Canada-European Union: Comprehensive Economic and Trade Agreement (CETA)
Increasing Exports of Agriculture and Agri-Food Products
Canadians are blessed with an abundance of delicious products—B.C. cherries, P.E.I. potatoes, Niagara peaches, Prairie grains, Annapolis Valley apples, cheeses for every mood and taste from every region of Quebec, and the best beef and pork in the world, to name just a few. Our agricultural and agri-food sector is one of the most dynamic in the world, renowned as a reliable supplier of safe, high-quality products. In many countries, a label that reads “Made in Canada” immediately indicates that a product is in the premium category.
The sector employed close to 578,000 people in 2013, accounting for close to 3 percent of Canada’s GDP. In 2013, Canada was the fifth-largest exporter of agricultural and agri-food products in the world. More than a third of Canadians employed in the sector work in the processing end of the industry, turning raw ingredients into processed foods, ready-to-eat meals, beverages, nutritional supplements and a nearly limitless variety of other high-quality products. CETA will not only open new markets for raw ingredients, it will open up new markets for the food processing and beverage industry.
Canada’s agricultural exports to the EU totalled an annual average of $2.5 billion between 2011 and 2013, led by wheat (durum and common), soybeans and other oilseeds, canola oil, frozen fruits and maple syrup. Canada is interested in expanding exports of these and a wide variety of other products, including meats, grains and oilseeds, fruits and vegetables, and processed foods.
Canadian agricultural exports to the EU currently face high tariff rates, with average EU agricultural tariffs of 13.9 percent.
When CETA comes into force, almost 94 percent of EU agricultural tariff lines will be duty-free, and seven years later, that number will rise to over 95 percent. This duty-free access will give Canadian agricultural products, including for a specified amount of Canadian beef, pork and bison, preferential access to the EU market and a competitive advantage over producers from other countries that do not have a free trade agreement with the EU. This will create new opportunities for increased sales that will directly benefit hard-working Canadians through more jobs, higher wages and greater long-term prosperity. For example, EU tariffs will be eliminated on:
- durum and high-quality common wheat (maximum tariffs of up to $190/tonne and $122/tonne, respectively), for which CETA will lock in permanent duty-free access;
- fresh and frozen fruits and vegetables, including fresh cherries (EU seasonal tariffs reaching as high as 12 percent), fresh apples (EU seasonal tariffs reaching as high as 9 percent), and frozen blueberries (the EU tariffs of 3.2 percent to 14.4 percent are not currently applied, but CETA will lock in the rate at 0 percent);
- processed fruits and vegetables, including sweetened, dried cranberries (EU tariffs of 17.6 percent) and frozen potato products, such as french fries (EU tariffs of 14.4 percent to 17.6 percent);
- oils, including canola oil (EU tariffs of 3.2 percent to 9.6 percent);
- processed products, including cat and dog food (EU tariffs as high as $1,218/tonne), and miscellaneous food preparations (EU tariff s that start at 12.8 percent);
- other grains, including oats (EU tariffs of $114/tonne), barley and rye (EU tariffs of up to $120/tonne), and low- to medium-quality common wheat (EU tariffs of up to $122/tonne);
- maple syrup (EU tariffs of 8 percent);
- processed pulses and grains, which include baked goods, pulse flour, meal and powder (EU tariffs start at 7.7 percent);
- other products, such as mushrooms, potatoes, peas, cranberries, raspberries and strawberries, as well as processed products such as jams, jellies and juices, fruit and nut bars, yeasts, mixed seasonings and condiments, sugar confectionery, chocolates and mixes and doughs.
Food processing sector
Transforming agricultural commodities into food and beverages is an important part of Canada’s agricultural and agri-food industry, and a key manufacturing sub-sector. In 2013, the food processing industry contributed $27.8 billion to Canada’s GDP. Canadian processors across the country transform primary agricultural goods into value-added products that are consumed, sold and enjoyed around the world. Between 2011 and 2013, annual Canadian exports of manufactured food and beverages to the EU averaged $913.3 million.
Currently, Canadian exports of processed food products and beverages face complex and prohibitive EU tariffs. For example, EU tariffs for certain fruit jams start at 24 percent, and can reach much higher. Other processed foods face tariff s that are applied based on the quantity of certain ingredients used in the final product. CETA will immediately eliminate existing EU tariffs on processed foods and beverages—including the vast majority of processed beef and pork products—making these world-class items more competitive and creating the conditions for increased sales into the EU. Tariff elimination will directly benefit Canada’s processed foods and beverages sector across the country by generating more jobs, higher wages and greater long-term prosperity.
