Meeting of the EU-Canada CETA Committee on Agriculture and Agriculture Dialogue – November 15, 2021

by videoconference

Report

Summary

The fourth meeting of the EU-Canada Comprehensive and Economic Trade Agreement (CETA) Committee on Agriculture took place online on November 15th 2021, together with the Canada-European Union Agriculture Dialogue. Both parties continued with a commitment to maintain a positive collaborative approach, noting the importance of the European Union (EU)-Canada relationship, the positive contribution of CETA, and the importance of reliable and like-minded trading partners.

CETA Committee on Agriculture

CETA Implementation

Review of Bilateral Trade

Canada and the EU conducted a review of trade data and noted increases in exports on both sides for agriculture and agri-food products. Fish and seafood exports decreased on both sides in 2020.

EU Beef and Pork TRQs

Canada reiterated its concerns that the EU Tariff Rate Quota (TRQ) administration system for CETA beef and pork TRQs fails to meet the CETA obligation to provide a mechanism whereby import licenses can be issued automatically on demand when they remain unused and/or unallocated quantities are available on a monthly basis following the initial allocation period. Canada noted that this issue may become increasingly problematic once Canadian producers begin to export higher quantities to the EU.  Canadian beef and veal exports to the EU27 continue grow.  In the first eight months of 2021 exports were valued at $12.1 million, an increase of approximately 24% over the same period in 2020. The EU maintained its position that the existing system is in compliance with the CETA requirements, and recalled how the quota allocations are administered

WTO beef and pork TRQs Apportionment Linked to Brexit

Canada sought assurances from the EU that the apportionment of its WTO beef and pork TRQs will not affect the EU’s market access commitments under CETA. The EU referred to the negotiations on the EU’s apportionment of its WTO TRQs, which are ongoing with WTO Members, including Canada.

Canadian Cheese TRQs

The EU again reiterated concerns about how the TRQ quota was filled, particularly the volume of transfers, as well as voiced their disappointment with the comprehensive review being put on hold. The EU reiterated its fundamental concern that the cheese TRQ management system, through the pooling system, fails in its CETA obligation to provide a mechanism by which the TRQ is allocated to operators most likely to use it. The EU also noted that the market-share based allocation resulted in new market players receiving economically unviable allocations, acting as a barrier to new entrants. The EU made reference to the detailed comments included in its submissions to the comprehensive review of tariff rate quotas and, in particular, to the fact that high rates of transfers and related transfer costs reflect structural problems in the TRQ management system that is not “as conducive to trade as possible”. The EU called again on Canada to introduce disciplines on chronic/abusive transfers. Canada remarked that it understands that the cheese TRQs are an important issue for the EU. In that regard, Canada stated that it is fully meeting its CETA obligations in regard to TRQ administration. Canada pointed to the very high fill rate of the CETA cheese TRQs (around 94.1% in 2020) as a clear indication that the TRQs are working and that EU exporters are benefitting. Canada reiterated that allocation transfers are permitted under the agreement and that they are a useful mechanism to support high utilization rates.

Cheese TRQs and the Impact of Brexit

The EU sought assurances from Canada that its access to the Canadian cheese market will not be reduced as a result of the United Kingdom’s (U.K.) continued access to Canada’s WTO EU-reserve cheese TRQ. The EU stressed in particular the need to rely in this context on historical trade patterns before Brexit. Canada indicated that the EU’s access under its WTO TRQ is unchanged and explained that the arrangement to allow the U.K.’s access is temporary under a side letter to the Canada-United Kingdom Trade Continuity Agreement.

EU Approach to Country-of-Origin-Labelling

Canada raised its continued concern about individual Member States mandatory country of origin labelling (COOL) measures and their impact on the EU single market. Canada reiterated its expectation that the EU maintains a harmonized and predictable EU-wide COOL measure that does not create barriers to trade. Canada noted that it looks forward to the upcoming consultations on the impact assessment on EU wide COOL measures, an initiative the EU announced as a part of the Farm to Fork Strategy in May 2020.

