Canada’s export strategy: What does the U.S. election mean for us?
The U.S. is by far our largest export market in literally all of the food sectors
If you’re like me, you’re getting tired of all the U.S. election coverage and talk about what Donald Trump’s agenda will be when he takes office in January. But we can’t afford to ignore what’s happening either. Trump has made it very clear that he is not aligned with NAFTA. He wants to have an “America First” strategy for all trade agreements. He has said he wants to tear up the NAFTA agreement. And now Prime Minister Trudeau has indicated to Trump that he is willing to have talks about NAFTA and perhaps renegotiate it. That is probably a reasonable approach for him to take at this time, since we still don’t know how far Trump wants to take the issue. Maybe he’s just going after Mexico. Who knows?
Let’s keep in mind a few things. First of all, Canada is the largest export customer of the U.S. And the U.S. is the largest export customer of Canada and the largest import supplier as well. And in the food industry the same is true. The U.S. is by far our largest export market in literally all of the food sectors. The same is true when you look at imports. The U.S. is our largest supplier. Those numbers can be found in Food in Canada’s 2016 Canadian Food Industry Report.
In listening and reading comments about NAFTA from both the U.S. and Canadian sides of the border, one seems to never hear about the food industry in the NAFTA context. I think that is indicative of how both Canadians and Americans see the food industry…basically they don’t see it. And yet we are one of the largest sectors of the Canadian economy.
So as we look ahead, it is still unclear as to how hard Trump is going to go after NAFTA. Will he rip it up, or be willing to renegotiate on a less harsh basis? We won’t know until after he is in office. Also, where will it be on his agenda? Will it be one of the first items because he assigns so much importance to it? Or will it be an item that he gets to when he gets to it? It pretty much sounds like it will be high on his agenda of “America First!” So what do we do now?
It seems to me that Agriculture and Agri-Food Canada needs to do, and perhaps already has done, some analysis work to understand what the options might be. Perhaps the Food Processing Industry Roundtable, in conjunction with the various agriculture sector roundtables, needs to dig into the possible implications and develop a potential negotiation strategy when the U.S. comes after us.
But let’s not just focus on NAFTA. Let’s consider the overall Increased Exports Strategy I’ve spoken about in previous articles. For example, if we lose a great deal of revenues exporting to the U.S., where do we look for more opportunities? Is CETA going to happen in some format that will result in increased exports to the EU and/or Britain? And what is going to happen to the TPP? It is pretty clear that the U.S. is not going to ratify it. So what are our options with regard to the Asian markets?
Food exports are now a very complex and challenging topic. And yet, exports are probably the best way to grow our food industry. But let’s not forget our other key strategies: innovation, increased productivity, and sustainability. Innovation, in particular could make our products more appealing to both domestic and export markets. Increased productivity can increase our margins and/or reduce our prices. And the sustainability issue is a must do if we are to maintain our industry’s role in feeding the rapidly increased global population and the capability to do so.
I think Prime Minister Trudeau has taken the right approach for now by saying we are willing to talk about the renegotiation of NAFTA. He is trying to get on the “trusted side” of Donald Trump. But, as I’ve said, we still need to do some preparatory analyses before those negotiations around NAFTA take place.
I know we can do it! Let’s do it!
Gary Fread is president of Fread & Associates Ltd., consultants to the food industry. He has spent more than 25 years in management positions in the food processing industry, with a background in sales, logistics, purchasing and technical areas. He has worked with Procter & Gamble, Campbell Soup and Morrison Lamothe, and is the past president and CEO of the Guelph Food Technology Centre. He is active in many food industry associations and organizations, serving on the boards of several. Contact him at firstname.lastname@example.org