The European Union called on the United States Thursday to end its trade investigation into the Canadian lobster industry.
The Trump administration launched the election year probe after complaints from Maine as Canadian lobster shippers took advantage of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
European Union trade counsellor Tomas Baert suggested the point became moot this summer when the EU yielded to demands from Donald Trump and agreed to eliminate tariffs on U.S. lobster, putting it on par with Canada.
“We therefore believe that the ITC investigation should be terminated, at least by the time the trade package is implemented on both sides,” Baert said via video conference.
There is no doubt American lobster exports to Europe cratered by $100 million after CETA went into effect in 2017.
Annie Tselikis, executive director of the of the Maine Lobster Dealers Association, told the panel the United States handed the European market to Canada when the Trump administration abandoned the Transatlantic Trade and Investment Partnership, a free trade negotiation between the United states and European Union.
It meant tariffs remained on U.S. lobster while Canadian shippers enjoyed the immediate elimination of an eight per cent tariff on live lobster and the phase out of even higher tariffs on processed products.
“In 2016, U.S. exports to major European lobster-importing nations were valued at $162.3 million and by 2019, the value had declined to $62.3 million. Ceding the market to the Canadian lobster exporters were receiving preferential treatment,” Tselikis said.
In response to CETA, the Maine industry moved more lobster into Atlantic Canada where the lobster processing sector for both countries is concentrated.
If the hearing revealed anything, it was the close integration between the Canadian and American lobster industries with complementary harvest seasons that ensure a year-round supply and product crossing the border in both directions.
Both are each other’s largest lobster trading partners.
The global trade was worth $2.6 billion in 2019 with 61 per cent of the trade between Canada and the United States.
Close ties
“We are each other’s suppliers, customers and competitors,” said Tselikis.
The European downturn was followed by an even bigger blow when China slapped retaliatory tariffs on lobster as part of a trade war with Donald Trump.
Those tariffs, adding up to 42 per cent to the cost of U.S. lobster, shut down access to the world’s largest seafood market.
Again, Canada was a beneficiary.
“We have watched Canada move in on our former Chinese customers and we have seen their federal and provincial governments provide financial assistance for everything from increased export capacity at the Halifax Airport to capital improvement in seafood marketing available through the Atlantic Fisheries Fund,” Tselikis said.
China has eased these tariffs, but the market remains depressed because of the COVID-19 pandemic.
Factors in Canada’s favour
Canadian industry representative Geoff Irvine of the Lobster Council of Canada pushed back when commission chairman Jason Kearns suggested government subsidies were the main reason the processing sector is located north of the border.
“No, the Atlantic Fisheries Fund is not why processing is bigger here. It’s bigger here because of the history, and you having regulatory issues in New England where you weren’t allowed to process,” Irvine said.
“I wouldn’t say that any of those programs have moved the bar in terms of any of that. It’s folks are willing to invest in their businesses up here over decades and decades.”
Tselikis conceded there are other factors in Canada’s favour.
“They have health care that covers their workers that we do not have here in the United States. There are a number of reasons why it is more effective to process lobsters in Canada than here in the United States,” she said.
Industry representatives from both countries said they expect U.S. lobster exports to Europe to recover once the pandemic abates.
Currently, U.S. citizens are still barred from travelling to Europe because of COVID-19.
The U.S. International Trade Commission will report back on its lobster investigation in the new year.
