Oilseed crushers in Canada also depend on the U.S. for sales of canola meal. In 2024, 66 per cent of canola meal exports were shipped south of the border.

With the U.S. market worth $5.7 billion in canola sales last year, Canadian growers and industry leaders will be carefully watching the upcoming review of the Canada-U.S.-Mexico Agreement.

On March 5, the Office of the U.S. Trade Representative (USTR) announced the first round of bilateral discussions to prepare for the joint review of CUSMA.

The discussions were between Mexico and the U.S.; Canada wasn’t involved.

This tactic, of talking to Mexico and Canada separately, is possibly how the U.S. will approach the review, said Patrick Leblond, a professor at the University of Ottawa’s Graduate School of Public and International Affairs.

“There’s the (option) we renew CUSMA, but the U.S. negotiates bilaterally with Canada, bilaterally with Mexico, and then they try to fit that within the existing CUSMA.”

Another option would be for the countries to make bilateral deals outside of CUSMA, Leblond said.

Implications for farm futures

Many analysts, including Leblond, are deeply worried about the trade deal and potential outcomes. The Americans could pull out of CUSMA this summer and basically say the deal is invalid, he said.

“The Trump administration ultimately cannot be trusted. … We can negotiate, we can try to come to a deal, but we have no guarantee whether that deal will be respected.”

Others, including leaders in the canola industry, are more hopeful. U.S. farm organizations are strong supporters of the trade deal, and their lobbying could be a difference maker in Washington.

“We see really positive support from agriculture, on both sides of the border, for the benefits of CUSMA,” said Brittany Wood, ‪senior manager for transportation and trade policy with the Canadian Canola Growers Association.

Farm-level support is helpful, but there are also established supply chains between canola crushing plants in Western Canada and users of canola oil in the U.S.

Canola ripples and waves

Mondelez International, a food manufacturer with headquarters in Chicago, is a major buyer of canola oil for its line of snack foods, including Ritz crackers.

That’s just one example. Canola oil is the No. 2 edible oil in the U.S. market, says the Canola Council of Canada.

“We’ve traded canola oil into the United States, for decades … bottled oil, packaged food, restaurant use.” Wood said.

There’s also demand from the U.S. biofuel industry, which relies on canola oil to produce biodiesel and renewable diesel.

If there was a disruption in canola oil exports because Trump crushed CUSMA, the American market would be extremely difficult to replace.

Domestic surge

However, there are positive developments within Canada. Domestic use of canola oil has been increasing and is expected to climb in future years.

“In 2021, we had about one million tonnes of canola oil staying here in Canada,” Wood said.

Last year, the amount was around 1.6 million tonnes, thanks to additional demand from biofuel production.

Wood hopes that trend continues, but it will require regulations that encourage biofuel production and use in Canada.

“That is where we see the growth opportunity.”

Meanwhile, there may be room to rebuild canola oil exports to China. From 2016 to 2020, canola crushers exported 700,000 to 1.1 million tonnes annually. Since 2022, volumes have dropped to around 120,000 tonnes a year. With the federal government working to renew its relationship with Beijing, restoring that market could help offset reliance on the U.S. — though that prospect remains uncertain.

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There has been a lot of opposition to the bill from grain and livestock exporters who say entire deals are at risk if the supply managed sectors are kept off the table. The bill is currently in second reading in the Senate.

Speaking at the Canadian Federation of Agriculture annual meeting today, Verheul said each side always has its “red lines” when talks start, so they aren’t really a surprise.

“I really see this more as a political signal of support to the dairy sector and to supply management more broadly,” he said.

“We’ve already negotiated with most of the major dairy exporters to Canada.

“I don’t think there’s actually an imminent threat. This is about politics, about support. I don’t expect this to have a huge impact on negotiations going forward.”

Verheul said Canada would prefer that politics be kept out of trade and let markets operate. He said while the World Trade Organization at the moment is fundamentally broken, bilateral agreements are working well and where most efforts need to take place.

He was Canada’s chief negotiator from 2017-21, working on the new U.S.-Mexico-Canada Agreement and the free trade deal with Europe. Between 2003 and 2009 he was Canada’s chief agricultural negotiator.

