Canadian Agriculture and International Trade Negotiations

Annual General Assembly Dairy Farmers of Canada

July 15, 2014

Outline

• The current trade environment

• Update on current trade negotiations

• Issues of interest to the dairy sector

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Trade is essential for the agricultural sector

• Sustained growth of the sector depends on Canada’s ability to remain competitive in global markets.

Exporters of agricultural products (2008 & 2013)

Exporting countries

Value of global exports (billions CAD)

2008 2013 European Union (28)

123 (2) 167

United States 129 (1) 158

Brazil 62 (3) 89

China 32 (6) 49

Canada 40 (4) 47

Argentina 38 (5) 41

India 21 (7) 41

Importers of agricultural products (2008 & 2013)

Importing countries

Value of global imports (billions CAD)

2008 2013 European Union (28)

138 (1) 138

United States 92 (2) 115

China 57 (4) 115

Japan 60 (3) 63

Russia, Federation of

34 (5) 38

Canada 28 (6) 36

Mexico 25 (7) 28

South Korea 20 (8) 25 Source: Global Trade Atlas

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Seizing Growth Opportunities: A Trade Policy Toolbox

Trade Agreements

(WTO Agreements, NAFTA, other existing FTAs) • Regular

committee meetings

• Dispute settlement

• Management of rights and obligations of Canada

Trade Negotiations • WTO Agriculture

Negotiations

• FTA negotiations

Market Access

• Market development initiatives

• Bilateral technical discussions

• Import policy

International Institutions

• Standard- setting

(CODEX, IPPC, OIE)

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Free Trade Agreements (FTAs): An ambitious agenda

In force, signed and concluded FTAs

Ongoing negotiations

Canada-U.S. and NAFTA Israel Chile Costa Rica EFTA

Peru Colombia Jordan Panama Honduras Korea

European Union TPP Japan Ukraine India Morocco

CARICOM Costa Rica Central American Countries (El Salvador, Guatemala and Nicaragua) Israel

Cumulative percentage of agri-food exports from Canada (2013) 58% 75%

Cumulative percentage of global agri-food imports (2013) 27% 63%

Free trade agreements: our competitors

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FTA: New Zealand Negotiations: Australia

China Japan

FTA: Australia Negotiations: New Zealand, EU, U.S., TPP

Korea

FTA: U.S., EU, Australia Negotiations: New Zealand

Brazil

India

Negotiations: EU (MERCOSUR)

Negotiations: Australia, New Zealand, EU

FTA: Korea , Mexico, EFTA Negotiations:Mercosur, Japan, U.S.

EU

Dairy consumption expected to increase at a higher rate in emerging countries

26%

9%

13%6%

-4%

2%

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China Brazil Russia U.S. Canada EU

Kilo

gram

s pe

r Cap

ita

Per Capita Dairy Products Consumption (in fat equivalent)with Total Growth Rate between 2012 to 2022

2012 2022 (Projection)

Source: FAO OECD agricultural outlook 2013-2022 7

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Canada-European Union CETA Negotiations

• Most significant trade negotiation since NAFTA – Potential to transform trading relation

• Agreement-in-Principle announced October 18, 2013 – Details on: www.actionplan.gc.ca/ceta

• Working to finalize remaining issues

• Ratification/Entry into force

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Canada-European Union Trade Relationship

• The EU is Canada’s second largest trading partner and the world’s largest market for agriculture and agri-food products (population of nearly 500 million).

33.8%

4.1% 27.2%

20.1%

8.4% 3.2% 3.2%

Top 5 Canadian Exports to EU-28 Total 2013 Ag. & Agri-Food Exports to EU-28: $2.39 billion

Others Processed Foods Soybeans & Flax Wheat Lentils & kidney beans Corn Frozen Fruits & Nuts

47.3%

10.9%

21.3%

8.8%

4.6% 3.9% 3.3%

Top 5 Canadian Imports from EU-28Total 2013 Ag. & Agri-Food Imports from EU-28:

$4.43 bilion

Others Processed Foods WineBeer Mink furskins ChocolateCheese

Source: Statistics Canada 9

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CETA: EU’s Agricultural commitments (tariffs)

New market access opportunities for Canada:

• Elimination of over 95% of EU ag tariffs upon implementation

• Immediate duty-free treatment for: – Fruits and vegetables, including apples, blueberries and cherries – Processed foods, including maple syrup, sugar confectionary,

chocolate, biscuits, cookies, mixes and dough, baked goods and other food preparations

– Oils, including soybean and canola oil – Cat and dog food

• Tariff elimination over 7 years for: – Durum and high-quality common wheat – Low-medium quality wheat (100,000 tonnes transitional duty-free quota) – Rye, barley, oats

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CETA : EU’s Agricultural commitments (quotas)

• New market access opportunities created for beef, pork, bison and sweet corn. • Beef: duty-free tariff quota for 50,000 tonnes • Pork: duty-free quota for approx 80,000 tonnes • Bison: duty-free quota of 3,000 tonnes • Sweet corn: duty-free quota of 8,000 tonnes

• Phase in of the quota volumes still under negotiation

CETA: Canada’s Agricultural commitments

• Elimination of 92% of Canadian agricultural tariffs immediately upon entry into force (92.9% once implemented)

-7.1% of lines excluded (dairy, poultry and eggs)

• Liberalization of the milk protein isolates

• New quotas for cheese -16,000 tonnes of all cheeses -1,700 tonnes industrial cheese

• Geographical Indications

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CETA: Government of Canada’s commitment

• Committed to monitoring the potential impacts from the implementation of the Agreement

• Compensation would be provided should a negative impact

be observed

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Canada’s mark in the Asia-Pacific region: Trans Pacific Partnership (TPP)

• Market of 650 million people, more than 40% of world GDP

• Canada’s participation is essential for our competitive position in this high growth region

• Chief Negotiators meeting held from July 3-12 in Ottawa.

• Key issues outstanding include: – Goods Market Access – State Owned Enterprises – Sanitary and Phytosanitary measures – Rules of Origin – Intellectual Property 14

• Negotiations concluded on March 11,2014 • Text of the Agreement tabled in House of Commons on June 12 (available on DFATD’s website) • Canada’s agriculture and agri-food export interests include:

– beef, pork, malt, canola, animal feed, wheat and flour, soybeans, ice wine, maple syrup and pulses.

• Both countries committed to bringing FTA into force as soon as

possible

Canada-Korea Free Trade Agreement

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Canada-Japan Economic Partnership Agreement (EPA)

• Main Canadian agriculture and agri-food exports:

– Oilseeds (canola), pork, cereals (wheat and barley), pulses, malt, soy and animal feed.

• Average duty on agriculture and agri-food imports: 17%

• Import regime

• Would complement TPP

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World Trade Organization

• Cornerstone of Canada’s trade policy agenda

• “Bali Package”: -trade facilitation -agriculture package (food security, TRQ administration, export subsidies)

• Efforts continue to resume Doha round -sensitive products -export subsidies

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Final thoughts

• The government will continue to consult with agricultural industry stakeholders to leverage global opportunities

• Your views are important to us and will be helpful in

shaping our negotiation position towards a balanced outcome

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