1 proposed canada-eu fta and agricultural trade david blandford [email protected] regional trade...
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1
Proposed Canada-EU FTA and Agricultural Trade
David [email protected]
Regional Trade Agreements (RTAs): New developments and expectations
AES/CEAS ConferenceSchool of Economics, University of Kent
24th June, 2011
2
Canada-EU FTA: A proposal to conclude a Comprehensive
Economic and Trade Agreement (CETA) between the EU and Canada was announced in June 2009
Seven rounds of negotiations have been completed since October 2009
The aim is conclude the negotiations by 2012 The EU is Canada’s 2nd largest trading partner
taking $C49.2 billion of exports and supplying $C55.2 billion of imports in 2010
3
Canada-EU FTA: Joint Canada-EU study has suggested a gain of
0.77% in Canada’s GDP and 0.08% in EU GDP from liberalization of trade in goods and services
The study and its conclusions have been controversial in Canada
Canada already has an FTA with the US its largest trading partner: NAFTA, 1994 the successor to CUSTA, 1988
4
Leading US agricultural export destinations (2010)
Source: Foreign Agricultural Trade of the US
China
Canada
Mexic
o
Japan
European U
nion-2
7
South K
orea
Taiwan
Hong Kong
Indonesia
Turkey
Egypt
Philippin
es
Vietn
am
Thailand
Russia
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Mill
ion
do
llars
5
Leading US agricultural export destinations (2010)
Source: Foreign Agricultural Trade of the US
China
Canada
Mexic
o
Japan
European U
nion-2
7
South K
orea
Taiwan
Hong Kong
Indonesia
Turkey
Egypt
Philippin
es
Vietn
am
Thailand
Russia
0%
2%
4%
6%
8%
10%
12%
14%
16%
Pe
rce
nt
of
tota
l
6
Leading US sources of agricultural imports (2010)
Source: Foreign Agricultural Trade of the US
Canada
European U
nion-2
7
Mexic
o
China
Brazil
Indonesia
Austra
liaChile
Thailand
Colom
bia
Mala
ysia
New Zeala
ndIn
dia
Guate
mala
Costa R
ica0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Mill
ion
do
llars
7
Leading US sources of agricultural imports (2010)
Source: Foreign Agricultural Trade of the US
Canada
European U
nion-2
7
Mexic
o
China
Brazil
Indonesia
Austra
liaChile
Thailand
Colom
bia
Mala
ysia
New Zeala
ndIn
dia
Guate
mala
Costa R
ica0%2%4%6%8%
10%12%14%16%18%20%
Pe
rce
nt
of
tota
l
8
US agricultural trade with Canada
9
US agricultural trade with Canada
10
US agricultural trade with Canada
11
US agricultural exports to the EU (2010)
Source: Foreign Agricultural Trade of the US
Oilsee
ds &
Pro
ds
Nuts &
Pre
p
Anim
als &
Pro
ds
Grain
s & F
eeds
Other
Hor
t Pro
ducts
Tobac
co, U
nmfg
Fruits
& P
rep
Win
e
Essen
tial O
ils
Veget
able
s & P
rep
Seeds
, Fie
ld/G
arde
n
Fruit J
uice
s
Sugar
& T
ropi
cal P
ro
Nurse
ry &
Gre
enho
use
Bever
ages
Ex J
uice
Cotto
n, E
x Lin
ters
Tobac
co -
Mfg
Cotto
n Li
nter
s0
500
1,000
1,500
2,000
2,500
Mill
ion
do
llars
12
US agricultural imports from the EU (2010)
Source: Foreign Agricultural Trade of the US
Bever
ages
, EX F
ruit J
uice
Essen
tial O
ils
Anim
als a
nd P
rodu
cts
Oilsee
ds a
nd P
rods
Grain
s and
Fee
ds
Veget
able
s and
Pre
ps
Cocoa
and
Pro
ds
Other
Hor
t Pro
ducts
Drugs
, Cru
de N
atur
al
Coffe
e, In
cl Pro
ds
Fruits
& P
rep
Sugar
and
Rel
ated
Pro
ds
Seeds
, Fie
ld a
nd G
arde
n
Nurse
ry S
tock
, Bul
bs, E
tc
Tea/M
ate,
Incl
Herba
l Tea
Spice
s and
Her
bs
Cut F
lower
s
Tobac
co, U
nmfg
Fruit J
uice
s
Tobac
co, M
fg
Nuts a
nd P
reps
Fiber
s, Exc
l Cot
ton
Rubbe
r/allie
d Gum
s, Cru
de
Cotto
n, E
xcl L
inte
rs0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
Mill
ion
do
llars
13
Canada’s total trade with the EU
From J. Stanford, “Out of equilibrium: the impact of EU-Canada free trade on the real economy”, October 2010.
14
Canada’s trade with the EU, 2009
Source: J. Stanford, “Out of equilibrium: the impact of EU-Canada free trade on the real economy”, October 2010.
Category Exports Imports Trade balance
Average Cdn. tariff
Average EU tariff
Million C$ Percent
Agriculture 1,724 258 1,467 2.3 6.6
Processed foods
719 1,450 -731 32.5 15.6
Beverages and tobacco
26 1,767 -1,741 4.8 7.4
All goods 29,443 44,268 -14,825 3.5 2.2
Structure of Canada-EU trade 2009
15
Source: J. Stanford, “Out of equilibrium: the impact of EU-Canada free trade on the real economy”, October 2010.
38%
11%
50%
Primary Processed primaryValue-added
Canadian exports to EU
8%
6%
86%
EU exports to Canada
Major agricultural products in Canada-EU trade, 2009
16
Source: J. Stanford, “Out of equilibrium: the impact of EU-Canada free trade on the real economy”, October 2010.
Canadian exports to EU EU exports to Canada
Wheat Soybeans Leguminous vegetables
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Wines Spirits and Liqueurs
Beer0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
17
Wine policies in Canada1. MFN tariff on beer, spirits and most types of
wine (made from grapes) is zero2. But:
A Federal excise tax of 51.22 cents/litre is applied for wine over 7% alcohol
A 5% goods and services tax (GST) is added on top of the excise duty
Provincial liquor control boards or commissions (13) apply a mark-up to the wine (e.g., 17% in BC)
Provincial liquor sales taxes are applied on top of all this (10-12%)
Total tax can be over 50%
3. A Canada-EC wine and spirits agreement has existed since 2003 – primarily for GIs
18
Access to Canada’s dairy market1. A supply management system has operated
since 19702. NAFTA (and the earlier Canada-US FTA) had
very little impact on U.S. market access for dairy products
3. Canada created TRQs for dairy products as part of the URAA (e.g., the tariff-free access for yogurt of 332 metric tons – the over quota tariff is 237.5%). The TRQ for cheese is 20,411.866 tonnes
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Proposed Canada-EU FTA and Agricultural Trade
David [email protected]
Regional Trade Agreements (RTAs): New developments and expectations
AES/CEAS ConferenceSchool of Economics, University of Kent
24th June, 2011