Freer trade still comes with strings attached

Glacier FarmMedia Special Report: Industry officials say they must continue efforts to reduce or eliminate non-tariff trade barriers

Glacier FarmMedia assembled a team of reporters from its network of publications, which includes the Manitoba Co-operator, to examine the implications of Canada’s new trade deal with the European Union on Canadian agriculture and food processing. In coming weeks, watch for a series of articles that zero in on the challenge Canadian agriculture faces turning this new market potential to market share.

Canadian producers and industry officials seem confident that the new trade deal with the European Union will open the market door wider to the region’s 500 million population.

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It’s tough to “nail a number to the wall and say this is the benefit” farmers will see with the Comprehensive Economic Trade Agreement, said Cam Dahl, president of Cereals Canada.

“While I can’t tell you it’s going to be X billions of dollars a year, I think that there are significant benefits.”

Brian Otto, who chairs the Barley Council of Canada, has been farming with his wife, Carolyn, in southern Alberta for 43 years. For the last two years, he’s been working on farm succession with his son, who will be the fifth generation on a farm that grows a variety of crops from barley to safflower to pulses.

Otto said Canada’s agriculture industry is competitive because its players are innovative, whether that be farming methods, crop-breeding programs or the country’s relationships with international customers.

He said exports are key to agriculture.

“And so it’s very, very important that our federal government continues to pursue trade agreements with our trading partners.”

Otto hopes to see the Trans-Pacific Partnership trade deal ratified with Pacific Rim countries and is glad to see the new federal government working on better trade relations with China.

He also sees CETA as a “step forward.”

More meat exports

Otto said it grants more access to Canadian beef and pork, and more meat exports mean more demand for feed barley.

“And that’s where the benefits to barley come because we are a major player in the feed industry here in Canada.”

He said CETA also offers opportunities for Canada to create a food barley market in Europe, such as hulless barley for flour.

Brian Innes, vice-president of government relations with the Canola Council of Canada, said the biodiesel market presents the biggest opportunity for canola in the EU, particularly France, Portugal and Belgium.

“Germany could also present opportunity in the future,” he said.

The European Union produces more canola than Canada, but Innes said Canadian market opportunities depend on the growing season and how much European farmers grow.

Canadian canola also competes with Australia, and demand in other markets will affect exports to the EU.

Most people think about tariffs when talking about trade barriers, and CETA certainly promises to eliminate tariffs on some Canadian products.

However, Dahl said that while he doesn’t dismiss the importance of tariffs, non-tariff barriers are often overlooked and are “quite big.”

“As tariffs come down and are eliminated, governments will turn to other things to block trade, and that’s why it’s important to have an agreement that sanitary and phytosanitary issues will be based on science,” said Dahl.

Framework

For example, he said CETA provides a framework for handling mycotoxins, which is an issue for the cereal industry. Pesticide residues are another big issue.

Innes said CETA also promises to lift tariffs on canola oil, but non-tariff barriers, such as the EU’s “unpredictable approval process for biotech traits,” are also a concern.

He said the EU has committed to a timely processing of new biotech canola traits, but a biotech trait approved in Canada in 2012 was still recently under review in the EU.

Innes said potential benefits also include a science-based approval process, co-operation on low-level-presence policies and reducing the negative impact of regulatory processes on trade.

Increased market access isn’t the same as market share, but Canadian exporters have some experience in that area as well.

Henry Vos, a director with the Alberta Wheat Commission, travelled to Europe in the fall of 2015 as part of a new crop mission in the EU.

CETA wasn’t on the agenda, but Vos said the mission provided insight into how trading relationships are maintained and enhanced.

The six-day trip included meetings in London and Bologna and Foggia in Italy, where delegates met with millers, bakers, pasta makers and other importers.

Vos said the Europeans he met want specific details about the crop and how it’s produced.

Negotiating tactics

Questions that seemed simple on the surface were sometimes negotiating tactics to snag a better deal on Canadian wheat, Vos said.

For example, one U.K. importer said DON levels were high, but he later admitted that he was buying No. 3 wheat because he didn’t like the price of No. 1 wheat.

“I think as Canadians, we have this urge to try and satisfy our customers with our products however we can, but sometimes we need to be careful we’re finding out the complete story before we attempt to make a change.”

However, Vos also said buyers seemed to appreciate the Canadian industry’s response to previous problems with gluten strength.

Several Canadians on the mission had been on previous delegations, and Vos said they had formed long-term relationships with the Europeans, which he saw as an important factor in global trade.

“We’ll get the order, if there’s a strong personal relationship, over somebody in the wilderness, so it’s important that we cultivate those (relationships), and these trade missions were a part of doing that.”

Lisa Guenther with files from Scott Garvey

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