Canadian farmers will benefit from the Trans-Pacific Partnership Agreement (Part 2)

Beef and pork

The TPP Agreement will provide new opportunities for Canadian exports of beef and pork, and will ensure that these products compete on a level playing field with key competitors. The Agreement also provides for a rule of origin for these products that recognises the integrated nature of this industry in the North American economy and will help businesses be able to fully realize the benefits of tariff liberalization. 

Trade snapshot - Pork

From 2012 to 2014, Canada exported over $2.6 billion worth of pork and pork products on average per year to TPP markets.

TPP Agreement highlights - Pork

• Japan will eliminate the over-gate price tariff of 4.3 percent on fresh/chilled/frozen pork cuts and pork offal within 10 years, and reduce the under-gate price tariff of up to 482 yen/kg to an amount of 50 yen/kg within 10 years.
• The over-gate price and below-gate price tariffs will be eliminated within 10 years for preserved and processed pork.
• Tariffs of up to 20 percent on pork products, including sausages, in Japan not currently subject to the gate price system will be eliminated within 10 years.
• Preferential imports of most pork products into Japan will be covered by 10-year transitional volume-based safeguards;
• Tariffs of up to 27 percent in Vietnam on fresh/chilled and frozen pork will be eliminated within nine years.
• Tariffs of up to 31 percent on all other pork products, including sausages, in Vietnam will be eliminated within nine years.

Trade snapshot - Beef

From 2012 to 2014, Canada exported over $1.3 billion worth of beef and beef products to TPP markets per year, with 83 percent being exported to the United States, 10 percent to Mexico and 6 percent to Japan.

TPP Agreement highlights - Beef

• In Japan, tariffs of 38.5 percent on fresh/chilled and frozen beef, as well as tariffs of 50 percent on certain offal will be reduced to 9 percent within 15 years.
• In Japan, tariffs of up to 50 percent on processed beef and most offals will be eliminated within 15 years.
• In Vietnam, tariffs of up to 31 percent on fresh/chilled and frozen beef will be eliminated within two years.
• In Vietnam, tariffs of up to 34 percent on all other beef products will be eliminated within seven years.

Wheat and barley

The TPP Agreement offers new market access opportunities for Canadian wheat and barley, a mainstay of Canada’s agricultural sector. The TPP will also provide Canadian exporters with a significant advantage vis-à-vis competitors outside of the TPP, such as the European Union, Argentina, and Russia.

Trade snapshot

From 2012 to 2014, Canada’s exports of wheat and barley to the TPP were, on average, $2.8 billion per year.

TPP Agreement highlights - Wheat

• In Japan, feed wheat will be duty-free, quota-free upon entry into force.
• In Japan, Canada will also have access to a Canada-specific quota for food wheat which starts at 40,000 tonnes and grows to 53,000 tonnes within six years. Mark-ups within this country-specific quota will be reduced by 45 or 50 percent.
• In Vietnam, tariffs of up to 5 percent on all wheat will be eliminated upon entry into force.

TPP Agreement highlights – Barley

• In Japan, food and feed barley fall under a quota system with mark-ups. Feed barley in Japan will be duty-free, quota-free upon entry into force.
• Mark-ups applied to the price of food barley by Japan will be reduced by 45 percentwithin eight years.
• Canada will also have access to a TPP-wide quota for food barley which starts at 25,000 tonnes and grows to 65,000 tonnes within eight years.

Canola oil

Trade snapshot

From 2012 to 2014, Canadian exports of canola oil to the TPP countries totaled $1.8 billion annually. Japan is currently one of Canada’s leading markets for exports of canola oil, while Vietnam and Malaysia both represent markets with significant growth potential.

Tariff highlights

• In Japan, tariffs on canola oil of up to 13.20 yen/kg will be eliminated within five years.
• In Vietnam, tariffs of 5 percent will be eliminated within five years.

Processed food and beverages

Trade snapshot

Transforming agricultural commodities into food and beverages is an important part of Canada’s agricultural and agri-food industry, and a key processing sub-sector. In 2013, the food processing industry contributed approximately $27.7 billion to Canada’s economy.

