Winter
2016
Grains
West
24
In South Korea, a competitor once
again beat out Canada for market
access when the U.S.-Korea Free Trade
Agreement came into force in March
2012. A Canada-Korea Free Trade
Agreement followed three years later,
but the damage was already done.
“In the case of Korea, the U.S.
got in before us and that created
disadvantages,” Citeau said. “Basically,
we cannot see that repeated.”
A TALE OF TWO TRADE DEALS
The TPP agreement comes on the
heels of the Canada-European Union
Comprehensive Economic and Trade
Agreement (CETA), a deal that faced
similar challenges in its formative
stages. Both the TPP and the CETA are
undoubtedly significant for Canadian
agriculture, but according to Mussell,
the TPP will likely provide more value
going forward for the industry.
“I don’t think we have the same trade
relationships in the EU, broadly speaking
here, than we do with countries in the
TPP,” he said. “We just haven’t had
massive trade with the EU, and also, of
course, they’re
pretty significant
producers
themselves. You
look at some of
the TPP countries
and I think we’ve
had longer
relationships,
larger trade
volumes and we’re
frankly counted on
as a core supplier
to some of those
markets.”
The TPP and the CETA will also benefit
Canadian agriculture disproportionately
along regional lines, Otto said.
“Transportation will always dictate
where the benefit comes, because for
Canada, that’s the one disadvantage
we have when we’re trading: our cost of
transportation,” he said. “The European
free-trade agreement obviously benefits
people all across Canada, but for those
that are closer to that market, I see huge
benefits for them. Whereas when you
look at the TPP agreement, especially
for agriculture in Western Canada, it’s
definitely a benefit for us, because that’s
our closest market when it comes to
export trade.”
INVESTING IN INFRASTRUCTURE
According to Porozni, the TPP highlights
the importance of continued investment
in infrastructure for trade, especially
when demand for Canadian exports
is expected to rise when the TPP
agreement comes into force. Canadian
agricultural products need to be
shipped across tremendous stretches
of land and water to reach their final
destinations. This process is only
sustainable if there is enough shipping
capacity to ensure exports reach their
international buyers in the right quantity
and on time. Unfortunately, this is not
always the case. The railway system has
already been under scrutiny in recent
years for not being able to keep up with
the high demand for grain shipping, a
situation that could get worse if demand
increases even
further.
“Because we’re
so heavily reliant
on exports, we
have to make sure
we continue to
lobby the railways
to make sure that
they can deliver
our products, our
commodities, on
time to the West
Coast,” Porozni
said. “If you’re going to increase your
production by two to three per cent
on average, we need the infrastructure
to make sure we can meet those
demands.”
Otto said he’s not worried about the
railways and other export infrastructure,
because if there’s a market for it,
businesses will pick up the slack. “As we
increase our market share and demand
for export facilities is needed, the free
market system adapts to that,” Otto
said. “If the business is there, of course
the grain companies are going to build
something to handle that business.
That’s how they make money.”
NEXT STEPS FOR THE TPP
The TPP currently has 12 member
countries, but that could change down
the road if others are admitted into its
ranks. Not only would this give Canada
access to additional markets, but also,
as a founding member, Canada would
have tremendous leverage over any late
entrants.
“If we’re in right from the beginning,
it gives us an opportunity to negotiate
the terms of entry for potential future
entrants,” Citeau said, adding that
countries like South Korea, Taiwan,
the Philippines and Thailand have all
expressed interest in joining the TPP.
Before any talk of adding countries to
the agreement gets off the ground, the
complete text of the deal will have to be
ratified by each member country. This
process could take years to complete.
“The expectation at this point is that
it could be in place by January 2017,”
Mussell said. “The new government is
going to want to address this relatively
quickly.”
During the 2015 federal election
campaign, there were worries that
a new government could derail the
TPP agreement, especially if Thomas
Mulcair’s NDP rose to power after
campaigning on an anti-TPP platform.
The Liberal government is in favour of
free trade, but Prime Minister Justin
Trudeau will need to further review
the specifics of the agreement, which
became public in November, before any
formal decision is made.
Even though the agreement has yet
to be ratified, Otto is confident that
Canada’s participation in the TPP is not
in question. “Certainly, we’ll have to
wait and see how the new government
perceives this agreement,” he said. “But
we have a commitment to it right now
and I think at the end of the day Canada
will be part of the TPP.”
“Transportation will
always dictate where the
benefit comes, because
for Canada, that’s the one
disadvantage we have
when we’re trading.”
–Brian Otto
