1. Economic and Policy Analysis Directorate 1 Canada’s Agricultural Trade with FTAA Countries Organized Symposium at the Meeting of the American Agricultural Economics Association Tampa, Florida August 1, 2000 José Quiroga Agriculture and Agri-Food Canada Agriculture et Agroalimentaire Canada

2. Economic and Policy Analysis Directorate 2 Canada’s total agri-food trade on rising trend Source: AAFC Trade Data Retrieval System.

3. Economic and Policy Analysis Directorate 3 Source: AAFC Trade Data Retrieval System. Canada’s agri-food trade with the United States increasing significantly

4. Economic and Policy Analysis Directorate 4 Source: AAFC Trade Data Retrieval System. Canada’s agri-food trade with Mexico on the rise

5. Economic and Policy Analysis Directorate 5 Source: AAFC Trade Data Retrieval System. Canada’s agri-food trade with the Caribbean and Central America (excl. Mexico) in equilibrium

6. Economic and Policy Analysis Directorate 6 Source: AAFC Trade Data Retrieval System. Canada’s agri-food trade with South America diverging

7. Economic and Policy Analysis Directorate 7 Key data on selected FTAA countries, 1998

8. Economic and Policy Analysis Directorate 8 FTAA region has a combined population of over 800 million (400 million in Latin America except Mexico) and a GDP of US$11 trillion FTAA region comprises some of the fastest growing markets in the world in terms of economic growth and growth in per capita income Bilateral agri-food trade between Canada and its NAFTA partners has grown significantly under the NAFTA Bilateral agri-food trade between Canada and FTAA countries (excluding the U.S. and Mexico) has doubled from $1.2 billion in 1988 to $2.4 billion in 1998 As agri-food production is becoming highly interdependent with international trade, FTAA countries offer Canada significant opportunities for complementary trade FTAA agreement offers improved and more secure market access and enhanced rules to facilitate expansion of trade Western Hemisphere a Strategic Region for Canada

9. Economic and Policy Analysis Directorate 9 Variety of market access barriers: - tariffs - tariff rate quotas - price bands - import licensing (conditions and administrative practices) - misuse of sanitary and phytosanitary certification requirements - technical barriers Non-tariff measures may be linked to domestic support measures Barriers faced by Canadian exports in the hemisphere

10. Economic and Policy Analysis Directorate 10 Ministerial Declaration of San José (1998) Launch of negotiations at the Second Summit of the Americas in Santiago, Chile, in April 1998 Commitment to complete negotiations no later than 2005, with concrete progress to be achieved by 2000 FTAA Agreement consistent with WTO rules and disciplines Elimination of tariffs on substantially all trade as required by Article XXIV of the GATT 1994 and its Uruguay Round Undertaking Objectives and Progress of the FTAA Negotiations

11. Economic and Policy Analysis Directorate 11 The institutional infrastructure for the negotiations has been put in place and the meetings of the nine Negotiating Groups and three advisory bodies have been ongoing since September 1998 Progress in the negotiations was achieved with the realization of a business facilitation package which focuses on customs and transparency enhancement At the Trade Minister’s meeting in Toronto in November 1999, FTAA countries agreed to work in the WTO on the elimination of export subsidies in any form on agricultural products Negotiating Groups are currently developing draft texts of their respective chapters for consideration by Trade Ministers at a meeting in Argentina in April 2001 Progress to date

12. Economic and Policy Analysis Directorate 12 Canada’s FTAA negotiating approach Canada’s position is based on - approach followed in other regional and bilateral agreements, and - considering that certain issues can only be effectively addressed multilaterally in the WTO (e.g., DS, XS, SPS) Market Access: Elimination of tariffs for substantially all trade within agreed time frames as required by Article XXIV of GATT 1994 Domestic Support: WTO is appropriate forum for negotiating further disciplines on trade-distorting domestic support Export Subsidies: WTO is appropriate forum for developing further disciplines on export subsidies but there may be scope for eliminating their use more quickly within the hemisphere Sanitary and Phytosanitary Measures: Reaffirmation of rights and obligations under the WTO, including the WTO Agreement on the Application of SPS Measures

13. Economic and Policy Analysis Directorate 13 outcome of FTAA negotiations still unclear interplay between WTO agreements and FTAA will be important factor freer trade among all FTAA countries (e.g., no tariffs on most imports) will make comparative advantage more important in determining location of production and trade flows Canada’s factor-determined comparative advantage in grains and oilseeds is not unique ‑ other FTAA countries have comparative advantage in similar sectors Effects of an FTAA

14. Economic and Policy Analysis Directorate 14 predominance of U.S. as export destination for Canadian agriculture exports - how much is determined by geographical proximity and how much by policy factors? - how will U.S. predominance be affected by FTAA? will freer trade under FTAA stimulate change in agricultural structure and policy (farm income policy, marketing policy) and in other sectors (transportation policy, etc.)? - will such changes be similar across FTAA countries or different? Questions for the future

15. Economic and Policy Analysis Directorate 15 Prepared by: Jose Quiroga/Michael Swidinsky/Lars Brink Consulted: Pamela Cooper/Alicja Wielgus Presentation July 29, 2000 File location: O/EPAD/Pa/Faa/J_QUIROGA/FTAA.ppt Output: Deck

16. Economic and Policy Analysis Directorate 16 T.P. for slide 2 Canada’s agri-food exports have trended upwards overtime, totaling C$22 billion in 1999, having effectively doubled from the early 1990s Total agri-food exports exceeded the Canadian Agri-Food Marketing Council projected growth by 11% in 1996, 14% in 1997, and by 5% in 1998. But, preliminary figures show a 7% shortfall in 1999 due to low commodity prices Exports of value-added in agri-food have grown rapidly nearly equaling bulk goods as a share of total Canadian agri-food exports Grains and oilseeds followed by red meats and live animals make up the largest share of total Canadian agri-food exports Expansion of Canada’s agri-food exports is attributed in part to increased global demand and the impacts of trade liberalization Canada’s agri-food imports totaled C$17 billion in 1999 having increased throughout the 1990s. Valued-added in fruits and vegetables are Canada’s main imports of agri-food

17. Economic and Policy Analysis Directorate 17 T.P. for slide 3 The United States is Canada’s largest trading partner in agri-food accounting for about 60 percent of total Canadian exports and imports Following the entry into force of CUSTA in 1989 and NAFTA in 1994 Canadian agri-food trade with the United States increased significantly

18. Economic and Policy Analysis Directorate 18 T.P. for slide 4 After the United States, Mexico is Canada’s largest trading partner in the Americas for agri-food Following the entry into force of NAFTA in 1994 Canadian agri-food trade with Mexico has increased

19. Economic and Policy Analysis Directorate 19 T.P. for slide 5 Canadian agri-food exports to the Caribbean and Central America (excl. Mexico) have increased while imports from this region have remain unchanged

20. Economic and Policy Analysis Directorate 20 T.P. for slide 6 While Canadian agri-food imports from South America have increased, exports to this region have declined

21. Economic and Policy Analysis Directorate 21 T.P. for slide 7 The United States is by far the richest and most populous country in the Americas Brazil followed by Mexico also have large populations however their per capita GDP is low As per capita GDP increases in the Rest of the Americas, the demand for value added in agri-food will increase