A new report is warning Canadian agri-food is in an “ominous situation” in the face of rising global trade disruptions.
The Agri-Food Economic Systems’ report, “Shifting Geo-Politics and Trade Policy: Wither Canadian Agri-Food Policy?” released this month says escalating trade tensions have resulted in a rapid deterioration of the relatively stable environment that has governed international trade since the 1980s.
“The trade environment is challenged today with the increased economic and geopolitical prominence of countries that do not fit with many of the assumptions of a liberal world order, and others in which portions of the population feel taken advantage of or otherwise left behind,” writes Al Mussell, Douglas Hedley and Ted Bilyea.
If global trade is to be based on leverage and influence, then Canada lacks the economic weight to keep its current position in world trade and market access, the report says. In short, Canada is not well positioned to deal with the merging world order when it comes to trade.
It warns the re-emergence of agricultural subsidies “cannot be a winner for Canada” because the country does not have the financial might to compete globally in doing so, and notes such measures create distortions in global markets.
Attempts to continue use of the free market assumptions and World Trade Organization (WTO) in isolation to deal with global trade animosity, or try to use ad hoc support as a buffer will be futile, because the international environment has already changed too much, they write.
“Canada’s strategy and policy structures for agri-food development will need to be rethought and redesigned,” they said.
To that end, the paper proposes a list of options.
One suggestion is to pursue a revamp of WTO or a new trade policy with willing countries.
Other ideas speak directly to specific countries. Noting factors such as China’s lack of food security and devastated pork supply, the authors suggest, “Food may be an entry point in discussions with China, not necessarily to settle current drivers in Canada’s tensions with China, but rather as a means to extend goodwill and willingness to engage.”
A post-Brexit U.K. will also need a new agreement, with the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) being the obvious default framework. However, Canada “could explore a further, more intimate commercial relationship in a Canada-U.K. trade agreement,” the authors suggest.
Continued development of alternative crops to lower dependence and offer flexibility to market changes is encouraged, as is broadening Canada’s diplomatic messages around the agri-food trade.
On this, the report says, “Canada will not use food as a weapon in dealing with other countries; how can we assist other countries to join us in this commitment?”
It also notes Canada’s advantage on the global stage in sustainable natural capital to produce food, noting other food-exporting countries don’t have the same natural resources — or ability to efficiently manage them — as Canada does.
In one of the bolder suggestions, the authors say Canada may want to consider a tax on agri-food imports, “To protect its resource base from imports that are not produced as sustainably and are thus underpriced.”
Such pronouncements — considered by the industry to be absurd not long ago — are indicative of the seriousness and abrupt change experienced recently.
“The negative tone may seem exaggerated or even dire. This serves to underline the point that no stabilization payment package, nor crop disaster or livestock disease emergency elsewhere that shocks supply and temporarily lifts Canadian farm prices can change the fact that the world is turning away from liberalized, rules-based trade. Canada needs to face and adjust to this reality,” conclude the authors.