Canada-EU trade deal more important than ever

A couple years ago, when Canada was working hard to complete the Canada-European Union trade deal, a lot of people within farming and agriculture were skeptical.

After all, everybody knew that the Europeans were never going to accept two-way trade, so we were probably just getting played for fools, said many skeptics.

A couple of years later, with the United States threatening to tear up the North American Free Trade Agreement and launching a trade war against China and India, getting along with our friends in Europe seems like something we should embrace.

Luckily for us they’re making it easy, or at least easier than it once was. The free-trade deal came into force in September and the Europeans are showing signs of actually wanting it to work.

Last week, seven consul-generals of European Union nations visited Winnipeg to talk about new trade possibilities and it didn’t seem like an empty gesture. They were making connections and trying to see opportunities.

“The work starts now,” Hungary’s consul-general, Stefania Szabo, told me during the delegation’s four day visit to Manitoba.

Europe has had a bad reputation for being anti-trade beyond its continental borders, a reputation often well-deserved when it has come to bans on genetically modified organisms and regulatory aggressiveness against imports, but there are signs the gigantic trade bloc is looking outward with more desire. It has concluded a number of trade deals in recent years, and its companies are looking for opportunities.

Just look at the almost $500 million pea protein plant just built in Portage La Prairie by French firm Roquette. That’s serious interest.

In a lot of ways western Canadian farmers are suffering because of the high efficiency and rationality of Canada’s grain transportation and marketing system. That efficiency and rationality works great, until it doesn’t.

When politics erupt inside some of our markets, our rational expectations of demand for the supplies we have created can drive right into a wall. If we don’t have well-established markets and customers outside our mainstays, finding a market closed can be a catastrophe.

When weather is a bit worse than usual, like this winter, our railway system proves itself to be optimally organized — for fair weather. Having excess capacity for bad weather no doubt pencils out to “inefficient and costly” if you own a railway.

Overreliance on our biggest existing markets and our efficiently resourced railways isn’t OK for farmers. It’s farmers who sit at the bottom of the value chain, in the place that something unprintable flows down to.

That’s why many farm and agriculture organizations spend so much time and money on developing small markets around the world. If the door suddenly shuts somewhere, farmers need to find other places that are more hospitable.

And that’s why farm and agriculture organizations and companies are never willing to just trust the railways. You can trust the railways to act in their own self-interest, but that’s about it. Some sort of power is required to force the railways to incorporate extra capacity or the ability to quickly boost capacity. They’re not going to do it just to be good citizens.

Farmers are fortunate to have a gaggle of farm and commodity organizations working hard on expanding markets and keeping the heat on the railways and politicians, but the present failure of the grain transportation system and the threats to some of our most important markets underline why farmers can’t back off from forcing critical infrastructure to carry extra capacity.

The Canada-EU deal got a lot less notice and generated a lot less excitement than it deserved. It might not have seemed that promising to ink an agreement with an often-vexatious market when bigger and easier markets and partners were better established and closer at hand.

But with Donald Trump throwing trade bombs and India building walls, having a group of friendly, optimistic Europeans in town sure didn’t seem an inconsequential matter that could be cynically shrugged off.

It seemed like a bit of capacity-building in a world in which rational expectations aren’t making too much sense these days.

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Comments

  • bufford54

    You forgot to mention the $.77 Canadian dollar, Ed.

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