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Proposed Canada-EU FTA and Agricultural Trade. David Blandford dblandford@psu.edu. Regional Trade Agreements (RTAs): New developments and expectations AES/CEAS Conference School of Economics, University of Kent 24 th June, 2011 . Canada-EU FTA:. - PowerPoint PPT Presentation

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1

Proposed Canada-EU FTA and Agricultural Trade

David Blandforddblandford@psu.edu

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

Canad

a

Mexico

Japan

Europea

n Unio

n-27

South K

orea

Taiwan

Hong K

ong

Indon

esia

Turkey

Egypt

Philippine

s

Vietnam

Thaila

nd

Russia

02,0004,0006,0008,000

10,00012,00014,00016,00018,000

Mill

ion

dolla

rs

5

Leading US agricultural export destinations (2010)

Source: Foreign Agricultural Trade of the US

China

Canada

Mexico

Japan

Europea

n Unio

n-27

South

Korea

Taiwan

Hong K

ong

Indone

sia

Turke

yEgyp

t

Philippin

es

Vietnam

Thailan

d

Russia

0%2%4%6%8%

10%12%14%16%

Perc

ent o

f tot

al

6

Leading US sources of agricultural imports (2010)

Source: Foreign Agricultural Trade of the US

Canad

a

Europea

n Unio

n-27

Mexico

ChinaBra

zil

Indone

sia

Australi

aChile

Thaila

nd

Colombia

Malays

ia

New Z

ealan

dInd

ia

Guatemala

Costa

Rica0

2,0004,0006,0008,000

10,00012,00014,00016,00018,000

Mill

ion

dolla

rs

7

Leading US sources of agricultural imports (2010)

Source: Foreign Agricultural Trade of the US

Canad

a

Europea

n Unio

n-27

Mexico

ChinaBra

zil

Indone

sia

Australia

Chile

Thaila

nd

Colombia

Malays

ia

New Zea

land

India

Guatemala

Costa R

ica0%2%4%6%8%

10%12%14%16%18%20%

Perc

ent o

f tot

al

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 &

Prod

s

Nuts &

Prep

Animals

& P

rods

Grains

& Fee

ds

Other H

ort P

roduc

ts

Tobac

co, U

nmfg

Fruits

& Prep W

ine

Essen

tial O

ils

Vegeta

bles &

Prep

Seeds

, Fiel

d/Gard

en

Fruit J

uices

Sugar

& Tropica

l Pro

Nursery

& G

reenh

ouse

Bevera

ges E

x Juic

e

Cotton

, Ex L

inters

Tobac

co - M

fg

Cotton

Linte

rs0

500

1,000

1,500

2,000

2,500

Mill

ion

dolla

rs

12

US agricultural imports from the EU (2010)

Source: Foreign Agricultural Trade of the US

Bevera

ges,

EX Fruit J

uice

Essen

tial O

ils

Animals

and P

roduc

ts

Oilsee

ds an

d Prod

s

Grains

and F

eeds

Vegeta

bles a

nd P

reps

Cocoa

and P

rods

Other H

ort P

roduc

ts

Drugs,

Crude N

atural

Coffee

, Incl

Prods

Fruits

& Prep

Sugar

and R

elated

Prod

s

Seeds

, Fiel

d and

Gard

en

Nursery

Stoc

k, Bulb

s, Etc

Tea/M

ate, In

cl Herb

al Tea

Spices

and H

erbs

Cut Flow

ers

Tobac

co, U

nmfg

Fruit J

uices

Tobac

co, M

fg

Nuts an

d Prep

s

Fibers,

Exc

l Cott

on

Rubbe

r/allie

d Gum

s, Crud

e

Cotton

, Exc

l Lint

ers0

200,000400,000600,000800,000

1,000,0001,200,0001,400,0001,600,0001,800,000

Mill

ion

dolla

rs

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

19

Proposed Canada-EU FTA and Agricultural Trade

David Blandforddblandford@psu.edu

Regional Trade Agreements (RTAs): New developments and expectations

AES/CEAS ConferenceSchool of Economics, University of Kent

24th June, 2011

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