Friday, December 11, 2020

Canada faces tough U.S., China trade realities

Canada’s farmers are facing daunting challenges rooted in bullying trade tactics practiced by the United States and China.

A new paper from Agri-Food Economic Systems details why it’s going to be difficult to maintain those markets, even though demand ought to be strong.

The U.S. has – and will probably continue to – impose tariffs on Canadian farm exports whenever their domestic farmers complain. It happened in the past for beef and pork and it could happen again, even though eventually the U.S. was forced to abandon the trade impediments because they violated World Trade Organization rules.

The U.S. has refused to appoint people to disputes-settling panels, so the World Trade Organization is no longer an avenue that can be used to discipline the U.S.

China has ignored international trade rules to disrupt exports of Canadian canola, pork, beef and soybeans. In the case of soybeans, China simply made it too expensive to keep waiting for approval to unload boats in its ports.

China may have targeted Canada as retaliation for the arrest of Meng Wanzhou to comply with an extradition order from the U.S.

It targeted Australia to disrupt trade for beef, wine and barley after Australia criticized China over COVID-19.

The U.S. and China waged a tariff war that sideswiped Canadian farmers. Chinese tariffs on U.S. pork and soybeans depressed Canadian prices for those commodities.

The U.S. lavishly subsidized its farmers to compensate; Canada did not, yet Canadian farmers have to compete with the Americans.

The study’s authors, Al Mussel and Doug Hedley, also speculate that China is disrupting trade so it can snap up Canadian companies at bargain prices and thus secure a food supply chain.

There is little that Canadians can do to offset these troubling developments, according to the lengthy paper.

One suggestion is to take meticulous care to meet technical standards so importers have no excuse for banning our exports, as China did for pork and canola and India did for pulses.

Another is to invest in processing our raw materials into brand-name food products that will be more difficult for China and the U.S. to block since they win the loyalty of consumers.

The problem is, however, that most of Canada’s largest food-processing companies are foreign owned and it’s challenging to entice investors to establish new Canadian facilities in the face of the risks involved.

Another is to take full advantage of new trade agreements with Europe, the Trans-Pacific Partnership and Africa.

And Canada has been one of the leaders pushing for an alternative to the World Trade Organization for settling trade disputes among themselves.