Canada appears to be on the edge of unusual trade relation territory with the United States. Federal agriculture minister Gerry Ritz has said that Canada will impose tariffs on products imported from the U.S. as soon as he receives approval from the World Trade Organization.
The tariffs will be imposed in retaliation to the U.S. government’s continued support of mandatory country-of-origin labelling. The political manoeuvring that follows the WTO’s approval, or lack thereof, will be interesting.
Given that the WTO stands against trade barriers such as tariffs, is it reasonable to expect that it will give the nod to Canada placing tariffs on U.S. products?
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If the WTO approves Canada’s re-quest to implement tariffs on U.S. products, those Canadians using the imported products will feel the pressure from COOL.
If you assume that the imposed tariffs will cause Canadian importers to react negatively, Agriculture Canada will have a new set of domestic and international pressures to deal with.Â
Will the U.S. suppliers receive the intended message? Time will tell.
There appears to be huge opportunity to grow Canadian exports across the globe. To facilitate this potential, the federal government and industry groups have been unflinching in their pursuit of new trade agreements.
These agreements will hopefully allow Canada to increase its export competitiveness around the world and this line of action is hard to argue with.
However, there is a key aspect to trade that may make these agreements less than free, namely trading partner commitment.
In the event of a trade dispute, the WTO decisions are based on interpretations of the trade agreements and individual countries’ commitments. In the case of COOL, the U.S. is obviously not committed to free trade with Canada.
With increased focus on exports, Canada is increasingly reliant on committed trade partners. These commitments are often a tangled web of give and take.
However, if our closest and most cost effective trading partner lacks commitment to our agreed free trade, isn’t it reasonable to expect the same level of commitment, or less, from other countries?
The pursuit of trade agreements are a great first step to driving export profits, but it would be interesting to correlate signed agreements with tangible pounds of exported product and dollars spent to maintain the trade. Such a comparison may assist in identifying where Canadian exports are creating most value for Canadians.
Although the actual pounds ex-ported and the costs of maintaining the agreements vary, one thing appears to be constant with each trade agreement.
The handshake during the signing ceremony does not seal the deal but is merely an introduction to a yet unwritten story of trade relations.
