Unpacking the changing ag export markets

Wednesday, July 18, 2018

CETA may unlock possibilities for increased Canadian agri-food exports to Europe

By Jim Algie
Writer
Better Farming

"Modest" Canadian gains from the Comprehensive Economic and Trade Agreement (CETA) with the European Union should include growth for the agricultural industry and food exporters, a report from Jean-Denis Fréchette, the independent parliamentary budget officer says.

The 44-page report – titled The Canada-EU Comprehensive Economic and Trade Agreement: A Prospective Analysis and dated May 2, 2017 – is available on the parliamentary budget officer's website.

The report highlights potential gains in Canadian wheat and beef exports to Europe. A combination of tariff reductions and new import quotas in CETA produced these opportunities. The treaty took effect in late September 2017.

The report also warns of deterioration in Canada's trade balance: "on an export-weighted basis, Canada's exporters were facing lower tariffs than were Europe's prior to the agreement." However, the parliamentary budget officer estimates net gains in Canadian economic output of almost $8 billion, or about 0.4 per cent of gross domestic product.

Adversely affected sectors that show possible "slower output growth" include some dairy and agricultural products, textiles, some machinery, and manufacturing goods, the report says.

However, tariff reductions should mean a $742-million boost for Canadian exports of agricultural, forestry and fishery products, and a $727-million boost for Canadian food and beverage products. European food and beverage exports to Canada should also grow by more than $1.17 billion, the report says.

The parliamentary budget officer predicts a $705.6-million gain for Europe-bound Canadian wheat but only a $300,000 increase in Canadian-bound European wheat. Canadian oilseeds exports could drop by about $6.5 million in sales to Europe, although the category for vegetable oils and fats shows a $15.3-million gain.

    cstar55/E+ photo

Canadian bovine meat products exported to Europe could jump by $31.3 million; they'd be well ahead of a $7.0-million increase in Europe-to-Canada exports. But Europe may be ahead in the dairy products category. Europe could get a $175.6-million boost in its exports to Canada while Canada could get a $26.7-million gain in its exports to Europe.

The parliamentary budget officer predicts Europe could be ahead by $877.6 million in the general food products category, a reference specifically to prepared food imports. The predicted Canadian sales boost is smaller: $627.8 million. European and Canadian trade in beverages and tobacco products are also expected to grow: $28.1 million for European exports to Canada and $2.1 million for Canadian exports to Europe.

The European agreement will lead to reductions in trade with our North American Free Trade Agreement partners, the parliamentary budget officer predicts. Canadian exports to the United States are expected to decline by $1.4 billion, and Canadian exports to Mexico should drop by about $38 million.

European exports are only a tenth of the value of Canada's exports to the United States and about double the value of Canadian merchandise exported to China. Canada's sales of oil and gas to the United States alone "are worth more than all the goods and services (Canada) sells to the European Union," the report says. BF