Business & Policy
April 11, 2017
By Brandi Cowen
While making the rounds at industry events this winter, I noticed one topic was sure to draw a crowd every time. It seems producers, suppliers and other industry stakeholders are eager to soak up whatever information they can on international markets and trade – and with good reason.
Within days of taking office, President Donald Trump signed an executive order withdrawing the United States from the Trans-Pacific Partnership (TPP), a 12-country deal representing about 40 per cent of the global economy. The move essentially killed the trade deal since, as Canada’s Foreign Affairs Minister, Chrystia Freeland, told reporters, “This agreement was so constructed that it can only enter into force with the United States as a ratifying country.” Many Canadian producers and commodity groups were hopeful the TPP would improve market access for agricultural exports to Australia, Vietnam, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Brunei.
Overshadowing disappointment over the failure of TPP for many in the agriculture world is fear the North American Free Trade Agreement (NAFTA) may be radically transformed if Trump succeeds in “tweaking” the agreement, as he’s promised to do. According to the Council on Foreign Relations (an independent, non-partisan organization with offices in Washington and New York), Canada is a leading importer of American agricultural products, and “one of NAFTA’s biggest economic effects for Canada has been to increase bilateral U.S.-Canada agricultural flows.” The organization reports Canada’s total agricultural exports to NAFTA members have more than tripled since the mid-‘90s. What might happen now is anybody’s guess. But, as Glen Hodgson, a senior fellow at the Conference Board of Canada, told the audience at the CropConnect Conference in Winnipeg in mid-February, we need to watch developments in all sectors covered by NAFTA and remember that disruptions to Mexican imports to the United States will have an effect on Canada’s economy, too.
Across the pond, the European Union ratified the Comprehensive Economic Trade Agreement (CETA) in mid-February. Under the terms of the new agreement, for example, various processed pulse products including canned pulses, lentil flour, pulse meal and powder, and soups and broths will be permitted for export to the EU duty-free. Agriculture and Agri-Food Canada (AAFC) reports that in the past, EU tariffs on processed pulse products have been as high as 19.2 per cent. When CETA comes into force, likely sometime this spring, whole pulse exports to the EU will remain duty-free. All things considered, the Canadian Agri-Food Trade Alliance estimates CETA could drive up to $1.5 billion in additional exports, including a $100 million bump in grain and oilseed exports.
However, as Mike Krueger, founder of Money Farm in North Dakota, told the audience at CropCronnect, scheduled elections in a number of member states throughout the spring and into the summer could have important implications for the EU, its Common Agricultural Policy and taxes and duties on imports. The ripple effects could very well affect the EU’s trading partners too.
Given all the external factors at play, what are Canadian producers to do?
The answer is straightforward: get involved. Get involved with your neighbours and help them understand what you do. Get involved with grower associations and commodity groups and help shape the messages being passed along to the officials who negotiate trade deals that affect your business.
Other sectors will be actively advocating for their own interests. Agriculture, too, must have a voice at the negotiating table.