Canada-EU Trade Agreement Announced

Canadian Prime Minister Stephen Harper and EU President Jose Manuel Barosso formally unveiled the EU-Canada Comprehensive Economic and Trade Agreement (CETA) at an Oct. 18 joint press conference in Brussels. Ratification of the agreement is required by all Canadian provinces and all 28 EU member states, a process that is expected to take up to two years.

The full text of CETA has not yet been released but some details on agricultural trade are available, including:

  • According to the Canadian Cattlemen’s Association (CCA), the EU will allow duty-free access for 50,000 mt of Canadian beef (carcass weight equivalent), which includes 35,000 mt of fresh/chilled beef and 15,000 mt of frozen beef. Canada will also continue to have access to the existing, shared duty-free quota for high-quality grain-fed beef.
  • Canada will not gain access to the new duty-free beef TRQ until it allows access for EU beef, which is currently banned due to BSE.
  • The EU will open a TRQ for Canadian pork of 80,000 mt, carcass weight equivalent. It is USMEF’s understanding that the duty-free portion of the TRQ is approximately 75,000 mt (carcass weight equivalent) plus the roughly 4,600 mt TRQ that currently exists for Canadian pork, which will still be subject to specific duties.
  • For Canadian beef and pork, broader access to the EU market will be in the form of expanded quotas. The agreement is not expected to include changes in the EU’s restrictions on the use of hormones or beta agonists in livestock production.
  • Canada agreed to a near-doubling of its total cheese import quotas from 20,000 mt to 37,700 mt, and to increase Europe’s share from 13,000 mt to 30,000 mt. Of the 17,700 mt increase in quotas, 16,000 mt will be for high-quality cheese and 1,700 mt for cheese for industrial purposes.
  • No changes were announced with regard to poultry or egg trade restrictions.

The increase in cheese import quotas is the most controversial of Canada’s agricultural concessions and could meet strong resistance at the provincial level, especially from the large dairy-producing provinces of Ontario and Quebec. The dairy industries in both provinces are expected to push for significant compensation.

The Canadian Cattlemen’s Association (CCA) praised the agreement but cautioned that work remains regarding technical issues that have historically inhibited beef trade.

“As important as the new tariff conditions are, resolution of the technical barriers for exporting Canadian beef to Europe are also vital,” said CCA in an Oct. 18 news release. “Details remain to be worked out on the technical issues, but for the first time, there is a written commitment between Canada and the EU, including a timetable, to resolve the technical barriers.”

The Canadian Pork Council offered similar sentiments in its press statement, including the following comments from Chairman Jean-Guy Vincent:

“Our current exports of pork cuts to the EU are virtually non-existent. This is not because our prices are uncompetitive but instead is due to tariff and non-tariff barriers to entry into the EU market which CETA will now address. CETA will provide the Canadian pork sector meaningful access to the EU market and an estimated economic return far greater than the projected export value when factoring in the additional economic development stimulated by the increased feed grain production, meat processing and distribution activities generated by these new sales of Canadian pork.”

When asked whether the EU-Canada agreement holds any significance for the EU-U.S. Transatlantic Trade and Investment Partnership (TTIP) negotiations, Agence France-Presse (AFP) quotes Barroso as stating, “The EU expects it to set some standards for other negotiations… not only with United States but with Japan, Mercosur. This is part of our vision about the liberalization of trade in the world.”

USMEF will provide more details on the EU-Canada agreement, especially with regard to beef and pork access, when the full text is available.