Fall economic statement sets target of 50 per cent export growth by 2025

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Finance Minister Bill Morneau’s Fall Economic Statement puts more money where the Trudeau government’s mouth is on its trade diversification strategy, in an attempt to nudge more businesses into pursuing export markets beyond the United States.

A new export diversification strategy allocates $1.1 billion over the next six fiscal years, starting in 2018-19, to improve infrastructure and provide more resources and services for exporters.

The goal is to boost Canada’s overseas exports by 50 per cent by 2025, particularly in sectors that have demonstrated potential in certain parts of the world.

For example, when Morneau and International Trade Diversification Minister Jim Carr were in Beijing earlier this month, they set a goal of doubling Canada’s agrifood exports to China by 2025, and growing farm exports globally to $75 billion annually by that same year.

Wednesday’s economic statement noted that agriculture makes up more than six per cent of Canada’s gross domestic product. The government is allocating $25 million over the next five years to « enhance federal capacity to address situations where Canadian agricultural producers may be prevented from selling goods in international markets. »

The Liberal government’s trade agenda touts the economic growth potential of opening up new markets for Canadian goods and services. While Canada has negotiated preferential trade deals with every G7 country, its exports of non-energy goods — which represent about two-thirds of total export volumes — have remained largely unchanged over the last decade.

The economic statement notes that 99 per cent of Canada’s oil is exported to the U.S., creating a « near-total reliance » on the U.S. market. Canada will face pipeline transportation constraints until the TransMountain pipeline extension, now owned by the federal government, is built.

A recent analysis of import and export data for the first months following the implementation of the Comprehensive Economic and Trade Agreement (CETA) with the European Union found that Canadian exports weren’t significantly up, or weren’t growing as fast as EU exports to Canada, under the terms of the new deal.

Finance Minister Bill Morneau’s fall economic statement accelerates funding for marine port, rail and highway infrastructure to make it easier for non-energy goods to reach markets beyond the United States. (Sean Kilpatrick/The Canadian Press)

Canada’s share of goods exported to emerging economies (developing countries) is also lower than the share claimed by the countries it wants to compete with internationally. The Department of Finance attributes this to a reliance on the U.S. market — but given the protectionist measures implemented by Donald Trump’s administration, too much focus on American customers is risky.

Morneau’s statement Wednesday announced that, out of the $597 million collected so far through Canada’s recent retaliatory tariffs (introduced in response to U.S. steel and aluminum tariffs), $250 million will be put into an existing strategic innovation fund to pay for new investments in the sector.

New transportation infrastructure funding

While relying on the American market has drawbacks, taking advantage of new market opportunities presented by American trade policy decisions can be equally difficult. Take soybeans, for example: retaliatory tariffs put in place by the world’s biggest soybean buyer, China, have all but shut U.S. farmers out of a key market as other countries have moved in. But Canadian soybean exporters were prevented by limited rail transport and port capacity from moving significantly more of their crop to Asia.

Morneau’s fall economic statement takes nearly $774 million from infrastructure spending announced in the 2016 budget — intended to be spent over ten years — and moves it up to fund investments in marine ports, rail infrastructure and highways over the next five years.

An additional $13.6 million over the next three years will be spent to improve rail passenger and freight data, to help Canadian supply chains operate more predictably and efficiently.

The Canadian Trade Commissioner Service will get $184 million over the next five years, boosting its ability to provide advice and services in areas like digital technology, e-commerce and intellectual property.

Its Can Export program, which helps Canadian businesses find new markets, will be tripled in size. Its technology accelerator program, which has helped Canadian firms raise capital in Boston, Philadelphia, New York City and Silicon Valley, will receive an additional $17 million to expand to Delhi, Hong Kong and Tokyo.

Other measures in the update meant to help Canadian exporters include:

  • An expansion of a program to help small and medium-sized businesses in the steel, aluminum and manufacturing sectors explore new export markets created by recent trade deals with the EU and Pacific Rim trading partners. A $50 million investment was announced last June, and this economic statement provides $100 million more over six years.
  • $13.5 million for a ‘mentors’ program for « high-potential exporting firms. »
  • $10 million for partnerships with other levels of governments and business organizations to help small- and medium-sized businesses compete internationally.

