Source: Winnipeg Free Press
Another day, another threat to Canadian exporters is made by the Chinese government.
This time, the target of its ire is the Canadian meat industry, which they claim is unsafely exporting product using fake certificates.
There is broad consensus that this situation is rooted in the politics of the ongoing Huawei extradition case, but to what end?
A strategic pivot took place earlier this month when U.S. President Donald Trump tied the case of the detained Canadian diplomats in China to the ongoing Sino-American trade negotiation. In effect, that tactic has increased the level of expected concessions from the Chinese, while also appeasing the Canadian government, which is paying a heavy price for acquiescing to American requests to honour a long-standing legal agreement.
What we are therefore seeing unfold is a strategic counterpunch from the Chinese government.
To weaken Trump’s bargaining position going into the G20 meetings, they engaged in a pressure campaign to have Canada voluntarily withdraw itself from the trade conflict by releasing Meng Wanzhou from custody. Any delay on Canada’s part would bring upon it a cascade of economic penalties that will be carefully selected and impeccably timed.
For example, the bans on canola and meat products not only hurt the exporters currently trading in China, they also damage the reputation of Canada’s food-safety system, which underpins its value in other corners of the world. It is equally designed to come to bear in the months leading up to a hotly contested federal election.
There is also an implicit message to all other Chinese trading partners to be found within its treatment of Canada: access to the country’s massive market is contingent upon bowing to its national interest.
Regardless of how the current legal case against Meng unfolds, that message will echo for years to come and portends a future of multi-polar globalization that is fraught with potential for political entanglements.
That is especially true for the agriculture industry, which tends to be highly promoted and protected in every country.
That emerging landscape focuses the spotlight directly on a major trade issue currently facing Manitoba farmers and food producers: is this the type of intrigue we can expect in our attempt to diversify our export markets?
The latest headlines are filled with details of the Huawei case, but our exporters have also recently endured setbacks in Vietnam and India, as those governments have used food-safety concerns to protect their domestic industries, as well.
Being a key agricultural exporter, it might sound like the prospects for Manitoba are consequently grim, but the food industry will not always revolve around a seller securing demand — it will soon turn on whether a buyer can secure supply.
The logic is straightforward: everybody eats, and as wealth increases in a society, the consumption of proteins increases, too. Consumers can eventually afford more grains and meat in their diets, but more importantly, they can also afford qualitatively better grain and meat products. That is precisely what analysts have been forecasting for years.
The qualitative edge currently seen in Manitoba is relatively rare on the global market and is about to get rarer as Asian economies compete to purchase the best products available for their burgeoning consumer base.
In fact, as soon as the Chinese canola ban was announced, Japanese importers started showing renewed interest in Western Canadian supply.
That behaviour reflects an increasing need for major consuming countries to secure their supply of our agricultural goods before a competing market does the same, because there will soon be more hungry consumers than tonnes of quality grain and meat to serve them.
In short, Manitoba farmers produce what the world’s emerging middle class will soon be eating on a massive scale. Targeting these exporters to send a political message might prove to be a penny-wise and pound-foolish proposition.
Mariette Mulaire is president and CEO of the World Trade Centre Winnipeg.