Odysseas Gounalakis, left, owner of Scheffler’s Deli in St. Lawrence Market, says 'the quality and the variety of my product is way better,' since CETA came into effect.Carlos Osorio/The Globe and Mail
Aficionados of burrata, manchego and chaumes can find upwards of 400 cheeses at Scheffler’s Deli & Cheese, which has been selling high-end food products at Toronto’s historic St. Lawrence Market for more than six decades.
In recent years, the deli has geared more of its selection to fresh cheeses that supermarkets typically wouldn’t bother with, such as La Tur, a soft and creamy type from Italy’s Piedmont region. Odysseas Gounalakis, co-owner of Scheffler’s since 1992, brings in all of his European cheese by plane – an expensive choice, but one that maximizes the shelf life of certain varieties that spoil within a couple months of production.
This shift in strategy is made possible by the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), which began to take effect in 2017. Because of the free-trade pact, Mr. Gounalakis was able to obtain an import permit, and in 2023, it allowed him to fly in roughly 8,000 kilograms of duty-free cheese from the EU.
Before CETA, Mr. Gounalakis relied on established importers and distributors, whose primary focus was shipping in whatever large retailers wanted. Now, he enjoys more discretion over his inventory.
CETA is “a great thing,” Mr. Gounalakis said. “The quality and the variety of my product is way better.”
The trade deal has kicked off a boom period for cheese imports. In 2022, Canada brought in a combined 19.2 million kilograms of cheese from Italy, France and the Netherlands, according to Statistics Canada. That amounted to a doubling since 2016 and outpaced growth from the U.S., which remains the largest source of imports by weight.
Even so, Italy reigns supreme in dollar terms. Canada imported $139-million of cheese from Italy – famed for its production of Parmigiano-Reggiano, ricotta and gorgonzola – in 2022, compared to $124-million from the U.S.
With recent trade deals, Canada has conceded more access to its dairy market, which is governed by a supply-management system that shields the domestic industry from foreign competition. Consumers are reaping the benefits: Today, they can find way more cheese from across the Atlantic.
“Clearly consumers love this stuff,” said Laura Dawson, a trade expert and the executive director of the Future Borders Coalition, an organization focused on Canada-U.S. border issues.
“What’s more, the sky did not fall,” she added. “Canadian cheesemakers are still making cheese. And consumers are continuing to enjoy cheese and they’ll benefit from a broader range of things to choose from.”
In 2023, CETA allowed Odysseas Gounalakis to fly in roughly 8,000 kilograms of duty-free cheese from the EU for Scheffler’s Deli & Cheese.Carlos Osorio/The Globe and Mail
Under the terms of CETA, Canada ramped up its annual quota of tariff-free cheese imports to the current maximum of 16 million kilograms, plus 1.7 million kilograms for industrial cheese used in food processing. (There is additional access to the Canadian market at reduced tariff rates under World Trade Organization rules, which also existed pre-CETA.) Beyond these quantities, imports are subject to prohibitive tariffs of 245.5 per cent.
In 2023, 244 companies were able to import cheese from the EU, and tariff-free quantities were evenly split between two groups: manufacturers (such as Kraft Heinz Canada ULC) and distributors and retailers. The retailers run the gamut from big-box stores (Costco Wholesale Canada Ltd.) to smaller operations, such as Scheffler’s.
Pat Nicastro, owner of La Bottega Nicastro in Ottawa’s ByWard Market, also has a permit. Before CETA, there were frequent supply issues, he said, because importers would exhaust their quota before the winter holidays.
“Toward the end of the year, all your favourite cheeses weren’t available,” Mr. Nicastro said. Now, “there’s more variety. There’s more competition. Everybody’s bringing in some very special product” that they couldn’t before.
Patrick Pelliccione, president of Jan K. Overweel Ltd., the owner of several retail food brands, imported less cheese from Italy in 2023. The cost of procuring it has risen substantially, which combined with stiffer competition to sell Italian cheese in the Canadian retail space, has led to lower margins.
Instead, Mr. Pelliccione has brought in more cheese from the Netherlands since mid-2022. “You can drive a lot of volume” with Gouda and Edam, which have a “value price point,” he said.
While the Canadian dairy market has opened up slightly, it is still dominated by domestic producers, which account for just over 90 per cent of cheese supply in the country. Prices are another sore point for consumers: According to Statscan, cheese prices have jumped 20 per cent over the past four years, compared to 13 per cent in the U.S., which unlike Canada does not set production limits for the dairy industry.
Canada’s other trade partners aren’t necessarily pleased with the situation either. Under the North American and Pacific Rim trade deals, Canada has granted the right to import cheese exclusively to processors and distributors, shutting retailers out of the process. This has raised the ire of the U.S. and New Zealand, which have argued in formal proceedings that their dairy farmers are thwarted from enjoying the full benefits of free trade.
Effectively, those countries argue that incumbent players in Canada’s dairy sector – which have benefited from decades of supply management – largely control what foreign products come into the country. (In trade negotiations, the EU deliberately pushed for the inclusion of Canadian retailers to import its dairy products.)
The Canadian dairy sector is “a highly controlled, highly interventionist market that prevents normal import and export activities from taking place,” Ms. Dawson said.
Mr. Nicastro described supply management as an “archaic” system to protect the domestic industry – often at the expense of selling the best product to consumers.
”Canadian cheese producers, no offence, can’t produce the cheeses that they’ve been making for hundreds of years in Italy,” he said. “Italy has mastered a lot of things, and cheese is one of them.”