Canada’s Atlantic fisheries are undeniably vulnerable to ongoing trade wars.
Donald Trump’s repeated threats to impose across-the-board, double-digit tariffs on Canadian products provoke understandable worry. China has already applied tariffs of 25 per cent on Canadian seafood, in retaliation to Canadian tariffs on Chinese-made EVs, steel, and aluminum.
But it is deeply disheartening when Canadian governments—claiming to be rising to these external challenges—make matters worse.
On the eve of Canada Day, Ottawa unwisely removed all remaining federal exceptions from the internal Canadian Free Trade Agreement (CFTA), including an important safeguard for federal fisheries policy. This needless political gesture could easily undermine the careful balance of interests built into the Canadian inshore fisheries over generations.
The CFTA exception for fisheries policy served an important purpose by protecting licensing, economic development and conservation regulations from potential trade challenges in Canada. To see where the risks lie, we can look at the Atlantic lobster fishery.
Over many decades, successive federal and provincial governments, industry leaders and community advocates have fought for and gradually created a policy ecosystem that ensures that the benefits of the lobster fishery are widely shared. It is a remarkable success story that has helped sustain small, vibrant fishing communities throughout the region.
The lobster fishery thrives, in good measure, because of policies that favour local harvesters and coastal communities. These protections do not affect trade as such. They are concerned, instead, with who benefits from the harvesting and sale of this publicly owned natural resource.
Will it be the Atlantic region’s independent harvesters and their communities? Or large processors and corporate interests, whether Canadian or foreign-owned?
There are many potential conflicts between the local economic development philosophy governing Atlantic fisheries regulation and trade treaty precepts. This inherent tension is the reason that Canada has long excluded fisheries policies from the CFTA and all its international trade treaties.
Owner-operator and fleet separation policies
There are over 40 lobster fishing areas (LFAs) in eastern Canada (see this map). To get a licence, a lobster fisher must be a resident in the LFA in which they fish. This local residency requirement is at odds with the core geographical “non-discrimination” rules found in every trade treaty, including the CFTA.
Additionally, a licence holder must personally fish their own licence. They cannot lease it out or have someone else fish on their behalf. This policy, called the owner-operator rule, is vital to prevent corporate control over the inshore fishery and protect independent harvesters. It applies to lobster and other inshore fisheries throughout the region.
Since 2013, these owner-operator rules have been backed up by federal fleet separation policies meant to ensure the processing and harvesting sectors remain clearly distinct. If a processor acquires a beneficial interest in a licence (for example, through loans to a harvester that give the lender controlling rights or privileges), the Department of Fisheries and Oceans can suspend the licence.
By deliberately tilting the playing field in favour of smaller, local interests and independent harvesters, and against corporate entities, these fisheries policies clearly violate the CFTA’s investment and market access obligations. Without these protections, which have been upheld by the Canadian courts, processors and outside investors would dominate the inshore fisheries.
For example, these policies bar corporations from acquiring new fishing licenses in those inshore fisheries restricted to small vessels (under 65 feet). But the CFTA investment chapter explicitly prohibits any investment measure that “restricts or requires specific types of legal entity or joint venture through which an enterprise may carry out an economic activity (CFTA Article 312, Market Access).” Such investment restrictions are prohibited outright.
Until now these supports for the lobster fishery were shielded from challenge under the CFTA. Ottawa’s baffling decision to remove the fisheries exemption exposes these vital measures, and others, to challenges by corporate and even foreign interests, which are treated as domestic under CFTA rules as long as they are established within Canada.
| Canada’s deleted CFTA fisheries exception Sector: Fisheries Sub-Sector: Fishing; services incidental to fishing Industry Classification: CPC 04, 882 Type of Exception: Article 201 (Non-Discrimination), Article 301 (Right of Entry and Exit), Article 307 (Market Access – Services), Article 312 (Market Access – Investment). Description: Canada reserves the right to adopt or maintain any measure with respect to licensing fishing or fishing related activities including entry of foreign fishing vessels to Canada’s exclusive economic zone, territorial sea, internal waters, or ports, and use of services therein.” Emphasis added. |
A successful investor challenge under the CFTA can result in millions of dollars in penalties. In a worst-case scenario, the federal government could comply with an adverse ruling by modifying or eliminating the challenged policy.
To see the havoc that could result if the owner-operator rules are gutted, one need only look to the west coast halibut fishery, where investors can own licences and quota.
Active harvesters now own only a tiny share of the halibut quota. Formerly independent fishers have been reduced to sharecroppers turning over a large proportion of their proceeds to corporations, investors or retired harvesters. New entrants, including young and Indigenous harvesters, have been squeezed out by steeply rising leasing costs.
In fact, the elimination of the federal exception, which also allowed for future policy flexibility, has troubling implications for those west coast harvesters advocating for new owner-operator and fleet separation policies like those in the Atlantic fisheries.
Any attempt to introduce such policies could now be successfully challenged by affected investors under the CFTA’s person-to-government dispute settlement mechanism.
Did the government ignore internal policy advice?
Fisheries regulation is primarily a federal responsibility—one they seemed to take seriously before June 30, 2025.
Earlier this year, in a now-deleted online release, the federal intergovernmental affairs secretariat stated that the “remaining federal exceptions under the CFTA are essential for supporting Canadian interests and do not create meaningful barriers for internal trade in Canada.”
This document highlighted the importance of the fisheries exception which “ensures the federal government can regulate fish licensing or related activities, including entry of foreign vessels.”
Regrettably, Canada’s “new government,” as it is routinely branded in public statements, has disregarded this sound advice from its own officials. Their thoughtless blunder has exposed vital fisheries policies to investor challenge under the CFTA.
Before further damage is done, the federal government should either reinstate the exception or negotiate a provision that carves out vital Canadian fisheries policies from the CFTA, just as supply management is excluded under CFTA Article 812.
This step would likely gather support from the Atlantic Canadian provinces, Québec and Nunavut. There is no valid reason for any other province to oppose it.
A shorter version of this article was published in the Charlottetown Guardian on July 30, 2025.
