It’s not a big deal … at least not yet

The last couple of weeks has seen much of the Canadian export agriculture sector’s promotion and advocacy organizations sending out

The last couple of weeks has seen much of the Canadian export agriculture sector’s promotion and advocacy organizations sending out reams of press releases congratulating the federal government on signing the Canada/EU free trade agreement known as CETA.

All seem to proclaim that a new era of massive increased trade with the EU has just arrived and billions of dollars will be made. Be that as it may, there is always more to the story -— and as the saying goes, “it’s not a done deal yet.”

Firstly, CETA is at least two years from being ratified by both sides. That may be an easy exercise in Canada with the provinces and territories already on side, but for the EU side, it’s another story — they need the approval of 28 different countries all with very diverse trade concerns.

The first hurdle is that CETA has to be translated into languages from Celtic to Swedish to Croatian — can you imagine the discussions on how to interpret a certain word so that it has the same meaning and nuance in say Slovenian or Danish.

Then there is the matter of creating the accompanying regulations to CETA — and absolutely in this case the “devil is truly in the details.”

Let’s cite the most obvious example of where this kind of bureaucratic mischief can derail any real increase in a specific product — that being beef. From personal experience, beef is expensive in Europe, and would seemingly be a great trade opportunity for better and less expensive North American (NA) beef.

European consumers would overwhelmingly embrace such trade, but the powerful EU farm lobby sees such trade as a dire threat and they have been successful in getting the EU to keep out any meaningful quantities of NA beef through diabolical trade regulations and protocols.

In my view, CETA will not change that long established scheme — here’s why:

The first hurdle the EU has to overcome is to convince France and Ireland the two biggest beef producers to sign an agreement that will allow more NA beef imports — an issue they have fought successfully against for the past 50 years. Neither will roll over easily and a no vote by these two big dogs would scuttle the agreement.

France might be placated somewhat by more cheese exports to Canada but that’s minor. The only way both countries and others will agree is if there is an understanding that regulations will be created to make additional NA beef imports all but impossible.

The EU has done just that in the recent past when they agreed to increase the NA beef quota, but then put in a permit and protocol system that made it too expensive for NA beef exporters to ship beef to the EU. A classic example of “the devil in the details.”

There is more, of course — the EU has historical beef trade agreements with Argentina that I expect will not be allowed to be jeopardized by a sudden influx of unfettered beef imports from North America. The EU also has beef quota deals with Australia and New Zealand — I expect those countries won’t stand by and let their traditional share be diminished.

Then there is that elephant in the room — the impending free trade discussions between the EU and the U.S. — which surprise, surprise will also see increased beef exports to the EU as a critical component.

Add all that together and the dream of vastly increased Canadian beef exports to the EU becomes more of a pipe dream or perhaps a nightmare. For the EU, there is a political and trade reality — they need to be seen as keeping everyone happy — yet maintain the status quo. I suggest they are past masters at doing just that particularly in the beef business.

I expect the only way Canada can force EU compliance for any real increases in beef exports is to tie the regulations into the trade concessions that Canada gave the EU in regards to pharmaceuticals and EU cheese exports.

Without a real stick in the fight, I can’t see how the EU will change its past approach of “yes” to more beef imports, but “no” to any actual more trade.

More on the Canada/EU agreement next time.

— Ahead of the Heard

 


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