As governments around the world look inward to garner votes, Canadian exports face increasing uncertainty.
Whether it’s the collapse of the World Trade Organization’s dispute resolution process, countries introducing new technical trade barriers, or politicians injecting subsidies and tariffs in the name of increasing domestic employment. The world as a whole is moving away from free trade and toward protectionism, says Canada’s former chief trade negotiator.
“We’re not in a very good spot and we’re not on a very good trajectory,” Steve Verhuel said last week at the 2024 Crop Conference in Winnipeg, Massachusetts.
Mr. Verheul retired from the federal government in 2022 after serving as Canada’s chief trade negotiator and, before that, chief agricultural negotiator. He shared his thoughts on the state of global trade at the Crops Conference and had a fireside chat with Tyler McCann of the Canadian Institute for Agriculture and Food Policy.
With some of the world’s largest economies withdrawing from multilateral rules-based trade, middle-market countries like Canada have little recourse when export markets introduce protectionist barriers.
Canadian agriculture is particularly vulnerable, as approximately half of everything grown on Canadian farms is either directly exported or processed for export markets. The majority of our beef, pork, canola, wheat, pulse crops and soybeans are sold to customers outside of Canada.
That leads to a big question for Verheul in a conversation at the crop convention (watch/listen below).
What should Canada do to strategically counter or minimize the damage caused by this growing protectionist threat to Canadian exports?
On its own, Canada often lacks the clout to compete with major economies such as the United States, European Union, China, and India, but the Canadian government and export-focused industries are Must take a leadership role in establishing the group. Verheul suggests similar concerns.
He said many countries that rely on trade with legally enforceable rules are also concerned about China’s rise as the United States shifts its focus domestically.
“You guys from Norway and Switzerland in Europe, and certainly Australia and New Zealand and other parts of Southeast Asia. We have allies in Latin America and Central America, and those countries are also dependent on trade. , we need to have these rules in place,” Verhuel said.
While the same domestic political forces driving protectionist moves in the U.S. and EU make it highly unlikely that politicians in either jurisdiction would lead efforts to reduce trade barriers, Verheul suggests that the best hope for Canada and other pro-trade countries may lie in the U.S. and EU forming a coalition that can be signed.
“If such an effort could gain some traction and start putting together some workable ideas, I think it would be easier for the United States to join such an effort than to start one on its own, and I think the European Union would be welcoming and eager to join,” he said. “I don’t see the United States or the EU or anything like that being in a position to take a leadership role at the moment. So it has to come from somewhere.”
For more information about my conversation with Mr. Verheul at the ’24 Crops Conference, please see the conversation above. Conversations will include a new “Team His Canada” approach to trade with the United States, the compatibility of climate policy and trade, and the need for a longer-term vision for trade from Canada’s political leaders ahead of the next federal election. Includes his thoughts on and more.
Related: Behind the Trade Room Door — 1-on-1 with Steve Verheul
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