Skip to content

Trade agreement seriously affects other commodities

The recent Canada/EU free-trade agreement (CETA) signing has seen much speculation on how it will help Canadian beef exports to the EU.

Part 2 in a series

The recent Canada/EU free-trade agreement (CETA) signing has seen much speculation on how it will help Canadian beef exports to the EU.

But there are other agricultural commodities involved in the agreement and they too will benefit if all goes well with the details.

Pork producer groups have been touting the new trade opportunity that CETA will bring their industry — they cite 90,000 tonnes of new tariff free Canadian pork access to the EU.

Sounds pretty good, but then Canadian pork exports to the EU at present amount to about zero tonnes. There should be an opportunity here for Canadian pork exports, but it’s not guaranteed.

That’s because the EU market is essentially self-sufficient in pork production and the EU is a significant pork exporter by itself.

I expect any Canadian pork in the EU will face fearsome competition from domestic producers. The Dutch and the Danes invented intensive agriculture and are both sophisticated and robust pork production experts.

Along with the Germans, they have a massive hog production and pork-processing infrastructure.

Canadian pork should be able to compete on price with EU pork in their own market. EU hog producers face very high production costs with imported feedstuffs, onerous environmental regulations and expensive humane handling practices.

The latter is the wildcard that may derail any significant Canadian imports. You can expect EU pork producing countries to demand that CETA have regulations that equalize the environmental and handling practices relating to pork production in the agreement.

The point being that if EU producers have to meet those costly standards than so must any imported pork.

The EU will also want to pass judgment on any feed additives that are used to produce Canadian pork, but are not available to EU growers.

Another concern is that EU pork production seems to be shifting eastward toward Poland and other low-cost production countries.

Those countries will want to see some import restrictions before they ratify any new trade agreement.

Producers of cereals, oilseeds and pulses all see some hope of increased exports of their products to the EU in the new agreement.

Some of their production already enters the EU tariff and quota free so that would not change.

Where there are new possibilities is with further processed flours, oils, fibres and proteins. Many of those products will see tariffs reduced to zero.

Canada is a significant world player in many of those products, both raw and processed, so competition should favour more Canadian products in the EU.

The elephant in the room is GM plants and pesticide use. EU opposition to GM is well-known and they are quick to ban any product that contains even miniscule traces of any GM residue.

When push comes to shove, one also foresees EU bureaucratic mischief with banning products that contain any residue of pesticides or herbicides that are banned in the EU.

There’s one sector that feels sold out by the new agreement and they are Canadian cheese producers. CETA calls for the doubling of the quota for tariff free EU fine cheese imports.

Dairy producers feel it will drive small Canadian artisan cheese producers out of business under a flood of additional EU fine cheese imports.

That waits to be seen as those already buying imported fine cheeses are more likely to increase their purchases rather than any new customers switching from Canadian cheese.

Most cheese consumed in Canada is commercial cheddar  and mozzarella both brick and processed. It’s unlikely imported EU cheese can displace much of that massive market domination controlled by a few giant Canadian dairy processors.

If Canadian cheese makers have anyone to fear, it’s unfettered imports from the USA and New Zealand. Both countries produce similar commercial cheese products as Canada.

If CETA is ever ratified, there will be some opportunities for increased Canadian ag exports to the EU if the regulations are fair.

But I expect the increases will be modest and hard fought for being the EU market is already well served by domestic suppliers and other foreign marketers like the USA, Australia, New Zealand, Brazil and others.

None of those countries are going to stand quietly by as they lose market share to Canada through CETA. They will not only furiously compete, but will be demanding their own free trade agreements with the EU.

When that occurs, the ag export trade business to the EU might be back to Square One.

— Ahead of the Heard