1 Proposed Canada-EU FTA and Agricultural Trade David Blandford Regional Trade Agreements (RTAs): New developments and expectations AES/CEAS Conference School of Economics, University of Kent 24 th 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 2 nd 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

5 Leading US agricultural export destinations (2010) Source: Foreign Agricultural Trade of the US

6 Leading US sources of agricultural imports (2010) Source: Foreign Agricultural Trade of the US

7 Leading US sources of agricultural imports (2010) Source: Foreign Agricultural Trade of the US

8 US agricultural trade with Canada

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10 US agricultural trade with Canada

11 US agricultural exports to the EU (2010) Source: Foreign Agricultural Trade of the US

12 US agricultural imports from the EU (2010) Source: Foreign Agricultural Trade of the US

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 CategoryExportsImportsTrade balance Average Cdn. tariff Average EU tariff Million C$Percent Agriculture1, , Processed foods 7191, Beverages and tobacco 261,767-1, All goods29,44344,268-14,

Structure of Canada-EU trade Source: J. Stanford, “Out of equilibrium: the impact of EU-Canada free trade on the real economy”, October Canadian exports to EU EU exports to Canada

Major agricultural products in Canada- EU trade, Source: J. Stanford, “Out of equilibrium: the impact of EU-Canada free trade on the real economy”, October Canadian exports to EU EU exports to Canada

17 Wine policies in Canada 1. MFN tariff on beer, spirits and most types of wine (made from grapes) is zero 2. But:  A Federal excise tax of 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 market 1. A supply management system has operated since 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, tonnes

19 Proposed Canada-EU FTA and Agricultural Trade David Blandford Regional Trade Agreements (RTAs): New developments and expectations AES/CEAS Conference School of Economics, University of Kent 24 th June, 2011