- Non-tariff barriers have traditionally posed problems for Canada’s agri-food sector, and COVID-19 could potentially become another one of these barriers.
- Free trade agreements have to be enforced strictly by the Canadian government to ensure fairness in implementation.
- Protectionist policies can be further exacerbated by the conditions of COVID-19, and the Canadian government will need to remain vigilant to combat this.
The Canadian government can help further support the agriculture industry not only throughout COVID-19 but into economic recovery as well, by making sure free trade agreements are fully capitalized on and fair for all parties. Through proper implementation and enforcement, even industries adjacent to agriculture will benefit greatly.
What is the current state of Canada’s agri-food industry and what is its importance to Canada’s economy?
Agri-food exports are a key driver for the economy. They have created at least a million jobs across the country. According to the government, one in five Canadian jobs depends on exports specifically in the Canadian agri-food industry. In addition, 90% of farms, one in two jobs in the crops sector, and one in four in food manufacturing depend on the agri-food industry. A lot of people do not realize this but the food manufacturing industry alone is the largest manufacturing employer in Canada. It is responsible for more jobs than the auto and aerospace industries combined, and that blows people away when they hear that but it is absolutely true.
“The food manufacturing industry alone is the largest manufacturing employer in Canada.”
The Canadian agri-food industry is growing faster than other segments of the economy, reaching a record high of $60 billion in terms of gross domestic product (GDP) last year. Canadian agri-food exports generate about $95 billion annually. Obviously, our closest trading partner is the US and they absorb about 55% of our exports, followed by China, Japan, Mexico, the EU, and other Asian markets.
In the beef sector, we are highly competitive on high-quality products, which a lot of other countries do not produce and so they certainly want our product. We are extremely competitive as far as that goes, and certainly, our food safety systems in Canada are second to none. That contributes to a lot of trading opportunities as well.
How has the agri-food industry in Canada been impacted by COVID-19 and what is needed from stakeholders to support the agriculture value chain?
We hear about frontline workers all the time, and we cannot thank them enough for all that they have done for us through COVID-19, but as a farmer, I am proud of my fellow farmers for all the work that they have done in producing and moving food throughout the pandemic.
Over the course of the last year, every one of our major packing plants has closed down for a certain period of time, which creates a backlog of product that needs to be slaughtered and processed. Livestock is different from a lot of other things—they need to be fed and maintained, and so the longer they wait to be processed the bigger and more unmanageable they get. Early on, when some of the packing plants were closed down for COVID-19, we did see a shortage of supply in stores for certain things. That is a challenge and it created some fear in consumers for a while.
However, my biggest fear with COVID-19 is that it will be used as a non-tariff barrier. 2020 looked like it was going to be a really big year for trade with agreements such as the Canada-United States-Mexico Agreement (CUSMA) and the Comprehensive Economic and Trade Agreement (CETA) moving along. The UK was also considering more trading options with us. This is all good but COVID-19 can create more potential problems for trade. Some countries already put up a lot of non-tariff barriers to inhibit trade or stop some products from coming in while they continue to gain access to our markets, and there is a possibility of COVID-19 becoming another non-tariff barrier.
“My biggest fear with COVID-19 is that it will be used as a non-tariff barrier.”
The Canadian government has done a great job keeping our borders open through COVID-19, especially with the US, our main trading partner. However, they have to dive into some of these trade deals a little bit further and stand up for our agriculture sector as far as these non-tariff barriers go if we want to continue to expand on our exports. If we do not do that, a lot of the good work that has been done by our government and industry to ramp things up is going to go for naught.
How are Canada’s trade relationships with our biggest agri-food trading partners?
Let us start off with our biggest trading partner, the United States. The renegotiation of the North American Free Trade Agreement (NAFTA) went well for the most part. The biggest issue we have with the US is the labelling for country of origin, which is probably one of the biggest non-tariff barriers out there. As long as we can use the World Trade Organization (WTO) to oversee things like that, then Canada does not have much to worry about. If we leave it up to the United States to govern this themselves, we will have more issues. With the new administration, I am more comfortable that trade with the US will be stable. It may not be smooth-sailing, but it will be more coherent.
“The biggest issue we have with the US is the labelling for country of origin, which is probably one of the biggest non-tariff barriers out there.”
In terms of other trading partners, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has been a great trade deal for Canada. It allowed us to get some of our high-quality products into Japan with tariffs being lowered over a number of years.
“Our government needs to stand up for our exporters and producers and make trade agreements work for everybody.”
What should have been really great for us was the CETA deal, which has not proven to be what we had hoped for. There is a lot of protectionism there, and that is where government can step in and help exporters more. When that agreement was signed, everybody understood the different processes required for commodities such as body washes, cattle processing, how grains are grown, and more, and that was all agreed to. Once the deal was signed, all of a sudden European products started flooding into Canada but our products were not as welcomed. Our government needs to stand up for our exporters and producers and make trade agreements work for everybody. That needs to happen on all trade deals moving forward. The hope is that there will be more functional and long-term deals coming into play in the future.
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Has COVID-19 accelerated or magnified any trends that could have a profound impact on the agri-food sector?
From an export point of view, I do not see any changes or trends that will change how we do business other than the fact that all our negotiations are now done remotely. I have been doing this for a while and I find what we have to do now to be a poor cousin of the way we should be doing things. Face-to-face meetings and developing a relationship to do these deals are by far the best way, and that would be the same for developing markets as well.
As far as producing products to export, the only real change or difficulty that has arisen from COVID-19 is the ability to rely on products that our producers need in everyday life. We do not know what manufacturer is going to be shut down and for how long. Many science-based and chemical-based industries have pivoted to producing COVID-19 vaccines or related supplies, which takes away from things the agriculture sector needs. That is a difficulty that I do not see us coming out of any time soon, because the shift in this direction is going to continue in the future. I do not think COVID-19 is going to go away even once everybody is fully vaccinated. It will be a continuous thing. That is a challenge our producers and suppliers are going to have to contend with moving forward. It is both a good and bad challenge. It is bad in the sense that we have to figure out a way of getting those supplies and continuing on, but down the road, the challenges of COVID-19 can present opportunities for new suppliers and create employment for people.
What are the top three actions that need to be taken to strengthen Canada’s position as a top agri-food supplier?
First, the Canadian government must implement and maximize the free trade agreements we have with other countries and ensure they are fully delivered on as promised. Free trade agreements can create further export growth and that is vital for both the export market and the businesses that support the agriculture industry. Government is constantly compensating the supply management for potential loss of markets, but there needs to more action to make sure the trade deals they put in place for us are fully utilized.
Secondly, the Canadian government needs to focus on combating growing protectionism in other countries and enforce a global rules-based trading system to ensure stable and predictable trade. It has to be science-based and not reliant on how different governments feel at the time. The same rules have to apply to all trading partners.
The Canadian government needs to focus on combating growing protectionism in other countries and enforce a global rules-based trading system to ensure stable and predictable trade.
Finally, Canada has to accelerate diversification into new markets so that we can unleash the agri-food trade potential we have. Canada’s economic recovery depends on agriculture and how we can benefit from our trade deals. It is vastly important for us to be able to feed ourselves, and Canada has been doing that but we need to be able to continue this by accessing trade deals in a fair manner.
All this comes back to what the agriculture industry’s job is. The agriculture industry’s job is to support government in making these deals and by producing and growing these products. When trade deals are implemented the way that they should be, it is the agriculture industry’s job to grow the economy and the industries related to those trade deals. It is also our job to explain to government why certain things work or do not, and what can be done to change things to make them work.