Lobster Price Knowns and Unknowns in Canadian-Euro Trade Agreement

by Sandra Dinsmore

The Comprehensive Economic and Trade agreement, signed on October 30, but not yet in force, will eliminate 98 percent of the tariffs between Canada and the European Union.

Tangier Lobster managing director Stewart Lamont stated, “Shipments sent through America from Canada will be accompanied by a Canadian health certificate for purposes of international export. This [certificate] will distinguish the product and the shipment from any American counterparts.” Lamont said he thought that as this certificate falls within the CETA protocols and terms of compliance, it would resolve the issue as to origin.

Asked his opinion on how the US lobster industry will be affected, Kittery lobster dealer Tom Flanigan spoke for all when he said, “I think it remains to be seen.” He continued, “I don’t see it as a positive for the Maine lobster industry and I think the over all impacts are going to be nothing positive. I also think, based on past history in other areas, anyone expecting a quick solution to it on this side of the border is going to be disappointed. That’s a major market and even if you are not a big European shipper, it will probably have some ripple effects down to even the boat level.” He explained, “Although it is a major export market, I don’t see that it does anything positive for demand, which ultimately leads back to boat price levels. Will that be offset by a difference in catches or increased demand for processed product or other markets like Asia? Sure.

“There are still so many unknowns about it,” Flanigan continued. “I don’t know how Canadian product goes through the US, which a lot of Canadian product does because of air capacity. Halifax doesn’t have the flights. It’s unknown to me how that’s going to be treated. If a Canadian company ships Canadian product out of Boston or JFK in New York, it’s going out of a US port. Now, is that under the CETA thing or is that subject to the same tariff a US product would be?”

New Bedford dealer Skip Manchester, who exports to China, said he hopes the agreement will leave a void in China when Canada chooses to ship to the EU tax-free. He added, “Maybe that will leave a void in the Asian market that the US can fill.”

Rob Bauer, sales manager for Beal’s Lobster Pier in Southwest Harbor, said he doesn’t think the agreement is going to bother the US that much. “Given that a big chunk of bugs are going east to Asia and [that] Canada still needs our lobsters in the summer, I don’t see a big impact. I think the strong US dollar and pressure on China to float its currency will have a bigger impact. Even the Chinese have a tipping point as to what they’ll pay for lobsters. Also we’re starting to see a falling demand domestically due to the high price of lobsters. No more 9.95 lobster rolls. More like $19.95 now and that has slowed demand. I also think people are getting tired of all the hype about lobsters. Trump is a steak guy. I think meat is trending now. That’s ok with me if the price isn’t so strong. It’s hard for dealers to make money with a high boat price.”

East Coast Seafood lobster procurer Spiros Tourkakis, when asked for his opinion on the CETA agreement, said, “CETA is important because when applied it will eliminate the tariffs in Europe of Canadian product. That will make Canada’s lobsters lower priced. So here [in the US] we will have a challenge and we will have to lobby for similar arrangements.” He said he thought the CETA agreement might be applied as early as in a month.

Bob Behrman, of Boston Lobster, thinks the CETA agreement will make a huge difference because it will give Canadian companies a monetary advantage over US ones.

He said the Canadian companies were not sure yet if their lobster would be able to be packed in Canada, trucked down to the US, and then flown out of US airports. “They may purely have to be packed in Canada and shipped out of Canada,” he said. “We’re not really sure how it’s going to work yet,” explaining that if Canadian companies are going to ship out of the US, they are going to face the same restrictions that US businesses have.

“The Canadians may want to ship a lot more,” he said, “but there might not be enough air space—lift. [They really have] a huge advantage, and it’s not fair. We don’t really have an advantage other than more lift—more space on the planes out of Canada. They don’t have as much lift overseas as we do. That’s basically what it is. We’ll wait to see what they decide.

“We own a plant in Canada, as well,” Behrman said, explaining that the plant is a Canadian company. “If we have to,” he said, adding that he was sure other lobster companies are doing the same thing—that there may be US companies that either own a plant in Canada or have very good relations with a plant in Canada—then we may have to do what they are doing: Have them pack the lobsters for us using their name as the shipper and ship for us. Fight fire with fire.

Where our plant is located, Sable Island, we’re not near a major airport. It may not be feasible for us to run a truck two or three hours to get there. We’re not really set up for it. If we have to, we’ll have to pack the lobster up there and ship them down to us, and we’ll just truck them over to the airport.”

Asked when this agreement would take effect, Behrman said, “I have no idea. I only know that one of our freight forwarders said he is going up this summer to check out various plants up there to see if they have got the TSA regulations as well as the sanitary regulations.”