Canadian processors across the country transform raw ingredients into processed foods, ready-to-eat meals, beverages, nutritional supplements, and other high-quality products that are consumed, sold and enjoyed around the world.

From 2012 to 2014, annual Canadian exports of processed food and non-alcoholic beverages to TPP countries averaged $7.3 billion.

TPP Agreement highlights

• Canadian exports of processed food products and non-alcoholic beverages face high tariffs from TPP countries such as Japan and Vietnam.
• For example, Vietnamese tariffs for frozen french fries are 24 percent.
• The TPP Agreement will eliminate or reduce many of the existing tariffs or create tariff rate quotas on processed foods and non-alcoholic beverages, including maple syrup, baked goods, processed grain and pulse products, and sugar and chocolate confectionery.

Creating new markets for Canadian fruit growers and processors

A family has owned a 25-acre cranberry bog for three generations. The family-run operation primarily sells to the processing market, with a small portion of the crop selling locally as fresh berries. While the majority of product is destined for the U.S. market, as with many industries across the country, cranberry exporters are keen to identify other potential markets to maximize commercial potential–and have been looking to Asia and the Pacific region for opportunities. Under the TPP, Canada’s cranberry industry will benefit from removal of existing tariffs in TPP countries such as Japan, Vietnam, Malaysia, New Zealand and Australia. In Japan, for example, elimination of tariffs of up to 16.8 percent on sweetened dried cranberries could translate into more Canadian exports. Streamlined processes at the border and trade-facilitating rules on non-tariff measures will also help support sales to TPP markets. This family is looking forward to the new opportunities the TPP will bring.

Wines and spirits

The distilled spirits industry has a long history in Canada, and contributes significantly to the nation’s economy. Domestically and internationally, Canada continues to be known for producing Canadian whisky, a distinctive rye-flavoured, high-quality beverage.

For wines, Canada is recognized as a world-leader in the production of icewine. Forty-five per cent of Canada’s wine export revenues come from sales of icewine.

Trade snapshot

On average from 2012-2014, Canadian exports of wines and spirits to the TPP were worth $473.2 million annually.

TPP Agreement highlights

Through tariff elimination, the TPP Agreement will significantly improve market access opportunities for Canada’s wines and spirits sector.

• Whisky
• In Malaysia, duties of 58 Ringgit/litre will be eliminated within 15 years.
• In Vietnam, duties of 55 percent will be eliminated within 12 years.
• In Australia, duties of 5 percent will be eliminated upon entry into force.
• Wine, Icewine and Sparkling Wine
• In Japan, duties of up to 182 yen/litre will be eliminated within seven years.
• In Vietnam, duties of up to 59 percent will be eliminated within 11 years.
• In Malaysia, duties up to 23 ringgit/litre within 15 years.
• In Australia, duties of up to 5 percent will be eliminated immediately upon entry into force.
• In New Zealand, duties of up to 5 percent will be eliminated immediately upon entry into force.

Beyond tariffs

Canadian producers and processors of agriculture and agri-food products in all regions of Canada will benefit from provisions that address both tariff and non-tariff barriers, including enhanced regulatory cooperation, provisions to address technical barriers to trade, and streamlined customs administration procedures that will save time and money at the border.

The TPP also contains a strong Sanitary and Phytosanitary (SPS) Chapter, including provisions on regionalization, equivalence, and science and risk analysis, which is important for Canadian agriculture and agri-food exporters. These provisions will help ensure that market access gains are not negatively impacted by unjustified SPS-related restrictions.

The TPP SPS Chapter safeguards the right of each party to take measures necessary to protect human, animal or plant life or health. By doing so, Canada can continue to ensure the safety of our food supply and plant and animal resource base, while facilitating and expanding trade. The Chapter also establishes a mechanism whereby SPS issues can be addressed by experts, resulting in enhanced cooperation and resolution of issues.

