In 2016, shortly after the Canada-European Union trade deal was signed, Glacier Farm Media published a story outlining the challenges Canada’s agricultural sector would face to take advantage of the deal.
Most concerned understanding new markets, establishing certification processes and whether there’s energy to take advantage of new opportunities in Europe.
The story turned out to be prescient. A year and a half after the Comprehensive Economic and Trade Agreement went provisionally into force, many challenges have yet to be overcome, but that does not mean the deal is a bust. Opportunities abound; it’s just a matter of when it’s right for Canada’s agricultural sector to take advantage of them. Europe, meanwhile, is already out of the starting blocks.
The deal eliminated most tariffs in trade with the 500 million strong, 28-member EU, which for now, includes the United Kingdom. Opportunities in agriculture included “niche” markets that were considered high end.
Canadian hormone-free beef is selling for $15 per kilogram in Europe, which the Canadian Cattlemen Association’s John Masswohl says is “our highest value market on the planet.”
But there isn’t enough of it.
CETA was touted as having the potential for $1.5 billion in new agrifood exports to Europe, including $600 million in beef and $400 million in pork.
Yet, as a story today in The Western Producer shows, for the first 11 months of 2018, Canada has a $155 million trade deficit in beef and pork with the EU.
So what happened?
European markets are regional, posing a challenge for Canadian exporters who strive to understand them. And the EU’s rules on hormone use in cattle means Canada has to adapt an entire industry. A stringent certification process must be followed. A hormone-free beef herd is developing in Canada, but slowly.
The United States remains the biggest market for Canadian beef, so naturally, efforts in trade remain strong there. And the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which went into effect in December, opened up new markets in Asia, particularly Japan, leaving Europe, with its quirky rules, a less attractive option.
As well, the Canadian herd is shrinking, by about 1.5 million cattle in 10 years. Yet the world is producing more beef.
In pork, the U.S., China and Japan continue to be the biggest export markets, and shipments to Mexico are increasing. The EU barely registers. The EU wants certification that Canadian pork is free of the trichinella parasite, yet no such certification exists in Canada.
Non-tariff trade barriers remain a problem. CETA doesn’t address hormone use in cattle, approval delays of genetically modified organisms or GMO labelling and traceability.
Wheat exports to the EU have increased, but the comparison period is too small to be certain of sustained growth, and the outlook on glyphosate in countries such as France, Germany and Italy may prove to be a problem.
Indeed, Italy is using glyphosate as a non-tariff trade barrier on Canadian durum. Exports to Italy have tanked. The Italian government has said it will not ratify CETA, but Canadian officials remain optimistic. (Only 13 EU countries have so far ratified the deal.)
It should be noted that the Europeans have run into their own problems with CETA.
The deal more than doubled allowable tariff-free imports of cheese, but EU countries have not yet been able to capitalize due to the vagaries of Canada’s quota system.
There is a lot that goes into success with the opportunities that CETA presents. Much of the success by Canadian producers in the European market will depend on how much they want it, or need it.
Karen Briere, Bruce Dyck, Barb Glen, Brian MacLeod and Michael Raine collaborate in the writing of Western Producer editorials.