December 17, 2017
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New Canada-EU trade deal puts Maine lobstermen at competitive disadvantage

By A.J. Higgins, Maine Public
Micky Bedell | BDN
Micky Bedell | BDN
A new EU-Canada free trade agreement gives Canadian lobster shippers an 8 percent advantage over their Maine competitors.

As the Trump administration reassesses its international trade policies, the Canadian government is moving forward with a new European trade agreement that will give its lobster suppliers an 8 percent price advantage in European Union countries.

Maine lobster dealers hope to capitalize on longstanding relationships with buyers in Asia and Europe in order to offset the competitive disadvantage. But at least one major lobster shipper says lower prices for EU customers could prompt the industry to develop new markets here at home.

Inside Ready’s Seafood on the Portland waterfront, the atmosphere is akin to a Wall Street trading pit. Sellers occupy a bank of telephones that connect them to buyers in Europe and China, hoping to close lobster shipments in time for Christmas and New Year’s celebrations.

Being able to communicate in more than one language is a distinct advantage for Ready seller Daniel Speranza, who holds dual citizenship in the U.S. and and Italy.

“In Italy, they love lobsters, especially our Maine lobsters,” he said. “They prefer ours over any of the other ones, being much sweeter in flavor, and meat texture is much better.”

But lately, Speranza said his European buyers are spending more time talking prices. That’s because of the new Canadian Comprehensive Economic and Trade Agreement with European Union countries that gives Canadian lobster shippers an 8 percent advantage over their Maine competitors.

“I receive phone calls every day about this, people want to save that 8 percent, it’s a big, big chunk of money for them,” he said. “A lot of them tell me that that’s basically their profit over there, and they’re basically telling us, ‘I won’t be able to buy from you all year because we have to buy from Canada in order to save the 8 percent.’”

[Maine lobster, the most valuable species in US seas, hit by Trump’s trade stance]

Moving Maine lobsters from Stonington to Shanghai or Paris is no easy task. At Ready’s, aerated tanks can hold up to 300,000 pounds of lobsters until they can be boxed and shipped to their international destinations.

Owner Brendan Ready said that historically, Canadian dealers already had a price advantage over Maine because of the exchange rate. But he said the dynamics of the lobster business still required Canada and Maine to cooperate on both lobster imports and exports.

He said the new CETA agreement is changing those rules of engagement.

“That’s kind of taken a Canadian trade partner who is the United States’ largest trade partner for live lobsters and has turned them more into what I would say is a competitor over that time frame,” Ready said. “When you’re competing you’re always looking for a strategic advantage, and I think the CETA agreement is a significant trade advantage that Canada has on Maine lobster dealers and shippers.”

Some lobster dealers hope that increased domestic sales and a growing appetite for Maine lobster in China can help erase some of the sting from the lost EU sales. And even though Ready does not expect to feel the full impact of the CETA deal until next year, he said some shippers are already preparing, and part of that could mean cutting prices.

“Absolutely, no question about that whatsoever,” Ready said.

[Maine lobstermen, wholesalers worry Trump could ruin access to Asian markets]

Annie Tselikis, executive director of the Maine Lobster Dealers Association, said there will definitely be an effect on Maine’s 320 lobster dealers, who were responsible for about 80 percent of U.S. lobster sales to the EU last year, totaling nearly $157 million.

In addition to the 8 percent advantage that Canadians will have on live lobster sales to the EU, Tselikis said they will get an even larger advantage on sales of processed lobster meat.

“It will eventually be phased in — the elimination of a 20 percent tariff on processed lobster or other frozen and prepared lobster products, which currently enters at a 16 percent duty from the United States,” she said.

[How more Maine lobsters can be cracked by the Japanese market]

All of these numbers prompt Matt Jacobson of the Maine Lobster Collaborative to one conclusion.

“There are risks inherent in international trade, and I don’t think any business that’s in that line would tell you any differently,” Matt Jacobson said.

Jacobson said that one of the easiest ways to confront the disadvantages posed to Maine lobster dealers by foreign markets is to focus on sales at home. He said enhanced processing techniques and quicker shipping turnarounds can deliver high quality frozen and live products for American consumption.

In fact, Jacobson said if just one out of three Americans ate a lobster each year, they would consume Maine’s entire annual catch.

This article appears through a media partnership with Maine Public.

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