Agricultural trade liberalization is being derailed by protectionist forces at a time when progress is needed more than ever, the new executive director of the Canadian Agri-Food Trade Alliance says.
“Unfortunately, we’re maybe at a stage where we’re working more to prevent things from going backwards,” said Michael Harvey, who joined CAFTA this summer, after years working with Global Affairs Canada and GoldCorp, a global mining company.
“There is a broad move away from trade liberalization. And moving towards protectionism…. There is just less interest in the biggest countries in the world, in liberalization of trade.”
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CAFTA and other organizations that support free trade of ag commodities are especially concerned about national policies around climate change and sustainability, which are becoming barriers to trade.
One example is the European Union and its Carbon Border Adjustment Mechanism.
In the simplest terms, it imposes European policies on other countries.
“(It) is our landmark tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries,” says the European Commission website. “(It) will ensure the carbon price of imports is equivalent to the carbon price of domestic production.”
The Carbon Border Adjustment could force Canadian canola producers to pay the same carbon price as European rapeseed growers. That could mean a carbon tax on fertilizer or diesel fuel equivalent to European levels.
This sort of policy may be designed to cut global emissions, but it’s very close to a non-tariff barrier to trade.
“It’s framed from an environmental perspective, but it has trade-distorting effects,” Harvey said from his office in Ottawa.
In late November, CAFTA, the Canadian Federation of Agriculture and other organizations pushed back against environmental policies that threaten agricultural trade.
CAFTA and the CFA are part of the Cairns Group of Farm Leaders. It includes national farm groups from ag-exporting nations.
The Cairns Group is a coalition of 19 countries, including Canada, Argentina, Brazil, Australia and New Zealand, which support free trade of agricultural goods.
The Farm Leaders group issued a news release in late November, saying it is concerned that “sustainability and climate change measures are being used to create further barriers” to trade.
They say policies like the European Carbon Border Adjustment do not consider the principles of economics.
For instance, Canada may have a natural advantage in producing a crop like oats. Maybe Canada increasing its production of oats makes more environmental sense than a country like Mexico growing its own supply.
“Trade liberalization means more efficient agricultural production,” Harvey said.
“Which means less greenhouse gases. Less land use. Which means better green outcomes…. (Also) you can look at things from a strictly environmental perspective and forget that the people of the world need to be fed.”
In a time when many segments of society are focussed on climate change, a message about the environmental benefits of free trade is a hard sell.
But pro-trade groups like CAFTA will continue the fight.
“These things tend to come and go,” Harvey said. “At some point, things will move back (toward) trade liberalization.”
