of this period, FDI has been growing faster than trade, contributing significantly to global economic integration…. Since 1990, the stock of Canadian direct investment abroad (CDIA) has more than quadrupled from $98.4 billion to $465.1 billion in 2005.” Source: Statistics Canada.

Unemployment and Temporary Foreign Workers

November 9, 2012

“To see what is in front of one’s nose needs a constant struggle” – George Orwell

The quotation from Orwell is a constant reminder on many scores. Today it is the fact that unemployment in Canada is higher than desired, while the country is pursuing a policy to bring in both skilled and temporary foreign workers. What can be deduced from this?

A shortage of skilled workers may be due to the need for specialized training. This can be alleviated over time with appropriate training provided to Canadians, and targeting immigration policy to attract persons with these skills. Training is the preferable route if there is a need to curb immigration flows.

A shortage of temporary workers, mainly in the agricultural and construction sectors, suggests that unemployed Canadians are unwilling to perform these tasks. There is no shortage here just a reluctance to do the work. This might be overcome by offering higher wages, but these could backfire if they make producers less competitive. An alternative would be to withhold unemployment payments to those refusing to take up available jobs. There seems to be a disconnect here if Canadian workers are able but unwilling to do the jobs undertaken by temporary foreign workers.

What do the figures show? Unemployment in October 2012 was 7.4% nationally in Canada that is 1.4 million people in a labour force of about 19 million, and a population of almost 35 million.

The temporary foreign workers, especially live-in caregivers and seasonal farm workers, entering Canada each year has doubled from 100,000 a year in 2003 to almost 200,000 per year in 2011. But in 2011 there were almost 300,000 temporary foreign workers in Canada, consisting of those who entered in 2011 and those who entered in previous years and have not departed (CIC figures as reported in the Ottawa Citizen, Nov. 6, 2012, p.5).

Thus, if 100,000 of the 1.4 million Canadian unemployed could or would fill one third of the jobs presently held by temporary foreign workers, the unemployment rate would fall to 6.8%; and if 300,000 of the unemployed filled all of the jobs filled by temporary foreign workers, the unemployment rate would fall to 5.8%. The latter is about the equivalent of full employment. Thus an alternative to maintaining the influx of temporary foreign workers is a policy which trains Canadian unskilled unemployed workers and moves them to where they are needed. I doubt much is needed for seasonal farmwork.

The need for skilled workers is addressed by the economic category of immigrants. This is refined to let Provinces nominate the skill categories required and may work, but once a person is admitted into Canada as a permanent resident, he or she can move freely to any other province.

There is another number to consider the estimated 500,000 illegal migrants in Canada, many of whom hold jobs in the service sector.

CRTC and Bell-Astral – Culture and Agriculture

November 4, 2012

The proposed acquisition of Astral Media Inc by BCE Inc revolved around the question of the future shape of the Canadian broadcasting system – television and radio in French and English –see http://www.crtc.gc.ca/eng/archive/2012/2012-574.htm

Refusal to approve the acquisition was based on the Commission’s view that the system would become too concentrated, to the detriment of Canadian viewers and listeners, and that the mandate of promoting Canadian content would be weakened. System here means the market for broadcast signals which has suppliers, such as Astral and BCE, and customers who are the Canadian viewers and listeners. The customers are small and diverse, while the suppliers are large, such as the CBC and BCE, and operate in concentrated markets. The suppliers carry their own content and that produced by others.

In light of the way broadcast signals are now distributed, it is misleading to suggest that the Canadian broadcast system (or market) is or can be separated from the wider market of internet distribution of programs films and music by cable and satellite. While the Commission notes this, it chose to retain the view that such a division exists and can be maintained by appropriate policies and rulings.

In some ways, the Commission is hamstrung by its political mandate, which all political parties support, to promote Canadian content. Politicians believe this is popular among voters and an objective that is achievable through appropriate policies. These can achieve a certain level of particular types of content, but cannot force Canadians to watch and listen to it. Thus, for example, viewership of CBC broadcast TV programs has shrunk,

“The CRTC annual monitoring report (available online) shows the CBC’s share of the English language market fell from 13.2% in 1994 to 7.5% in 2000 and to 4.9% in 2010, rising to 6.4% in 2011. The long run trend is clear.”

 

Where protectionism remains

Two sectors which remain protected by Canadian policies are culture and agriculture, specifically supply management. Technology has undermined cultural protectionism as consumers are increasingly able to watch and listen to what they want, and the panoply of cultural policies is no longer subject to challenge by foreign suppliers. Protectionist supply management policies for agriculture remain with no political party willing to anger the diminishing number of producers who benefit from them. Probably the only sure way to end supply management is to buy out the farmers and let consumers benefit from the lower prices which will then prevail. But the costs could be high. Mike Gifford in a report for the Canadian Council of Chief Executives states – http://www.ceocouncil.ca/wp-content/uploads/2012/04/Golden-Opportunities-and-Surmountable-Challenges-Prospects-for-Canadian-Agriculture-in-Asia-Michael-Gifford-FINAL2.pdf at p.25.

“Depending on the extent of the changes required (and the degree to which they reduce the value of the quotas owned by farmers, which in the dairy sector alone total some $25 billion), it may be necessary to provide some level of financial assistance to help farmers adapt to the new import regime. There is a precedent for such assistance: in the late 1980s a joint federal-provincial trade adjustment package enabled Canada’s grape and wine industry to adapt (with great success) to the Canada-U.S. Free Trade Agreement. A similar adjustment package, tailored to the specifics of the supply-managed dairy and poultry sectors, could also be developed. This would need to be done in collaboration with all industry stakeholders, including the provinces  – which, with the federal government, are jointly responsible for creating and regulating the supply management system through marketing boards that control production, tax, set prices, and manage interprovincial trade.”

Public pressure from disorganized consumers is necessary to force the federal and provincial governments to respond.