So we have an agreement in principle on a free trade agreement with the European Union. After years of negotiations, the inking of the AIP last week marks the beginning of the end of negotiations.
Over the next two years, the task of translating what has been agreed into a legally binding text will take place. There are still many hurdles to overcome, but the ratification of the agreement in the member states of the European Union — and the meeting of various legislative requirements in our own country — are promising. Look almost where you like and you will find widespread support of this agreement.
As expected, most of the mainland coverage focuses on the implications for the agriculture and automotive industries. But closer to home what does it mean?
To be certain, the greatest winner in this deal, Atlantic Canada wide, is the fishing industry.
While the beef and pork industries out west, with their increased EU market access, are heralding the deal, unlike the seafood industry, they will never make it to a zero tariff rate for products entering Europe.
The deal, when signed, will see 99.1 per cent of seafood product lines go to a zero tariff rate immediately. Compare this to the tariffs that our seafood industry has had to deal with.
On shrimp, by way of example, we have had to deal with tariff rates as high as 20 per cent. We have been able to avoid some of the prohibitive tariffs by accessing what is referred to as an autonomous tariff rate quota (ATRQ).
Unfortunately, the ATRQ was open to other countries to access and had an end use restriction. The end-use restriction required seafood entering the EU to be subject to further processing in the EU prior to final sale. This meant Newfoundland and Labrador shrimp invariably ended up in some processing plant in Denmark for some form of “value-added” processing, often as little as brining and re-packing.
This may not seem like a big deal, but this simple trade restriction meant Newfoundland and Labrador companies had no opportunity to market direct to the consumer and had to deal with a small pool of companies that effectively controlled the gateway to the EU seafood market. This deal scraps the end-use requirement immediately.
Yes, when the deal comes in to effect, we will have to give up our mandatory processing requirements. Is this a big deal? Some would have you think so, but I think not.
The deal only applies to Europe-bound fish, not the U.S. or Asia. So any fish heading anywhere other than Europe is still subject to whatever processing requirement the government deems appropriate.
Furthermore, Europe has at least as high a labour standard as us; they have higher labour costs, higher production costs and higher energy costs.
In short, it is difficult to conceive how they could be competitive with Newfoundland and Labrador-based operations. In point of fact, our fishing industry, the only jurisdiction among our competitors in the North Atlantic with these tariff restrictions, will be far more competitive going into the European market with the finalization of this deal.
The European market, with half a billion people consuming on average 22 kilograms annually (compared to the North American seven-kg average), is a discerning seafood market with high standards and good taste. They like fish.
Unlike how it is for North Americans, seafood is not a delivery mechanism for batter and a variety of low-quality sauces. Rather, the European seafood market is a mature one, demanding high quality, traceability, sustainability and environmental protection. These are standards that we can meet, though in some cases it will require some adjustment in how we prosecute our fishery.
While some have used this AIP to sound the death knell for our processing operations, on the contrary, it represents one of the few opportunities to come around in a long time that gives places like Arnold’s Cove the uninhibited market access that gives them a fighting chance.
The seafood industry in this province is the biggest winner in this deal; unfortunately we have to wait two years for it to be signed to start reaping the benefits.
Trevor Taylor is a former cabinet minister under the Danny Williams
administration. Email: email@example.com.