Two new trade deals have given Canadian agriculture a much-needed lift in recent months.
The new potential openings in the Europe Union and South Korea are timely, coming in the wake of the behemoth $1 trillion U.S. farm bill that clearly undermines the Canadian livestock industry with its protectionist country-of-origin labelling rules.
Canada’s true global awakening is nigh. The country now has deals covering the east and west: call it strategic global trade coverage.
In the east, Canada will gain access to Europe, while in the west, it will connect with many of the world’s fastest growing economies, such as Korea.
The Canada-Korea trade agreement will likely be easier to ratify, given the number of countries in-volved. Nonetheless, both pacts are equally crucial for the future of Canadian agriculture.
The eastward-facing EU deal will give our beef and pork industry in-creased access to a market of 500 million affluent consumers and position Canada as a portal between America and Europe.
With the St. Lawrence Seaway acting as a watery highway, Ontario and Quebec are likely to benefit from this deal.
We can see that Canada’s first trade deal in the Asia-Pacific market and commitment to Korea will also better position us at the Trans-Pacific Partnership negotiating table.
The forecasted economic expansion in that region, which includes Chile, Japan, Malaysia and Singapore, is almost unprecedented and will become a wealth creation engine over the next 20 years.
Regrettably, Canada is hardly trading with these countries right now. British Columbia and the Prairies, which transact more with Korea than other regions, will likely look to capitalize on the trade opportunity.
With this agreement, Canada will just be catching up with the EU, Australia and the United States in the livestock arena because these countries and regions already have trade agreements with Korea, the portal to the lucrative Asian market.
Ottawa estimates that the deal will boost Canada’s exports to South Korea by 32 percent.
In actuality, instead of seeing agricultural trade tip in Korea’s favour at a rate of around 14 percent per year, the deal will stop the hemorrhaging. This deal will likely put Canadian beef producers on a more level footing with the U.S. and other counterparts for the Asian market.
Let’s face it, the Canadian beef and pork sectors have been experiencing periods of severe and prolonged financial strain with exceptionally narrow margins, increasing liabilities and general economic stress taking their toll.
COOL, unfavourable currency exchanges, increasing input costs, BSE, swine flu: there always seems to be something on the horizon curtailing growth. As a result, more players in these sectors are leaving.
Often overwhelmed by the ever-powerful pro-supply management lobby, Ottawa never ventured to move boldly on the international front. Just recently, dairy farmers raised a fearful din when Ottawa allowed European cheese to be in-cluded in the Comprehensive Euro-pean Trade Agreement, and it likely won’t die down any time soon.
However, it seems Ottawa won’t be stopping.
Our inward-looking agricultural policies have reached a dangerous point of obsolescence.
Demand for traditional commodities such as milk and beef plateaued years ago as the country grew older and more ethnically diverse. With our relatively small population and abundant access to natural resources, agriculture can expand only by looking outside our borders.
Our trade deficit in the agriculture and agri-food sector has now surpassed $8 trillion.
Given our strengths and competitive advantage, our deficit should at least be a surplus.
The risk-mitigating era in Canadian agriculture may be over, now that the CWB monopoly is gone and signs are appearing that supply management is reaching its expiry date.
At any rate, Ottawa is clearly forcing the debate on the issue domestically by building its case globally. It could help the Conservatives win a second consecutive majority next year.
What is certain is that Canada has shown its willingness to play ball with the rest of the trading world, finally.
Sylvain Charlebois is professor of food distribution and policy and associate dean of the University of Guelph’s business and economics college.