The deal is done
Sunday, October 4, 2015
by JIM ALGIE
No sooner had trade ministers of the 12-nation, Trans-Pacific Partnership (TPP) announced a deal in Atlanta, than the Canadian government announced in Ottawa as much as $4.3 billion in “income protection” and support for affected farmers and processors of supply-managed commodities.
U.S. Trade Representative Michael Froman and ministers from 11 other members of the Trans-Pacific group, including Canada, announced the successful conclusion of all outstanding issues in the five-year-long talks in Atlanta, early Monday. Canadian International Trade Minister Ed Fast told an Atlanta news conference his government is “very pleased with the outcome we have been able to secure for all sectors of our economy.”
The deal, which still requires ratification by affected national legislatures, includes major tariff reductions, particularly in Japan, Malaysia and Vietnam, for a variety of Canadian agricultural products, a senior trade official said during a separate technical briefing. It includes particular gains for pork, beef, wheat, barley, pulses, maple syrup, fruit wine and spirits, said the official who spoke not for attribution.
Background statements on the Trade and Development ministry’s website describe TPP as “the most comprehensive trade agreement in the world.” Agricultural gains are “particularly significant” in Japan, Malaysia and Vietnam where Canadian goods now “face high tariffs and no prior preferential treatment,” the statement said, referring to an average of 15 per cent tariffs in those three nations.
As part of the deal announced, Monday, Canada also agreed to provide new access to Canadian markets for a variety of products now controlled by this country’s 50-year-old, supply management system for poultry and milk. Access is to be granted through quotas phased in over five years. The quotas represent 3.23 per cent of Canada’s current annual production of milk, 2.3 per cent of egg production, 2.1 per cent for chicken, two per cent for turkey and 1.5 per cent for broiler hatching eggs.
Organizations representing Canadian farmers reacted differently to Monday’s TPP announcement depending on the deal’s expected impact. In a prepared statement, Dairy Farmers of Canada President Wally Smith said his organization “obviously would have preferred that no additional market access be conceded in the dairy sector.”
“I am disappointed that additional access was granted in the deal,” Smith said in a statement. “We intend to continue to diligently work to preserve a strong and sustainable Canadian diary industry,” Smith said.
Smith, who farms on Vancouver Island, spent much of last week in Atlanta following the talks from close at hand. He returned late Sunday to Ottawa, uncertain whether or not a deal would be concluded, he said in an interview late Monday afternoon.
By the time he landed in Ottawa a press conference scheduled for Sunday had been rescheduled three times and negotiations continued “late into the night,” he said.
TPP talks began with demands among some negotiators for a complete end to Canadian supply management, Smith said. “They wanted a phase out of the system; we’re a long way from that,” he said on the phone from Ottawa. “Canada really needs to be inside the TPP, notwithstanding all the pressure on supply-management.”
“For other sectors, it’s a clinch deal for them,” Smith said. Compensation programs proposed by the government over the next 15 years represent the cost of “giving up a little bit of access,” he said.
“We’re not happy about it but we’re relieved,” Smith said. “The system is intact.”
As a result, farmers can go about their business with “less anxiety and far more confidence in the future,” Smith said.
The Canadian Cattlemen’s Association (CCA) expressed strong support for the deal. CCA president Dave Solverson called the agreement “a game changer” and “fantastic news” for Canada’s beef industry.
CCA vice-president Dan Darling, who farms in Ontario’s Northumberland County, emphasized new access for Canadian producers to customers in Japan and “other growing markets in Asia.” The CCA statement underlined proposed tariff reductions in Japan over five years from as much as 38.5 per cent currently for some categories of product to nine per cent. That includes an immediate 27.5 per cent tariff cut when the agreement takes effect.
Canadian Pork Council chair Rick Bergmann said in a news release his organization “strongly supports Canadian participation in TPP. He expressed praise for Canada’s chief negotiator Kristen Hillman and for Trade Minister Fast for concluding a deal he said will secure access for Canadian pork to “roughly 40 per cent of the world economy.”