—Karen Briere writes for the Western Producer from Saskatchewan.

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Agricultural exports are important economic drivers. Once you lose a market, it is really tough to get it back. In 2017, we exported $140 billion in farm products, which is $21 billion more farm products than we imported. We cannot afford to lose our place as a leader in the agricultural global marketplace.

Tariffs are severely impacting our three largest markets, which are Canada, Mexico and China.

• Read more: G20 ag ministers slam protectionism, pledge WTO reforms
• Read more: NAFTA teams ready to ‘start solving’ stalled issues, Mexico says

In 2016, agricultural and food exports accounted for nearly one-third of Minnesota’s total merchandise exports. Specifically, more than 24 per cent of all Minnesota agricultural exports go to Canada and nearly 24 per cent of all Minnesota agricultural exports go to Mexico.

President Trump often talks about our need to export more things that we make, but from a rural America perspective, we also need to export more of the things we grow. U.S. agriculture carried a favourable trade balance, a surplus of $17 billion in 2017. Minnesota farmers recognize that more than 95 per cent of the world’s population lives outside of the United States and that we have the ability to reach customers outside of our borders through protecting, modifying and modernizing our current trade agreements and expanding market opportunities through new free trade agreements.

Minnesota Farm Bureau strongly believes that we need to resolve trade concerns before resorting to tariffs. It is critical that we limit trade disruptions and resolve trade disputes through negotiations, not tariffs or withdrawals from other trade agreement discussions. Once you lose a market, it is really hard to get it back.

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The U.S. pork sector has been caught up in the latest round of trade volleys between the United States and China.

The Chinese government announced a sweep of tariffs April 1, blaming new U.S. tariffs against steel and aluminum, in effect since March 23. Pork is among eight products facing an extra 25 per cent penalty, China’s Finance Ministry announced. In another blow, China announced that it would not roll back tariffs on 120 other U.S. products as obligated by the World Trade Organization (including fruit, nuts, sparkling wine and ginseng), but would be raising them by 15 per cent instead. The tariffs impact an estimated $3 billion of U.S. goods and came into effect April 2.

Manitoba’s pork sector expects to take a hit alongside the U.S., given how closely the two are tied.

Andrew Dickson, general manager for the Manitoba Pork Council, says market uncertainty from the tariffs will directly impact prices north of the border.

“In Canada pretty well all our producers, our own formulas, are based on the national base price in the United States… if they get less money, there’s disruption in the marketplace, our producers will automatically get less money,” he said.

• Read more: Pork producers tackle new challenges, opportunities in 2018

Tyler Fulton, director of risk management with H@MS Marketing Services, estimates that U.S. hog price will drop three to five per cent as a result of lower volumes and demand. That price drop will transfer directly to Canadian producers in the short and medium term, he said.

“All of the hogs that are sold to packers in Western Canada are typically sold on a long-term contract that references a U.S. pricing point and then there’s some conversions that happen that include the conversion into Canadian dollars and also just some things that kind of reflect just what defines the relationship between Canadian and U.S. pigs,” he said. “It’s really just a straight, direct function of what those American prices are.”

Prices may adjust, however, if the current situation extends longer than 10 months, he added.

“If Canada consistently has a comparative advantage over its U.S. counterparts in terms of export markets and export potential, then you could make a pretty solid argument that those past relationships that are worked into those long-term packer agreements need to be changed, need to be adjusted, because the gains would just accrue then to Canadian packers as opposed to Canadian packers and producers,” he said.

In terms of live exports from Manitoba, Fulton added that a drop in U.S. hog market price tends to trickle back towards weanling prices.

Manitoba is Canada’s largest producer of piglets and exports a steady stream of feeder pigs south of the border, although Dickson says it is too soon to see if the tariffs will impact that demand.

Producers south of the border are also waiting to count the impact of the recent changes.

Trent Thiele, president elect of the Iowa Pork Producers, said he was disappointed to hear about the tariffs, but was unsure how hard it would hit their industry.

