When Darren Rabin of Wiltshire, England, spoke to CBC News last Tuesday, there was gray weather outside his window, but the weather was consistent with his company’s 2024 sales forecast for Canadian cheese. Ta.
“Essentially, we are going to fall off the edge of a cliff at the end of this year,” said the managing director of Combe Castle International. Award-winning global exporter Sale of British dairy products including specialty creams, butters and cheeses.
After Brexit, the UK’s withdrawal from the European Union in 2020, an interim agreement will allow for tariff-free British production as government negotiators work on a long-term bilateral trade deal to replace the liberalized trade the UK enjoyed. The cheese will be on Canadian shelves for three years. Under the terms of the Canada-EU Comprehensive Economic and Trade Agreement (CETA).
These bilateral negotiations have not yet been finalized. And in the meantime, both countries have confirmed that their interim agreement on cheese will expire at the end of 2023. There is a risk that UK cheese imports will plummet.
Larkin, who has worked with other top British cheesemakers for 40 years to find an outlet for premium British cheddar cheese in Canada’s notoriously closed dairy market, is “pretty desperate.” He admitted that he felt that way. The change will affect about a third of his business. British cheese shipments may not go to zero, but Canada will lose much of its shelf space.
according to international trade dataThe UK exported more than 2 million kilograms of cheese to Canada in 2022, a significant amount of which was from Coombe Castle. Cheese is a seasonal product. Trade data shows Canadians love party platters and holiday gift baskets this time of year, and there’s strong demand for Coombe Castle’s signature cheddar cheese, a type of ship. This also includes advent calendars and a maple cheddar flavor specifically targeted to Canadians.
Rahbin said the company is working with partners in Canada to ship as much as possible to close out 2023. But if stock sells out, jobs at British suppliers as well as small businesses such as boutiques in Canada will be at risk. his product.
CBC News reached out to Lisa McNeill of Tree of Life, a Toronto company that works with Combe Castle to import British cheese. She acknowledged that the change would also have a negative impact on her business, saying she “didn’t need to do it”.
“Off the table.”
Canada’s dairy industry believes that the UK’s decision to leave the EU (and by extension CETA) should not be a problem to be solved.
In the wake of the renegotiation of the North American Free Trade Agreement, Prime Minister Justin Trudeau has promised dairy farmers that future negotiations will no longer give exporters a slice of Canada’s domestic market.
“For dairy farmers, a promise made is a promise kept, and we expect the same from our government,” Dairy Party of Canada President Pierre Lampron wrote to Prime Minister Trudeau on Dec. 1. In the letter, he reminded the Liberals of the trade deals they have had in place since their inception. According to the dairy sector’s calculations, authorities have already outsourced 18 per cent of the Canadian market to foreign producers.
“Canada’s dairy industry must not be further disadvantaged by the UK’s decision,” Lampron said. “New access to Canada’s dairy sector should be taken off the table.”
a Private member’s bill currently before the Senate It could also tie negotiators’ hands and prohibit future trade treaties from allowing additional imports of supply-controlled agricultural products such as cheese.
compete for a smaller share
To import cheese duty-free, companies must hold a Tariff Quota (TRQ). This is a permit allocated by the Government of Canada for a specific annual quantity according to specific criteria.
Global Affairs releases import data Applies to certain categories of cheese in accordance with the Canadian Commerce Treaty and World Trade Organization regulations. In 2023, TRQs were allocated to:
- 16 million kg from the EU under the auspices of CETA (and an additional 1.7 million kg of European industrial cheeses, which are produced in large quantities and often used as input for further processing).
- 3.6 million kg will be supplied by member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), including Pacific Rim dairy exporters such as Australia and New Zealand (in addition, 8 million kg of industrial cheese and 2.9 million kg of mozzarella cheese will be added). CPTPP block cooked cheese).
- 4.1 million kg under the auspices of the Canada-United States-Mexico Agreement (CUSMA, which updated NAFTA in 2020) (plus 4.1 million kg of industrial cheese from the United States or Mexico).
