Canada closely watches European-American talks

If U.S. President Donald Trump is successful in forcing the European Union to include agriculture in upcoming trade talks, Canada may well be cheering from the sidelines.

The EU has announced that agriculture will not be a part of talks. In response, Trump has threatened to place tariffs on imports of European autos — a $43 billion industry.

As well, trade between the U.S. and the EU is $1.3 trillion annually, but the U.S. is running a US$157-billion trade deficit with the EU. Such imbalances have long aggrieved the U.S. president.

The EU is also resolute. Environmental restrictions and food subsidies are strong motivators in EU politics and European leaders fear that Trump will try to assail both.

It is, however, non-tariff trade barriers that irk Canadian exporters, since the Comprehensive Economic and Trade Agreement between Canada and the EU allows increased tariff-free agricultural exports to the EU (chiefly beef and pork), but rules that are not science based are hindering Canadian exporters from developing markets.

As CETA has shown us, removing tariffs is not a guarantee of increased exports. CETA went into effect in September 2017, touting the potential for $600 million in beef and $400 million in pork exports to Europe.

The key is to convince the EU to move to risk assessment (actual exposure conditions) rather than hazard assessment (laboratory conditions), and to adapt Codex for maximum residue limits, which are internationally accepted standards.

For example, the EU classifies plants modified with CRISPR gene editing technology as genetically modified food, putting those crops through an extensive approvals process.

The U.S. has no rules on CRISPR technology and in Canada, extra approvals are required only if a novel trait is developed.

The EU is also about to restrict the use of the diquat, a desiccant used mainly on pulses in Canada, and glyphosate came close to being banned. As well, the EU will not accept beef produced through the use of synthetic hormones, which limits the amount of Canadian beef available for export.

So, even if tariffs are removed on agricultural products, it can still be difficult to export to the EU.

The Canadian Chamber of Commerce recently released a report identifying these non-tariff trade barriers, as well as country-of-origin labelling, as the reasons that ag trade with the EU has not significantly increased.

Non-tariff trade barriers are difficult to address in trade agreements, but if Trump is able to breach that wall, Canadians could benefit.

The chamber’s report has some suggestions for the crop sector. They include addressing known concerns, such as phytosanitary rules, in talks, rather than through dispute settlement; harmonizing approvals between the jurisdictions, resolving pesticide issues (such as maximum residue limits), and using a dedicated forum to address plant breeding issues, such as CRISPR.

In the EU, ag policy is mainly set in Brussels, so there is opportunity here.

Last summer, when the U.S. and the EU agreed to preliminary trade talks, Trump said during a trip to the Midwest, “we just opened up Europe for you farmers.”

As is often the case with Trump, the truth has shown to be something different.

The EU has 11 million farms that provide about 44 million jobs. Half of the EU’s land is farmland, in part due to the lure of subsidies. Any movement on agricultural policy will not come easily.

The world has watched Trump bluster his way into trade negotiations. But, as the USMCA trade agreement showed, he didn’t achieve a whole lot.

But if he manages to crack the EU’s obstinacy, Canadian agriculture may benefit.

Karen Briere, Bruce Dyck, Barb Glen, Brian MacLeod and Michael Raine collaborate in the writing of Western Producer editorials.

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