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Prosperity Through Trade. Sharing Canola With the World Tackling Trade Barriers Presentation to the Canola Council of Canada Convention March 23, 2004 Liam McCreery, President Canadian Agri-Food Trade Alliance. Prosperity Through Trade. Presentation to Canola Council of Canada Convention.
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Prosperity Through Trade Sharing Canola With the World Tackling Trade Barriers Presentation to the Canola Council of Canada Convention March 23, 2004 Liam McCreery, President Canadian Agri-Food Trade Alliance
Prosperity Through Trade Presentation to Canola Council of Canada Convention • Introduce CAFTA • The Importance of Trade to the Canadian Canola Industry • Why Liberalize Trade? • Goals for this Round • Update on Negotiations
Prosperity Through Trade 1. Introducing CAFTA • Officially Formed in Spring, 2001 • Roots in dissatisfaction with the results of the Uruguay Round
Prosperity Through Trade The Uruguay Round: Took the first steps to agricultural trade reform, but: • Allowed Japan to bind tariff on wheat at $US 440 per tonne and $US 310 per tonne on barley • Allowed Norway to bind a 318% tariff on canary seed • Allowed for tariff escalation eg. Japan, canola seed enters free of tariff, oil hits tariffs of $130 to $150 per tonne
Prosperity Through Trade The Uruguay Round: Took the first steps to agricultural trade reform, but: • Tariff discrimination between competing products e.g. canola and soybeans • OECD Countries still provide $US 318 B in trade distorting subsidies • Export subsidies are still used – e.g. EU can use export subsidies on 11 million tonnes of grain • Grain and oilseed industry in Canada loses $1.3 billion annually
Prosperity Through Trade Introduction to CAFTA- Roots in the Uruguay Round • Minimal results was partly the fault of our sectors • A lack of direction from the international market reliant sectors • Isolation of Canada in negotiations
Prosperity Through Trade • Canadian Alliance of Agri-Food Exporters formed in 1998 • Founding members included Prairie Pools, Cattlemen, Pork Council and Sugar Institute • Merger with AITG resulted in formal organization CAFTA in 2001
Prosperity Through Trade Membership: • Agricore United • Canada Beef Export Federation • Canadian Cattlemen’s Association • Canadian Meat Council • Canadian Oilseed Processors Association • Canadian Sugar Institute Canola Council of Canada Cargill Food and Consumer Products Manufacturers Grain Growers of Canada Malting Industry Association of Canada
Prosperity Through Trade • The Importance of Trade • Exports account for 40% of Canada’s GDP (4X US) • 1 in 3 jobs depends on exports • 7% of total exports are of agriculture and food = over 80% of farm cash receipts • 75% of wheat and durum • 98% of canary seed • 70% of cattle and beef • 68% of dry peas • 60% of canola • 50% of hogs and pork
Prosperity Through Trade • The Importance of Trade • Canada is the world’s third largest exporter and 5th largest importer of agriculture and food • Exports are important to Provincial economies • B.C. - $2.1 billion • Alberta - $5.2 billion • Saskatchewan - $4 billion • Manitoba - $2.5 billion • Ontario – $8.4 billion • Quebec – 3.3 billion
Prosperity Through Trade • The Importance of Trade If Canada Didn’t Trade – The domestic market would only require: • 6.5 million tonnes wheat - 6.7 million acres • 842 thousand tonnes of durum - 1.2 million acres • 2.1 million tonnes of canola - 3.6 million acres
Prosperity Through Trade • The Importance of Trade If Canada Didn’t Trade (wheat,durum and canola) • 25.9 million acres currently in grain and oilseed production wouldn’t be required • 20,000 farmers wouldn’t produce grains and oilseeds • Revenue to the agriculture and Canadian economies would drop by about $5.6 billion Trade is important, even in a distorted market
Prosperity Through Trade 3. Why Liberalize Trade? 1/3 cut in global agricultural tariffs means $100 million for Canada • $11 million for Manitoba • $25 million for Ontario • $16 million for Quebec • $7 million for B.C. • $21 million for Alberta • $15 million for Saskatchewan Elimination of ALL tariffs globally means $60 billion for Canada • $1.4 billion for Manitoba • $29.7 billion for Ontario • $11.6 billion for Quebec • $5.0 billion for B.C. • $7.2 billion for Alberta • $1.8 billion for Saskatchewan From DFAIT, Stats Canada and AAFC
Prosperity Through Trade 3. Why Liberalize Trade? Sector Gains from Tariff Elimination George Morris Centre, 1999
Prosperity Through Trade 3. Why Liberalize Trade? Sector Gains from Tariff Elimination George Morris Centre, 1999
Prosperity Through Trade 3. Why Liberalize Trade? • Tariff elimination over 10 years could return $485.6 million to the Canadian canola industry annually • $81 per tonne • $45 per acre • Elimination of export and trade distorting domestic subsidies could return $234 million to the Canadian canola industry annually • $39 per tonne • $22 per acre George Morris Centre, 1999 and AAFC
Prosperity Through Trade 3. Why Liberalize Trade? • End of Subsidies and Tariff Barriers could return $719.6 million annually • $120 per tonne • $67 per acre George Morris Centre, 1999
Prosperity Through Trade 3. Why Liberalize Trade? India Tariffs - Canola oil 85%, Soybean oil 45% Tariff Equity = increased exports for Canada of 200,000 tonnes of oil requiring 500,0000 tonnes of seed = about $200 million Korea Tariffs – Canola 20% Soybeans 5% Tariff Equity = increased exports for Canada of 200,000 tonnes = about $70 million
Prosperity Through Trade 4. Goals CAFTA’s long term goal is the establishment of global tariff and subsidy-free trade in agriculture and food products • For this round: • Elimination of export subsidies • Elimination or at least substantial reduction in trade distorting support • Substantial and meaningful increases in market access
Prosperity Through Trade 4. Goals Cancun Framework provides the opportunity for substantial reform Export Subsidies – provides for the negotiation of a date for elimination Domestic Support – provides for substantial disciplines on trade distorting support and disciplines non-trade distorting support Market Access – formula for tariff reduction is complemented by an overall cap on tariffs, and requirements for expansion of minimum access
Prosperity Through Trade 5. Negotiations Update WTO Agriculture Committee meets this week in Geneva • New chair – Tim Groser of New Zealand • No more negotiating with the Chair • Establish work plan • Framework in May to July period – Ministers and General Council end of July
Prosperity Through Trade 5. Negotiations Update • Renewed commitment to the round • US and EU determined to get a framework this year • G-20 holding firm on subsidies • Cairns Group trying to be the bridge – focus on market access • Can We meet the Dec 31, 2005 Deadline? • Elections in U.S. and India – US grows more protectionist • EU Expansion and Change in Commission
Prosperity Through Trade Canada Needs To Be a Leader • A highly trade dependent sector in a highly trade dependent country • Seek opportunities for the future – build on Canada’s competitiveness and innovation – look out, not in • CAFTA and its members have an important role to play
Prosperity Through Trade Canadian Agri-Food Trade Alliance Suite 1403 150 Metcalfe Street Ottawa, Ontario K2P 1P1 Tel: (613) 560-0500 Fax: (613) 233-2860 www.cafta.org Email: office@cafta.org Liam McCreery, President Patty Townsend, Executive Director