New access for world-class Canadian beef, pork and bison
CETA will provide new market access opportunities for key Canadian agricultural exports: beef, pork and bison. These world-class products will now benefit from preferential treatment in the EU. CETA establishes tariff rate quotas for each product, giving Canadian farmers yearly duty-free access for up to:
- 80,000 tonnes of pork (including consolidation of existing quota of approximately 6,000 tonnes);
- 50,000 tonnes of beef; and
- 3,000 tonnes of bison.
In addition, CETA will give farmers duty-free access:
- for high-quality beef under existing quota of nearly 15,000 tonnes (Hilton beef quota, current duty of 20 percent); and
- for processed beef, pork and bison products.
Recognizing the importance of grain and oilseed products in Canada’s total agricultural exports to the EU, CETA will establish mechanisms to address issues of key importance to agricultural producers, including technical discussions and regulatory cooperation. In addition, CETA will enhance the existing Canada-EU forum for discussion on biotechnology and emphasizes the promotion of efficient science-based approval processes and cooperation on low-level presence of genetically modified crops. Canadian grain and oilseed exporters will benefit from such cooperation, which will increase transparency and provide greater predictability for them as they seek more buyers for their products in the EU.
CETA also includes provisions to address non-tariff barriers in the EU, such as those related to animal and plant health and food safety. Building on the strength of existing Canada-EU cooperation in these areas, CETA establishes a mechanism under which Canada and the EU will cooperate to discuss, and attempt to prevent or resolve, non-tariff barriers that may arise for agricultural exports. CETA will provide opportunities and tools for Canadian and EU regulators to exchange information in order to better understand each other’s requirements to assist importers and exporters alike.
Maintaining Canada’s supply management system
Canada’s supply management system provides Canadians with a consistent supply of high-quality dairy, egg and poultry products at reasonable prices. This system supports farmers on around 17,000 Canadian farms. CETA will not affect Canada’s supply management system, which will remain as robust as ever. The supply management system and its three key pillars (production control, import controls and price controls) remain intact. The vast majority of supply-managed products will be exempt from increases in market access. The Government of Canada remains committed to working with industry stakeholders throughout the implementation period to ensure that Canada’s agricultural sector remains strong and vibrant.
Reaping the benefits
The EU is the world’s largest importer of agricultural and agri-food products, importing more than $138 billion worth of such products in 2013. New and expanded export opportunities in this market will be very important for the growth of Canada’s agricultural sector, not only in areas of traditional strength but also in new and innovative niche products. For example, the EU market for specialty foods and beverages, in particular those in the health and wellness sector, is growing at a sustained pace, driven by consumers seeking healthier, more nutritious food and beverages. Canada’s expertise in these areas and our dynamic, innovative agri-food sector ensures that we are well-positioned to meet this demand.
Whether they grow cherries in British Columbia or potatoes in Prince Edward Island, farmers, producers and processors across Canada will benefit from this agreement to open new markets in Europe.
Europe is the highest-value market for many beef cuts, and the ability to export every part of an animal to the market that is willing to pay the most for it is vital for the prosperity of the Canadian beef cattle sector. CETA will enable Canadian beef producers to finally benefit from the high value that the European beef market represents. CETA is the most significant new trade agreement for Canadian beef producers since the Canada-U.S. Free Trade Agreement in 1989. We expect it to add hundreds of millions of dollars in annual exports for Canadian beef producers.Martin Unrau, Past President, The Canadian Cattlemen’s Association
CETA will provide the Canadian pork sector with secure and meaningful access to the EU market and will enhance our sector’s export opportunities. This will benefit workers, businesses and families who rely on the pork sector for their livelihood.Jean-Guy Vincent, Chair, Canadian Pork Council
CETA is, without doubt, the most important trade deal that Canada has concluded since NAFTA. It could easily grow Canadian agriculture and food exports to the EU by $1 billion. Canada exports half of its food production. By increasing the sale of Canadian products in Europe, CETA will directly benefit Canadian farmers and food processors, and will help promote Canada’s national, provincial and rural economies.Kathleen Sullivan, Executive Director, Canadian Agri-food Trade Alliance
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