The impact of trade liberalization on the global oilseed complex Rebalancing the complex with supply, demand, processi

1. OFI China 11-12 September 2007 Guangzhou, China The impact of trade liberalization on the global oilseed complexRebalancing the complex with supply, demand, processing shifts Robert Broeska, President, IASC & Canadian Oilseed Processors Association

2. The impact of trade liberalization on the global oilseed complex • Market drivers 2. Trade policy - industry position 3. Trade reform – the China case 4. Doha WTO negotiations 5. WTO impact on industry

3. Population • current world population 6 billion people • 2050 world population 9 billion • 97% of increase in less developed regions • key developing markets are China & India

4. Per capita oils & fats consumption

5. Vegetable oil disappearance GATT Tokyo Round China WTO accession GATT Uruguay Round

6. Production of oilseeds & products

7. Soybean production

8. Palm oil production

9. Rapeseed & sunflower production

10. World oilseed crush and GDP GATT Tokyo Round China WTO accession GATT Uruguay Round

11. Vegetable oil exports

12. Oilmeal exports

13. The global oils & fats market 2. Trade policy - industry position 3. Trade reform – the China case 4. Doha WTO negotiations 5. WTO impact on industry

14. Trade of oilseeds & products GATT Tokyo Round China WTO accession GATT Uruguay Round

15. Trade – IASC policy statementA new vision for the international trade of oilseeds & oilseed productsA WTO Development Round sectoral initiative31 March 2003 The members of the International Association of Seed Crushers Council today announce their support for an oilseed industry sectoral initiative under the auspices of the World Trade Organization. The IASC seeks a broad agreement for the liberalization of global trade in oilseeds, oilseed products and edible oils. • In pursuit of this objective, IASC member associations agree to solicit the support of their national trade authorities and WTO negotiators for a global sectoral agreement, which harmonizes, reduces, and ultimately eliminates all trade distorting policies and practices for oilseeds, oilseed products and edible oils. Such an agreement would accommodate and define the necessary degrees of staging and/or phasing as agreed to by the participants. • The IASC Council envisions that this endeavour will provide a global trading environment, which is conducive to the expansion of production, processing, trade, and consumption of all oilseeds, oilseed products and edible oils. The Council urges all WTO members to avoid trade distorting policies at production or trade levels (i.e. tariff and non-tariff trade barriers, export incentives, export subsidies, export taxes, product-specific supports, etc.). • The Council firmly believes that an open and unfettered food trade system is essential to the efficient provision of food for the world’s next billion citizens and beyond. The elimination of trade barriers will reduce food costs for consumers while creating a larger global marketplace for producers. • The IASC intends to convey this message directly to the Chairman of the WTO Agricultural Negotiating Committee without delay, and agrees to provide any supporting discussion requested.

16. OILSEED PROCESSORSLEVEL PLAYING FIELD COALITIONJOINT DECLARATIONSeptember 2005 In order to establish an international Level Playing Field (LPF) during the Doha Development Agenda negotiations on agriculture, our national associations hereby endorse the following reciprocal objectives to be implemented as part of a WTO Sectoral Agreement which provides that member countries eliminate all trade barriers for oilseeds, oilseed products, and edible oils: • Eliminate import tariffs for oilseeds, oilseed products, and edible oils • Eliminate export subsidies for oilseeds, oilseed products, and edible oils • Eliminate differential export taxes (DETs) on oilseeds, oilseed products, and edible oils • Provide export credits only in conformance with WTO rules and disciplines In addition to the above LPF objectives, we support the following mutual undertakings: • To actively encourage our respective governments to provide an increasing portion of domestic support for agriculture in a decoupled form • Not to implement any other trade distorting practices ABIOVE - Associaçâo Brasileira das Industrias de Óleos Vegetais, São Paulo, Brasil AOF - Australian Oilseeds Federation, Melbourne, Victoria, Australia CIARA - Cámara de la Industria Aceitera de la República Argentina, Buenos Aires, Argentina COPA - Canadian Oilseed Processors Association, Winnipeg, Canada FEDIOL - Fèderation de l’Industrie d’Huilerie de la CE, Brussels, Belgium, European Union NOPA - National Oilseed Processors Association, Washington, DC, United States

