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Comment: Hold steady with China

In mid-September, our foreign affairs minister announced that Canada was dropping trade talks with China.

“I don’t see the conditions being present now for these discussions to continue at this time,” François-Philippe Champagne told Nathan Vanderklippe of the Globe and Mail. “The China of 2020 is not the China of 2016.”

This was hardly surprising given the growing tension since Meng Wanzhou was arrested in Vancouver on a U.S. extradition warrant, and Canadians Michael Kovrig and Michael Spavor were arrested on espionage charges in China, in a move widely viewed as retaliation for the Huawei executive’s arrest.

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Our beef exports this year were also hit by the COVID-19 issues at our packing plants this spring. Then China put Cargill’s High River plant on a temporary suspension list (along with several other meat plants from the EU, South America and the U.S.). The suspensions came after another COVID-19 outbreak in China, followed by China’s customs officials requesting official declarations from exporters that their food products were COVID-free. The World Health Organization, along with the Centres for Disease Control and other institutions and health experts, state that there’s no evidence that COVID-19 spreads through food or food packaging.

Before these “complicating factors,” Canada’s beef exports to China had been growing since 2012, says Fawn Jackson, director of government and international relations with the Canadian Cattlemen’s Association. In fact, in 2017 and 2018, China was our fifth-largest market.

“And if we hadn’t suspended trade in 2019, they would have been neck-and-neck with Japan, to be our second-largest export market.”

Canada’s beef exports to China have been growing steadily since 2012. The 2015 surge was due to China blocking imports from grey channel countries, shifting product to official channels in China.
photo: Source info for graphic: Statistics Canada/CFIA

China is also a high-value market, just behind Hong Kong and the EU in value per kilogram of beef exported, she adds.

“So, it doesn’t matter how you look at it, in terms of quantity, in terms of value, in terms of potential for future trade, it’s an exciting market to look at. But can they be a predictable trading partner?”

That is the question many of us are asking ourselves these days. Jackson doesn’t see the relationship improving until some of Canada’s requests are met, including the release of the two Michaels.

Meanwhile, other countries are making inroads into China, including the U.S. The U.S. agreement is interesting as while it clearly does benefit our southern neighbours, it also includes requests that China follow international guidelines, Jackson notes. That is “exciting for the whole world. Because I think the more predictability that we can build into shipping to that market, the better.”

There are also other markets with opportunity that we can focus on. As the U.K. prepares to depart from the EU, Canada needs to focus on a transitional agreement that is amenable to trade, Jackson says. Depending on things such as technical access, we could also look at getting the U.K. into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), she adds.

It’s also worth looking at getting other economies into CPTPP, she says, such as Thailand and Taiwan. “There’s no shortage of opportunity in Asia, that’s for sure.”

Jackson also notes that we already have great relations with South Korea, and there are more opportunities in that market. She’d like to see us get better technical access (for example, being able to export beef from animals over 30 months), as well as tariffs more in line with U.S. and Australian beef.

While Canada and South Korea are on good terms now, back in 2009 the Canadian government filed a complaint with the World Trade Organization (WTO) on South Korea’s ban on beef from cattle under 30 months. Before the WTO ruled, South Korea agreed to allow beef from cattle under 30 months, putting an end to the dispute in 2011. In other words, trade relationships can improve.

For her part, Jackson says we should all hope that Canada and China can get back to developing a trade relationship, as there are benefits on both sides. Canada is “a very reliable trading partner,” she notes, with one of the best food safety systems in the world, a large agriculture industry and a relatively small population. China offers a high-value, high-quantity potential market.

While it’s unlikely things will improve until the Michaels are released, Jackson says there is a “huge value in us being steady and committed,” continuing to push and show that we’re doing things right here, while also focusing on diversification.

The work Canada is doing with other middle powers at the WTO is also important, so that economies follow rules and “so that we do have a foundation of trade that’s predictable,” she adds. After talking to Jackson, I read a Western Producer article by Sean Pratt that notes Canada was elected chair of the WTO’s sanitary and phytosanitary measures committee. That committee deals with issues around food safety, health measures, and plant and animal life affecting trade. Canada’s election to the chair is good for rules-based trade, the article notes.

Jackson sees opportunity in China “but it’s going to be challenging. And we should keep on being what we’re really good at being, which is a predictable trading partner, and hope that we’re able to find solutions together for the future.”

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Lisa Guenther

Lisa Guenther is the editor of Canadian Cattlemen. You can follow her on Twitter @LtoG.

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