A seasoned trade negotiator says trade agreements will do a lot to open markets for Canadian beef, but once they’re open, a second ingredient is needed — customer demand.
“Despite all the constraints and problems there may be, the future for Canadian agriculture and for Canadian meat production and beef production, I think is really very bright,” John Weekes told a seminar for members of the Cattlemen’s Young Leaders program here last month.
Weekes, an Alberta Livestock and Meat Agency (ALMA) board member, served as Canada’s ambassador to the World Trade Organization, as ambassador to GATT during the Uruguay Round of trade negotiations and as a Canadian negotiator for NAFTA. He is now senior business adviser for the law firm Bennett Jones.
Weekes says that politically, now is the time for the Canadian beef industry to really push for increased foreign market access. With more than 50 per cent of Canadian beef now exported, increased growth has to come from other countries.
“There’s a lot of opportunity in taking advantage of markets in Europe and Asia where there’s still increasing demand for meat, and it’s growing quite rapidly in places like China and Korea,” Weekes said, adding that markets in Asia and the EU are significantly more valuable on a per-kilogram basis than exports to the U.S. However, the potential payoff is often offset by high tariffs.
“The barriers to foreign access are often quite high and this is particularly true in Asia where you have tariffs, for instance in Korea on beef and pork, of 40 per cent. Beef tariff in Japan is 38.5 per cent, and through a trigger mechanism if there’s a certain volume going in it can go up to 50 per cent, and you can see similar numbers when you look at other markets,” Weekes said.
Falling behind the U.S.
A recent free trade agreement between the U.S. and Korea means U.S. beef and pork can be imported for less, and tariffs are being reduced annually with a total phase-out in 15 years. “You can already see the order books drying up on Canadian pork exports to Korea right now,” Weekes said.
He said the Canadian government is responding. “The Harper government has an ambitious trade negotiations agenda. It’s perhaps the most ambitious trade agenda we’ve ever had.”
New talks with Korea look promising to reignite negotiations, preliminary talks have begun with Japan, India is on the table (albeit not for beef,) and talks with the mega-market of China are progressing.
With a smorgasbord of nations as possible export destinations, it can seem overwhelming to know which countries to target.
“It’s very important to set some priorities. You can’t just say, ‘Well, we want everything.’ It’s just not manageable to go about achieving everything. You should figure out where your key markets are — and this has been done to a large extent — and what the priority barriers are,” Weekes said.
As the government works on opening the door to foreign markets, Weekes says it’s critical that work to create consumer demand is done at the same time. Market access isn’t worth a red cent if no one is buying the product.
“Canada is a relatively small player and I think we need to make clear to our partners what it is we’re trying to achieve,” said Weekes, emphasizing that industry cannot give the government mixed signals on trade policy. “We need to work together in advising the government on trade negotiations. If the industry comes at them with fractured voices as to the direction they should be taking, inaction is the mostly likely result.”
Weekes said that with a surge in bilateral free trade negotiations among many countries — what he calls “competitive liberalization” — the time to act is now. Many countries are feeling pressure to sign agreements they believe will increase their security. However, the very meaning of security may be changing, Weekes said.
“Increasingly I think people are not just looking for security of energy supply but are starting to look for security of food supply,” he said. “We’re now seeing a transition to a world that is beginning to run short of food resources. We’re going to be responding to pressures to supply these other markets, which is certainly a much more favourable game to be in.”
Weekes said ALMA’s priority in its business plan has been to increase foreign trade opportunities.
“I think it’s really interesting that a provincial government agency has put this as its No. 1 priority, and that’s quite challenging from the perspective of sitting in this place to think about how you can advance those interests from this vantage point.”