TPP called critical to continued beef growth

Producers say the vitally important Japanese market would be threatened by a failure to reach a new trade deal

Canadian beef farmers could be out millions of dollars in new exports if Canada is shut out of the Trans Pacific Partnership.

Beef exports have been growing significantly to Japan and other parts of Asia. Allowing other competitors such as Mexico and New Zealand better access to that market through the TPP means “we would effectively be knocked out of the Japanese markets, other than some commodity beef,” says Dennis Laycraft, executive vice-president of the Canadian Cattlemen’s Association.

“I’d say we’re entering into, I’ll say, over the next four weeks, the most critical period in decades for trade, with what happens with TPP and what’s likely to happen in (the North American Free Trade Agreement),” he says.

Laycraft was one of several speakers at the Beef Industry Convention in London, Ont., to lay out the potential losses to the Ontario and Canadian cattle sectors if the TPP isn’t signed by Canada.

TPP member states were expected to meet Jan. 22-23, when they hoped to move ahead with the deal. Laycraft says there are $200 million worth of opportunities if Canada is outside of the TPP.

Canada has not committed fully to the TPP, since the United States withdrew, but other countries are moving ahead with it.

Laycraft said he understands the federal cabinet is split on whether or not to continue with the TPP deal.

The challenge for Canada is that it is renegotiating NAFTA at the same time as it is having to make a decision on TPP. There are concerns over auto sector provisions in the TPP and the dairy sector is concerned because the agriculture parts of the deal haven’t been opened up and renegotiated since the U.S. left the deal. The Canadian dairy sector was satisfied with giving up 3.25 percent more access to TPP deal members when it included the United States, but currently it would still have to give up 3.25 percent to remaining TPP members, in addition to any access that may now be given up to the U.S. in the NAFTA talks.

Australia’s free trade deal with Japan has meant significant gains for Australian meat, with a 27.2 percent tariff. That compares to the 38.5 percent tariff currently on Canadian beef. With the TPP, the tariff on beef for all countries moves down gradually to nine percent, but as a first step to 27.2 percent.

The Ontario Corn Fed Beef program, which represents most of the exported branded beef from the province, increased its exports to Japan by 51 percent in 2017 compared to 2016, says John Baker, brand management and business development with the Ontario Corn Fed Beef program.

“There are real opportunities. It’s a critical time for us.”

Laycraft said that the NAFTA renegotiations are reaching a critical period, when the major areas of conflict need to be sorted out.

“Very difficult topics have been put on the table on purpose by the Americans. It’s important that countries go and find some creative solutions,” he says.

If American President Donald Trump pulled the U.S. out of NAFTA, then some American industries would take the U.S. administration to court because there’s no clear legal opinion over whether the president can unilaterally take the country out of NAFTA. And even if the Americans pulled out, they would like continue to negotiate.

Laycraft says their legal opinion is that if NAFTA was killed, then trade rules would follow the Canada-U.S. Trade Agreement that preceded NAFTA, but he didn’t rule out the Americans terminating both agreements.

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