Bergmann, who farms near Steinbach, Manitoba, emphasized access to the Japanese market which already represents a $1 billion export market for Canadian pork. The deal places Canada “on fully competitive terms with the United States and other TPP exporting countries,” Bergmann said.
At the same time as it proclaimed new trade opportunities for much of agriculture, Agriculture and Agri-Food Canada announced $4.3 billion in measures aimed at protecting both the income and quota values of farmers operating under supply management. That includes $450 million for processor modernization and $15 million for market development initiatives to prepare for new export opportunities, particularly to the U.S. and particularly for artisanal cheeses.
As well, the federal government is to “intensify on-going, anti-circumvention measures that will enhance our border controls.” Several observers underlined the importance of new government commitments on border control.
La Coop fédérée President Denis Richard said the “new breach to tariff barriers in dairy adds to lax border control in recent years as well as expected additional imports of cheese from Europe under terms of the Comprehensive Trade Agreement concluded-but-not-yet implemented with the European Union.
La Coop fédérée is a 100,000-member federation of 98 co-operatives in several Canadian provinces and claims to be Quebec’s largest agri-food organization. Richard also recognized benefits from secure and streamlined access to south-east Asian markets. The co-op’s businesses include a variety of meat processing concerns including: Olymel, Flamingo and Lafleur brand meats. Richard said the agreement “will allow the pursuit of international development strategies,” particularly in Japan.
Dairy Farmers of Ontario general counsel Graham Lloyd spent most of Monday meeting with dairy farmers in Woodstock, Ont. He described “a sense of loss” among the farmers he met Monday but also “an understanding the circumstances could have been much more serious in the context” of negotiating demands, particularly by New Zealand. Calculations of the actual dollar value of losses to Canadian dairy farmers will depend on further analysis of the finalized agreement which is not yet complete, Lloyd said in an interview from Woodstock.
“It’s really difficult and challenging to answer those questions,” Lloyd said when asked about the size of federal compensation programs as compared with expected losses. New Zealand particularly sought much broader access to Canadian markets for its dairy exports and a weakening of cheese standards that require certain levels of protein and milk for particular varieties of product.
A joint statement issued Monday by Ontario ministers Brad Duguid, Economic Development, Employment and Infrastructure and Jeff Leal, Agriculture, Food and Rural Affairs, expressed disappointment that they received details “only today.”
“Ontario requires a more detailed briefing on the agreement to further understand the implications and impacts for Ontario than what has been provided so far.”
The statement expressed concern about the impact of the agreement on the province’s auto and agricultural sectors. “Allowing import flows in foreign dairy and poultry products undermines consumers’ desire to buy local, jeopardizes Canada’s supply management system, and does not provide Canadian producers reciprocal benefits to export,” the statement said.
The terms of the federal compensation to supply-managed sectors caught the eye of Grain Farmers of Ontario. In a Monday news release that mostly praised the TPP deal, the organization called for “the same level of attention and commitment given to risk management for grain farmers.”
New Zealand Trade Minister Tim Groser welcomed Monday’s agreement among 12 countries of the Trans-Pacific Partnership as “a very high level of achievement” that also means new international trade opportunities for dairy farmers of New Zealand and Australia.
Although the deal falls short of complete free trade arrangements sought by his country’s negotiators, it has established “a direction of travel that will open up political space for future generations of trade ministers,” Groser said, Monday morning, during a press briefing from Atlanta broadcast on the Internet by officials of the U.S. Trade Representative’s office.
“We start the journey from where we stand,” Groser said. “These are progressively opening up opportunities not just for my industry but Australia is a dairy exporter but also for other people,” Groser said. The agreement should also help reduce world market volatility in dairy trade.
“This is unquestionably positive for our dairy farmers,” the New Zealand minister said. BF