Is the Trans-Pacific Partnership Balanced for Canada’s Agricultural and Agri-Food Industry?

Aïcha L. Coulibaly
Khamla Heminthavong
Resources and Environment Section

On 5 November 2015, the Government of New Zealand released the text of the Trans-Pacific Partnership (TPP). The TPP brings together 12 countries,[1] including Canada; in 2013 they accounted for over 35% [2] of the world’s gross domestic product. In 2014, Canada exported 65% of its agri-food production to these countries.[3]

Canadian Trade Balance of Agri-Food Products, 2014 (in Canadian dollars)

Sources:  Figure prepared by the Library of Parliament. Scale 1:80,000,000. Based on data from Industry Canada, Trade Data Online; and the United Nations Global Administrative Unit Layers (GAUL), G2015_2014, 2014. Using: ArcGIS [software], version 10.3.1.

 

Between 2009 and 2014, with a positive trade balance that grew by roughly 75%, Canada became a net exporter of agricultural, agri-food and forest products worldwide. In 2014, Canada’s main exports were processed products, including prepared meals and infant formula (47% of export value), grain and horticultural products (42%), live animals (7%), beverages and tobacco products (2%) and forest products [4] (2%). [5]

TPP negotiations covered all agricultural, agri-food and forest products, including those under supply management.

Introduced in the 1970s for the dairy, poultry and egg industries, supply management aims to protect farmers from price fluctuations through a mechanism to control production, prices and imports. To protect its products from imports, Canada applies tariffs of up to 300%.

Under the TPP Agreement, Canada would phase in limited access to its market for supply-managed products. For example, the Agreement provides greater access for the following products:

  • butter: from 750 to 4,500 tonnes in the five years following implementation of this Agreement, followed by a 1% annual increase over 13 years;
  • protein concentrates: tariffs eliminated upon implementation;
  • whey: tariffs eliminated in 10 years;
  • certain beverages containing milk, such as chocolate milk: tariffs eliminated in five years;
  • chicken: from 3,917 to 23,500 tonnes over five years, followed by a 1% annual increase over 13 years;
  • turkey: from 583 to 3,500 tonnes over five years, followed by a 1% annual increase over 13 years;
  • table eggs: from 2.78 million dozen to 16.7 million dozen over five years, followed by a 1% annual increase over 13 years; and
  • hatching eggs: from 166,667 dozen to 1 million dozen over five years, followed by a 1% annual increase over 13 years.

The text provides additional access to supply-managed products in Asia and Oceania. For example, New Zealand would remove all tariffs on dairy, poultry and egg products upon implementation. Japanese tariffs on dairy, poultry and egg products would be reduced or phased out over 20 years; tariffs on turkey would be removed immediately. For its part, the United States would remove tariffs on poultry products in 10 years and commit to removing tariffs on dairy products over 10 to 30 years. Vietnam would remove tariffs on certain dairy products immediately and other tariffs in five years; tariffs on poultry and egg products would be removed in 13 years. Malaysia would immediately remove most tariffs on dairy products and bring in an (increasing) import quota on poultry and eggs.

As for non-supply-managed Canadian agriculture and agri-food products, countries such as the United States, Mexico, Peru, Vietnam, Australia and New Zealand have proposed completely removing tariffs on most products upon implementation. There is also a proposal to phase out certain tariffs on products such as meats, fruits and vegetables, grain and other processed products over a certain period, depending on the country. For instance, Mexico is proposing complete removal over periods between five and 15 years upon implementation. For New Zealand, Vietnam and Peru, these periods would be two to five years, three to 13 years and six to 16 years, respectively. Other countries such as Malaysia, Brunei Darussalam and Singapore removed tariff lines for most of their agriculture and agri-food imports back in 2010.

Japan has proposed increasing its quotas and/or reducing its tariffs with the option of applying agricultural safeguards to certain industries, particularly processed beef or pork products. Any complete elimination of tariff lines would take place over a period of between six and 16 years. As for Canadian exports of forest products to Japan, Canada would need export permits and Japan could apply safeguard mechanisms.

Regarding access to the Chilean market, most tariffs would be removed upon implementation. However, tariffs for certain processed products would be phased out over eight years or would be consistent with the Canada–Chile Free Trade Agreement.

Lastly, the TPP is also intended to reduce non-tariff barriers related to sanitary and phytosanitary measures. The TPP countries have proposed, among other things, adopting cooperation mechanisms for recognizing regional health statuses, establishing equivalence systems, evaluating inspection programs and developing sanitary and phytosanitary certificate models.

Notes

[1] Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.

[2] Calculated using data from the World Bank, GDP (current US$).

[3] Calculated using data from Innovation, Science and Economic Development Canada, Trade Data Online.

[4] Do not take into account the manufacturing of paper and other wood products.

[5] Calculated using data from Industry Canada, Trade Data Online.

 

Related resource

Gauthier, Alexandre, and Pascal Tremblay. Trade Agreements in the 21st Century: From the North American Free Trade Agreement to the Trans-Pacific Partnership, Library of Parliament HillNote, Parliamentary Information and Research Service, 1 February 2016.