The world has become protectionist. There is, justifiably, much focus on issues with China. But it is not just China. Canadian agriculture commodities are blocked in India, Italy, Saudi Arabia, and Vietnam and face issues in key markets like Peru. Countries are turning inward, finding new ways to block trade. How do we protect our trading relationships when the rules of trade have been thrown out the window?
A critical component of protecting our trade is using the dispute resolution tools that are part of the agreements we have signed. Canada has a very competent diplomatic service that works with our scientific regulators to help resolve issues that threaten to block trade. The value of these efforts, which almost always occur behind the scenes, cannot be overstated. However, this dedicated work cannot combat the political agendas that are driving protectionism. There are times when we need to move out of the back rooms of diplomacy and publicly defend ourselves.
Canada is the only G7 country that has a free trade agreement with every other G7 country. But when our partners put up trade barriers the question quickly becomes “so what?” What good are trade agreements when countries refuse to follow them? We have tools at our disposal through the Comprehensive Economic and Trade Agreement (CETA) and the World Trade Organization (WTO) to challenge Italy’s protectionist country of origin labelling requirements. But these tools have not been utilized. We are also able to initiate WTO dispute resolution processes with China but have not chosen to do so.
Dispute resolution processes are long and can be expensive. But the willingness to defend trade agreements sends an important signal to other would-be protectionists, namely Canada is willing and able to defend itself if it is bullied by countries pursuing a protectionist agenda.
Canada also needs to be engaging in proactive measures to prevent trade barriers from cropping up in the first place. This will take resources – time and money – from both industry and government.
One of the ways to proactively prevent border closures is to work together with importing countries to build their regulatory capacity. Canada exports wheat to almost 100 countries around the world. Some customers, like the United States and Japan, have well developed science and risk-based regulatory systems that facilitate open trade. But this does not apply to the majority of the markets to which we export.
If regulatory systems are not well-developed or lack the human resources necessary to implement a science and risk-based approach, they can become vulnerable to political or activist interference. When these systems are responsible for approving the importation of Canadian grains, oilseeds and special crops our agriculture sector becomes vulnerable.
Canada needs to develop outreach and development programs that are focused on increasing the science and risk-based regulatory capacity in key markets. Examples include growing markets in West Africa, Bangladesh, new partners in the Trans-Pacific Partnership agreement and neighbors in Latin America.
The mandate of regulatory agencies like the Pest Management Regulatory Agency (PMRA) and the Canadian Food Inspection Agency (CFIA) should be adjusted to explicitly include regulatory capacity building in key export markets. And the agencies need to be given dedicated funds and people to carry out this work.
Trade barriers can also arise because of a lack of understanding of the sophisticated nature of Canada’s production and logistics systems and the regulatory oversight that helps ensure we continue to deliver safe, high-quality food. For example, there are markets for Canadian crops where the capacity and technology employed in Canadian on-farm storage exceeds that of the importing mills. Many concerns raised in these markets are already addressed within the Canadian value chain. Bringing regulators from these markets to Canada, to gain a better understanding of the capacity of the Canadian system, would go a long way to preventing barriers to trade from arising.
There are other areas where additional proactive focus can help prevent future trade disruptions. This includes work through international bodies like CODEX. We need to continue efforts to reform the WTO. And we need to be a leader in the development of strong science-based rules that will facilitate the trade of new varieties developed through new plant breeding techniques. All of these options require revisions to the mandates of regulatory agencies to explicitly include facilitation of trade and new resources, money, and people, dedicated to proactively preventing non-tariff trade barriers.
We have entered a new age of protectionism. A new barrier to agriculture trade is brewing someplace in the world. I don’t know where, I don’t know what commodity will be hit next time, but in our current environment I am sure it is coming. When new barriers arise, Canada needs to be ready to quickly and actively respond using the dispute resolution tools we currently have available. We also need to see governments and industry cooperatively engage in capacity building, regulatory exchanges and other proactive trade facilitative measures aimed at preventing barriers from rising up in the first place.
World attention has shifted away from multilateral cooperation. This is not good for Canada. We need to adjust our focus and resource allocation to address the new reality.