Our March 24, 2016 issue marks the second in a series of Special Reports prepared by reporters from the Glacier FarmMedia network, which includes the Manitoba Co-operator. In these articles, reporters explore the implications of the yet-to-be- ratified Comprehensive Economic and Trade Agreement between Canada and the European Union.
Grain-marketing professionals in the towers at Winnipeg’s Portage and Main intersection are busily analyzing how the Comprehensive Economic and Trade Agreement could affect their companies, industries and interests.
Institutions such as the Canadian International Grains Institute, companies such as Richardson International and organizations like Pulse Canada and the Canola Council of Canada view the free trade deal with the European Union as potential for more exports.
However, most also see the European market as a tough nut to crack, CETA or no CETA.
“They really don’t want to import grain. They want to grow everything themselves. They make it difficult for us,” said Richardson’s Terry James, who has decades of experience exporting crops to Europe.
“This agreement may help resolve some of those problems, but it’s not going to happen overnight.”
James has dealt with Europe both as a quality market and as a vexing and undependable market.
For example, large and steady sales of flax were suddenly shut down in 2009 by the Triffid crisis when GMO traces were found in shipments to Europe.
However, at the same time, premium sales of other crops continue year after year.
“We’ll still sell durum to Italy. We’ll still sell high-quality wheat to the U.K. We’ll still sell to markets from time to time that we can get our spring wheat into,” said James.
The situation for pulse growers and marketers has generally been more relaxed than for genetically modified crops such as canola or crops that are already grown in abundance in Europe.
Sales of Canadian beans, peas, lentils and soybeans have tended to occur without a lot of problems, and that’s something Pulse Canada wants to preserve, said Gord Kurbis, head of market access.
CETA establishes committees and processes through which phytosanitary, GM and residue issues can be dealt with instead of allowing them to quickly escalate into political issues, Kurbis said.
“If committees can be used to address problems before they arise, by harmonizing standards or approaches… then that’s great,” he said.
It might be a key defence for Canadian exporters when dealing with hypersensitivity in the EU.
“Tolerances and policies generally in the EU that relate to the use of technology in food production and just how satisfied consumers are doesn’t seem to be going in the right direction,” he said.
The Canadian pulse industry wants tariffs and other processing costs reduced so that they aren’t more than what is paid on raw seed shipments.
Kurbis said CETA should accomplish that.
“It’s really creating an enabling condition,” he said.
“We would like to be in the situation where we’re bursting at the seams with respect to value-added processing here in Canada, and the tariffs really are the only thing holding back the development.”
The EU now applies pulse ingredient tariffs of 5.1 per cent for fibre, 7.7 per cent for flour, 12.8 per cent for protein and $245 per tonne on starch.
CETA clears away those tariffs except for the one on starch.
However, James said there are multiple risks when facing European regulations.
The GM issue is a significant risk because of the zero tolerance for unapproved varieties. As well, phytosanitary issues can prevent ships from being unloaded, chemical residue limits can be set extremely low and new concerns such as requiring “sustainability certificates” can interrupt the trade flow.
“These are all the other things that I see, one after the other, that create added risk and problems into Europe,” said James.
“There are a lot of moving parts over there.”
However, most of Winnipeg’s grain trade will probably find future business with Europe less stressful, if always fraught with doubt, if CETA manages to stop disputes from escalating into the political realm.