New Canada-EU Trade Deal Puts Maine Lobstermen At Competitive Disadvantage

Dec 4, 2017

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 EU 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 says. “They prefer ours over any of the other ones, being much sweeter in flavor, and meat texture is much better.”

But lately, Speranza says 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 says. “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.’“

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

He says 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 says. “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 says some shippers are already preparing, and part of that could mean cutting prices.

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

Annie Tselikis, executive director of the Maine Lobster Dealers Association, says 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 says 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 says.

All of these numbers prompt Matt Jacobsen 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 Jacobsen said.

Jacobsen says 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 says enhanced processing techniques and quicker shipping turnarounds can deliver high quality frozen and live products for American consumption.

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