A complex web of overlapping free-trade agreements is creating opportunity, but also new challenges, for Canadian food and agricultural producers.
Canadians will face lingering trade barriers, new competitive challenges at home and a changed regulatory environment as a result of trade deals with Europe, South Korea and various Pacific Rim countries, according to a new report by the Canadian Agri-Food Policy Institute.
“We have entered into a world [of] competitive trade liberalization,” say authors John Weekes, Al Mussell and David McInnes. “In this new environment, countries are competing with one another to be the first to secure free, or at least preferential, access to the world’s major markets.”
Signing free-trade deals is just the first step. Now companies must put in the hard work to exploit these new markets, the report says.
The report urges producers to conduct a thorough “trade barrier audit” to determine the most cost-effective way to reach foreign customers due to the “increasingly complex variable geometry in international trade barriers.”
Companies need to determine where best to locate production to take full advantage of the changed trade landscape, pointed out Mr. Weekes, a former top Canadian trade negotiator and now senior adviser at law firm Bennett Jones in Ottawa.
“We’ve got work to do,” he said. “It might not be as simple as first thought.”
Consider the case of South Korea. Canada, the U.S. and the European Union all have free-trade agreements with the fast-growing Asian economy. But Canada is a relative late-comer, and U.S. and European rivals will enjoy years of preferential access because they did their deals first.
Meanwhile, Canada is on track to get into the vast European market with preferred access before the U.S. as a result of the recently negotiated free-trade agreement.
Because the European deal will take roughly two years to come into force, companies have plenty of time to plot strategies and align their operations to take advantage of the opportunities, Mr. Weekes added.
Industries must also ensure they have the right policies in place in Canada as well as the capacity to meet any new demand, argued Mr. Mussell, a senior research associate at the George Morris Centre in Guelph, Ont.
“We need to be prepared to have a discussion about how we are going to make this work, both in terms of regulatory changes and investments,” he said.
The report cites the example of Canada’s beef industry, which is poised to get 50,000 tonnes of duty-free access to the European beef market, up from almost nothing now. But the beef must be free of certain growth hormones that are often used in Canada. The industry, already suffering from tight supplies, will have to greatly expand its hormone-free herds if it wants to fill the quota.
The report also points out that significant new canola-processing facilities will be needed in Canada to take advantage of new market opportunities in Europe and South Korea.
Mr. Mussell said Canada has made significant concessions to Europe to secure those opportunities, including extending patent protection for pharmaceuticals and allowing more duty-free dairy products into the country. “Let’s make good on it, and that implies new investments and some expansion in output to take advantage of it,” he said.Report Typo/Error