NAFTA’s demise would be wake-up call

Winnipeg Free Press - - TANK - SYLVAIN CHARLEBOIS — Troy Me­dia

ALKS to re­fresh North Amer­ica’s trade agree­ment seem to be head­ing nowhere, and that could spell se­ri­ous trou­ble for our agri­food sec­tor.

Want­ing to push back on Mex­ico’s in­flu­ence over the U.S. econ­omy, Wash­ing­ton now seems to favour a bi­lat­eral deal with Canada. But, for our agri-food sec­tor, many won­der what life will look like without the North Amer­i­can Free Trade Agree­ment (NAFTA).

Should NAFTA end, there is no doubt tar­iffs will rise and will im­pede cross-bor­der sup­ply chain ef­fi­ciency. In fact, the Peter­son In­sti­tute for In­ter­na­tional Eco­nom­ics sug­gests tar­iffs on agri­cul­tural com­modi­ties and other food prod­ucts could go up by 3.5 per cent on av­er­age for the U.S., 4.2 per cent for Canada, and 7.5 per cent for Mex­ico. This brings a lot of un­cer­tainty to ma­jor agri­cul­tural sec­tors such as cat­tle, hogs and many grains.

In agri-food, Canada has a trade deficit with the U.S. mar­ket. We sell the U.S. about $22 bil­lion worth of goods while the Amer­i­cans sell us $24 bil­lion worth of food prod­ucts, rang­ing from pro­duce to baked goods and pro­cessed food items. But these num­bers hide an in­con­ve­nient truth about what our agri-food econ­omy is about on a global stage: most of what we sell are raw com­modi­ties that have been pro­cessed at a very ba­sic level, only to buy them back, pack­aged or in a bot­tle, at 20 times the price.

This is per­haps the wake-up call Canada needed. For years, Canada has been a tradere­liant agri­cul­tural econ­omy and has never been

Tcom­pelled to be­come strate­gic about trade. Our global po­si­tion on agri-food trades has been weak at best. With more than 120 mar­ket­ing boards across the coun­try, our econ­omy has been ob­sessed with coun­ter­vail­ing oligopolis­tic pow­ers up­stream to pro­tect our farm­ers.

Farm­ing needs sup­port, but most of our agri­cul­tural poli­cies have been at the ex­pense of pro­cess­ing and dis­tri­bu­tion. Some com­pa­nies have suc­cess­fully hedged against Ottawa’s decades­long non­cha­lant fo­cus on trade. Sa­puto in Mon­treal and AGT in Saskatchewan are two bril­liant ex­am­ples. It is only re­cently, with at­tempts to join TPP and with CETA, that Ottawa has shown signs it re­al­izes it needs to up its game on trade.

We can blame Wash­ing­ton all we want for the NAFTA im­passe, but Canada has not demon­strated it wants to lib­er­al­ize its trad­ing po­si­tion ei­ther. Ottawa has per­haps sig­nalled it wants to mod­ern­ize the tri-coun­try trade pact, but it seemed un­will­ing to make ma­jor con­ces­sions. We seem con­tent to play de­fence against Go­liath.

Some of the most vi­brant agri-food economies in the world have been en­gaged on the global stage to give their agri-food sec­tors a sense of pur­pose. Mean­while, as the rest of the world pro­gresses, we al­low car­tel-es­que agen­cies to sup­port such com­mod­ity groups as dairy, eggs, poul­try, maple syrup and many other sec­tors. In fact, we are still try­ing to fig­ure out what our agri-food strat­egy will look like.

To off­set U.S. Pres­i­dent Don­ald Trump’s wrath, Ottawa did ev­ery­thing to pre­pare it­self for NAFTA talks, ex­cept for one thing: it failed to con­sider it­self an agri-food pow­er­house in the mak­ing. To get there, we need a shift in our mind­set.

Wash­ing­ton is invit­ing Canada to ad­dress a dilemma which we have never wanted to face. CETA (the Canada/EU trade agree­ment) was a mir­a­cle that hap­pened in spite of our­selves. Canada is not even close to hav­ing a trade deal with the sec­ond-largest econ­omy in the world — China. It should be a pri­or­ity for Ottawa.

Canada should start think­ing about how it could re­form its sup­ply man­age­ment sys­tem so it makes sense to the rest of the world, not just us. It should also think of ways we can cap­i­tal­ize on our new trad­ing friends in the EU.

We also need to think about in­creas­ing our pro­cess­ing ca­pac­ity, and sell semi-pro­cessed or fin­ished food goods to the rest of the world, and not just wheat, bar­ley or beef. Re­search sug­gests ex­port­ing com­pa­nies are al­ways more in­no­va­tive. For any agri-food econ­omy, it is al­ways chal­leng­ing to build a com­pet­i­tive ad­van­tage with raw com­modi­ties.

The cruel truth is that Canada’s agri-food in­flu­ence is ir­rel­e­vant to the rest of the world.

The Trans-Pa­cific Part­ner­ship was cre­ated, and killed, and Canada’s opinion hardly mat­tered.

U.S. me­dia barely cov­ered Trudeau’s lat­est visit to Wash­ing­ton. So in­stead of try­ing to please an am­biva­lent neigh­bour, it is time for Canada to seek more new friends on the world stage.

MANUEL BALCE CENETA / THE AS­SO­CI­ATED PRESS FILES

If Cana­dian, Amer­i­can and Mex­i­can ne­go­tia­tors are un­able to reach an agree­ment on NAFTA, the end of the trade deal could have a sig­nif­i­cant im­pact on agri­cul­ture.

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