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Ports expect to benefit from European trade deal

MONTREAL, Quebec—Canada’s new trade deal with the EU will eventually help eastern ports expand their business with Europe but won’t reverse what has been a momentum swing to Asia, according to experts.

Port of Halifax CEO Karen Oldfield said the recently negotiated Comprehensive Economic and Trade Agreement will “jet propel” existing trade with Europe without undercutting trade with other global regions.

“I don’t think it will shift the pendulum back necessarily,” she said in an interview. “I think it will just grow the pie to an even bigger pie.”

European trade represented 38 percent of the east coast port’s business last year, the second-largest destination behind Asia and triple the activity with Latin America and the Caribbean.

More than 416,000 containers passed through the port in 2012, of which 52 percent were exports. The port’s top five exports are newsprint and paper, wood pulp, manufactured goods, seafood and vegetables.

She said reducing and eliminating tariffs on many products will grow European exports, helping companies that sell products including locomotive engines, automotive parts, seafood, minerals and soy beans. Oldfield points to $115 billion worth of large-scale capital projects such as an underground mine in Voisey’s Bay, Newfoundland and Prince Edward Island soybeans.

“It will make it much more advantageous for Canadian companies to be looking at Europe versus say what many Canadian companies do today, which is just look south of the border, exporting into the United States.”

North America’s closest deep water port to Europe has all the infrastructure in place but Oldfield said Canadian officials will have to work on trade missions to educate the European public about the agreement.

The Port of Montreal is also positive about the trade deal but spokeswoman Sophie Roux said the benefits of the new pact would not be realized overnight.

Northern Europe accounts for nearly 47 percent of the 1.4 million carloads shipped through the port annually, followed by 19 percent for the Mediterranean and 13.7 percent for Asia.

The port expects to reach full capacity by 2020 and may further expand on land it owns in Contrecoeur, Quebec, northeast of its current facilities in Montreal.

As the second-largest container port in Canada and leading port in the east, Roux said the Port of Montreal should maintain its competitive advantage over rivals.

“We’re really the longest way to come in by water but it’s most economical, and then it’s the shortest route by train to reach the Midwest so I think we would conserve our competitive edge,” she said in an interview.

Infrastructure Minister Denis Lebel said Monday that the federal government hasn’t yet decided how much infrastructure spending will be allocated to help ports and transportation facilities prepare to take advantage of the deal with the European Union.

“It’s too early to give you the details of this plan but…we will continue to support economic development all across the country,” he told reporters after speaking to the Montreal Council on Foreign Relations.

UBC professor Kurt Huebner expects rail infrastructure will have to be improved to avoid bottlenecks in the port structure caused by a 10-fold increase in the number of Canadian assembled automobiles allowed to be exported to the EU.

But he doesn’t foresee the EU trade deal reducing Canada’s trade deficit with Europe any time soon or having much of an impact in the short to medium term.

And while Asian trade is increasing, it remains much smaller overall than activity with Europe.

“It will solidify, not reverse the Asian trade, (while) opening up huge opportunities for both sides,” he said.

Huebner added that the deal opens the doors for Canadian businesses but said success isn’t guaranteed in a market with tough environmental regulations, labour standards and expectations of quality.

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