Prime Minister Justin Trudeau was eager to highlight how last year’s Pacific Rim trade deal has been great for Canadian farmers as he hosted his Japanese counterpart, Shinzo Abe, in Ottawa this weekend.
“There are many Canadian ranchers and others who are significantly benefiting from the tremendous increase in beef and pork exports to Japan over the past months, while Americans do not have that kind of access,” Mr. Trudeau told reporters on Sunday.
Japan has cut tariffs on billions of dollars worth of Canadian farm exports – a benefit rival U.S. exporters don’t enjoy because U.S. President Donald Trump pulled out of the Trans-Pacific Partnership in 2017.
The remaining 11 member countries, including Canada and Japan, went ahead with the trade deal anyway last December, renaming it the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
Unfortunately, Canada’s trade advantage could be short-lived. Mr. Trump is now threatening Japan with steep tariffs on its cars unless American farmers get a similar or better deal to what Canada and other countries got.
The trade agreement came at a good time for Canadian exporters, who have been struggling with depressed prices and rising protectionism elsewhere. Canada is poised to pass the United States this year as the top exporter of chilled pork to Japan, according to Gary Stordy, a director of the Canadian Pork Council, an industry lobby group.
“We’re capturing more market share there,” he said. “This year, we are probably going to overtake the U.S. as the dominant supplier.”
Mr. Stordy said he’s not surprised the United States is now trying to get a better deal than what it would have had under the TPP, using autos as a “pressure point" to get its way.
Canada sells roughly $1-billion worth of pork to Japan every year. Under the trade deal, Japan’s 21.3-per-cent tariff on pork is being phased out over 15 years. Tariffs on beef, canola and wheat are also being reduced or eliminated.
It was inevitable that the United States would fight back, said Canadian Meat Council president Christopher White. That’s why Canadian farm groups lobbied so hard for early ratification of the trade deal, he added.
The U.S. fight to win back its share of the Japanese market is just the latest uncertainty facing global agricultural trade. The continuing trade war between the United States, China and other countries is causing chaos in key markets. China has hit the United States with retaliatory tariffs on soybeans and pork, sending prices of those products tumbling in North America. Meanwhile, China has blocked Canadian exports of canola, used for cooking oil and animal feed, in a move linked to Ottawa’s arrest last year of Huawei’s chief financial officer in Vancouver. The Chinese canola market, now closed, was worth $2.7-billion to Canadian exporters in 2018.
Mr. Trump is facing intense pressure from U.S. farmers to reopen markets in Asia and elsewhere.
Canada and Japan are caught between warring trade giants. The United States has hit both countries with duties on steel and aluminum. And as early as next month, the United States could go ahead with a tariff of up to 25 per cent on Japanese vehicles and parts.
The increasingly chaotic trade environment was high on the agenda for Mr. Abe, who arrived in Ottawa from Washington on Saturday after dining with Mr. Trump at the White House and playing a round of golf.
Mr. Trudeau and Mr. Abe spent much of their news conference Sunday defending rules-based trade and promoting the TPP as a model for future trade agreements.
The deal “highlights the benefits of countries working together and not falling back on protectionism,” Mr. Trudeau said.
Mr. Abe said he intends to sell the idea of free trade as a “source of economic growth” when he hosts a meeting of Group of 20 countries in Osaka in June.
The problem for both leaders is that Mr. Trump is in no mood for trade hand-holding and happy talk, preferring instead the rough-and-tumble tactic of tariff threats to get what he wants.