No clear amounts for dairy compensation

Anyone hoping to find specifics about compensation for Canada’s supply-managed agriculture sectors in Wednesday’s statement came away disappointed.

The Comprehensive and Progressive Trans-Pacific Partnership will take effect on Dec.30, opening up new slices of Canada’s protected dairy, egg and poultry markets to foreign competition. This market access was a concession Canadian negotiators deemed necessary in order for Canada to receive other benefits from the new deal.

At the time the original Trans-Pacific Partnership was negotiated, the former Conservative government proposed a large compensation package for these industries, worth up to several billion dollars. The Trudeau government has not yet committed to any specific measures, but has formed two working groups to discuss the future of these industries generally, and compensation specifically.

A table included in Wednesday’s documents includes a line for « non-announced measures » — which could include whatever the federal cabinet eventually settles on as a compensation package — but it’s not known what percentage of these figures could be spent on compensation.

Scant progress on interprovincial trade barriers

Morneau’s statement also re-tells an old story about how the Canadian economy would be more competitive if internal trade barriers were reduced between jurisdictions in Canada.

Canada has had an internal trade agreement in place since July 1, 2017. Public procurement was opened up across provinces, and discriminatory treatment of businesses from other jurisdictions is now not allowed. A new dispute resolution process is also being implemented.

Premiers like Manitoba Premier Brian Pallister, Nova Scotia Premier Stephen McNeil and Ontario Premier Doug Ford last met as a group in July. They’ll meet Prime Minister Justin Trudeau on Dec. 7 for talks focused on economic and trade issues. (Andrew Vaughan/Canadian Press)

But it’s not clear how many regulatory barriers have been addressed in the months since.

It’s an issue Canada’s premiers have been wrestling with for years. The next meeting of Canada’s First Ministers, scheduled for Dec. 7, will revisit the subject again.

Wednesday’s statement includes a list of 23 items in a « work plan, » prioritized in four categories: goods transportation (including trucking), food inspection, construction services and alcohol liberalization.

While the federal government participates in the federal-provincial committee on internal trade, most of these action items fall under provincial jurisdiction. The federal government has addressed just two of them: by eliminating restrictions on organic labelling for aquaculture products and by repealing inspection requirements for some agricultural products.

Wednesday’s statement announced some new funding for the National Research Council to make access to national building codes free — to help small businesses and to provide a boost to the construction sector. Ottawa is working with provinces and territories to encourage them to adopt the national codes, so the industry isn’t dealing with different rules across Canadian provinces.

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Reality check: Do Canadians need to worry about growth hormones in dairy post-USMCA? – National

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The new and improved NAFTA — called the U.S.-Mexico-Canada Agreement — has opened the door to allow U.S. milk into the Canadian market.

Canada has agreed to provide U.S. dairy farmers access to about 3.5 per cent of its approximately $16-billion annual domestic dairy market.


READ MORE:
Canadians shouldn’t bet on lower dairy prices under new trade deal: experts

Along with outrage in support of the livelihoods of Canadian dairy farmers, Canadians are also concerned about the U.S.’s use of hormones on cows and the effect it will have on the milk they drink.

The recombinant bovine growth hormone (rBGH) is a manmade bovine hormone that increases milk production in cows.

The hormone is banned in Canada and Europe because it’s been found that “it’s too stressful for that cows and it was rejected in this country or made illegal based on animal welfare grounds,” explained researcher Marie-Claude Fortin.

WATCH: Dairy Farmers on USMCA






The Animal Welfare Institute says the increased lactation period for cows doubles the “metabolic stress” of the cow, and increases the rates of illnesses in the cows.

It isn’t banned in the U.S.

Only about 20 per cent of U.S. farmers use the hormone, Fortin says since the synthetic hormone is identical to the natural hormone, it’s impossible to tell whether the hormone is present in milk.

As for effects on human health, the bovine hormone rBGH can trigger an increase in another hormone called IGF-1 which has the capacity to impact humans.


READ MORE:
Alberta dairy farmer explains why he’s disappointed with NAFTA replacement

Health Canada found no evidence of adverse health concerns from the hormone, which is also called rBST.

But Fortin says the science isn’t clear on how much this second hormone can affect us.

“Frankly, the results go both ways,” Fortin said.

