US election brings real concerns

AHEAD OF THE HEARD -- The election of Donald Trump to the US Presidency should cause the political braintrust of Canadian national....

AHEAD OF THE HEARD — The election of Donald Trump to the US Presidency should cause the political braintrust of Canadian national agriculture producer groups to seriously analyze any potential repercussions.

That’s because President-elect Trump’s position on trade issues could seriously impact Canada’s major ag exports to the USA such as pork and beef. During the campaign he hammered the North American Free Trade Agreement in particular, citing it as the worst trade treaty ever. His invective was directed towards Mexico, but Canada will be caught in the crossfire. Our meat and livestock exports are vulnerable considering past trade actions and US border and marketing restrictions. Grain exports could also be of concern noting that the US has instigated nine countervail trade actions against Canadian wheat exports. Some experts note that the original Canada/USA Free Trade Agreement is the fallback if NAFTA is lost, but nothing should be taken for granted.

A new President who favours protectionism will surely embolden the usual cabal of anti-Canadian trade groups like the notorious R-CALF to again lobby and launch nuisance trade actions. As cattle prices continue to decline, such trade mischief is inevitable. R-CALF is sure to be plotting ways to reassert COOL regulations on Canadian meat and livestock. This is a real danger as Trump has implied that he would disregard WTO decisions. It gets worse of course; if protectionism becomes the trend of the Trump administration, sooner or later it will filter down to the local level at US border crossings. This will happen as the new regime replaces Obama-appointed senior officials in the US Customs authority. If those new officials determine that protectionism is part of the Trump mandate you can expect more nit-picking inspections and more pointless paper work for Canadian meat and livestock exporters. That sort of border mischief discourages exports and significantly increases costs. If you think it won’t happen – it can and has happened as recently as a few months ago after the WTO decision on COOL. If it becomes entrenched it can take years just to unravel such protectionist attitudes. If you think common sense will prevail, it generally doesn’t in trade mischief – for instance Canadian bison exports to the US were banned for years because of the BSE outbreak, even though there has never been a case of BSE in bison.

Can it get even worse – well yes – the President-elect will surely not establish an American carbon tax, which would be in direct contrast to this country where both the federal and provincial governments are charging blindly into forcing carbon taxes on ag producers. That increases our costs and competitive disadvantage. Does it get worse – you bet – the never-ending battle over softwood lumber exports is going to become really nasty. If Canada loses that battle it will impact rural and small towns the most because that’s where trees are harvested and manufactured into lumber creating hundreds of thousands of jobs across the country. The impact will be devastating to local economies, particularly in central and northern Alberta and Saskatchewan already hammered by the collapse of the energy servicing sector. The energy and forestry industries have always provided extra employment opportunities to farmers and ranchers and their families. The only glimmer of hope for the rural areas and small towns of Alberta is the potential of the Keystone XL pipeline to the US being approved. Trump has indicated he will approve the pipeline that was cancelled by President Obama. That development activity will have a trickle-down effect by creating more servicing jobs and continued oilsands development.

In contrast to ominous US trade developments, some are taking comfort that ag trade will increase with the EU as result of the new free trade agreement with that trading block. Well don’t hold your breath – it will help grain and oilseed exports, but any increased pork and beef exports are years away. The EU, even before the signing, was already engaged in restricting Canadian meat exports with bogus health and processing sanitation regulations. That’s worked for them for the past 30 years so don’t expect them to give up that successful trade obstruction. Oh, and did I mention that in all likelihood Australia and the EU will be signing a free trade agreement similar to the one with Canada? Guess what they export to the EU – beef, grain and oilseeds – sound familiar? Like Canada, the Aussies are also convinced that they will be increasing their exports of those commodities to the EU. Free trade fun and games just never seem to end.