The European agriculture sector, renowned for its political influence, has not taken long to consider protective measures to buttress itself from the competitive pressures flowing from the Comprehensive Economic and Trade Agreement between Canada and Europe (CETA). The first target of that protectionist reflex is unsurprising - Canadian wheat.
Wheat is a major agricultural product in the provinces of Alberta, Saskatchewan and Manitoba, where it benefits from ideal climate conditions and vast acreages of suitable land. Yet, although 30 million tonnes of Canadian wheat are produced each year, this is only about twenty percent of Europe's total production. A particular kind of wheat, durum wheat, is sourced by Italy from a number of countries, including Canada and the Ukraine. It is used to produce pasta. Canada has historically shipped about a million tonnes per year of durum wheat to Italy.
In October of last year, Canadian durum wheat shipments to Italy were halted in response to what was considered protectionist action taken by the Italian government. Italy had decided to apply country-of-origin labelling (COOL) requirements on pasta through a decree issued in the summer of 2017. This was triggered by the desire to protect Italian producers from a significant fall in the price of durum wheat. The primary cause for this fall was a large increase in imports from the Ukraine following the signing of an EU-Ukraine free trade agreement.
COOL requirements are permissible only when there is a clear link between the quality of product and its origin - such as champagne, which must come from the French region of Champagne. The COOL campaign for durum wheat was premised on claims about excessive glyphosate and mycotoxin levels in imports, which have been proven to be false. Accordingly, there is no justification for the COOL protection that had been afforded durum wheat.
Whilst the European Commission has an interest in ensuring that the arduous battle fought over CETA is not undermined by its member states, it is clear that there are strong political forces within the European Union encouraging greater protectionism. The use of COOL represents, in some cases, a compromise to assuage these factions. Thus, we have seen the EU making concessions on country-of-origin labelling in Lithuania, Portugal, Romania and Greece on dairy and related products. France is also running a COOL pilot regulation on meat and milk in processed foods.
With respect to durum wheat, the Italian (COOL) decree was challenged in the Regional Administrative Court in Lazio by the Italian Association of Confectionary and Pasta Industries (Aidepi). The local Court rejected a motion to suspend the decree. The Court then refused to refer the matter to the European Court of Justice (ECJ). The European Commission, as guardian of EU law, could have unilaterally challenged the decree, but chose not to do so. Given the results from the recent Italian election (showing an increasing anti-EU sentiment), the EU may be even less inclined to act. As a result, it would appear that the burden to challenge COOL in durum wheat rests with Canadians.
While the Canadian Government has raised the matter through official channels in Brussels, this is unlikely to be sufficient. The Canadian Government may need to 'go legal' and use various mechanisms under CETA and the rules of the World Trade Organization. Canada knows these mechanisms well following its successful challenge of COOL in relation to American beef. Of course, 'going legal' does have some consequences, but the political calculation favours a challenge. Canada must never forget the many men and women who fought valiantly for CETA. Those men and women sit not only in Ottawa, but also Brussels.
Al Gourley, Fasken
Jeff Townsend, Aspect Consulting