Other Trade Issues

EU Veterinary Medicinal Products Regulation

Canada expressed concern about the potential trade impact of the EU’s Veterinary Medicinal Products (VMP) Regulation. Canada was pleased to see that the criteria have been agreed upon and appreciated the fact that the EU and Canada shared the view that antimicrobial resistance represents a serious public health issue that should be tackled globally. Canada urged the EU to share the proposed list of antimicrobials reserved for human use in a timely manner to enable fulsome comments from trading partners, and to provide trading partners with a sufficient transition period to implement, adapt and comply with the export requirements of the VMP based on the realities of production systems and product storage.

The EU noted that veterinary medicines would be discussed at the CETA Joint Management Committee for Sanitary and Phytosanitary Measures (‘the CETA SPS Committee’) meeting the same week.

Maximum Residue Limits and Import Tolerances for Plant Protection Products

Canada raised its on-going concerns with the potential impact on trade as a result of the EU’s hazard-based decision-making (cut-off criteria) approach to assessing pesticides and subsequent impacts for setting maximum residue levels and import tolerances. Canada emphasized the importance of appropriate transition periods when changes are made to allow for sufficient time to adapt to new requirements. Canada renewed its concerns regarding the high number of emergency authorizations by Member States for previously banned pesticides which place imports at a disadvantage vis a vis EU products.

Canada noted its appreciation for DG SANTE’s recent seminar on the process for establishing import tolerances and positively views the EU’s announcement that they will conduct an impact assessment on re-authorization requests. At that meeting, the EU re-iterated its position that import tolerances would continue to remain subject to a risk assessment. Canada expressed it desire to work collaboratively with the EU on this issue to identify opportunities for cooperation and to find solutions that will avoid trade disruptions.

The EU invited Canada to discuss this issue in more detail at the upcoming CETA SPS Committee meeting.

Contaminants and Maximum Levels

Canada raised its concern about the trade implications of the EU’s new regulatory approach to adopt maximum levels for new contaminants.  Canada noted that contaminants are naturally-occurring substances, which are difficult to mitigate through good farming practices. Canada re-emphasized the importance of appropriate transition periods to allow producers time to adapt to new regulations. The EU noted that contaminants would be discussed at the upcoming CETA SPS Committee meeting.

Sustainability Certification of Canadian Canola

Canada reported on its ongoing work with the European Commission (DG Energy) for Canadian canola to be recognized as a sustainable input into European biofuel production under the EU Renewable Energy Directive (RED). Canada is working with the EU at the technical level to have its current methodology for enhanced sustainability criteria certified as meeting EU RED requirements. The EU assured Canada that the Commission is committed to continued work on this issue and invited Canada to continue working on the technical details with DG Energy. Canada expressed hope that revisions to RED under RED III as a part of the recently released Fit for 55 package will reflect the positive contribution that biofuels produced from food and feed crops can make to greenhouse gas emissions reduction targets.

Canada Sugar Countervailing Duties

On August 6, 2021, the Canadian International Trade Tribunal (CITT) issued its decision to continue its antidumping and countervailing orders against sugar from the EU. The EU expressed their disappointment in the renewal decision of these measures, given that changes have been made to the EU sugar regime. The Commission welcomed that Canada has initiated a re-investigation on 6 October and expressed an expectation that this leads to the removal or substantial decrease of the countervailing duties. Canada noted EU concerns and confirmed Agriculture and Agri-Food Canada (AAFC) has no role in the review.

Wheat Gluten Anti-Dumping Investigation

In April 2021, Canada made a final determination in its antidumping investigation on imports of wheat gluten from certain EU countries. As a result, anti-dumping duties will apply for five years on imports of wheat gluten from Austria, Belgium, France, Germany and Lithuania. The EU regrets this decision and considers that its Common Agriculture Policy (CAP) payments and support to biofuels does not distort EU prices of wheat gluten. AAFC indicated that CITT and the Canadian Borders Agency (CBSA) carry out such investigations independently.

Update on Canadian Food Origin Labelling Legislation

In April 2021, CFIA published an updated Forward Regulatory Plan for 2021-2023 Amendments to Safe Food for Canadians.  Canada clarified that changes to this labelling measure were not included 2021-2023 package however they could be included in future packages. Canada noted that once further progress is made they would communicate with the EU.

Canada-European Union Agriculture Dialogue

CAP Update and Linkages to Member State Strategic Plans

The EU outlined progress on the implementation of the most recent agreement on the EU Common Agriculture Policy (CAP), which is due to enter into force in 2023. The EU noted the new policy framework places greater emphasis on the environment, climate and natural resources than previous CAPs. The objective is to align CAP implementation with broader EU climate and environment objectives, as set out in the EU Green Deal, and Farm to Fork Strategy.

