Agriculture is emerging as a key sector during North American trade talks as Canada and the United States clash on recurring pain points of protections for food industries.
On the same day that U.S. President Donald Trump said his country doesn’t need anything from its northern neighbour, one of Canada’s chief trade negotiators said his American counterparts are asking for more perks to keep the giant economy onside.
Trade Negotiations and Agricultural Integration
Matthew Smith, Canada's chief agriculture negotiator for the Canada-United States-Mexico Agreement (CUSMA) and director general of trade agreements and negotiations at Agriculture and Agri-Food Canada, addressed an audience at Farm Credit Canada’s Regina headquarters on Wednesday. He noted that the conversation has centred on how to consider adding to what is already in place rather than starting all over again.
Smith is responsible for reviewing potential gains or losses in the agricultural sector based on any changes the U.S. proposes. He appeared reluctant to reveal details from closed-door conversations but highlighted the strength of American farmers who have told their government they want to stay integrated in a North American market.
Deadline and Political Statements
The continent faces a pressing deadline on July 1 as the U.S. stalls renewal of the trilateral trade agreement as part of a scheduled review. During a press briefing in the Oval Office on Wednesday, Trump repeated his long-standing argument that the U.S. doesn’t need anything that Canada has, musing about possibly pulling his country out of the trade pact.
However, a day later, U.S. Ambassador to Canada Pete Hoekstra was in Toronto at a Canada-U.S. summit where he appeared to add nuance to the president’s remarks. “America has a tremendous amount of things where we have a need,” he said. “We need potash.”
Fertilizer and Supply Management
While both countries appear to agree that fertilizer should be trade-barrier free, Canada’s protections for some food producers have been a point of contention. Canada has long refused to remove its supply management regulations for quotas on dairy, poultry, and eggs.
Smith said the U.S. will likely slide past the July 1 deadline but has scheduled meetings with Mexico next month. CUSMA still stands until at least 2036 unless one country pulls out of the pact. However, without a 16-year extension signed by all countries, the deal requires annual renewals.
Investor Confidence and Economic Impact
The lack of long-term commitments is affecting investor confidence in Canada and Mexico. “There’s some real value to the United States in keeping that uncertainty,” Smith said. “If you’re going to pick one of the three countries in this moment … there is more investment that is going to be pointed at the United States.”
Craig Johnston, vice-president and chief economist at Farm Credit Canada, says this uncertainty is creating headwinds for Canada, with businesses largely adopting a “wait and see” approach.
