Canada faces a dire future,
warn three agriculture economists who run Agri-Food Economic Systems at Guelph.
Canada relies heavily on
trade and agriculture needs exports, yet world trade is breaking down, they
say.
The World Trade
Organization’s disputes-settling mechanism is under threat by the United States
refusal to appoint new judges, its free-trade negotiations are at a standstill
and protectionist measures adopted by many countries, including tariffs imposed
by China and the United States, are rampant.
The new trade deal the
United States and Japan have struck would be illegal under normal circumstances
because it violates most-favoured-nation standards, the economists say, but
there doesn’t appear to be any nation willing to file a challenge.
“The world is turning away
from rules-based trade- just as it begins to grapple with an unprecedented meat
shortage- and major assumptions underlying our expectations of agri-food
marketing, business risk management policy, and international trade will need
to shift,” say economists Al Mussel, Ted Bilyea and Douglas Hedley in their new
report.
The United States is helping
its farmers with $28 billion in subsidies. Canada can’t afford to match a
return to subsidies, the economists argue.
And Canada lacks clout when
it comes to trying to restore trade to the disciplines of agreements, including
the World Trade Organization rules, they say.
So “Canadian agri-food finds
itself in an ominous situation on multiple fronts in the fall of 2019,” they
write.
There are a few glimmers of
hope. One is that China will need to buy more food. Losing half of its
40-million-sow hog herd to African Swine Fever is sending prices soaring and
making the public restless, so China is shopping around the world.
But fewer hogs also means
less Chinese demand for soybeans and canola. And the soybeans it does need it
is increasingly sourcing from South America.
China also has a long-term
strategy to build roads, railways and shipping such as an expensive link across
Asia. That will impact trade patterns.
They say China appears to be
“playing a larger geo-political game ultimately designed to wall-off its market
to the US and its allies.”
They
say that “among a range of its apparent options (for Canada) are:
• Pursue a revamp of WTO or a new trade policy alignment and rules with “willing
countries”
• Food may be an entry point in discussions with China, not necessarily to
settle current drivers in Canada’s tensions with China, but rather as a means
to extend goodwill and willingness to engage
• Canada will need a new agreement with the UK post-Brexit. The apparent default
is the CETA framework, but Canada could explore a further, more intimate
commercial relationship in a Canada-UK trade agreement
• Broaden Canada’s diplomatic messages at UN and
other fora to specifically include agri-food trade. Canada will not use food as
a weapon in dealing with other countries; how can we assist other countries to
join us in this commitment?
• Canada has a comparative advantage in sustainable
natural capital to produce food. In some cases (e.g., GHG’s) this can be
measured and validated. Other food exporting countries lack Canada’s natural
resources or fail to manage them sustainably. To protect its resource base from
imports that are not produced as sustainably and are thus underpriced, Canada
may wish to consider a tax on agri-food imports.
They say “a number of these
options would have been seen as extreme,
wrongheaded and even absurd only just a short time ago . . . (but) it is
in indication of the seriousness and abrupt change in the situation that these
now warrant some consideration.”
