Trump vows to back U.S. dairy farmers in Canada trade spat

By Rod Nickel

By Rod Nickel

(Reuters) - U.S. President Donald Trump promised on Tuesday to defend American dairy farmers who have been hurt by Canada’s protectionist trade practices, during a visit to the cheese-making state of Wisconsin.

Canada's dairy sector is protected by high tariffs on imported products and controls on domestic production as a means of supporting prices that farmers receive. It is frequently criticized by other dairy-producing countries.

"We’re also going to stand up for our dairy farmers," Trump said in Kenosha, Wisconsin. “Because in Canada some very unfair things have happened to our dairy farmers and others.”

Trump did not detail his concerns, but promised his administration would call the Canadian government led by Prime Minister Justin Trudeau and demand an explanation.

"It's another typical one-sided deal against the United States and it's not going to be happening for long," Trump said.

Trump also reiterated his threat to eliminate the North American Free Trade Agreement (NAFTA) with Canada and Mexico if it cannot be changed.

U.S. dairy industry groups, in a letter last week, asked Trump to urge Trudeau to halt the pricing policy that has disrupted some U.S. dairy exports and prioritize dairy market access in NAFTA renegotiation talks.

"A WTO complaint would be a last resort because it would take five or six years to come to any resolution," said Jaime Castaneda, senior vice president for the U.S. Dairy Export Council.

Canada's dairy farmers agreed last year to sell milk ingredients used for cheese-making to Canadian processors, who include Saputo Inc and Parmalat Canada Inc [PLTPRC.UL] at prices competitive with international rates. The pricing agreement was a response to growing U.S. exports of milk proteins to Canada that missed Canada's high tariffs.

Industry groups in New Zealand, Australia, the European Union, Mexico and the United States complained that the new prices for Canadian milk ingredients under-cut their exports to Canada.

“President Trump’s reaction is not surprising. He is defending his domestic dairy industry," said Jacques Lefebvre, CEO of Dairy Processors Association of Canada. "We believe that further communications with the Canadian government will broaden his perspective."

The Dairy Farmers of Canada said it is confident that the Canadian government will "continue to protect and defend" the country's dairy industry.

Representatives for Canada's trade and agriculture ministers could not be immediately reached.

Heritage Minister Melanie Joly, speaking to CTV, said about the dispute that "any form of restriction (on) trade will hurt workers on both sides of the border."

(Reporting by Rod Nickel in Winnipeg, Manitoba; additional reporting by Steve Holland in Kenosha, Wisconsin, Karl Plume in Chicago,; Ayesha Rascoe in Washington; and David Ljunggren in Ottawa; Editing by Lisa Shumaker)