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Agriculture This Week - Trade deals not always issue free

The idea of trade agreements opening doors to free trade between nations is a good one. But ink on a document does not mean a relationship is a smooth one.
World Trade Organization

The idea of trade agreements opening doors to free trade between nations is a good one.

But ink on a document does not mean a relationship is a smooth one.

Canada and the United States have been major trading partners from the earliest days of the two countries based on location alone.

They have also been signatories to various deals, such as the North American Free Trade Agreement, designed to formalize the relationship and smooth relations.

The deals help, to a point.

But any agreement is only as good as the desire of signatories to honour not such the fine print of the deal, but to live by the intent of the document.

That however is something the United States tends not to do.

They often talk about being a country of commerce and trade, but they spend millions and millions looking for loop holes in trade deals.

Through the years Canada has been forced into court over a wide range of trade arguments, including soft wood lumber, to pork and live hogs and beef.

One of the most recent instances has revolved around the United States wanting to implement Country of Origin Labelling (COOL).

The idea on its surface makes sense from a domestic producer and consumer perspective. It’s understandable producers would like consumers to support them by buying domestic foods.

In Canada, as an example, sheep producers have long lamented New Zealand lamb arriving in this country, often at lower than local cost of production prices, and thus impacting Canadian lamb sales.

We also saw the importance of the idea of consumers purchasing a Canadian product when the country rallied to eat through the surplus of beef after Canadian beef exports were stopped after the first case of BSE.

There is even the consumer-driven idea of buying food from within a 100 kilometres of home as a way to hold added control over what we eat, because it builds relationships directly with local area producers.

But labelling gets to be a dicey situation when you start dealing with what the country of origin is. What country of origin is a calf born in Canada, exported south at 500-pounds, finished, processed and sold in the U.S.?

The calf originated here, but the beef is more correctly American sourced.

In addition to the vagaries of what constitutes country of origin are trade deals which are supposed to offer fair access, and labelling which works to give domestic product an edge runs counter to many deals.

Canada and Mexico saw it that way, and they have fought the United States for nearly a decade on COOL. The World Trade Organization has ruled against COOL before, and recently did so again, a decision which exhausts the appeals open to the U.S.

Canada is not in a position to place tariffs on U.S. imports in retaliation for the economic harm done to Canadian cattle and pork because of the mandatory COOL laws.

The long fight has cost millions in court fees, and millions more in losses to Canadian producers because of COOL. It is money which will not be recovered, even as U.S. producers would have seen better returns because of the unfair advantage COOL was shown to provide.

The circumstances once again suggest the idea of unfettered trade is something to be talked about as an ideal, but is an idea in practice only accepted if a local advantage is seen to exist.

It is something to be remembered whenever a new trade deal is being negotiated, never are they as golden as they seem.

Calvin Daniels is Assistant Editor with Yorkton This Week.