Initial U.S. demands on dairy don't calm Canadian anxieties at NAFTA talks

American negotiators want Canada to be "more transparent" about its supply management system for dairy, according to a source with direct knowledge of NAFTA talks underway in Washington.

But the initial U.S. demands presented Friday did not include what Canadian dairy farmers fear the most: greater access to the Canadian market.

A spokesperson speaking on background for the U.S. trade representative told CBC News that those demands are expected at a later date.

"Market access negotiations have not begun," said the spokesperson.

A NAFTA schedule obtained by CBC News shows that agriculture will be discussed through the weekend, but market access talks are not covered by the agriculture chapter of the agreement. The current round of NAFTA talks is expected to wrap up Tuesday.

The call for greater transparency is related to a dispute over a recent price reduction on some milk products sold to processors in Canada that U.S. producers say has undercut U.S. imports.

In a statement Friday, the Dairy Farmers of Canada said it was not surprised by the U.S. demands, which they called "outrageous."

The group, which advocates for Canadian dairy farmers, said it expects the United States to make market access demands at some point, but it does not see supply management itself "as being on the table."

"Prime Minister [Justin Trudeau] and his cabinet have clearly expressed their support and willingness to defend the dairy industry and supply management. We remain confident they will stay true to their word," the statement said.

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Canada and the U.S. have different views on the dairy industry. 

Canada had been expecting extreme demands from the U.S., after President Donald Trump said Canadian dairy rules were "unfair" to American farmers back in April.

In a speech to factory workers in Wisconsin, the president specifically mentioned Canada's dairy supply management system, which he called a "one-sided deal" that doesn't let U.S. farmers compete fairly.

His comments came after Canada's producers lowered their prices for dairy ingredients to make them more competitive with cheaper American imports. About 70 dairy producers in both Wisconsin and New York were affected by the new policy, and have lobbied the U.S. government for action on the file.

Ahead of the fourth round of talks, U.S. Agriculture Secretary Sonny Perdue hinted the U.S. would be looking for increased access to Canada's dairy market.

"Obviously we need to keep these markets open," Perdue told a public forum organized by the Washington International Trade Association.

But he acknowledged that, overall, NAFTA has been particularly good for the U.S. agriculture industry. With that in mind, he said he's warned U.S. trade representative Robert Lighthizer to tread carefully around the sector.