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Market access, income supports come with Trans-Pacific pact

Ottawa sets up income, quota value guarantee programs for supply-managed sectors


Canada’s federal government has pledged a suite of compensation programs for supply-managed dairy, poultry and egg sectors, against what it promises will be a mousehole in Canada’s tariff wall.

Federal officials on Monday confirmed negotiations have concluded on the multilateral Trans-Pacific Partnership, now billed as “the largest, most ambitious free trade initiative in history.”

The agreement commits Canada to pull back or remove tariffs for products from Japan, Australia, Malaysia, New Zealand, Singapore, Vietnam and Brunei Darussalam — as well as for Canada’s existing free-trade partners, the U.S., Mexico, Chile and Peru — while granting new access for Canadian wares in all 11 markets (see below).

For Canadian beef, pork, wheat, barley, canola, wine and whisky producers, a TPP deal means either tariff elimination or more market access to Japan, Malaysia and Vietnam, whose agricultural tariffs on Canadian product now average 17.3, 10.9 and 17 per cent respectively.

Canadian dairy, poultry and egg producers and processors can also expect more duty-free access to the U.S. and other TPP countries, the government said, noting “complete tariff elimination” on artisanal cheese and certain other specialty cheeses bound for the U.S.

Canada, meanwhile, has pledged “limited new access” in goods now covered by supply management, to be granted via quotas phased in over five years.

The new access, the government said, represents “a small fraction of Canada’s current annual production” — 3.25 per cent for dairy, mainly in milk and butter for value-added processing; 2.3 per cent for eggs; 2.1 per cent for chicken; two per cent for turkey; and 1.5 per cent for broiler hatching eggs.

Canada’s supply-managed producers in return will get a new Income Guarantee Program, which the government said Monday will protect those farms’ incomes against increased access for imports granted through both the TPP and the Canada/European Union free trade agreement (CETA).

The program is expected to provide “100 per cent income protection” to affected farms 10 years from the day the TPP comes into force, then more support on a “tapered basis” for another five years afterward.

The Income Guarantee Program, budgeted for $2.4 billion over those 15 years, would grant a typical dairy producer about $2,087 per cow in total; a chicken farmer, about 35 cents per chicken; a turkey farmer, about 24 cents per kilogram (live weight); an egg farmer, about $3.15 per layer hen; and a hatching egg producer, about seven cents per egg.

The government also announced a “demand-driven” Quota Value Guarantee Program, which is to protect producers against reduced values in quota is sold after the TPP is implemented.

The government said the program, worth $1.5 billion over 10 years, will ensure farmers’ banks and other lenders are secure in continuing to use quota as collateral for loans.

Those programs remain to be finalized with the Canadian Dairy Commission and the Farm Products Council of Canada, the government said.

Related programs announced Monday include a Processor Modernization Program, worth $450 million, to “further advance… competitiveness and growth” of processors in supply-managed sectors.

Supply-managed groups will also get a new Market Development Initiative, worth $15 million added to the AgriMarketing program, to assist them in “promoting and marketing their top-quality products.”

The government also pledged to plug other holes in Canada’s tariff wall through stronger “anti-circumvention measures” such as certification for spent fowl; preventing importers from circumventing import quotas by adding sauce packets to chicken products; and excluding supply-managed products from the federal Duties Relief Program.

Cheese compositional standards Ottawa introduced in 2008 have also been maintained, the government said.

Market access

The TPP deal as agreed upon Monday commits Japan to eliminate almost 32 per cent of its duties on farmed and agri-food products when the deal comes into force; another nine per cent of tariff lines will be get preferential treatment through permanent and “country-specific” quotas for Canada.

Japan’s remaining tariff lines will see tariff elimination or reductions over up to 20 years.

Vietnam will end tariffs on close to 31 per cent of its farmed and agri-food product tariffs when the TPP comes into force, and another 67 per cent of its tariff lines will become duty-free within 15 years, with preferential treatment for others.

Malaysia will end tariffs on nearly 92 per cent of its tariff lines for farmed goods and agri-foods when the TPP comes into force and end another seven per cent of duties within 15 years.

Australia and New Zealand, meanwhile, have pledged eliminate nearly all their tariffs on agriculture and agri-food products when the TPP comes into force, and remaining duties will end in five years or less.

Pork: Canadian pork bound for Japan will see that country’s “over-gate” price tariff of 4.3 per cent on fresh/chilled/frozen pork cuts and pork offal end within 10 years, and Japan’s “under-gate” tariff of up to 482 yen per kilogram cut to 50 yen/kg within 10 years. Over-gate price and below-gate price tariffs will also end within 10 years for preserved and processed pork.

Japan’s tariffs of up to 20 per cent on pork products, including sausages, not subject to the gate price system will also end within 10 years.

Fresh, chilled and frozen pork going to Vietnam from Canada will see tariffs of up to 27 per cent, and tariffs of up to 31 per cent on all other pork products, including sausages, eliminated within nine years.

Beef: Japan’s tariffs of 38.5 per cent on fresh/chilled and frozen beef, and 50 per cent on certain offal, will be cut to nine per cent within 15 years. Its tariffs of up to 50 per cent on processed beef and most offals will end within 15 years.

Vietnam’s tariffs of up to 31 per cent on fresh/chilled and frozen beef will end within two years, and its tariffs of up to 34 per cent on all other beef products end within seven years.

Wheat and barley: Feed wheat bound for Japan will be duty-free and quota-free when the TPP comes into force. Canada will also get a “Canada-specific” quota for food wheat, starting at 40,000 tonnes and rising to 53,000 tonnes within six years. Markups within that country-specific quota will be cut by 45 or 50 per cent.

Vietnam’s tariffs of up to five per cent on all wheat will be eliminated upon entry into force.

Food and feed-grade barley bound for Japan fall under a quota system with markups. Feed barley in Japan will be duty-free and quota-free when the TPP comes into force; Japan’s mark-ups on the price of food barley will be cut by 45 per cent within eight years.

Canada also gets a TPP-wide quota for food barley, starting at 25,000 tonnes and growing to 65,000 tonnes within eight years.

Canola oil: Japanese tariffs on canola oil, now up to 13.20 yen/kg, will be eliminated within five years, as will Vietnam’s tariffs of five per cent.

Wine and spirits: Canadian wine, icewine and sparkling wine will see Japanese duties of up to 182 yen/litre end within seven years. Vietnam’s duties of up to 59 per cent would end within 11 years and Malaysia’s duties of 23 ringgit/litre within 15 years.

Australia and New Zealand have both agreed to end their duties of up to five per cent on Canadian wines immediately when the TPP comes into force; Australia’s five per cent duty on Canadian whisky would also end at that time.

Malaysia’s duties of 58 ringgit/litre on Canadian whisky are to end within 15 years, as are Vietnam’s duties of 55 per cent will be eliminated within 12 years.
In Australia, duties of five per cent will be eliminated upon entry into force.

Canada said the TPP deal will also end or cut many of the TPP nations’ existing tariffs, or create tariff rate quotas, on Canada’s exports of processed foods and non-alcoholic beverages including maple syrup, baked goods, processed grain and pulse products, and sugar and chocolate confectionery. — Network


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