Geo-politics of food trade

Canada faces imminent threats to its agri-food system from the growing global trade turmoil and the sudden decline of the rules-based international accords, says a new report from Agri-Food Economic Systems, an independent Canadian economic research organization. The U.S.-China conflict and simultaneous epizootic outbreak in China’s swine industry demand integrity in the international trade systems to mitigate fallout, integrity that has suddenly declined.

 

“The global situation with regard to staple food products, notably meat and oilseeds, is deteriorating,” says Douglas Hedley, Agri-Food Economic Systems associate and co-author of the report. “The spread and implications of African Swine Fever (ASF) in China will seriously impair global meat supplies and spark food price inflation - especially in China. Meanwhile, the implied reduction in Chinese feed demand sharply limits any upside for soybean and canola prices, amid burdensome stocks.”

 

The U.S. and China are engaged in an escalating trade war over a range of long-standing issues that are irritants for the U.S., which have not been resolved to the satisfaction of the U.S. through World Trade Organization (W.T.O.) dispute resolution processes.

 

“Ordinarily, resolution of this situation would be a positive for Canada, with the U.S. standing up for international institutions”, says Ted Bilyea, Agri-Food Economic Systems associate and co-author of the report.  “But the situation today is very different. It could result in a China/U.S. agreement which is self-contained and preferential; this could signal the beginning of the end for the W.T.O.” 

 

“Through its actions against China, the U.S. is creating a trade crisis that could be used to force needed W.T.O reforms,” says Mike Gifford, former chief agricultural trade negotiator for Canada and co-author of the report. “However if this is not the U.S. strategy, and the U.S. increasingly relies on power leverage rather than the rule of law, we run the very real risk of the international trade system progressively unraveling.”

 

“China is a hybrid state/capitalist economy; the multilateral trade rules were designed for market economies,” says report co-author Al Mussell, Agri-Food Economic Systems research lead. “China appears intent on growing through its hybrid economic structure, but is vulnerable to food security and inflation. China’s response to its food situation, and its resolution of trade tensions with the U.S., will be historical inflection points for Canadian agri-food and the global economy.” 

 

The New Geo-Political Economy of Food report can be accessed at www.agrifoodecon.ca

 

Source: Agri-Food Economic Systems, May 16, 2019 news release

 

 

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Publish date: 
Monday, May 20, 2019

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