Canada forgotten as U.S. president strikes trade deal with Beijing

Canola and pork producers suffer another blow as politics and president’s deal making rule the day

A new trade agreement with China that President Donald Trump is touting as “the biggest deal ever made” for the American ag sector is another blow for Canadian farmers.

And it’s a hard one to take since China slammed the door on Canadian canola seed and pork after Canada detained Huawei executive Meng Wanzhou on an extradition warrant — at the request of U.S. authorities.

Margaret McCuaig-Johnston.
photo: Supplied

“Canadian farmers are really feeling the effects of this trade dispute,” said Margaret McCuaig-Johnston, senior fellow at the University of Alberta’s China Institute.

“All of this is due to the action we took on behalf of the U.S., so it would hurt to think that we might lose more agriculture exports with the U.S. directly benefiting from that loss.”

The new agreement with Beijing that Trump tweeted so enthusiastically about in mid-October will see China purchase up to $50 billion of American agricultural products annually, according to the president. That’s nearly double the 2016 record for U.S. ag exports to that country and four times what it sold last year as a result of the trade war between the two nations.

That initially helped Canada, which had meticulously developed good relations with Chinese buyers over many years, increase exports. Then doors started slamming shut — on canola seed in March and on pork in May.

In both cases, Chinese cited technical issues: Weed seeds and diseases in canola, and labelling concerns in pork shipments. But it’s widely believed that both actions (and the detention of two Canadian men) is payback for the detention of Meng, the daughter of the founder of the telecom giant, 11 months ago.

Darcy Fitzgerald.
photo: Supplied

“It could have been a technical issue back when we first ran into some troubles with China, but that technical issue has probably been resolved a long time ago,” said Darcy Fitzgerald, executive director of Alberta Pork.

“Now what we’re watching is a trade issue. So when we see the U.S. trade deal happen, we’re affected. It allows our competitor — the U.S. — to enter into the marketplace where we’re not allowed to because of a political issue, rather than a technical issue.”

China had been one of Canada’s top three pork markets, with sales hitting $514 million last year and being on track to top that in the early part of the year before the import ban.

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Now Canadian meat packers are scrambling to find a new home for these pork products.

“It was a good marketplace for our packers to be in, and now we’re sitting on the sideline,” said Fitzgerald. “China was a good outlet for us to move a lot of product, so now, it just means we have to keep moving things around the planet to find another home for these products.”

Everyone on their own

It’s the same story with Canadian canola seed, which has been completely shut out of China since early March. Before that, China had been a key market for Canadian canola, taking 40 per cent of all seed, meal, and oil exports. Seed exports alone were worth $2.7 billion in 2018, and until the trade disruption, demand had been “very strong,” according to the Canola Council of Canada.

In September, the Canadian government made a formal request to the World Trade Organization to resolve the ban, but so far, little has come of the request.

“Canada is still not exporting canola seed to China,” said Ward Toma, general manager of the Alberta Canola Producers Commission.

“It’s almost at the point where if China wants to trade with Canada, it’s going to. And I’m not entirely sure that hinges on anything to do with the United States.”

But this new trade deal does show how much the relationship between Canada and the United States has changed over the past few years, he added.

“Canada and the U.S. used to negotiate hand in glove,” said Toma. “We looked out for each other’s interests, and it was a North American bloc when it came to a lot of things. The U.S. would help Canada, and Canada would help the U.S.

“Right now, the U.S. is looking out for itself, and that leaves Canada in a position of being a very small player in trade with a very large player.”

Details of deal murky

Which agricultural products will be affected by this deal remains to be seen.

“There is overlap in the products Canada and the U.S. export to China, but there are other products that the U.S. might be able to export that would not affect Canada so severely, such as oranges from Florida or products from southern California,” said McCuaig-Johnston.

“There may be other ways of them accomplishing their agriculture exports that won’t impact Canada so significantly. I hope that will be the case.”

A rough framework for the deal came together over two days of negotiation between U.S. and Chinese officials in mid-October, with the first phase expected to roll out before the end of the year.

But few details have been released so far and many market analysts say it’s unlikely China would suddenly quadruple its purchases of American ag commodities. And because there’s no signed agreement, it’s hard to know what will happen, said McCuaig-Johnston.

“What was announced was very general,” she said. “For the agriculture part of it, all we have are those numbers. Of course, China may go back and decide that it will be something less than those numbers. China still has some negotiating room left.”

Even so, an agreement like this is a double-edged sword for Canadian farmers.

As U.S. commodity prices rise, so too do Canadian prices — but for export-dependent commodities such as pork and canola, an increase to U.S. exports would almost certainly impact Canadian exports of those commodities into China.

“During this past year, as a measure of good faith, China has increased its purchases of U.S. soybeans and pork — two products where Canada has been hit by decreases in Chinese purchases,” said McCuaig-Johnston.

About the author

Reporter

Jennifer Blair is a Red Deer-based reporter with a post-secondary education in professional writing and nearly 10 years of experience in corporate communications, policy development, and journalism. She's spent half of her career telling stories about an industry she loves for an audience she admires--the farmers who work every day to build a better agriculture industry in Alberta.

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