Prospect of U.S.-China trade deal creates access worries for Canadian farmers

OTTAWA — China’s move to stop buying several Canadian agricultural products has punished some farmers, and now industry leaders are worrying about the prospect of a broader threat — an eventual U.S.-China trade deal.

Canadian exports of beef, pork, canola and soybeans have largely been locked out of the massive Chinese market following the December arrest of Huawei executive Meng Wanzhou in Vancouver. Meng was detained on an extradition request by the United States, a move that angered Beijing and has dealt a severe blow to Canada-China relations.

But a few Canadian crops have had stronger sales to China over the past year. The trade fight between the world’s two largest economies has, for example, helped contribute to a surge in Canadian wheat exports to China since Beijing imposed tariffs on American products.

There are industry fears about what could come next — what will happen to Canadian farm exports if U.S. President Donald Trump and Chinese President Xi Jinping eventually strike a deal?

“If Trump forces China to buy a lot of American agri-food products, we won’t be selling Canadian agri-food products to China,” said Brian Innes, president of the Canadian Agri-food Trade Alliance.

“Canada may benefit in the short term, but we’re going to get whiplash if Trump makes a deal with China.”

Innes, who’s also vice-president of public affairs for the Canola Council of Canada, said Trump has been clear that any trade agreement would feature major agricultural purchases by China from the U.S.

At the moment, there are few signs of progress in U.S.-China negotiations. The trade war has grown increasingly bitter in recent months.

The two sides have hit each other with levies on hundreds of billions of dollars worth of goods. Last week, China announced it would stop buying American farm products in response to Trump’s threat of fresh tariffs on Chinese imports.

On Tuesday, however, the U.S. Trade Representative softened its position by announcing it would remove some Chinese products from a tariff list over “health, safety, national security and other factors.” Robert Lighthizer’s office also decided to delay the application of duties on certain products until Dec. 15, instead of the previous start date of Sept. 1.

Negotiators are expected to meet next month in Washington for another round of talks.

In Canada, the farming industry is watching very closely.

“We have been exporting wheat to China, but what happens when the two presidents come to an agreement?” said Cam Dahl, who heads Cereals Canada, which represents industries like wheat, oats and barley.

“I suspect that that trade stops overnight. Trade is being driven by politics and not the markets — and that’s something that it is of significant risk.”

Between January and June, federal numbers show Canada exported $335 million worth of wheat to China — an increase of more than 60 per cent compared to the same period in 2018.

“But, again, that’s growth that’s politically driven,” Dahl said. “That’s good and we’ll take it — but, still, that level of uncertainty is there … and when does that come to an end?”

Overall, the U.S.-China trade fight, coupled with worries about what could happen next, is creating uncertainty for farmers who sometimes plan their crops 18 months to two years in advance.

Federal governments — both Liberal and Conservative — have tried to help Canada avoid being overly dependent on only a handful of markets by striking a number of new trade deals over the last decade.

But Dahl said while some of the agreements have been beneficial for Canadian farmers, the world’s shift toward more protectionist policies — such as non-tariff barriers — have begun to weaken those gains.

For example, he said Canadian sales of durum wheat to Italy have fallen 60 per cent since Canada signed its trade deal with the European Union because of protectionist measures taken by the Italian government.

Dahl would like the federal government to deploy its scientists to countries that buy a lot of Canadian farming products before issues arise, so they can quickly respond to any frictions or help build capacity in places that lack a robust regulatory system.

Innes said the lift for Canadian agricultural products from Canada’s multilateral trade deals with the European Union and the Pacific Rim have been smaller than anticipated.

Non-tariff barriers still present in certain jurisdictions — in the form of regulations on things like meat processing, pesticides and seed technology — have prevented Canadians exporters from taking full advantage, he said.

Andy Blatchford, The Canadian Press