“There is a little concern but nothing extreme because we understand the negotiation process and we’re hoping that this is all part of that yet,” he said. “There’s always going to be some retaliation here and there. It sucks that it ended up being on our products but in the end game I hope it’s better for everybody.”

A silver lining?

Canadian processors may be able to move in on Chinese market share thanks to the tariffs, both Fulton and Dickson said, although Fulton noted that advantage will be split with other regions, such as Europe, that will also be eyeing the vacuum left by the U.S.

Dickson also cautioned that it might create a catch-22 between producers and processors in Manitoba.

“They’re going to be in a dilemma because they don’t want our producers pulling back on production because they’re getting a lower price,” he said.

The Manitoba Pork Council is still hoping for a return to normal trade patterns, although the growing trade tension between the U.S. and China continues to make news.

As of April 9, the U.S. may be on the cusp of another tariff hike, impacting a reported $50 billion of Chinese products. The U.S. has accused China of misappropriating technology from foreign companies (an accusation China has denied) and has pulled together a list of 1,300 potential targets for a proposed 25 per cent tariff, the Associated Press reported in the first week of April. In response, China threatened tariffs on a similar $50 billion of U.S. goods April 4, including soybeans, to the dismay of American farmers.

“We’re hoping that cooler heads will prevail and everybody will sort of get hold of themselves and say, ‘This is a really bad idea. It’s not going to help anybody and let’s all go for a walk, come back and rethink our positions,’” Dickson said.

Additionally concerning, according to Fulton, is a general trend towards protectionist trade policy.

He argued that the U.S. should give some sign, such as a finished NAFTA deal, to reassure a market currently on edge about the future of free trade.

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“In D.C. it’s chaotic. It’s the craziest situation I’ve ever seen, we’re shooting ourselves in the foot… I do think the U.S. is behaving so badly that it’s going to create opportunities for Canadian agriculture,” Hayes said Wednesday during Keystone Agricultural Producers’ (KAP) annual meeting.

Immediately after Trump took office last year he pulled the U.S. out of the Trans-Pacific Partnership (TPP). On Tuesday it was announced the TPP’s remaining 11 nations, including Canada, had reached a deal and would sign it in March.

According to Hayes, this is going to give Canada a leg up on the U.S. for the foreseeable future — even if the U.S. has a change of heart.

“Is it in Canada’s best interest to allow the U.S. back in (to TPP), given that they would have preferential access to Japan and Vietnam? I suspect that the damage is permanent, that the U.S. will never be able to get back into TPP,” he said.

North American Free Trade Agreement negotiations are ongoing as well and for Canadian agriculture it might not be the worst thing if it doesn’t work out. According to Hayes, it could lead to Canada receiving preferential access to Mexican markets.

“In the commodity business you can’t pay a 20 per cent duty if the Mexican producers are paying a duty and if the Canadian producers are not paying a duty. Again there could be opportunities here for Canada to the detriment of U.S.,” he said.

There is a plethora of opportunities for Canada trade-wise as the U.S. digs itself into a deeper hole, according to Hayes. During the KAP presentation he praised the Canadian government’s current approach to trade agreements.

“One of the things I’ve noticed is as bad as U.S. trade policy is right now, Canada has actually got some rational trade policies. You’re cutting a European free trade agreement, a bilateral potential free trade agreement with Japan,” he said.

For Canada there is potential for more trade opportunities, Hayes expects demand to grow from densely populated Asian countries such as China.

China has become a wealthy nation and is now paying attention to policies such as animal welfare and cleaning up its environment. It’s become a “rich country with rich country’s desires,” Hayes said.

Producers in China used to raise their own individual pigs and grow small crops, but its agriculture has modernized with larger operations. According to Hayes, China will soon begin to realize farming crops such as soybeans with manual labour on its mountainous terrain isn’t productive and it should switch to growing fruit and importing other crops to be more profitable.

This should have Canada thinking of trying to make a trade deal with China, according to Hayes.

“If (Canada) can get rid of those duties going into China and especially if other countries do not have that access it could revolutionize (Canada). I’ve seen it in Australia. I’ve seen it in New Zealand. When China starts to buy your product you become prosperous.”