- 20.4 million kg to meet World Trade Organization obligations, of which:
- 14.3 million is set aside for EU member states;
- 6.1 million available in all other countries.
a cheese side letter A document accompanying the 2020 Canada-UK Trade Continuity Agreement states: “Cheese of British origin will continue to be imported into Canada under the European Union’s reserve quota within Canada’s WTO Cheese TRQ until December 31 at the latest. “The applicant shall be qualified to apply for the , 2023.
Companies like Combe Castle will then have to compete with exporters from other countries such as Switzerland for space in the second-smallest WTO reserve quota for non-EU countries, which is already 96% taken up.
Meanwhile, French, German and Dutch cheeses could fill the gap left by British products on Canadian shelves. “Retailers need to plan for the future, so something else will take its place,” Rabin said. “It’s really sad.”
”We continue to talk to dairy farmers and producers about changes that may occur at the end of the year, including making sure they have all the information they need to prepare. ,” a spokesperson for the British High Commission said in a written statement to CBC News. It added that UK cheese exports to Canada increased by 11% in 2023.
Import permits are controversial
Once the UK’s accession to the CPTPP came into effect, the UK’s instruments of accession were agreed last summer, and earlier this month Japan became the first member of the Pacific Rim Trading Area to ratify its new membership. British cheese could contest available TRQs under CPTPP. That treaty.
That does little to soothe Rahbin’s heart. “There’s not enough cheese in the CPTPP,” he said, noting the UK would be up against major dairy exporters such as Australia and New Zealand.
And based on his company’s experience under CETA, Rahbin worries that CPTPP may not be as helpful as advertised.
CETA, CPTPP and CUSMA all allow Global Affairs to allocate import licenses to Canadian dairy processors rather than retailers or traditional importers.
“It’s creating something of a black market for transferring quotas,” Larkin said. “That was not the purpose of the whole trade agreement. It was never intended to be an opportunity for people who have no interest in importing to make money on trade quotas between each other.”
This process also increases costs for consumers, he said. “CETA brought in opportunists, but not in the long term.”
The Canadian government intended profits from dairy imports to serve as compensation for the market share lost by the domestic dairy industry to foreign competitors.
It was not something that the treaty parties felt was negotiable. Canada’s TRQ allocation process has been challenged by both the United States and New Zealand in recent trade disputes, with mixed results.
The Canadian Dairy Processors Association said it was not in a position to comment on the expiration of Canada’s side letter with Britain on cheese and said CBC News’ questions were outside the president’s scope of expertise.
Since the size of the EU has become smaller after leaving the EU, is it possible that the WTO quotas previously allocated to the EU will be reallocated to the UK? CBC News asked Global Affairs Canada whether it was considering such a reallocation.
“To date, Canada and the UK have not agreed any new arrangements regarding the UK’s access to Canada’s WTO Cheese TRQ,” said GAC spokesperson Jean-Pierre Godebau.
Cheese and beef trade-off
“I’m not saying the UK is not responsible for leaving the EU, but it’s good for us and our Canadian (import) partners to have the reassurance that we can continue to trade for a reasonable period of time,” Rahbin said. ” he said. You can see the agreement on both sides. ”
Rabin said he understands trade negotiations are difficult. He wrote letters and traveled to both London and Ottawa, meeting with officials and MPs to explain what was at stake. Although everyone loves his product, he says he is left with the impression that the negotiators were “stuck” for reasons unrelated to cheese.
Bilateral negotiations are scheduled to conclude in 2024, but Canada and the UK have yet to harmonize food safety standards to allow Canada to expand its meat exports.
Beef and pork producers are lobbying the Canadian government to hold off on new trade deals with Britain until their products are more accepted under British regulations.
Canadian dairy farmers also objected to the UK proposal to include a chapter on animal welfare standards in a Dec. 1 letter to Prime Minister Trudeau, saying it was a threat to Canadian sovereignty and that the UK would not be able to improve Canadian agricultural production standards. They said they were opposed to it, saying it was an attempt to make a decision.
Britain’s instruments of accession to the CPTPP were finalized last summer, but International Trade Minister Mary Ng’s office said last week that Canada had yet to even give Parliament the 45-day notice needed to begin the ratification process. admitted.
This is a replay of the “beef and cheese” standoff that characterized the final stages of the CETA negotiations a decade ago.
“I feel like we’re kind of a pawn in the whole game of trade negotiations,” Rabin said.