The Conservative party has long wanted to improve Canada’s trade opportunities, but with World Trade Organization negotiations wallowing and efforts to expand regional trade plodding, progress was uninspiring.
Trade deals with Liechtenstein, Panama and Honduras spark little excitement.
But that changed with the Comprehensive Economic and Trade Agreement with the European Union, a market with 500 million mostly well off consumers.
The details are not settled and it will take years to be ratified and come into effect. But from what we know now, this agreement will be a boon to agricultural trade.
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Most segments of Canada’s industry — beef, pork, and grain — hail the deal.
Most dairy farmers are not happy.
In the give and take of trade negotiations, Canadian dairy farmers and cheese makers are the givers.
The deal increases duty free access for European cheese by 16,800 tonnes to a total of about 30,000 tonnes. The deal covers high-end specialty cheese and the access represents 32 percent of that market.
The Dairy Farmers of Canada says small, artisan cheese makers will struggle to survive pitted against EU cheese made from cheap milk supplied by subsidized European farmers. If Canadian cheese makers lose market share, they will buy less milk from Canadian dairy farmers.
Of course, Canada’s dairy farmers have their own support system — supply management — that allows them to control the amount and price of milk produced here, virtually guaranteeing a profitable business for efficient producers.
The disruption created by the new access will lessen over time as Canada’s cheese demand increases by about 8,000 tonnes a year. Also, artisan cheese is arguably a market sympathetic to “eating local” and field-to-plate promotions.
And if sales are damaged, the government promises compensation.
The dairy sector got off lightly.
The Conservatives could have sided with ever-louder domestic voices critical of supply management and used the trade deal as cover to kill the system.
But as prime minister Stephen Harper has said, Canadian negotiators gave the dairy sector a victory: a major international trade document that recognizes and protects supply management. Indeed, supply managed poultry and eggs are even exempt from the whole deal.
At the same time, a potential $1.5 billion opportunity for the export oriented side of Canadian agriculture is created.
There is new duty free access to the EU for about 65,000 tonnes of beef, 81,000 tonnes of pork and 3,000 tonnes of bison.
The estimated value to beef is $600 million and to pork $400 million.
If fully realized, Canada cattle production would have to rise by 500,000 head.
In grain, EU duties on wheat, durum oats, barley and rye are eliminated over seven years, creating sales opportunities.
Processed products also benefit, with canola oil exports expected to double to $180 million.
The grain sector notes that increased livestock production will create increased demand for feed grain.
However, there is a major hurdle to overcome to capitalize on this potential.
Over the next two years, Canada and the EU will negotiate “technical barriers” such as sanitary and phytosanitary measures that have foiled theoretical access before. Also, Canadian meat plants will have to upgrade their facilities to meet European standards.
If negotiations bog down or investments are not made, then CETA must be rejected. But based on the spirit of the deal, we expect real access will be achieved.
CETA also creates an opportunity to offset an over-dependence on the U.S. and Mexican market.
Proximity means North America will always dominate Canadian trade, but it is a risk to put too many trade eggs in one continental basket.