Ensuring early and effective cooperation on SPS issues both strengthens the protection of Canadians and helps to avoid unjustified barriers to trade.

The TPP also contains provisions for wine that streamline labelling requirements and help reduce costs for Canadian wine producers. Specifically, the Agreement will protect the definition and traditional production method of authentic icewine (where it is made exclusively from grapes naturally frozen on the vine). This is a significant outcome for Canada given that almost all of Canada’s top icewine markets are members of the TPP.

Protecting and preserving Canada’s supply management system

The Government of Canada announced a series of new programs and initiatives for supply-managed producers and processors to support them throughout the implementation of the Trans-Pacific Partnership (TPP) and the Canada-EU Trade Agreement.  Under both agreements, the three pillars of the supply management system will remain protected.

The following programs will be implemented:

• The Income Guarantee Program will keep producers whole by providing 100 per cent income protection to producers for a full 10 years from the day TPP comes into force. Income support assistance will continue on a tapered basis for an additional five years, for a total of 15 years. $2.4 billion is available for this program.

• The Quota Value Guarantee Program will protect producers against reduction in quota value when the quota is sold following the implementation of TPP. $1.5 billion has been set aside for this demand-driven program, which will be in place for 10 years.

The Government also announced two additional programs:

• The $450 million-Processor Modernization Program will provide processors in the supply-managed value chain with support to further advance their competitiveness and growth.

• The Market Development Initiative will assist supply-managed groups in promoting and marketing their top-quality products. To support the initiative $15 million in new funding will be added to the AgriMarketing Program.

In addition to the long-term $4.3-billion investment outlined above, the Government will intensify on-going anti-circumvention measures that will enhance our border controls. These measures include requiring certification for spent fowl, preventing importers from circumventing import quotas by adding sauce packets to chicken products, and excluding supply-managed products from the Government of Canada’s Duties Relief Program. Cheese compositional standards, introduced by the Government of Canada in 2008, have been maintained.  The Government remains committed to ensuring they are enforced, so the standards we have for Canadian cheese are fully maintained.

The Canadian Dairy Commission and the Farm Products Council of Canada will work with Agriculture and Agri-Food Canada to ensure the Income Guarantee and Quota Value Guarantee programs are delivered to producers in an effective and efficient manner.  The Government will continue to work closely with dairy, poultry and egg producers and the entire supply-managed sector to implement these initiatives.

These Cabinet-approved initiatives will support producers and processors throughout the implementation period of TPP and the Canada-EU Trade Agreement.

The TPP will secure new market access opportunities for Canadian dairy, poultry and egg exports. Dairy, poultry and egg producers and processors will benefit over time from increased duty-free access to the United States and all other TPP countries. This will include complete tariff elimination on some specialty cheeses, including several artisanal cheeses, entering the United States.

Despite significant and broad demands from several of our TPP negotiating partners, Canada has offered only limited new access for supply-managed products. This access, which will be granted through quotas phased in over five years, amounts to a small fraction of Canada’s current annual production: 3.25% for dairy (with a significant majority of the additional milk and butter being directed to value-added processing), 2.3% for eggs, 2.1% for chicken, 2% for turkey and 1.5% for broiler hatching eggs.

Advantages of the TPP

Finally, Canada has secured provisions on products of modern biotechnology which emphasizes the importance of transparency in each Parties’ science-based approval processes for biotechnology products. The text addresses low-level presence (LLP) in a way that minimizes adverse trade impacts of current regulatory practices. It also includes the establishment of a working group to address issues related to biotechnology. This will benefit Canadian producers and exporters of biotechnology products. 

The TPP Agreement will give Canadian producers, processors and exporters a competitive advantage over agricultural exporters who are not TPP members (such as competitors in the European Union, China, and Thailand, among others) and create a level playing field for Canadian businesses to compete within the TPP.

The TPP Agreement will ensure Canadian businesses’ continued participation in critical North American value chains and generate new opportunities in the dynamic and growing Asia-Pacific region.

Source: www.international.gc.ca/