If Canada does continue to take advantage of these trade opportunities in a few years it will give the agriculture industry a leg up against its U.S. counterparts, according to Hayes.

“I think the U.S. will recognize eventually that not participating in these agreements is against its long-run best interest, but that’s not the case right now,” he said.

— Ashley Robinson writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @ashleymr1993 on Twitter.

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This time around, both major candidates for president opposed trade agreements arguing that they did not adequately protect those whose employment was negatively affected by these agreements. When the TPP was signed in October 2015, it was expected that it would be ratified by the U.S. in early 2016.

After experiencing resistance in the first part of the year, conventional wisdom held that it would be brought up and ratified during the lame-duck session between the election and the swearing in of the new president and Congress. Given the opposition to the TPP by both presidential candidates, the TPP was off the table during the lame-duck session of Congress.

In agriculture, as in the industrial sector, there have been winners and losers and the winners have not compensated the losers.

With NAFTA, we saw U.S. corn flood across the Mexican border undercutting limited-resource Mexican farmers who depended on the sale of corn for human consumption for their livelihood. With few opportunities for local employment, many of these farmers and their family members crossed the border looking for employment and a better life in the U.S.

Ironically, the U.S.-Mexican corn trade did not result in lower tortilla prices in Mexico. For the U.S., it also did not result in increased total corn exports. Corn exports remained below the 1979-81 peak. In addition, the U.S. balance of trade for primary agricultural products with Canada and Mexico has averaged -$3.5 billion per year between 2006 and 2015. If manufactured food products are added into the calculation, the balance of trade for all agriculture averaged -$2.2 billion per year over the same period.

In particular, trade negotiators often put grain producers front and centre to help promote trade agreements but, when put into effect, the agreements seldom improve grains’ contribution to a positive U.S. balance of payments.

In our discussion of agricultural trade, we are not talking about items that a country cannot produce or cannot produce in quantities sufficient to meet domestic demand. In the U.S. we need to import agricultural products like bananas, mangoes, cocoa, coffee, and tea. But, it doesn’t take a trade agreement to open the market for those products; importing countries usually don’t put tariffs on products they cannot produce.

Our concern about agricultural trade policy centres around the issue of timely market adjustment in crop (not simply grain) production in the U.S. and around the world. How do you make free trade policies for a sector that does not make the timely adjustments in the quantities supplied and demanded that are central to the free market rationale? In addition, what should agricultural trade policies look like in countries where agriculture provides employment for a large portion of the population and industrial employment is not sufficient to provide a livelihood for those moving off the land?

It seems to us that once we agree that aggregate agriculture is characterized by market failure, it makes little sense to impose the same trading rules on agriculture as for other economic sectors. It makes even less sense to expect for farmers of a nation to believe that we will give them access to markets in developed countries in exchange for accepting developed country rules for intellectual property rights.

Agriculture was once placed outside the General Agreement on Tariffs and Trade because world leaders understood that agriculture was distinct from other economic sectors and required different rules. Over the years, many began to believe that agriculture was no longer as distinct as it once was and it should be governed by the same rules as other products. As a result, the Agreement on Agriculture, which brought agriculture into the same trade agreement structure as other products, was negotiated as a part of the pro­cess that brought about the World Trade Organization in 1995.

We are of the opinion that agriculture is different and agricultural trade should be negotiated separately from other sectors that do not face the kind of market adjustment problems that characterize agriculture.

The cheapest agricultural production in the world may be the most environmentally damaging. And because agriculture is a major user of land, the need to protect the environment should be taken into account in establishing trade policies.

As we have seen with Mexico, changes in agricultural policy can have a dramatic impact on local employment in importing countries. Certainly countries will want to consider the employment factor in any agricultural agreement they sign.

Free trade may make cheap food widely available, but for a billion or more people food is still too costly. What they need is: a) access to land on which they can produce their own food, b) access to stable employment that will enable them to purchase the food they need for themselves and their families, or c) policies that directly provide them with the food they need. Agricultural trade policies must take employment consequences into consideration and recognize the right to food as a basic human right.

