By Will Verboven, Contributing Editor
eReaders would know that the trading relationship between Canada and the United States is the largest, most stable and most consistent in the world. It involves a whopping $2 billion per day, and a big chunk of that business is comprised of agriculture and food products flowing both ways. There isn’t always trade equity in products being traded. For instance, much of the fruit and vegetable trade flow is from the United States to the Great White North, being eight months of the year, not much grows up here in ice planet Canada.
Beef from western Canada moves into the United States, and U.S. beef moves into eastern Canada. But that’s the nature of trade; it’s ruled by location, production and economic advantages, and works well if governed by free-market principles. However, as virtually every sector of both our economies has at one time or another come to endure, politicians, governments and their regulators can’t resist aggravating problems that they, in many cases, have created. Much of that is the result of the ideology of the government of the day. Thanks to our leftist, liberal federal government, Canada has become notorious for inflicting restrictive regulations on natural resource development. But that’s another story.
Even though in most times the Canada/U.S. trade relationship is the largest in the world, it’s one-sided, and due to the smaller size of the Canadian economy, Canada depends on it 10 times more than the United States. That means that any new change in American trade policy or import regulations has, at times, devastating effects on sectors of the Canadian economy.
Hence when a U.S. election results in a new administration, anxiety breaks out in various Canadian export sectors. For instance, when Donald Trump became president in 2016, he stated that the North American Free Trade Agreement (NAFTA) was the worse trade deal in history. The cattle and beef industries on both sides of the border shuddered at that allegation, considering NAFTA had led to the most extensive, most stable North American cattle and beef markets since trading began 150 years ago. The fact that virtually every Canadian and American mainstream cattle, beef and meat industry organization lobbied intensely to leave well enough alone would indicate that NAFTA worked rather well for the North American cattle and beef sector. Although the status quo for beef and cattle was maintained in the new NAFTA agreement, it definitely put a scare into the Canadian beef and cattle business, which is disproportionally dependent on exports to the United States.
The Canadian industry’s worry relates to how protectionist the new Biden administration will be and how it will affect our multi-billion-dollar cattle and beef export business to the United States. That’s a big concern and is aggravated when one remembers the somewhat successful anti-Canadian trade lobbying efforts of an obscure but deadly lobbying group – R-CALF. This group may just be a pesky annoyance to mainstream American cattle producer groups, but they seem to cause considerable trade mischief from a Canadian perspective.
If the new U.S. administration naively gives R-CALF credibility because they are ideological soulmates or because they have allied themselves with Democratic Party pals like unions or green groups, trade troubles would seem inevitable. The exasperating outcome of R-CALF political meddling is that it does not increase prices to producers but has cost consequences to retailers and processors. We all know who pays for that in the end.
One thing Canadian and American ag producer groups have in common is that whenever a new political party or administration is voted into government, they are faced with new folks who are usually clueless about the realities of the agri-food industry in general. That usually means a full front lobbying effort to get some semblance of ag-industry understanding into the newbies running the new government or administration. Meat industry lobbying veterans know full well that they will have to compete for their attention with the well-oiled and financed lobbying machines of eco-socialist groups who are generally anti-commercial agriculture.
In Canada, we already have a federal liberal government that can be described as governed by eco-socialist ideology. It would seem from this foreign observer’s view that the new Biden administration may also harbour eco-socialist opinions on many issues, including agriculture and food production.
If both national governments have those sorts of political perspectives in common, that cannot bode well for the North American commercial agri-food business. For instance, we already have a carbon tax in Canada; it’s central to environmental ideology in the developed world. I expect the new Biden administration will seriously entertain the imposition of such a tax in the United States. Ag producers can protest all they want against such a tax, but I note that ag industry voters on both sides of the border do not show much political support for progressive liberal governments. It’s something government political strategists always remember.
I suspect the North American commercial ag business on both sides of the border will be quite anxious over the next year.