By Will Verboven, Contributing Editor
The export cattle and beef trade is a topic dear to my heart, being that trade is rather crucial to Canada as it’s 50 percent of our production. Compare that to U.S. beef exports that may be 14 percent of its production. Clearly, the Canadian beef industry lives and dies on exporting cattle and beef, and the United States is the destination of almost 70 percent of Canadian beef exports. Therefore, Canada is keen to diversify its beef export markets beyond the United States – but it’s not an easy exercise.
Most beef importing countries impose restrictions or demand tradeoffs on beef imports, not just from Canada but also the United States. The two countries compete with each other in those offshore export markets. Curiously, in most of those markets, the two export giants JBS and Cargill sell both Canadian and American export beef at the same time. Being North American beef is virtually all the same. One is intrigued by how this works as offshore buyers would try to play one against the other. I suspect it results in lower prices for both national beef suppliers and, in the end, cattle producers in both countries.
One country’s export advantage over the other is usually which one has the more favorable trade treaty with the importing country. That’s where Canada is disadvantaged; Canadian trade negotiators always seem ready to trade off beef exports for some other dubious trade agreement benefit. Only the present North American free trade agreement – the U.S.-Mexico-Canada Agreement – allows for actual cattle and beef free trade; many other trade deals Canada has made involve restrictions or quota limits on Canadian beef exports.
The most egregious example of beef trade barriers within a so-called free trade agreement is the Canada/European Union (EU) free trade agreement known as CETA. The U.S. beef industry needs to be forewarned about how bad CETA is for Canadian beef exports and that they not fall into the same nasty trap if they ever consider a U.S./EU free trade agreement. EU trade officials are devious and have a history of outsmarting beef exporters with empty promises and conniving hidden trade barriers. Let me cite the latest bit of EU treachery that has seen history repeat itself with Irish beef exports to Canada.
In 1986, Canada imposed countervailing tariffs against a flood of subsidized Irish beef imports. Those tariffs were achieved only after intense lobbying by the Canadian Cattlemen’s Association (CCA). Fortunately, that countervail action was greatly assisted by the United States, who claimed those subsidized Irish imports were displacing Canadian cattle into the United States and lowering their cow meat prices. If it wasn’t for that American pressure on the Canadian government, those tariffs might never have been implemented.
Once those tariffs were implemented, Irish beef exports to Canada ceased. Well, history seems to repeat itself, and according to the Irish Times newspaper, Ireland exported more than $20 million of beef to Canada in 2020, up from $3.4 million in 2017, and zero exports before the implementation of the Canada/EU free trade agreement. In comparison, Canada exported only $15 million of beef to the whole EU, excluding the United Kingdom (UK). Irish beef imports into Canada are back with a vengeance, and this time Canada has only itself to blame.
What’s worse this time is that the Canadian beef industry does not have a countervail trade action available to stop the subsidized Irish beef onslaught since Canada signed CETA that allows for unfettered and unlimited amounts of EU beef imports (that would be from Ireland) into Canada. The so-called free trade arrangement is not reciprocal; the EU does not allow unlimited and unfettered Canadian beef export access to the EU. In fact, the EU placed a 50,000-tonne quota limit on Canadian beef imports, which in retrospect looks laughable as Canada exported fewer than 900 tonnes to the EU in 2020.
The cause of that is CETA has loopholes allowing the EU to erect technical, health, food safety and logistical barriers on beef imports from Canada. I suspect the CCA was all too aware that this would happen but were somewhat powerless to stop it as Canadian trade negotiators were prepared to sell out Canadian beef in their desperation to achieve a trade deal with the EU. They did just that by not insisting that the EU give up its bag of tricks that it uses to restrict Canadian beef imports.
There probably are logistical/technical ways for Canada to restrict Irish beef imports, perhaps using some of the EU’s own devious trade barriers, but that won’t happen. Canada is too fearful of upsetting the EU and is known as the “boy scout” of international trade. It’s been noted that since the UK left the EU, there is now an opportunity for Canada to negotiate a free trade deal with the UK that would eliminate the beef import barrier outrages from the CETA deal. But alas, I suspect that will be an uphill battle as UK trade officials may well have been part of the original CETA negotiations and understand how well the CETA-connected beef barriers favored the EU. They will understandably want the same deal in a Canada/UK free trade deal.
The U.S. beef industry should be forewarned – beware “free” does not mean “free” to the EU when it comes to beef imports.
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