Opinion: Federal government struggles to deal with trade irritants

Capital Letters with Kelsey Johnson of iPolitics

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The Trudeau government has a trade problem down on the farm.

The Chinese government recently announced it had embargoed canola exports from one of this country’s largest grain exporters: Richardson International Ltd.

The Richardson embargo comes at a time of increased diplomatic tensions between Canada and China. Beijing says the move is required because a shipment from the company contained “hazardous pests.”

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A few days later, Chinese officials upped the ante, announcing Canadian canola exports as a whole will now face more rigid import inspections.

China’s actions have dealt a major blow to this country’s agriculture industry. Canada is the world’s largest canola exporter. Canadian canola exports to China alone are valued at around $2 billion.

The diplomatic spat also comes just months after Canada and China agreed in late 2018 to double the agricultural trade relationship, currently estimated to total some $8.4 billion, by 2025. In addition to canola, China is considered a premium market for Canadian agricultural goods including seafood, barley, pork, peas and maple syrup.

Foreign Affairs Minister Chrystia Freeland, who once took a jar of her father’s canola with her to China during a working visit in 2016, said there is no scientific basis for the Chinese government’s allegations.

Freeland, along with newly appointed Agriculture Minister Marie-Claude Bibeau and International Trade Minister Jim Carr have said the issue is of the utmost importance for the Canadian government.

But tensions between Canada and China over canola exports are not new.

In 2016, the same year Freeland packed a jar of her family’s canola in her suitcase, Canadian farmers were fearful they were about to lose access to their largest canola market. The concern came after China threatened to tighten its rules around the amount of foreign material, called dockage, allowed in canola shipments.

Chinese officials argued the new dockage limits were necessary to prevent the spread of blackleg, a disease that is also mentioned in the heightened inspection notice released by Beijing on March 7.

In September 2016, Prime Minister Justin Trudeau and Chinese Premier Li Keqiang agreed to a memorandum of understanding around blackleg that accepted Canada’s current thresholds until March 2020.

Canada’s canola industry has said that agreement must be extended past its March 2020 deadline in order to ensure the market access issue does not resurface. Industry has also quietly warned the dockage issue with China could re-emerge at any time.

But canola isn’t the only Canadian crop facing export issues. The list of agricultural trade disputes Canadian farmers face keeps growing.

Take pulses, for instance.

Canada and India remain deadlocked in a longstanding dispute over pest-control practices, known as fumigation, for pulse crops like lentils and peas. Trudeau and Indian Prime Minister Narendra Modi agreed to resolve the issue by the end of 2018.

That hasn’t happened. Instead, Canada and the United States announced earlier this year that they were taking the issue to the World Trade Organization.

Canada is one of the biggest suppliers of pulse crops to India, with more than 80 per cent of lentils and 50 per cent of peas grown in Saskatchewan exported there.

Then there’s the ongoing trade issues with Italy over durum wheat.

Canada and Italy have been embroiled in the dispute, which has been spurred by Italian consumer fears around the popular weed-killer glyphosate and proposed “Made in Italy” country-of-origin labelling requirements by Rome.

Canadian durum exports to Italy have slumped as a result. Former Agriculture Minister Lawrence MacAulay told senators in May 2018 that Canada was considering challenging the policy at the WTO. No challenge has been filed thus far. The issue also remains unresolved.

Meanwhile, Agriculture and Agri-Food Canada’s market access secretariat continues to work on hundreds of technical trade issues affecting Canadian agriculture goods.

In 2015, the Trudeau government flagged Canada’s agriculture industry as a potential economic darling. That year’s budget challenged the sector to grow its exports to $75 billion by 2025.

MacAulay during his tenure as agriculture minister repeatedly insisted that target was obtainable.

For now, Canada’s agriculture industry, which is heavily reliant on its ability to export, remains cautiously optimistic about that trade target, even as the list of trade issues lengthens and global trade uncertainty continues to grow.

On March 19, Finance Minister Bill Morneau was expected to release the Trudeau government’s latest fiscal plan. That budget may or may not include funding and policy directives for Canadian agriculture and agricultural trade.

About the author

Contributor

Kelsey Johnson

Kelsey Johnson is a reporter with iPolitics.ca in Ottawa. Born and raised in Alberta, Kelsey credits her Western roots for sparking her interest in all things related to Canadian agriculture. In her spare time, she can be found hiking, camping or curled up with a mug of tea and book.

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