Canadian dairy farmers say they will never agree to New Zealand's request to open up their markets as part of the Trans-Pacific Partnership because that would jeopardise their livelihoods.
A group representing New Zealand's dairy industry has said the deal on offer is appallingly bad and New Zealand should walk away if the other countries refused to do better.
Ministers from the 12 countries involved in the TPP talks are meeting in Hawaii to try to conclude the deal after years of negotiations.
The director of international trade for Dairy Farmers of Canada Yves Leduc told Morning Report he had sympathy for New Zealand farmers hard-hit by the global downturn in milk prices.
But he said if Canada was to completely open up its market, there would be an influx of heavily subsidised dairy products from the United States.
That would reduce Canadian farmers' incomes and may result in job losses in the processing sector.
"So why would I pay to save the New Zealand model?"
Mr Leduc said Canada's supply management system protected its farmers against the boom-and-bust cycle of world markets.
The chairman of New Zealand's Dairy Companies Association chairman Malcolm Bailey told Morning Report the United States, Canada and Japan are stonewalling New Zealand's bid for better access to their dairy markets.
"At this stage there is no way we can contemplate doing a deal overall for New Zealand here because dairy is our number one export
"If we can't get something reasonable for dairy it's just unthinkable for New Zealand to conclude here."
Mr Bailey, who's in Hawaii to observe the talks, said high level political pressure was needed to turn things around.
TPP negotiations among 12 Asia-Pacific countries to cut tariffs and improve access to markets began in 2006. The talks are also seeking common ground on issues such as environmental standards and intellectual property protections.