New world markets could be worth hundreds of millions of dollars in sales for Canadian farmers but changes must be made in trade rules, Canada’s negotiating tactics and government policy before it can happen, say food trade advocates.
The Canadian Agri-Food Trade Alliance told MPs on a trade subcommittee studying emerging markets that the potential is great and the hurdles are high.
CAFTA members want to reduce their dependence on markets in the United States and Mexico by developing new markets “with particular attention to those economies that are growing and where consumer preferences are changing,” alliance president Liam McCreery told MPs.
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“Many of CAFTA’s members are looking at emerging markets such as India, China, South Korea, Thailand and others as important to their future success.”
However, things will have to change for that to happen.
Trade deals will have to be negotiated that reduce tariffs and other import barriers erected to protect farmers in target countries, said McCreery.
“Many of the world’s emerging markets maintain very high, often discriminatory and changing barriers to access.”
He said rules often change without notice and there is a lack of predictability and stability for traders.
The southwestern Ontario farmer also told MPs that Canadian trade negotiators must understand the Canadian food industry better and work more closely with industry when deals are being negotiated.
Canola restricted
Canola faces tougher access rules than competitor products such as soybeans. India has a 45 percent tariff on soybean oil and 85 percent on canola oil.
“That keeps Canada out of the largest vegetable oil market in the world,” he said in a brief to the committee. “If tariffs were equal, Canada could capture a market valued at $500 million.”
McCreery told MPs a story that is famous among traders about the potential damage that negotiators can cause if they do not understand the needs of the industry.
Before China joined the World Trade Organization, it had to negotiate separately with other member countries and in Canada-China talks, Canadian negotiators agreed to a Chinese demand that employees in meat processing plants would not be able to wear knit cotton gloves.
“The use of cotton knit gloves is still the standard in both Canada and the United States and a similar agreement was not made with the U.S.A.,” he said. “While China has temporarily suspended the restriction, it is still on the books and is a threat to Canadian beef processing interests.”
He also said if Canada wants to help producers and food exporters make inroads into those markets, it has to be sure Canadian policy does not hurt producers by adding costs that competitor farmers do not face, by not allowing them to have farm chemicals their competitors have or by not having the transportation infrastructure to efficiently get goods to market.
The CAFTA president said the main way to get into new markets is through a trade-liberalizing WTO deal, but bilateral negotiations between Canada and individual countries can also work.
