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TRADE
TALK
FiddlingwithNAFTA
WHENOPPORTUNITY KNOCKS, WILL CANADAANSWER THE DOOR?
AS SAYINGS GO, “IF IT AIN’T BROKE,
don’t fix it” may not be profound, but for
Canadian farmers faced with the reopen-
ing of the North American Free Trade
Agreement (NAFTA), it offers more than
a “grain” of truth. What impact might
this have on grain trade among the three
parties to the agreement (Mexico being
the third), and Canadian grain farmers in
particular?
It is indeed a relationship that has
served Canada well for more than two
decades. “The United States is one of our
biggest customers and we’re one of their
best,” said Cam Dahl, president of Cereals
Canada. “This is a very positive trading
relationship, so the bottom line approach
should be to do no harm.”
RELIEVED OF OUR DUTIES
“As Canadian farmers, we’ve enjoyed
duty-free grain movement since NAFTA
was signed in 1994 and that’s something
we don’t want to lose,” said D’Arcy Hilgar-
tner, chair of Alberta Pulse Growers.
And there’s a lot to lose. From Aug. 1,
2014, to July 31, 2015, Canada exported
3.206 million metric tonnes of grains.
Agri-food exports to our southern neigh-
bour totalled $29.6 billion in 2016 and our
imports of the same were $26.5 billion.
While the low Canadian dollar has
slowed Canadian grain imports from the
United States, that’s nothing new.
“When the dollar is low, we sell more
to the U.S., and when it’s high, we buy
more,” said Hilgartner. “I’m looking for
a tariff-free trading arrangement where
the market sets pricing rather than some
artificial adjustment tax or other arbitrary
measure.”
TURF AND TARIFF
“Agriculture has been a very positive
part of NAFTA,” said Molly O’Connor,
government relations adviser for the
National Association of Wheat Growers
in Washington, D.C. “They may want to
look at [tariffs for] manufacturing or other
areas, but we would hate to see the return
of tariffs that negatively impact trade for
wheat growers.”
The push to retain the status quo is
complicated by the possible impact of
supply management in dairy, poultry and
egg production on the crop sector.
Alberta Wheat Commission chair Kevin
Auch is concerned the grain industry
may suffer if the government commits
to protecting supply management at all
cost. “Grain farming is 90 per cent of the
farming sector. We have to be concerned
that our interests would be traded away to
protect one small part of one sector.”
Martin Rice, acting executive director
of the Canadian Agri-Food Trade Alli-
ance, thinks the effect will be minimal. “I
assume the U.S. would want more access
to Canada for dairy and poultry, regard-
less of what we ship to them,” said Rice.
“Those sectors have their own interests in
exporting to Canada that aren’t based on
pork or crops or other products.”
GETTING DEFENSIVE
In Rice’s view, the Canadian government
doesn’t want to be seen as trading one
sector against another. He feels we’ll be
dealing with supply management from a
defensive stance and largely in isolation
from the export side.
“On export-oriented products like grain,
oilseeds, beef and pork, we are looking
at fairly friendly trading partners in the
U.S. who want to preserve the benefits
of NAFTA.” U.S. farm groups such as the
American Farm Bureau Federation and
the National Pork Producers Council have
been vocal in support of trade integration
between the three NAFTA nations.
One area that could be affected by
renegotiation is wheat grading under the
Canada Grain Act, but many experts feel
that’s a good thing.
“The act states that wheat grown in the
U.S. is only eligible for a feed grade, even
if the variety is registered in Canada and
has the same quality as grain grown north
of the border,” said Dahl. “Regardless of
what happens with NAFTA, that needs to
change.”
Auch agrees. “It’s an irritant for them,”
he said. “If they grow the same thing, fol-
low the same rules Canadian farmers do,
they should be allowed to sell here.”
FRIENDS WITH BENEFITS
Despite the longstanding alliance, Amer-
ican rhetoric around NAFTA has some
Canadian farmers nervous. On the other
hand, many industry members see reo-
pening NAFTA as an opportunity.
“This is a chance to bring NAFTA up
to speed with other trade agreements
around issues like testing of new biotech
crops and establishing maximum residue
limits,” said Rice. “There are many areas
where we can improve collaboration and
harmonize regulations.”
Dahl echoes this sentiment. “We can
use the re-opening to ensure we have
similar ways of regulating pesticides, a
common approach to new plant breeding
techniques that facilitates investment and
development, and electronic exchange of
information that supports cross-border
trade,” he said.
“These are all regulatory impediments
that renegotiation can address in a pos-
itive way. I am optimistic we’ll use this
time to modernize what we have while
increasing trade activity.”
Also seeing win-win opportunities is
Gord Kurbis, director of market access
and trade policy for Pulse Canada. “A big
Fall
2017
Grains
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