Canada-EU Agriculture Dialogue Workshops

At the Canada-European Summit in June 2021, Canadian Prime Minister Justin Trudeau, President of the European Council Charles Michel and President of the European Commission Ursula von der Leyen announced a series of joint workshops aimed at promoting sustainability environmental stewardship and climate action in agriculture. Canada and the EU recognized collaborative efforts on this initiative and the success of the first workshop which took place in October 2021 on soil health. The next workshop will be scheduled for the first quarter of 2022.

COVID-19 Support Measures

Both Canada and the EU have taken measures to maintain supply chains and provide support to farmers. Despite significant challenges resulting from the pandemic, the sector continued to deliver throughout 2020 and into 2021.

EU Fit for 55

The EU provided an update on the Fit for 55 package of climate and energy proposals released in July 2021. These proposals represent the EU’s plan to achieve its greenhouse gas emissions target of 55% below 1990 levels by 2030 and climate neutrality by 2050.  Canada appreciates the EU's ambition and leadership on climate action and expressed interest in learning further details about the proposals as they are developed and implemented.

Canada Climate Change Action Plan

Canada demonstrated its strong commitment to climate action by providing an update on a series of ongoing and developing initiatives. The presentation included the Pan-Canadian framework and Strengthened Climate Plan, Canada's greenhouse gas emission reduction targets, new net-zero legislation, and the Agri-environmental strategy currently under development.

EC Product Environmental Footprint

EU presented on progress in the development of its environmental foot-printing initiative aimed at determining the environmental impact of a range of consumer products. In response to Canada’s concerns about the potential impact on trade, the EU clarified that, in their view, there would be no discrimination against imported products, as the standards developed would be applied to all products entering the EU marketplace.

Organics

The EU presented the current status of the relevant delegated and implementing acts. The EU advised that they will inform Canada of the planned procedure to negotiate a new organic agreements with third countries, which will be consistent for all countries. Canada noted the importance of addressing aquaculture in the context of a future organics agreement.

International Trade Negotiations

Canada and the EU provided updates on the status of trade negotiations agenda.  Canada noted that pursuant to a commitment made within the Canada-U.K. Trade Continuity Agreement, both Parties are expected to launch new comprehensive bilateral FTA negotiations in 2022. Further, Canada continues to engage with the U.K. in its request to accede to the CPTPP.  The EU updated Canada on the state of play of its negotiations with Mercosur, Mexico, Australia and New Zealand.

Amendments to the Food and Drug Regulation

Canada provided an update to the Amendments to Food and Drug Regulations (FDR), which is intended to move compositional standards in Part B of the FDR to Incorporation by Reference (IbR) documents. The objective of this initiative is to make Canadian regulatory framework more agile, more responsive to innovation technology and consumer demand while protecting consumers from deception and enabling informed purchasing decisions. Canada indicated that the changes would not pose immediate impacts to trading partners and that future changes would involve consultation with trading partners. The EU welcomed the objective to facilitate subsequent alignment with international standard setting bodies and recalled its concerns as regards the Canada’s cheese compositional standards.

Compensation Payment to Dairy Farmers linked to FTAs

Canada provided an overview of its compensation payments to Canadian dairy farmers for the impacts of CETA and CPTPP. The Dairy Direct Payment Program will deliver $1.75 billion worth of direct payments over a four-year period to dairy producers based on their quota. Canada noted that there have been no decisions yet on Canada-United States-Mexico Agreement (CUSMA) related to compensation.

Information on EC Proposal for Nutritional Labelling

The EU noted its intention to introduce a harmonized system for front-of-pack nutritional labelling across the EU.

Participants

Canada:

Co-Chair: Agriculture and Agri-Food Canada

• Agriculture and Agri-Food Canada
• Global Affairs Canada
• Mission of Canada to the European Union
• Canadian Food Inspection Agency

EU:

Co-Chair: European Commission, Directorate General for Agriculture and Rural Development, Head of Unit A3 (The Americas)

• European Commission, Directorate General for Agriculture and Rural Development
• European Commission, Directorate General for Trade
• Delegation of the European Union to Canada