To help deal with these issues, Via Campesina has argued for food sovereignty. According to the February 27, 2007 Declaration of Nyéléni, “Food sovereignty is the right of peoples to healthy and culturally appropriate food produced through ecologically sound and sustainable methods, and their right to define their own food and agriculture systems.”

We believe that national governments need to take the livelihood of their citizens into consideration in any trade agreement, agricultural or otherwise. If we heard right, that issue was at the heart of the anti-trade sentiment expressed in the last presidential campaign.

Policy Pennings is a weekly column on agriculture policy issues co-authored by Dr. Harwood D. Schaffer, director, of the University of Tennessee’s Agricultural Policy Analysis Center and Dr. Daryll E. Ray, retired director, Agricultural Policy Analysis Center.

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The basic principle of free trade is clear. Imagine two isolated neighbouring islands. One is green and fertile, capable of producing more food than it can consume. The other, while dry and barren, possesses natural resources needed to manufacture consumer goods. Farmers in the fertile island sell food to the other in return for the raw materials needed to manufacture products.

Over time, factories on one island become more efficient at making some products, while manufacturers on the other island become more efficient at producing others. Consumers get access to the lowest-cost supplier.

But what if one island is a free market democracy and the other a socialist aristocracy? What if one has a culture of rule of law through an independent judiciary, while the other has a judiciary that’s often an instrument of repression?

What if one respects international intellectual property laws, while the other facilitates industrial espionage and cheap knockoffs? What if one economy is driven by private enterprise, while the other gains advantage from government policy and corruption?

What if one island has a free and open media, while the other has only state-controlled media? What if one island protects human rights, while the other throws those critics in jail for treason?

Finally, what if one island holds industries to strong environmental standards, while citizens in the other choke on smog and drink toxic water?

In such circumstances, wouldn’t the leader of the first island be extremely unwise to consider entering into free trade with the other?

Of course, the “other” island I’m describing is China.

And there are even more reasons for Canada to stay away from free trade with the great dragon. What do we have to sell them? Certainly not manufactured goods. There are very few that China can’t produce more cheaply.

The crux of the Canada-China trade relationship has always been that we send them raw materials and they ship consumer goods back to us. Since natural resources are globally traded commodities that already move tariff free, free trade would provide absolutely no benefit to resource exporters.

On the other hand, removing tariffs on manufactured goods would put our manufacturers at even greater disadvantage.

My six years on the board of the largest foreign bank operating in China provided insights into why free trade with that country is even more unwise.

My stint coincided with China’s supercharged gross domestic product growth, which was dominated by what bankers call “capital account” — massive government infrastructure programs and equally massive loans from government banks to build industrial capacity.

The result is a production capacity surplus that will hang over the global processing and manufacturing sectors for decades.

Then there’s the contrast in environmental enforcement. China operates more than 2,300 coal-fired power plants with almost 1,400 more planned or under construction.

Cheap power, subsidized manufacturing plants and huge overcapacity. Who can compete with that?

Finally, there’s China’s self-serving track record in trade, as seen in the recent canola trade spat. Could the enormous stockpile of Chinese canola have anything to do with it?

Gwyn Morgan is a retired Canadian business leader who has been a director of five global corporations.

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Responding to questions at an unrelated event in Winnipeg last week, Agriculture and Agri-Food Minister Gerry Ritz said Canada has put forward strong proposals regarding supply management when it comes to TPP negotiations. On July 21, the U.S. government publicly criticized Canada in an open letter, saying it was, “unwilling to seriously engage in market access discussions regarding dairy.”

“We consider the proposals we’ve put forward balanced in scope and we want to make sure those who export have the ability to export,” Ritz said. “And under the supply-managed system we recognized the value that it brings to the Canadian economy, we make all these arguments at the negotiating table, we don’t do it in public, nor does any other country for that matter.”

The exception to that rule may be the United States, which has put continuing pressure on Canada regarding supply management, particularly around the country’s dairy industry.