17. The global oils & fats market 3. Trade reform – the China case 4. Doha WTO negotiations 5. WTO impact on industry

18. China oilseed situation GATT Tokyo Round China WTO accession GATT Uruguay Round

19. Veg oil consumption & global prosperity • As the poor advance economically, they move from grains to veg oils to meat • Per capita veg oil consumption in the poorest countries is used by IMF as a measure of changing living standards • Very poor do not purchase meat • In many developing countries, massive job creation and rapidly advancing incomes spur improved dietary intake • The result? An unprecedented expansion of veg oil and protein consumption

20. China vegetable oil disappearance GATT Tokyo Round China WTO accession GATT Uruguay Round

21. China oilmeal disappearance

22. China oilseed imports

23. China vegetable oil imports

24. The global oils & fats market 4. Doha WTO negotiations 5. WTO impact on industry

25. DOHA WTO NegotiationsDraft modalities textCrawford Falconer, Chair, Agriculture Committee - July 17, 2007 Main negotiating pillars • Domestic supports – a tiered formula for overall phased reduction of trade-distorting domestic supports • Market access – a tiered formula for phased tariff and tariff escalation reductions • Export competition – parallel elimination of all forms of export subsidies and disciplines on all export measures • Other issues – range of issues/positions/proposals that are tabled/referred to and remain of interest, but are not materially advanced and not yet agreed; includes differential export taxes and sectoral initiatives

26. WTO draft modalities text - July 17, 2007Trade-distorting domestic supports* * Base period for calculation 1995-2000 ** Uruguay Round implementation period: 6 years commencing January 1, 1995

27. WTO draft modalities text - July 17, 2007Market access: tiered formula * Uruguay Round achievements - Agriculture • Tariffication and minimum access commitments • Tariffs reduced by 36% (average), minimum 15% • Average unweighted ad valorem bound tariff rates post-Uruguay Round for oilseeds, fats and oils 42% A.V.E. • NAMA – tariffs reduced by 40% to 3.8% A.V. Avg.

28. WTO draft modalities text - July 17, 2007Export competition (a) Export subsidies* (i) Developed – eliminate by end of 2013; 50% by 2010 (ii) Developing – eliminate in equal annual reductions by year X (b) Export credits/guarantees/insurance - maximum repayment schedule – 180 days - disciplines applied give effect to (a) (c) State trading enterprises/international food aid - disciplines applied give effect to (a) * Uruguay Round reduced volumes of subsidized exports by 21% and budget outlays by 36%; DOHA Round considering a phase-out of differential export taxes by end of implementation period

29. The global oils & fats market 5. WTO impact on industry

30. A study commissioned by the International Association of Seed Crushers and undertaken by LMC International (Oxford, England) June 2006 Vegetable oil demand would rise by more than 40% & oilseed meal demand by 30% in low-income countries Global vegetable oil production would increase by about 30% & oilseed meal production by about 40% In total, world trade would expand by 35% for vegetable oil & by 45% for oilseed meals An independent report by IPC (Washington, USA) October 2005 Global oilseed production (7 major oilseeds) would increase by about 25% (currently from 380 mmt to 475 mmt) Palm oil production would increase by 39% (currently from 38 mmt to 52 mmt) to meet these increased levels of consumption and trade requirements WTO trade liberalization significantly increases global production, consumption & trade of vegetable oils & protein meals

31. Notable market access indicatorsAverage price elasticities of demand & import tariffs

32. Veg oil trade liberalization: a WTO sectoral initiativeOil consumption forecasts (LMC International)

33. Protein meal trade liberalization: a WTO sectoral initiativeMeal consumption forecasts (LMC International)

34. World meal and oil production before and after liberalization in soybean meal and oil equivalents Source: LMC International, 2006

35. Percentage change in world seed/oil/meal production after liberalization, by oilseed Source: LMC International, 2006

36. World recoverable oil before & after liberalization Source: LMC International, 2006

37. Soybean production before & after liberalization Source: LMC International, 2006

38. Rapeseed production before & after liberalization Source: LMC International, 2006

39. Sunflower seed production before & after liberalization Source: LMC International, 2006

40. Palm & palm kernel oil production before & after liberalization Source: LMC International, 2006