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The economic case for dismantling Canada’s supply management system is strong, even in the absence of pressure from trading partners. Supply management imposes costs on millions of consumers that far exceed the benefits to a few thousand dairy and poultry producers.

Early reports on the recently-completed Trans-Pacific Partnership (TPP) negotiations suggest that Canada has agreed to small increases in the quantities of dairy and poultry products that are allowed into Canada without facing high import tariffs. The cost of an announced compensation package for dairy and poultry producers has been the focus of early headlines about the TPP agreement, but this focus on taxpayer costs distracts from the high costs of leaving the regime largely intact.

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Details of the compensation package have yet to emerge, but a commitment of up to $4.3 billion over 15 years has been made. Commentators have questioned the decision to provide such a generous financial offering to producers whose incomes are already kept high by government protectionist policies. However, it is important to consider the consumer benefits that will arise from lower dairy and poultry prices when evaluating this policy decision.