“Certainly we don’t tip our hand in public, they may think that’s a good way to negotiate; I don’t,” said Ritz.

The minister did say that Canada is paying close attention to products the U.S. regards as sensitive, such as sugar. He also noted that U.S. subsidies have not a free pass during talks.

“We point out the realities of what other governments do under the guise of helping,” said Ritz, referring to the U.S. Farm Bill.

But some of the U.S. farm programs have been grandfathered in by the World Trade Association, making them difficult to address directly.

Despite the hurdles ahead, Ritz was optimistic that Canada would be party to the agreement.

“There are a number of countries that want us at the table, including Japan,” he said. “I was a little concerned when I saw their trade minister say there’s two countries that may not make it into the end game, I don’t think Canada is one of them… the Mexicans like us at the table, the Japanese like us at the table, as do a lot of the other countries.”

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Export-oriented agri-food industries are keen to gain access to Europe’s 500 million consumers, but tariffs protecting supply management, genetically engineered crops, and rules of origin are among the most sensitive issues in the talks, according to a committee report based on months of hearings. However, government procurement rules and intellectual property protection will likely make or break the deal in the end, the report predicts.

Pork and beef groups are pushing for duty-free access to Europe. The Canadian Cattlemen’s Association says the protocol for demonstrating Canadian beef conforms with the European requirements and “should be the same as that used for American breeders who export their beef to the E.U. market,” while Canadian Pork International is requesting a tariff exclusion and special tariff rate quota for Canadian pork along with simplified administrative procedures.

Grain and oilseed groups are requesting simplified certification procedures for Canadian grains with a “reasonable” threshold level for genetically modified grain in shipments.

Meanwhile, Europe’s agri-food sector wants improved access for its cheeses and a reduction in tariffs protecting the Canadian dairy sector, the report said.

Both the NDP and Liberals submitted dissenting reports, which included calls to ensure that supply management isn’t watered down through increased access or lower tariffs.

The NDP accused the government of trying to rush through a trade deal before Canadians became aware of the many ways it could damage the country.

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OTTAWA/REUTERS / Canada and the European Union will need to put in quite a lot of hard work to settle several key differences in talks on a proposed free trade deal, according to senior officials.

Recent talks, the ninth round to date, are aimed at finalizing a deal by next year. Both sides said significant progress was made in many areas but there are still disagreements on issues such as investment protection, intellectual property, access for agricultural goods, and opening up local and national procurement markets.

One official said discussions have solved 80 per cent of the areas and negotiators are optimistic about resolving the remaining ones, but it won t be easy.

What is left to do is probably the hardest part but also the most valuable and it will require quite a lot of hard work, said the official.

Negotiators from both sides said the differences stemmed in part from a shared determination to lift tariffs and liberalize trade in areas they had not tackled in previous bilateral deals.

Canada is keen to diversify its exports away from the U.S., and a pact with Europe would be the biggest since it signed 1994 s landmark North American Free Trade Agreement with the United States and Mexico. Ottawa says a treaty with Europe would increase two-way trade by 20 per cent. Last year, bilateral trade in goods between Europe and Canada was worth $77 billion, far shy of the Canada-U. S. total of $556 billion.

One sticking point is Canada s insistence on protecting supply management by retaining stiff tariffs on imports.

We are interested in some of the sectors under supply management in Canada, said one official. If they re not on offer at the end of these negotiations, there will be things that are not on offer on our side.

Ottawa is keenly aware of critics who complain that opening up the Canadian procurement market could result in too much power being given to foreign firms.

As we enter the next phase of negotiations, our government will continue to vigorously defend Canadian interests to ensure any agreement we conclude benefits Canadian businesses, workers and their families, said Trade Minister Ed Fast.

Fast said there are particularly promising opportunities for Canadian firms in the giant EU procurement market, worth some $2.4 trillion a year.

Speaking earlier this week, officials said the European side was unhappy with Ottawa s stance on opening up the procurement market and also wanted to see more progress on allowing foreign investment in the heavily restricted Canadian telecommunications market.

———

What is left to do is probably the hardest part but also the most valuable and it will require quite a lot of hard work.

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