Canadian importers and distributors left hanging as British cheese talks stall

Grocers could see price increases at cheese counters after the United Kingdom walked away last month from trade negotiations with Canada on the import of British cheese. 

The two countries had been in talks since March 2022 as a result of Brexit – the U.K.’s separation from the European Union in 2020 – as the Brits were no longer bound by Canada's Comprehensive Economic and Trade Agreement (CETA) with the EU. During this time, Canada had been importing tariff-free British cheese under the Trade Continuity Agreement (TCA) Cheese Letters, but that agreement expired at the end of 2023. 

“Our government will never agree to a deal that isn’t good for our workers, farmers and businesses,” Canada’s trade minister, Marg Ng, posted on X on Jan. 25 following the breaking down of negotiations. 

It has to do in large part not with cheese, but Canadian beef and pork. Farmers say they are being prevented from free trade by U.K. food standards on imports, including a possible provision about animal welfare, and an agreement on cheese is being used by Canada as possible leverage. 

“It is our assessment that the main sticking point is both parties’ inability to come to an agreement on strategic sectors such as imported cheese from the U.K., and the U.K.’s food standards for imported beef and pork from Canada,” says Joe Dal Ferro, chair of the International Cheese Council of Canada (ICCC). 

“Small and medium-sized Canadian importers and distributors have spent decades building and investing in trade relationships with British cheese suppliers – and yet we are left hanging. Canadian businesses should not pay for Brexit.”

In an interview with Canadian Grocer, Dal Ferro says grocers shouldn’t feel the impact of a delayed agreement, at least not just yet. 

“Distributors like our members and myself have spent months planning for all scenarios, including the one we are in currently,” he explains. “In terms of the impacts on store availability, Canadian consumers won’t feel the impacts immediately, due to our careful planning.” 

“However, as the year starts to go by, consumers’ cheese counters will start to change and we’ll see less and less British cheese,” he warns. “The cheese that will remain will be higher priced, due to the hoops that we’ll each have to go through to get the cheese into Canada.”

According to the Observatory of Economic Complexity (OEC), Canada imported $80.4 million of cheese in November 2023, up 24.8% from November 2022. Imports came from Italy ($20 million), the U.S. ($16 million), France ($13 million), Switzerland ($5.19 million) and the U.K. ($4.62 million). 

English cheese is very popular with many cheese stores, with Toronto’s Cheese Boutique, for instance, buying about 350 kilos of English cheese each week last year. 

Now retailers have to rely on importers accessing the WTO Cheese TRQ (Tariff Rate Quota) NON-EU Reserve to import British cheese, competing with the likes of Switzerland on a reserve that is already more than 95% utilized. The tariff restricts the reserve to an annual volume of about 6 million kilograms.  

These distributors “provide a number of services to both brands and retailers, depending on each relationship. These can include promotional capabilities, storage and delivery, top-notch negotiations and more,” says Dal Ferro. “We don’t know how long this challenging time will last, but we’ll do our best to ensure that negative effects on consumers – caused entirely by government – are minimized.” 

With both Canada and the U.K. having to go to the polls in the next year or so, he is hopeful that the two governments will return to the negotiating table sooner rather than later. 

He encourages store owners to reach out to their members of Parliament. “We remain confident that negotiating parties will listen to their constituents – after all, the businesses we operate play an integral part of Canadian society.”

“At the same time, our retail partners should demonstrate compassion and understanding to distributors as we work with this new reality,” adds Dal Ferro. “We all share the same goal – delivering great imported cheeses at affordable prices for Canadian consumers.”