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OTTAWA (Reuters) - Canada's powerful dairy industry on Friday expressed concern that it could suffer if talks to create a Pacific trade treaty open up heavily protected Canadian markets to more foreign competition.
Some of the 12 nations taking part in negotiations on a Trans-Pacific Partnership (TPP) want Canada to start dismantling a system known as supply management, which protects dairy, egg and chicken producers.
"The pressure is there and there is a risk that access could be provided," said Yves Leduc, director of international trade at the Dairy Farmers of Canada lobbying group.
"The negotiations are moving on and obviously there is a risk, ... (and) that is causing a lot of concerns within the dairy farming industry," he said in a phone interview.
This could be problematic for Prime Minister Stephen Harper, whose right-of-center Conservatives will be relying on support in rural areas in a federal election due on Oct. 19.
Harper said on Thursday that Canada must join TPP but it would also work to protect supply management, a system that New Zealand's trade minister says belongs in the former Soviet Union.
The Canadian Council of Chief Executives and other industry groups in Canada say it is time to scrap the system, but the Conservatives are wary of the dairy lobby's power.
Farmers in the French-speaking province of Quebec, which accounts for 40 percent of dairy products, ran full-page newspaper advertisements last month opposing TPP. The ads featured large pictures of pitchforks.
Harper has given no indication of what concessions Canada might make at the talks.
"Obviously, if we are negatively hurt we will be seeking the proper measures to properly mitigate any negative impact," Leduc said.
Harper's office declined to comment on an article in the Globe and Mail newspaper on Friday that said Ottawa would give more access to foreign dairy producers under TPP and compensate Canadian farmers for any losses.
"We want to make sure that Canada is a part of a TPP agreement. ... (Harper) will only sign an agreement that's in Canada's best interests," a Harper spokesman said.
Dairy farmers are still unhappy that when Canada negotiated a recent free trade deal with the European Union it gave away an extra 17,000 tonnes of cheese, less than 4 percent of the overall Canadian market.
Leduc said the concession would have "a tremendous negative impact", estimating the value of the cheese at C$300 million ($244 million).
Editing by Leslie Adler