The anti-globalization movement has been around for about two decades. It floundered at first, but it is now picking up steam, setting its sights on tangible targets such as trade agreements.
This could be a serious problem for the agriculture sector in Canada.
Two recently negotiated trade deals — the 12-nation Trans-Pacific Partnership, which eliminates or reduces tariffs in the key Asian markets, and the Comprehensive Economic and Trade Agreement between Canada and the 28-nation European Union — have yet to be enacted, but both offer important opportunities for Canadian agricultural exporters.
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However, billions of dollars in potential increased trade for Canada could be thwarted by political machinations now underway in the United States and Europe.
U.S. presidential candidates Donald Trump and Hillary Clinton oppose the TPP. CETA is facing a backlash in Europe. As well, the North American Free Trade Agreement is coming under fire from Trump.
Pulling out of NAFTA requires six months notice, and while Trump hasn’t threatened to pull out of the World Trade Organization, he has threatened to undermine it by using its provisions to initiate a dispute with China over currency valuation and digital espionage.
Canada’s agricultural exports would be severely affected under the above scenarios.
Take, for example, the dispute resolution settlement mechanism offered by the WTO, which ruled in Canada’s favour four times during the fight against U.S. country-of-origin labelling legislation that restricted Canadian meat, fruit and vegetable exports to the United States.
It took eight years, during which Canada lost $3 billion annually in trade, but the resulting rulings pressured the U.S. to rescind the legislation.
That’s just one dispute.
NAFTA’s dispute mechanism has made 116 rulings, not the least of which concerned the continuing existence of Canada’s supply management sector. Absent valid dispute mechanisms in trade agreements, trade disputes could proliferate and become much more long-standing.
The TPP largely sheltered Canada’s supply management sector. If the U.S. does not abide by the TPP and renegotiates or even disavows NAFTA, it may well be in the mood to challenge supply management in Canada.
Trade between the U.S. and Canada in agriculture and agri-food has tripled since NAFTA was enacted in 1993, now exceeding $50 billion a year.
In livestock, crops, fertilizer and farm machinery, Canadian and American markets are largely integrated.
TPP opens the potential to increase trade by billions of dollars for Canadian exporters across the agricultural sector. CETA is more esoteric in its opportunities, but entrepreneurs will find them.
Such are the powerful effects of trade agreements. If the U.S. and Europe get in the mood to renounce trade agreements and instead use their economic might to focus on protectionism, Canada had better be ready to build more pipelines and railway capacity because we will need to significantly increase our exports elsewhere.
Is this likely to happen? Is Clinton, if she’s elected, likely to be so anti-trade when she doesn’t have to fend off Trump’s rhetoric? Is Trump likely to try to impose a new world order on Canadian trade? Is Europe about to stifle trade with North America?
Perhaps not, but neither can we rule it out.
