Sharing Canola With the World

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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
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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

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1. Introducing CAFTA

• Officially Formed in Spring, 2001

• Roots in dissatisfaction with the results of the
  Uruguay Round

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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

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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

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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

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• 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

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Membership

• Agricore United
• Canada Beef Export Federation
• Canadian Cattlemens 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
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• The Importance of Trade

• Exports account for 40 of Canadas 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

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• The Importance of Trade

• Canada is the worlds 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

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• The Importance of Trade

If Canada Didnt 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

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• The Importance of Trade

If Canada Didnt Trade (wheat,durum and canola)

• 25.9 million acres currently in grain and oilseed
  production wouldnt be required
• 20,000 farmers wouldnt 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
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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
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3. Why Liberalize Trade?
Sector Gains from Tariff Elimination
George Morris Centre, 1999
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3. Why Liberalize Trade?
Sector Gains from Tariff Elimination
George Morris Centre, 1999
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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
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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
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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
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4. Goals
CAFTAs 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

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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
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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

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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

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Canada Needs To Be a Leader

• A highly trade dependent sector in a highly trade
  dependent country

• Seek opportunities for the future build on
  Canadas competitiveness and innovation look
  out, not in

• CAFTA and its members have an important role to
  play

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Canadian Agri-Food Trade Alliance Suite 1403 150
Metcalfe Street Ottawa, Ontario K2P 1P1 Tel
[phone] Fax [phone] www.cafta.or
g Email office_at_cafta.org Liam McCreery,
President Patty Townsend, Executive Director