Agri-food trade policy is all politics today

The environment for global agri-food trade policy has shifted dramatically. The trade policies of the largest economies are increasingly transactional in nature, and essentially political. These are emboldened by the lack of an effective trade dispute resolution mechanism. Canada is a small player geopolitically, and the current situation leaves Canada exposed to multiple, deep concerns.  


Here’s the situation that confronts Canada in terms of the agri-food trade interests of the United States, of China, and of other countries. The U.S. has a heightened sensitivity to perceived fairness and lack of compliance from its trading partners. The sensitivity with China on agri-food trade is the dichotomy between urgent food security concerns and sudden trade restrictions thrust upon agri-food exporters.


“Canada needs a trade policy approach that discriminates between the risks posed by agri-food trade with China versus those posed by the U.S. and, in so doing, avoids having trade policy dominated solely by the U.S. and China, and tension between the two,” said Douglas Hedley, Agri-Food Economic Systems associate and co-author of the policy note. “With a weakened rules-based system, Canada needs to act more boldly on a plurilateral basis with like-minded countries, such as through the Ottawa Group, to improve its trade positioning in agri-food.” 


The policy note discusses key differences between risks faced by Canada in agri-food trade with the China and the U.S. and provides ideas for shifts in trade policy that address each.


“Canada is vulnerable to sudden stoppages in trade by China predicated on technical issues. Focusing on exporting more processed foods rather than raw farm commodities can be part of an avoidance strategy. We also need to watch for imposed trade stoppages that leverage acquisitions of Canadian agri-food companies,” says report co-author Al Mussell, Agri-Food Economic Systems research lead.  “Threats from the U.S. are very different -- established Canada-U.S.  supply chain alliances can be leveraged to avoid specific trade disputes, and influence the U.S. back toward multilateralism.” 


The policy note is available at  Agri-Food Economic Systems is an independent economic research organization dedicated to agri-food located in Guelph, Ontario.


Source:  Agri-Food Economic Systems October 25, 2020 news release

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Monday, October 26, 2020

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