This year, autumn didn’t just signal a change of seasons, but the launch of a whole new lucrative trade deal between Canada and the European Union.
On Thursday, 21 September, the Comprehensive Economic and Trade Agreement (CETA) came into effect. CETA is a progressive agreement with tariff removals staggered over five years. The immediate effect is removal of an eight percent tariff on 98 percent of Canadian products entering the European Union.
The agreement’s implementation is already having a definite financial impact on Canadian seafood businesses, according to Nat Richard, director of corporate affairs at New Brunswick lobster firm Westmorland Fisheries.
“CETA is really moving the needle for us,” he said. “Europe has been an important market for us for a while, and we think this is really going to light a fire under that market.”
At Nova Scotia-based Tangier Lobster Company, managing director Stewart Lamont told SeafoodSource CETA will be a big help for his company’s hopes of boosting sales.
“It’s a wonderful platform in a world in which protectionism is rampant and growing every day,” he said. “A free trade agreement with Europe is well-received and we’re very, very pleased to have it.”
While CETA doesn’t erase the current CAD 4 to 5 (USD 3.20 to 4.00, EUR 2.72 to 3.41) gap between American and Canadian lobster prices, Lamont said, it does eliminate an eight percent duty the E.U. had placed on live lobster imports.
“We have never been able to compete in live lobster to the E.U. with shippers from America. They have a lower-quality, lower-cost item. They have, in some instances, direct flights to some key destinations that we certainly don’t have from Halifax, so this seriously helps us level the playing field. I’m not sure our margins will increase, but I am quite confident that quite quickly our volumes will increase.”
Thanks to CETA, Lamont has been negotiating with two potential new clients in Italy, “who under other circumstances would have no interest in our products whatsoever,” he said.
“They recognize they would have to pay more for a premium Canadian hard-shell lobster, but that eight percent is not chump change. It’s very helpful,” he said. “Eight percent puts a serious dent in it and raises our profile.”
The other bonus to CETA, said Lamont, is as a type of reset button for reestablishing relationships with European buyers who needed help in justifying the price differential.
“CETA allows us to revisit some options, to be a little more creative, to talk to some clients who would love to buy from us, but couldn’t afford us in the past,” Lamont said. “Time will tell. But in terms of the landscape, we have a much better opportunity that we had before.”
One of Lamont’s industry friends is a forwarder “who has spent the last three months very seriously looking at creative options for Europe,” he said.
“He thinks too much focus has been put on Asia and, with CETA coming in, not nearly enough focus has been on Europe,” Lamont said. “I expect to be offered creative solutions logistically to get to various destinations in the coming weeks.”
At Comeau Seafoods in Saulnierville, Nova Scotia, vice president of marketing Sandy Clark said the firm’s European business is in scallops. That business is done in the spring, so they won’t see the benefit to the eight percent removal until 2018.
Geoff Irvine, executive director of The Lobster Council of Canada agrees it’s too early to know how CETA will help the business. However, “from my perspective it could have an impact in one or two ways.”
“Our customers pay the duty so it is up to our exporters to know when the duty is coming off so they can push up prices at the same time so that both parties can share the benefit,” Irvine said. “Lower tariffs should help us expand into new markets for lobster meat and tails that had a tariff of 16 to 20 percent. These come off by one-third and one-fifth, respectively, over three to five years, so the market development will likely be gradual, but should happen. This also should help with live and whole cooked and raw products”
In terms of fin and farmed fish, Tom Smith, executive director of the Aquaculture Association of Nova Scotia, doesn’t see any immediate impact on business.
“From an aquaculture perspective, 93 percent of the product farmed in Nova Scotia is exported now. Basically we can sell everything we can farm right now,” Smith said. “The big challenge for Atlantic Canada seafood [is] the NAFTA negotiations. And at this point we don’t foresee seafood, which has zero tariffs into the United States, as a hot button for NAFTA.”
Smith points to headline-making commodities like softwood lumber, dairy, steel, and car manufacturing as the focus for NAFTA negotiators.
“I think the price for seafood is terribly undervalued and new markets allow for more competition on the price side,” he said. “Then you get better margins for farmers. Better margins and more profitability for farmers brings new entrants to the industry. Growing a vibrant, profitable industry will be the big impact for CETA.”
When NAFTA was signed, the Canadian Prime Minister at the time famously said, “Canada is open for business.”
It now appears as if CETA is opening the door to a much bigger market.
