Sylvain Charlebois is dean of the faculty of management and professor in food distribution and policy in the faculty of agriculture at Dalhousie University.
Since the Brexit vote, Europe has been a mess. The pound is dropping, markets are scrambling and most are wondering how the political establishment will address what appears to be a constitutional vacuum related to exiting member states. It all speaks to how ill-prepared the union was for such an eventuality.
Yet, the biggest casualty of Brexit will likely be global trade. Canada may pay one of the largest prices – the comprehensive economic and trade agreement (CETA) is still under negotiation and will not be ratified any time soon. With so much uncertainty in agricultural policy, the deal is on life support at best.
CETA emphasizes Canada's relationship with the European Union. The deal was our greatest chance to act as a portal between Europe and North America. Britain is already one of our top food-trading partners within the EU, but the potential to increase trade with certain commodities was tangible. While more pork, beef and maple syrup would go one direction, more good European cheeses and other dairy products would come the other.
Indeed, CETA would finally create a critical breach in our highly protectionist supply-management system, a system of high tariffs on imports and production quotas. All provinces were deeply engaged in these negotiations, offsetting potential backlashes from quota-happy provinces such as Quebec and Ontario. Unlike the Trans-Pacific Partnership, the political process that led to the deal was textbook. Trading implications were potentially transformational for a country that has mainly been trade-reliant for decades.
Meanwhile, the United States has been pursuing its own deal with Europe. Given the anti-neoliberalism undertones between presidential candidates Hillary Clinton and Donald Trump, however, it is unlikely that Washington and the EU will sign a deal any time soon.
Let's face it – for Europe, Canada would play second fiddle to the almighty U.S. market. CETA was our window to outshine our southern neighbours for a while. It was a great opportunity for us to embrace our new-found status as a genuine trading economy.
But Brexit has made the situation much more convoluted for everyone, including Canada.
First, the EU needs to figure out what it will do with its common agricultural policy (CAP). For agriculture, CAP is a big deal. It represents more than 40 per cent of the entire EU budget. More than 55 per cent of farmer income support in Britain stems from the policy, which has been in existence since 1957. So CAP comes with extreme political and fiscal baggage. Since it is now on track to leave the EU, Britain will need to find ways to support its agriculture industry moving forward. Before thinking about new trade deals, farmers will surely want to address domestic issues.
One approach advocated for Britain in recent days is the Swiss model. In this case, food sovereignty would be the driving force behind most food and agricultural policies. In other words, the more consumption of locally grown commodities, the better.
An interesting idea for foodies, but it would tend to allow less-efficient production systems to emerge while keeping food prices much higher. Food inflation has not been an issue for Britain of late, but it could be, under this approach. As an island, populations often mitigate risks differently, meaning that Britain may find such an approach soothing. But this would not be good news for Canada.
Interestingly, more than 60 per cent of farmers voted Leave in the Brexit vote. That was likely galvanized by prohibitive herbicide regulations and policies related to genetically modified crops.
Now that Brexit is a reality, it will be interesting to see how the CAP situation develops in negotiations between Britain and the EU. But it will take months, maybe years. If CETA was ratified soon, agricultural issues would likely be left out. If not, it's as good as dead.