America-first agreement brings more restrictions
USMCA makes Canada-China trade more difficult
S details emerge in the aftermath of trade negotiations between Canada and the U.S., the number of pundits calling it a “good deal” for Canada is shrinking faster than hopes of getting one last shot of warm autumn weather.
Even the name of the agreement, USMCA, departs from the notion of a North American trading partnership to put America first.
At best, the Canadian negotiators contained the losses in key identifiable areas — dispute settlement, autos and supply management, but the nuances around what it gave up — even in agriculture — are quite astonishing.
Most in the agricultural community, with the exception of farmers under supply management, were relieved to see the U.S.-Mexico-Canada Agreement announced, with several major commodity organizations, including Cereals Canada, hailing it as a victory for free and open trade.
It’s an interesting spin given the clause in the deal that essentially ties Canada’s hands when it comes to negotiating trade deals with other sovereign nations such as China.
How is it a good idea to let another country decide who you do business with, especially as it pertains to your second-largest trading partner?
According to data released by the Canadian Agri-Food Trade Alliance just last year, China has become the third-largest destination for agricultural products worldwide and is expected to become the world’s largest agricultural importer by 2020.
“China will be crucial to Canada’s economic future over the next 50 years. China is, and will remain, Canada’s second-largest national twoway trade partner after the U.S.,” the alliance said in a discussion paper promoting pursuit of a bilateral agreement between the two countries.
“China is also Canada’s second-largest export market, absorbing $4.7 billion of Canadian agriculture and agri-food products in 2014.
Unlike many of Canada’s trading partners, exports to China have been climbing steadily and did not fall during the global economic crisis.”
Half of all Canadian agri-food exports to China
Aare canola and canola products, but it is also an important destination for Canadian soybeans, pulse crops, wheat, barley, beef, genetics and processed products.
Under USMCA, if Canada seeks to further cement that growing trade relationship, it needs to consult with the U.S. and face the threat of punitive action.
Canada’s key competitors in that market, including New Zealand and Australia, face no such restrictions. With regard to supply management, much of the attention has focused on increased market access for dairy, poultry and eggs. If you factor in the effects of the concessions given under the Canada-EU and Trans Pacific partnership negotiations, it adds up to about 18 per cent of the Canadian dairy market.
Less has been said about the clause that further restricts dairy farmers’ ability to export dairy ingredients such as skim milk powder to tightly regulated volumes. So they are gradually being squeezed out of their domestic market, yet given no ability to access global markets. Does that sound free and fair to you?
This approach seriously threatens the ability of Canada to maintain a domestic dairy and processing sector, which is our second-largest food-processing sector next to meat.
The federal government is missing the mark when it suggests “compensation” is in order, because that implies protecting the status quo. What’s needed now is a major investment in adaptation.
Because what became clear in the social media aftermath of the USMCA announcement is that Canadians want to consume Canadian dairy. That little blue cow logo signifying Canadian milk content became iconic overnight.
It’s partly because people don’t want milk that has been produced from cows injected with bovine somatotrophin (BST), a hormone used to boost a cow’s milk which is allowed in the U.S. but not registered for use in Canada. It was rejected by Health Canada in 1999, not because of safety concerns, but because of animal-welfare issues.
Everyone understands that U.S. President Donald Trump’s threat of economic isolation and sanctions was real and that supply management was a containable loss.
But their were few gains. Put simply, for the Trudeau government facing voters next year, a bad deal was better than no deal at all.