Prosperity Through Trade Sharing Canola With the World Tackling Trade Barriers Presentation to the Canola Council of Canada Convention March 23, 2004 Liam.

Prosperity Through Trade

Sharing Canola With the WorldTackling Trade Barriers

Presentation to the Canola Council of Canada Convention

March 23, 2004

Liam McCreery, PresidentCanadian Agri-Food Trade Alliance


Presentation to Canola Council of Canada Convention

1. Introduce CAFTA

2. The Importance of Trade to the Canadian Canola Industry

4. Goals for this Round

3. Why Liberalize Trade?

5. Update on Negotiations


1. Introducing CAFTA

• Officially Formed in Spring, 2001

• Roots in dissatisfaction with the results of the Uruguay Round


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 for tariff escalation eg. Japan, canola seed enters free of tariff, oil hits tariffs of $130 to $150 per tonne

• Allowed Norway to bind a 318% tariff on canary seed


• 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

Took the first steps to agricultural trade reform, but:

• Tariff discrimination between competing products e.g. canola and soybeans

The Uruguay Round:


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


• 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


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

Membership:


2. 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



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



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



If Canada Didn’t Trade (wheat,durum and canola)

Trade is important, even in a distorted market

• 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



1/3 cut in global agricultural tariffs means $100 million for Canada

Elimination of ALL tariffs globally means $60 billion for Canada

From DFAIT, Stats Canada and AAFC

• $7 million for B.C.• $21 million for Alberta• $15 million for Saskatchewan

• $11 million for Manitoba• $25 million for Ontario• $16 million for Quebec

• $5.0 billion for B.C.• $7.2 billion for Alberta• $1.8 billion for Saskatchewan

• $1.4 billion for Manitoba• $29.7 billion for Ontario• $11.6 billion for Quebec

Sector Gains from Tariff Elimination

British Columbia

Cattle & Beef $77 million

Hogs & Pork $11 million

Grains& Oilseeds $6.5 million

Alberta


Barley $123 million


Wheat $ 97 million

Saskatchewan

Canola $202 million

Wheat $139 million

Cattle & Beef $ 90 million

Barley $ 75 million

Manitoba


Canola $189 million

Cattle and Beef $132 million



George Morris Centre, 1999

Sector Gains from Tariff Elimination




Ontario


Soybeans $ 63 million

Corn $ 52 million

Wheat $ 4 million

Quebec


Corn $31 million

Soybeans $11 million

Wheat $ 2 million



• 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



• End of Subsidies and Tariff Barriers could return $719.6 million annually

• $120 per tonne

• $67 per acre




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


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:

1. Elimination of export subsidies

2. Elimination or at least substantial reduction in trade distorting support

3. Substantial and meaningful increases in market access


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


5. Negotiations Update

• 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

WTO Agriculture Committee meets this week in Geneva


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


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


Canadian Agri-Food Trade AllianceSuite 1403 150 Metcalfe Street

Ottawa, Ontario K2P 1P1

Tel: (613) 560-0500 Fax: (613) 233-2860

www.cafta.org Email: [email protected]

Liam McCreery, President

Patty Townsend, Executive Director

Prosperity Through Trade Sharing Canola With the World Tackling Trade Barriers Presentation to the Canola Council of Canada Convention March 23, 2004 Liam.

Documents

importance of trade

trade presentation

trade introduction

trade sharing canola

agricultural trade reform

trade oecd countries

pork slide

uruguay round slide