Another trade deal in doubt as Italy pushes back against CETA

Published on
June 26, 2018

With the business world's attention focused on the burgeoning trade war between China and the United States and the negotations between the United States, Canada, and Mexico as they try to hammer out a revised North American Free Trade Agreement (NAFTA), a third trade treaty once thought to be a done deal has hit an unexpected road block.

The future of the Comprehensive Economic and Trade Agreement (CETA) between the European Union and Canada is in doubt after Marco Centinaio, the agriculture minister for Italy’s new conservative government, told an Italian newspaper his government would ask his country's parliament not to ratify the treaty, claiming it does not ensure sufficient protection for the country's specialty foods. 

"We will not ratify the free-trade treaty with Canada because it protects only a small part of our PDO [Protected Designation of Origin] and PGI [Protected Geographical Indication] products," Centinaio said.

Centinaio’s issue is centered on CETA’s recognition of 40 Italian PDO and PGI labels out of a total of 292. He specifically mentioned Parmigiano Reggiano cheese and Prosciutto di Parma ham.

CETA removed tariffs on a large number of food products. As previously reported by SeafoodSource, that included an eight percent tariff on live lobster and tariffs as high as 20 percent for lobster meat and tails entering the E.U. from Canada.

All 28 E.U. member states must approve the agreement for it to take full effect, though there is no deadline for reaching that agreement. To date, 12 countries have ratified it: Latvia, Malta, Denmark, Croatia, Czech Republic, Portugal, Estonia, Spain, Lithuania, Sweden, Finland, and Austria.

Since provisional implementation of CETA started, it has been a boon for Canadian seafood exporters. And it also re-invigorated those exporters to increase and diversify their international markets.

“CETA is a work in progress, but still active and in place despite some skittish Italian conservatives,” said Stewart Lamont, the managing director of the Tangier Lobster Company on Nova Scotia’s Eastern Shore. “We have sold to a new client each of the last three weeks in Rome. The CETA discount has worked like a charm.”

Backing him up is Geoff Irvine, executive director of the Lobster Council of Canada.

“With a new government in place, it is predictable that there could be delays. We still hope and expect that Italy will ratify the agreement,” said Irvine, who was in Ottawa meeting with the E.U. Ambassador to Canada.

While there are clouds of doubt on the future of trade on several fronts, Irvine said the current data on exports is promising.

“Our members have been actively diversifying their sales efforts to Asia and Europe, with CETA helping support the European market expansion,” he said. “The latest export data for various lobster products shows good growth in some countries year over year. Seafood exports to the Netherlands are up 82 percent from last year [likely due to shipping channels with Netherlands being a key entry point]. Italy is up 11 percent.”

In the first four months of 2018 lobster exports to Canada’s top 10 markets are 6.7 percent ahead of 2017, or CAD 313.9 million (USD 236 million, EUR 201.8 million), versus CAD 294.8 million (USD 221.7 million, EUR 189.5 million) in 2016.

As for the Brexit situation in the United Kingdom, Irvine said it should leave Canadian exporters unscathed. 

“For Brexit, a withdrawal agreement is being negotiated between E.U. and U.K. Both sides want an orderly departure with a two-year grace period a likely conclusion to allow for a smooth transition and negotiation of other trade arrangements,” he said. 

Diversification is also taking place in fin fish and specialty markets. At Cape Breton’s Louisbourg Seafoods, vice president Dannie Hansen told The Financial Post it is expanding groundfish sales to the U.K. and South Korea, markets it previously only sold shellfish to. 

“There is a whole variety of markets that we’ve never had before in North America,” he said. 

Hansen said the company was always looking for new markets, but with the introduction of tariffs on Canadian steel and aluminum and threats to expand those to other products, the company feels compelled to look to Vietnam, Singapore, South Korea, the Netherlands, U.K., Belgium and elsewhere. 

“When you have all that uncertainty, it’s never good for anybody. We had to accelerate a little faster our research into new places,” Hansen said.

Despite that, Hansen said the uncertainty isn’t having them worried.

“We’re not panicking over these little spats," he said.

Reporting from Eastern Canada

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