Prime Minister John Key has warned Canadian politicians that unless they abandon trade protection for their dairy farmers, Canada will not be allowed to join a landmark trade agreement being negotiated.
Canada -- which has long resisted imports of New Zealand milk, with the help of a two-tier dairy system -- has no free trade agreements anywhere in Asia, and a failure to sign on to an expanded Trans-Pacific Partnership (TPP) would leave the country shut out of the Asia-Pacific region.
Mr Key, who has been in Ottawa for talks with his Canadian counterpart, Stephen Harper, told the Globe and Mail newspaper his message for the prime minister was that he hoped Canada would ultimately join the TPP.
But: "I made it clear from New Zealand's point of view we would want to engage in flexible and comprehensive agreements".
When asked whether any nation would be permitted to join the agreement while carving out protections for its dairy industry, he replied:
"That is not our intention. No."
Canada's Conservative government originally rejected a request to join the TPP negotiations, because Canada refused to dismantle quotas, marketing boards and tariffs -- collectively known as supply management -- that protect the dairy industry.
The Canadian government changed its mind when the United States agreed to join the talks last year. But Ottawa's request came too late and Canada is effectively shut out of the negotiations.
The US also protects its dairy industry, but Mr Key said that opportunities to pursue new and expanding markets in Asia will trump protectionist fears in both the US and Canada.
He argued that it would be in Canada's interest to compete in global dairy markets, where New Zealand is a dominant player, rather than hide behind tariff walls.
"There is going to be an explosion, and particularly for protein, as the middle classes of Asia emerge," Mr Key predicted.