Meeting of the Committee on Agriculture and of the Canada-EU Agriculture Dialogue – October 6, 2022

by videoconference

Report

Summary

The fifth meeting of the EU-Canada Comprehensive and Economic Trade Agreement (CETA) Committee on Agriculture took place online on October 6th 2022, together with the Canada-European Union Agriculture Dialogue. Both parties continued their commitment to maintain a positive collaborative approach, noting the importance of the EU-Canada relationship between reliable and like-minded trading partners and the positive contribution of CETA.

CETA Committee on Agriculture

CETA implementation

Review of bilateral trade

Canada and the EU conducted a review of trade data and noted that bilateral agricultural trade has increased for both sides since CETA entered into provisional application. While 2021 saw a decline in Canadian exports to the EU, notably of durum wheat and canola, this was largely due to the reduced Canadian harvest in marketing year 2020/21 and is expected to return to normal in 2022/23. Fish and seafood exports increased on both sides in 2021.

Canadian hops certification in EU

The Committee took note of the adoption, by the European Commission, of Implementing Regulation (EU) 2022/700 of 4 May 2022 amending Regulation (EC) No 1295/2008 on the importation of hops from third countries. That implementing regulation followed a request by Canada to take account of a change in the Canadian body authorised to certify hops for export to the EU. The Parties considered that good cooperation between both sides has resulted in a legally solid solution for Canadian exporters.

Canadian cheese tariff rate quotas (TRQs)

The EU again expressed concerns about how the cheese TRQs were filled, particularly the volume of transfers, and disappointment that the comprehensive review is not yet finalised. While noting that the EU was happy with the high quota fill rate, the EU reiterated its concern that the cheese TRQ management system, through the pooling system, fails to meet the CETA obligations to provide a mechanism which is “as conducive to trade as possible” and which allocates TRQ to operators “most likely to use it”, given the reportedly high level of transfers and related transfer costs. The EU also noted that the market-share based allocation creates a barrier to new entrants. The EU reminded Canada that it had called for the introduction of disciplines on chronic/abusive transfers in its submissions to the comprehensive TRQ review.

Canada remarked that it understands that the cheese TRQs are an important issue for the EU and stated that it is fully meeting its CETA obligations in regard to TRQ administration. Canada pointed to the high fill rate of the CETA cheese TRQs as a clear indication that the TRQs are working and 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, but there is no official data collected on potential costs associated with  transfers between allocation holders. Canada informed the meeting that it was not currently in a position to indicate when the comprehensive review would be finalized but would share this information when it became available. 

Cheese TRQs and the impact of Brexit

The EU sought assurance 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. Canada explained that the arrangement to allow the U.K. access to the EU-reserve is temporary and that from 2024 on, U.K. would not have access to the EU reserve.  

EU beef and pork TRQs

Canada reiterated its concerns that the EU 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. Canada noted that this issue would become increasingly problematic as Canada increases its capacity to export to the EU market.

The EU took note of Canada’s concern but maintained its position that the existing system is in compliance with 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 and urged Canada to adopt a pragmatic approach. The current negotiations run until 1 January 2023 and the EU hopes that a successful and mutually beneficial conclusion can be reached.

Other trade issues

Canadian milk pricing and cheese compositional standards

The EU raised concerns about Canada’s milk class pricing system and its cheese compositional standards, which together may represent a barrier to trade in Milk Protein Concentrates (MPC), as there has been a shift in trade patterns with a decline in EU exports and an increase in EU imports from Canada. Canada expressed its view that the trade shift is a reflection of competition on the global market, with many US processing plants close to the Canada-US border, creating a very competitive marketplace for Canadian MPC sellers. Cheese compositional standards require that cheese derives a minimum percentage of its protein from fluid milk or ultrafiltered milk, thereby restricting the use of high-protein ingredients in cheese and apply to both domestic product and imports. Canada maintains that its cheese compositional standards have no relation to trade of MPCs.

EU Commission report on the application of health and environmental standards to agri-food products

Canada expressed concern that EU health and environmental standards could be imposed upon imports and may not reflect the circumstances and market realities of trading partners. Canada requested the EU take an outcomes-based, rather than prescriptive approach.

The EU presented the findings of its report, which is technical in nature and does not announce any new initiatives or political commitments. The EU pointed out that WTO law gives some possibilities to apply environmental and animal welfare standards to imported products, under strict conditions and subject to non-discrimination. The EU advised Canada that it does not intend to erect unjustified and disproportionate trade barriers, but in some cases, it could act autonomously where multilateral or bilateral pathways do not work to address either global concerns or clear ethical concerns (e.g. animal welfare issues).

EU deforestation policy

Canada raised concerns about the proposed EU regulation to minimise consumption of agricultural and forestry products from supply chains associated with deforestation. Canada shares the EU commitment to finding ways to support sustainable production, but was particularly concerned that new due diligence requirements for EU trading partners would be difficult and costly to meet, and in some cases would not further the EU’s objectives. Canada requested that the EU implement a flexible approach that would not unnecessarily impact trade for countries with low deforestation rates such as Canada.

The EU indicated that the proposal is part of its commitment to reduce deforestation made at the UN Climate Change Conference in 2021. It is in line with international trade obligations and does not discriminate against imported products as it will apply equally to EU products. The Commission has proposed December 2020 as a reference date to assess whether deforestation has occurred, so the areas already dedicated to agricultural production in Canada today would continue to have access to the EU market. The EU has noted Canada’s concerns about due diligence requirements, pointing out that the proposal differentiates between high-risk, standard-risk and low-risk countries, which will enjoy simplified requirements.

