The Comprehensive Economic and Trade Agreement between Canada and the European Union is on track for implementation in 2017, a full decade since leaders first began discussions.
So now what?
Last week, the Co-operator began a three-part series on CETA, assembled by a team of reporters from the Glacier FarmMedia network of publications. The series explores the advantages and disadvantages of a more open trading relationship with the EU.
Like the deal itself, the joint project involving agricultural writers from the Co-operator, The Western Producer, Grainews and Food in Canada is a first. Working together isn’t always easy, especially when you’re accustomed to viewing each other as competitors.
A similar challenge faces the various interests in the Canadian agriculture sector as it postures for status as a global trader.
Some analysts, such as Laura Dawson, director of the Canada Institute in Washington, view CETA’s significance to Canada is something far more fundamental than the potential increase in trade measured in dollars.
“It is the first trade agreement that we have done with a modern industrialized set of economies for more than 20 years,” she said. The last big deal before that, the North American Free Trade Agreement, was negotiated before there was an Internet.
It is the first deal Canada negotiated in what she calls the “mega-regional” world of trade. The Trans-Pacific Trade Partnership quickly followed and there will be more to come. “Canada needs to be a player in the mega-regionals because eventually these mega-regionals are going to converge,” Dawson said.
The CETA deal also exposes the reality that despite all the work that goes into getting these agreements negotiated and through the process of political ratification, the industry’s work is only just beginning.
Canadian agriculture faces major technical, infrastructure and cultural hurdles in selling to Europe. Industry players will have to work together in new ways if they are to turn this new market potential into market share.
“Twenty or 30 years ago, I think that trade negotiations were like a panacea. If we had the agreement, everything else would be fine,” Dawson said.
“But what we are discovering now is that trade agreement is the first step. A trade agreement will help to reduce the risk, it will help to provide more transparent practices in the market you are looking at, but… our small- and medium-size exporters really need that next step, which is trade facilitation services, which is how to do business.”
The technical and non-tariff barriers are huge. For example, the increased market access for beef is predicated on that beef being raised without the use of growth hormones, which are generally accepted and widely used in Canada.
Despite the potential for lucrative sales, senior industry officials estimate this country currently produces enough hormone-free beef to fill one-fifth of the available quota. With the elimination of the U.S. country-of-origin labelling laws, the large-scale operators will continue to focus on the market they know in the South. Smaller operators may lack the resources to take the risk.
Dawson said the most tangible impediment to Canada extending its global reach is its limited transportation system; it can’t quickly or reliably increase supply for new markets.
That observation was backed up in spades by the recently released review of the Canadian Transportation Act, which said Canada has failed to strategically invest in a transportation system that will maintain and grow its competitiveness on the world stage.
However, while Canada is seen to have natural advantages as a global trader, our Canadian nature is perhaps the biggest thing holding us back.
“As someone who is a trade historian and who has watched these trends, Canada has been largely complacent, we’ve been lulled into complacency by easy trade with the United States,” Dawson said. “We haven’t been particularly aggressive in seeking new markets.”
You would think that a country as dependent as Canada is on global exports would be the opposite.
Not so, says a newly released study by the University of Toronto’s Impact Centre. It found that Canadians culturally are risk averse and they are not as driven to innovate as their American counterparts.
Lead researcher Charles Plant says both qualities contribute to a “lack of aggressiveness” in global trade.
“Canadians, when compared with Americans, tend to be more afraid to take new risks — so they are less likely to try to sell into an area of the world in which they have less experience,” he said.
New agreements open the door to new trade. But turning opportunity into sales requires ambition, a high tolerance for risk and perseverance.
Canada has some work to do.