guest column: Canadian free trade agreement raising concerns in Maine

First published in, Landings, August 2017

The European Union (EU) is one of Maine’s most important global markets. Maine’s exports to the EU topped $503 million in 2016, second only to its exports to Canada. Even with the rapid development of exports to China, Maine exports to the EU are nearly 2.5 times those to China.

Jeff Bennett is MITC’s
Canada Desk Director and Senior Trade Specialist covering the seafood industry.

The Comprehensive Economic and Trade Agreement (CETA) is a comprehensive trade agreement between Canada and the EU, with one of its key provisions aimed at eliminating 98% of the tariffs between the two partners. Negotiations were concluded in August 2014.

The majority of the text—its trade provisions—will apply provisionally from the first day of the month following the date on which the EU and Canada have notified each other that they have completed all necessary administrative procedures. The more controversial provisions on investment protection will be on hold.

During the G20 summit in Germany in July, Canada and the EU announced September 21, 2017 as the agreed-upon date to implement the trade provisions of CETA. A few previous target dates have come and gone this year but this is the date they are currently working towards.

When CETA comes into force, almost 96% of EU tariffs for fish and seafood products from Canada will be duty free.

No industry in Maine will be as greatly impacted by this agreement as the lobster industry. Seafood is the state’s leading export commodity, of which lobster is the major component, with the EU as a key export market. The EU is a mature market with high levels of seafood consumption and historically represents Maine’s second-largest export destination for seafood and lobster (after Canada).

Maine and Canada currently pay the same tariff rates to enter the EU. This will change with CETA implementation.

• Live lobster tariff rates (8%) will go to zero for Canadian product on the date of enforcement.

• Frozen lobster tariff rates (6%-16%) will drop to zero for Canadian product over three years.

• Processed lobster tariffs (20%) will go to zero for Canadian product over five years.

With Maine and Canada sharing the same lobster species and competing for the same global markets, CETA has raised serious concerns for Maine’s lobster industry.

The U.S. has been negotiating its own trade and investment agreement with the EU for some time. The Transatlantic Trade and Investment Partnership (T-TIP) negotiations stalled, however, during the 2016 political campaign. Both major party candidates expressed concern and reservations about multi-lateral trade and investment deals such as the T-TIP and the Trans-Pacific Partnership (TPP). Since President Trump’s election, the U.S. has not formally withdrawn from the T-TIP, though it has from the TPP.

Maine’s Congressional delegation, the Governor’s office, and the Maine International Trade Center have shared the deep concerns of Maine’s seafood and lobster industry with the Office of the United States Trade Representative (USTR) and the U.S. Commercial Service office. Governor LePage met with Commerce Secretary Wilbur Ross in late April. I met with Maine’s Congressional delegation while in Washington, DC, in early June. Secretary Ross announced on May 30 that he is open to resuming talks with the EU on the T-TIP.

Although CETA is significant, Maine’s lobster industry is positioned well. We have a long heritage, great reputation, sustainable fishery, and ever-growing demand. The U.S. exported a record $722 million of live, processed, and frozen lobster in 2016, most of which came from Maine waters. U.S. lobsters were shipped to more than 70 countries including Spain, Singapore, New Zealand, Qatar, Albania, Costa Rica, and Equatorial Guinea.

The implications of CETA certainly place Maine’s lobster industry at a competitive disadvantage for the European market compared to our Canadian neighbors. The T-TIP negotiations, first started in 2013, provide a framework for the U.S. and EU to proceed forward with our own trade deal. How long that takes to materialize is up to the political will of both governments.