John Weekes, a senior business adviser at Bennett Jones, was Canada's chief negotiator for NAFTA and is a former ambassador to the WTO. He is a director of the Alberta Livestock and Meat Agency and provides advice to the National Cattle Feeders Association.
Ministers and chief negotiators are meeting this week in Atlanta in a final effort to strike a deal on a Trans-Pacific Partnership (TPP) agreement. For the Harper government, and indeed all for all the major political parties in Canada, the timing of this meeting in the middle of the federal election campaign poses huge challenges.
The marathon trade negotiations among 12 Asia-Pacific nations include three of Canada's largest trade partners – the United States, Japan and Mexico. And make no mistake about it, this deal is probably coming to a conclusion in the next week or two – with or without Canada. For a series of reasons the other negotiating partners have decided the time to wrap up a deal is now. Canada cannot stop the clock or call a time-out.
Inevitably in big negotiations like this there will be some winners and some losers: Canada's negotiators need to make sure Canada has more of the former than the latter. Nowhere is this task trickier than in the agriculture sector, where import barriers in most countries are highest. For Canada the biggest prize in the TPP is the Japanese market, as it already has a free-trade deal with the U.S. and Mexico.
The biggest challenge here is to make sure that Canada's competitive export industries do not become the big losers. That is exactly what will happen if it is not part of a final TPP deal. Without improved access to Japan, these industries will almost certainly see existing market access dwindle, primarily in the red meat, grains and oil seeds sectors, as most of Canada's major competitors – the U.S., Australia, New Zealand – will be part of the TPP.
Japan imports some 60 per cent of the agricultural products it consumes and it is already a major market for Canadian producers – larger than the entire EU market of 28 countries. That market will be at risk.
This is the moment to act to position Canada to take advantage of the growing global demand for food in the years ahead. Canada is one of the few countries that has the capacity to increase its agricultural production in a sustainable manner. It has the resources – arable land, water, skilled producers and a vibrant processing and transportation sector. Canada's entire agri-food industry employs 2.2 million Canadians and accounts for 6.7 per cent of Canada's GDP.
Of course, Canadian dairy and poultry producers will face big challenges as trade barriers come down. These industries will be under pressure from the improved market access agreed under CETA (the Canada-EU agreement), and now will face further pressure under the TPP, although the actual increased imports under these deals are still a year or two in the future. Less well known is that dairy producers are already hurting from rapidly increased imports of non-fat protein concentrates and protein isolates coming in duty-free from the United States.
The future of Canada's dairy and poultry producers will not be secured by turning inward. They have already shown a capacity to develop new and innovative products, and can be competitive internationally. They will need time to adjust to new conditions, and the government should help ease the transition
As Canada completes the TPP agreement it should be focused on making sure Canadians can meet foreign competition at home and abroad on an even playing field. It is not just tariffs that affect trade but also subsidy programs that distort markets and decisions about where agricultural product should be produced. Such subsidies are already being negotiated in the WTO. Ottawa should press to revitalize these negotiations and at the same time ensure that foreign governments, including the U.S., are respecting their existing subsidy commitments. If necessary, Canada should commit to using the WTO dispute settlement system to make sure they do so.
Securing Canada's agriculture future requires bold action today. Let's hope its political leaders are up to the challenge.