Exports from Canada face growing uncertainty as governments around the world look inward in an effort to gain votes.
Whether it’s the collapse of the World Trade Organization’s dispute settlement process, individual countries introducing new technical trade barriers, or politicians deploying subsidies and tariffs in the name of more domestic jobs, the world is generally moving away from freer trade toward protectionism, says Canada’s former chief trade negotiator, much to his chagrin.
“We’re not in a very good place, and we’re not on a very good trajectory,” observed Steve Verheul, at the 2024 Crops Convention in Winnipeg, Man., last week.
Verheul retired from the federal government in 2022 after serving as Canada’s chief trade negotiator and as chief agriculture negotiator prior to that. He shared his thoughts on the state of world trade at the Crops Convention, joining Tyler McCann of the Canadian Agri-Food Policy Institute for a fireside chat.
The move away from multilateral rules-based trade by some of the world’s largest economies has left middle powers like Canada without much recourse when export markets introduce protectionist barriers.
Canadian agriculture is especially vulnerable, as approximately half of everything grown on Canadian farms is exported directly or processed for export markets. When it comes to beef, pork, canola, wheat, pulse crops, and soybeans, the vast majority are sold to customers outside of Canada.
That leads to the big question for Verheul in our conversation at the Crops Convention (watch/listen below):
What should Canada be doing to strategically counter or minimize the damage from this growing protectionist threat to Canadian exports?
On its own, Canada often lacks leverage to challenge major economies, such as the United States, European Union, China, or India, but the Canadian government and export-focused industries should play a leadership role in establishing a group of countries that share the same concerns, suggests Verheul.
There’s a large constituency of countries that depend on trade with enforceable rules, he says — many of whom are also concerned about the rise of China as the U.S. shifts its focus inward.
“It’s everyone from Norway and Switzerland in Europe. Australia, New Zealand, most definitely, and some others in Southeast Asia. We have allies in Latin America and Central America — countries, again, that rely on trade and need to have those rules in place,” says Verheul.
The same domestic political forces that are driving protectionist moves in the U.S. and EU make it highly unlikely that politicians in either jurisdiction will lead any effort to reduce trade barriers, but Verheul suggests the best hope for Canada and other pro-trade countries may lie in creating a coalition that the U.S. and EU could sign on to.
“If that kind of effort could get some traction and start to put together some ideas that would be viable, then I think it would be easier for the U.S. to then join that kind of effort than initiate it on its own. And I think the European Union would also welcome an effort like that and be eager to get on board,” he says. “I just don’t think the U.S., EU and others are in a position to show leadership right now. So it’s got to come from somewhere.”
Check out the conversation above for more with Verheul at the ’24 Crops Convention, including his thoughts on the renewed “Team Canada” approach to trade with the U.S., how climate policies fit with trade, and the need for more long-term vision on trade from Canada’s political leaders heading into the next federal election.
Related: Behind the traderoom door — a one-on-one with Steve Verheul
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