Contaminants and pesticides

Canada raised its ongoing concern about the trade implications of the EU’s regulatory approach to assessing pesticides and contaminants and subsequent impacts for setting 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 emergency authorizations by Member States for previously banned pesticides which place imports at a disadvantage vis-a-vis EU products. Canada expressed its desire to work collaboratively with the EU on this issue to identify opportunities for cooperation and to find solutions that will avoid trade disruptions. Furthermore, Canada raised concerns that the proposed measure to revoke the MRLs of neonicotinoids by the EU is more trade restrictive than necessary and will not meet the EU’s set objective (to protect the global pollinator population).

Canada and the EU agreed this issue will be discussed in more detail at the upcoming meeting of the CETA Joint Management Committee for Sanitary and Phytosanitary Measures (‘CETA SPS Committee’).

EU’s inception impact assessment on food labelling

Canada reiterated its call that any country-of-origin labelling (COOL) measures developed by the EU should be harmonized and predictable EU-wide, and do not create barriers to trade. Canada enquired about progress on the impact assessment on these measures.

The EU informed Canada that the Commission was carrying out an impact assessment on an initiative that aims to update the regulation on the provision of food information to consumers as regards various aspects, including front-of-pack nutrition labelling, nutrient profiles, date marking and origin labelling. The Commission envisaged putting forward legislative proposals on this initiative in the coming months once the impact assessment is finalised.

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 list of antimicrobials reserved for human use as notified to the WTO was in line with Canadian standards and practices. Canada urged the EU to provide trading partners with a five-year transition period to allow Canada to implement, adapt and comply with the changes to requirements of the VMP Regulation. The EU noted that veterinary medicines would be discussed at the upcoming CETA SPS Committee meeting.

Canada-European Union Agriculture Dialogue

Canada-EU Agriculture Dialogue Workshops

Both sides noted the success of the initiative to hold a series of joint workshops aimed at promoting sustainability, environmental stewardship and climate action in agriculture, launched at the Canada-European Summit in June 2021. The workshops had increased mutual understanding and allowed an exchange on best practices. Three workshops had taken place to date (on soil health, livestock emissions and organic farming), with two more workshops and a wrap up event scheduled. Both sides expressed their desire to continue the dialogue in the future.

Food security in the context of the Russian Invasion of Ukraine

Both sides agreed that global food security would remain an issue of great concern in the coming months, if not years. Canada and the EU’s close bilateral contacts have been instrumental in coordinating our efforts to help Ukraine both at a political and at technical level. Canada and the EU held two technical co-ordination meetings over the summer, to share information on Ukraine’s needs and the Parties’ contributions.  Canada welcomed the EU’s role in the Solidarity Lanes initiative to facilitate exports from Ukraine, in which Canadian companies are participating. The EU noted its appreciation for the contribution Canada has made to alleviate Ukraine’s grain storage capacity, which was crucial in the past months.

The Committee also noted the Parties’ engagement in bilateral discussions on the availability of fertilisers and raw materials.

Update on compensation for Canadian Dairy Farmers linked to FTAs

Canada noted that the Government has committed to publically announce compensation to supply managed sectors for the impacts of Canada-United States-Mexico Agreement (CUSMA) through its 2022 Fall Economic Statement later this year.

Update on progress regarding Canada’s Climate Change Plan and Considerations for Emissions Reductions in the Agriculture Sector and recent Agricultural Policy developments

Canada provided an update on ongoing and developing initiatives on climate action. This included the Pan-Canadian Framework on Clean Growth and Climate Change, the Strengthened Climate Plan, the Agricultural Climate Solutions programme, the Agricultural Clean Technology programme, Canada's Emission reduction plan, the new Net-Zero Emissions Accountability Act, and the On-Farm Climate Action Fund.  

Update on Member State CAP Strategic Plans

The EU outlined progress on approval of the Member States’ (MS) CAP Strategic Plans, with nine Plans approved so far and the others on track. Implementation is scheduled for January 2023. The process was fully transparent with draft plans published by the MS, and the EU also published its comments and observation letters to the MS. Summaries of the approved Plans were also available online.

Update on the Legislative framework for Sustainable Food Systems

The EU indicated that this is one of the key initiatives of the Farm to Fork Strategy and is still a work in progress. The Joint Research Centre has conducted a study and the impact assessment is now online, to which Canada is invited to respond. Canada pointed to a joint letter signed by Canada and many of the EU’s other key trading partners, outlining their concerns about potential mandatory sustainability labelling, which would be very onerous on business. Canada welcomed the opportunity to contribute to the discussions via the impact assessment.

Update on EU and Canada’s international trade negotiations

Canada provided an update on the status of its trade negotiations agenda. Bilateral negotiations with the United Kingdom started in March 2022. Canada also continues to engage with the United Kingdom in its request to accede to the CPTPP. Negotiations were also ongoing with India and ASEAN.

The EU updated Canada on the state of play of its trade negotiations with Australia, India and Indonesia and outlined the main elements of the recent agreement concluded with New Zealand, as far as agriculture is concerned.

Participants

Canada

Co-Chair: Agriculture and Agri-Food Canada, Director Europe, Middle East and Africa Division

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

European Union

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

• European Commission, Directorate General for Agriculture and Rural Development
• European Commission, Directorate General for Trade