“We have some studies in the United States that have looked at its possible impact on humans. … It’s not clear if there’s an increase in potential for the development of tumours or cancer.”

A study commissioned by Health Canada said there was not yet evidence to suggest IGF-1 is carcinogenic to humans, but that the worldwide scientific community will continue to study the matter.

No way to tell

While some dairies attempt to use farms that don’t use the growth hormone, there’s no test or third-party certification.

“It means that if Canadian consumers do not want to have dairy products (or) milk that comes from cows that have received this hormone, (there) is really very little we can do,” she said.

Once American milk starts coming into Canada, Fortin says processing plants will have to update their policies.

“Right now the different packages or labelling types that we see across the country are not are not equal in how much they disclose,” Fortin said.

“There’s nothing in any regulation of any source that requires that processing plants to disclose where the milk comes from because it has always come from Canada [previously].”

The one thing Canadians can do, is look for the “100% Canadian” logo on their dairy products — which has prompted both Canadian companies and consumers to talk about “buying Canadian.”

“This symbol guarantees 100% Canadian milk ingredients, no antibiotics and no synthetic growth hormones. #bluecow,” Manitoban cheese company Bothwell wrote on Facebook.

 

© 2018 Global News, a division of Corus Entertainment Inc.

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Milk carrying growth hormone could spill over the border following NAFTA deal, scientist says

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VANCOUVER—Consumers and experts are voicing concerns over an artificial growth hormone allowed in American milk that may flow into the Canadian market following the new NAFTA trade deal.

Under the new agreement, the U.S. can export tariff-free dairy products such as milk, cheese and yogurt amounting to about 3.6 per cent of the Canadian market over six years.

The short-term solution for shoppers is to choose milk with the blue cow logo indicating 100 per cent Canadian milk.
The short-term solution for shoppers is to choose milk with the blue cow logo indicating 100 per cent Canadian milk.  (JONATHAN HAYWARD / The Canadian Press)

There is growing worry that recombinant bovine growth hormone or rBGH — a man-made substance illegal in Canada, but used on cows in the U.S. — could make it onto grocery shelves in Canada.

Marie-Claude Fortin, a former scientist at Agriculture and Agri-Food Canada, said “limited data” shows there’s no scientific evidence suggesting it poses a problem to human health and that it is more of an animal welfare issue.

Use of growth hormones increases the risk of disease in cows and can reduce their lifespan, she said.

With more American milk expected to enter Canadian markets, she said it’s possible that the milk will arrive in bulk and packaged under common local brands, making it hard for shoppers to know whether their milk has the hormone or not.

“I’d be very surprised if people would be able to differentiate U.S. milk from Canadian milk, or dairy products,” Fortin said. “If consumers really want to know where their milk comes from, they’ll have to say it loud and clear. At this time, there’s nothing in place that forces a processing company to tell you where they source their milk.”

Since Monday when the deal was made, Trevor Hargreaves, spokesperson for the BC Dairy Association, has received an “outpouring” of 50 queries from people worried about the impact to the industry and about growth hormone in American milk.

Any enforcement would be governed by the Canadian Food Inspection Agency, he said. “Just because you’re letting the food in, it still needs to [meet] Canadian standards.” It wouldn’t be fair to ask Canadian farmers to apply one set of standards while accepting foods from another set of standards, he added.

In the short-term, he advises shoppers to look for the blue cow sticker with the 100 per cent Canadian milk label. As for any long-term plan, “I doubt that they’ve [the Canadian government] even given this any thought at this point.”

When asked whether milk containing this hormone could enter Canadian supply, Health Canada responded by saying that the substance is “not approved for use in Canada because of concerns it may affect animal health.” Health Canada did not address how it will differentiate between milk containing the hormone and hormone-free milk.

According to the Canadian government, the NAFTA agreement has exceptions built in. One of the articles states that it “include environmental measures necessary to protect human, animal or plant life or health.”

So far, Hargreaves said, meetings between dairy industry leaders and the federal government has been about reassuring farmers are compensated for having to produce less.

“The response was: we don’t want your compensation, we want a viable industry,” he added.

Jenny Peng is a Vancouver-based reporter covering business. Follow her on Twitter: @JennyPengNow

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