BLOG: We export rocks to Europe, they sell us Audis

The benefits of Canada’s free trade deal with the European Union can be summed up like this: we’re selling Europe more oil and minerals, they’re selling us more BMWs, pharmaceutical drugs and high-tech machinery.

In an optimistic document released in June, the federal government touted the economic benefits of the Canada-EU Comprehensive Economic and Trade Agreement (CETA), a deal signed in 2017.

The paper, Canada’s Merchandise Trade Performance with the EU after the Entry into Force of CETA, cheerily describes how Canada’s trade deficit with Europe has grown over the last three years.

In 2016, Canada exported $40 billion in goods to the EU and imported $60 billion from Europe.

In 2019, exports to the EU were $48 billion and Europe exported $76 billion to Canada. So, the trade deficit in merchandise has expanded to nearly $30 billion.

The tone of the report, suggesting CETA is a wondrous opportunity for Canadian companies, doesn’t match feelings within Canada’s agri-food sector.

Exporters are exasperated by European barriers to Canadian beef, pork, canola, durum and processed food, as the EU continues to use phyto-sanitary rules and country-of-origin labelling as a weapon against Canada.

The Canadian Agri-Food Trade Association has asked the federal government multiple times in 2020 to be more vocal about CETA and encourage European nations to uphold the spirit of free trade. Five former premiers, including Brad Wall, Gary Doer, Kathleen Wynne, Ed Stelmach and Jean Charest, also penned a letter to the government this month.

“CETA promised to be especially transformative for Canada’s world-class agri-food sector, one of the largest drivers of job creation and economic growth across Canada. The liberalization of trade was to increase Canada’s exports by nearly $1.5 billion annually,” they wrote. “However, CETA has now been in force for three years and it has failed to deliver on its promises for Canada’s agri-food exporters.”

As an example of the unlevel playing field, Europe exported $150 million worth of beef and pork to Canada in the first seven months of 2020. Meanwhile, Canada sold only about $10 million in beef and pork to the EU. The trade deal was supposed to accomplish the opposite.

“When completely implemented, CETA is expected to result in $1.5 billion in new agri-food exports, including $600 million in beef, $400 million in pork,” the CAFTA said a few years ago.

The federal government report from Global Affairs provides detail on what Europeans are selling to Canada and what we’re shipping to them.

Post CETA, Canada has exported:

• $933 million more in precious stones and minerals

• $2.7 billion more in crude oil

• $1.0 billion more in mineral ores

Europe, meanwhile, has gained about $6 billion in exports of pharmaceuticals, motor vehicles and parts and machinery to Canada.

The data also shows that prairie provinces such as Manitoba and Saskatchewan are seeing zero benefit from CETA.

Saskatchewan exports to Europe dropped by $135 million since CETA, and Manitoba’s exports sank by $62 million.

In a small moment of negativity, the Global Affairs report does mention that exports of durum to Europe have declined. That’s because Italy brought in country-of-origin labelling for pasta, which discriminates against Canadian durum.

Italian businesses, though, are taking full advantage of the trade deal.

Exports of machinery and other goods from Italy to Canada have climbed by $1.7 billion in the last few years, a jump of 22 percent.

Despite the depressing agri-food numbers and ballooning trade deficit with Europe, Canada’s minister responsible for export promotion and international trade remains hopeful about CETA. “CETA is strengthening economic relations, creating jobs for Canadians, and promoting new opportunities for Canadian and European businesses alike,” Mary Ng said on the Trade Commissioner Service website.

“With an inclusive trade agreement like CETA, we’re demonstrating that trade can support sustainable economic growth and that the benefits can be shared by everyone.”

Everyone in Canada except farmers and the 2.3 million people who work in the agri-food sector.

Contact robert.arnason@producer.com

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