'Buyer beware' on Canadian cheese concessions, say European exporters
A trade deal meant to give European cheesemakers more access to the Canadian market is falling short of its promise in its first full year, government data show, frustrating the European industry, which blames a year-old Ottawa quota system.
Under the Comprehensive Economic and Trade Agreement (CETA) with the European Union, Canada agreed to more than double tariff-free imports of cheese over five years, starting in September 2017. The new imports will eventually represent about 4pc of the Canadian cheese market.
Small quotas for 2017 were filled, but more than eight months into 2018, only 36pc of the high-quality cheese quota has been used.
European imports under quotas that predate CETA are on track for the year, suggesting something about the new quotas, which are allocated differently, is limiting imports. Many of the old quotas are held by specialist importers, which are largely shut out of the new system.
Frustration with the system could be a warning sign to the United States, which is demanding greater access to Canada’s sheltered dairy industry in a revised North American Free Trade Agreement (NAFTA). Canada is willing to make concessions, Reuters reported on Tuesday, although it is unclear what proposals are on the table.
“We were hoping and expecting to significantly increase our Canadian sales,” said Attilio Zanetti, whose Italy-based company Zanetti exports to Canada. “I would not recommend Canada’s CETA cheese tariff rate quota scheme to the Americans. My advice would be ‘Buyer Beware’.”
The European Commission said it is monitoring the issue, although it is too early to determine what is behind the trend. It requested that a Sept. 19 meeting with Canadian officials include a discussion of the management of the quotas.
In a statement, Global Affairs Canada said it expects usage to rise in the months ahead, especially between Thanksgiving and New Year: “The time required to establish business links can impact the timing of import and utilization.”