Supply management and trade agreements
The Comprehensive Economic and Trade Agreement with European Union (CETA)
On October 18, 2013, the Canadian government signed an agreement in principle with the European Union (EU) in the negotiations for the Comprehensive Economic and Trade Agreement (CETA). The CETA grants the EU a major concession in cheese, i.e. 17,700 tonnes of cheese, including 16,000 tonnes of fine cheese. This concession will potentially impact up to 30% of the retail market for fine cheese. Based on the annual growth of the fine cheese sector, which is only 1%, this sector may have decreased by a total of 25% when the 5-year implementation period for the new tariff quota comes to an end.
The Trans-Pacific Partnership Agreement (TPP)
The multilateral negotiations for the Trans-Pacific Partnership (TPP) free trade agreement in which Canada has been actively involved since 2012 ended in October in Atlanta with an agreement in principle. The agreement in principle must be ratified by the parliaments of the signatory countries before it can come into force. To reach this agreement, Canada made a concession in the dairy sector that impacts between 3.4% and 4% of the Canadian dairy market, depending on how you look at it. Canada’s concessions are proportionally greater than those offered by the United States and Japan to other countries.
The basic impacts of the PTP and the CETA
When these two trade agreements have both come into force, producers will ultimately be hit by a recurrent loss of around 6% of the Canadian dairy market, in addition to the 8% in market segments already conceded by Canada to its trade partners under trade agreements.
• Losses in milk sales (gross revenue) of around $400 million per year:
– TPP ($250 million);
– CETA ($150 million);
• Permanent annual losses in milk sales ranging from $29,000 to $33,000 per farm in Quebec.