Ensuring fair trade in new agreement

October 14, 2008
Written by
Competition in one segment of the industry will soon become much stiffer, perhaps insurmountably so for some growers. And it doesn’t have to be that way.

Canada and Colombia recently signed a Free Trade Agreement, something that attracted very little attention or media play. And yet one significant provision of the agreement, the elimination of tariffs on cut flowers exported by Colombia into Canada, has the potential to hobble the Canadian cut flower sector.

Tariffs currently range from six to 12 per cent, depending on the product. Yet even with them, Colombian cut flower exports into Canada have been growing over the past few years. As Flowers Canada Growers executive director Dr. Irwin Smith noted in his analysis elsewhere in this edition, cut mum exports doubled between 2003 and 2006 to eight million stems. Carnation exports into the Canadian market topped 100 million stems in 2005, a record level.

Making competition even more challenging is that, for at least one major crop, Colombian product prices have dropped. Since 2003, Dr. Smith reports, the average price of imported roses has dropped from 41.6 cents per stem to 33.8 cents per stem. Canadian rose growers, not surprisingly, have had to price their products accordingly. Canadian growers need higher prices for cut flowers, not lower prices.
Why did Canadian trade officials sell out the cut flower industry? Colombian negotiators, it appears, were willing to give up access to mining, wheat, barley and financial sectors in exchange for unhindered cut flower exports to the Canadian market. The cut flower issue, no doubt, was a potential deal breaker.
We have a free trade agreement, but it’s hardly a fair deal. Canadian cut flower growers have virtually no time to adapt. There is no phase-in of the new tariff cuts, despite assurances to the contrary as recently as last January.

Ottawa must show sensitivity to the crisis it’s creating by investing in the Canadian industry to level the playing field. Cut flower transitional funding could be used to help growers switch to new crops or invest in new technologies. It could be applied to cut flower research, of which the federal government currently funds very little (despite the fact that for years it has been collecting GST on flower purchases). It could be applied to pesticide registration programs to give Canadian growers the same tools enjoyed elsewhere.

Ottawa could also encourage Colombian exporters to contribute to a flower promotion program to expand the market. Colombians would be willing partners, as they were from 2000 to 2006 with their participation with U.S. growers in the Flower Promotion Organization campaign in five selected cities. It was found that targeted consumers in the study purchased flowers 26 per cent more frequently than in the control markets due to the FPO promotion.

We can’t fault Colombian officials for taking care of their growers; we just wish we could say the same for negotiators on the other side of the table. But Ottawa still has time to shore up this deal and ensure truly “fair” trade between the two countries.

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