economic and policy analysis directorate 1 canada’s agricultural trade with ftaa countries...

1Economic and Policy Analysis Directorate

Canada’s Agricultural Trade with FTAA Countries

Organized Symposium at the Meeting of the American Agricultural Economics

AssociationTampa, FloridaAugust 1, 2000

José Quiroga

Agriculture andAgri-Food Canada

Agriculture etAgroalimentaire Canada


Canada’s total agri-food trade on rising trend

0

5

10

15

20

25

1992 1993 1994 1995 1996 1997 1998 1999

Billions of CAN$

Imports Exports

Source: AAFC Trade Data Retrieval System.



Canada’s agri-food trade with the United States increasing significantly

0

2

4

6

8

10

12

14

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Billions of CAN$

Imports Exports



Canada’s agri-food trade with Mexico on the rise

0

100

200

300

400

500

600

1992 1993 1994 1995 1996 1997 1998 1999

Millions of CAN$

Imports Exports



Canada’s agri-food trade with the Caribbean and Central America (excl. Mexico) in equilibrium

0

100

200

300

400

500

600

1992 1993 1994 1995 1996 1997 1998 1999

Millions of CAN$

Imports Exports



Canada’s agri-food trade with South America diverging

0

200

400

600

800

1000

1200

1400

1992 1993 1994 1995 1996 1997 1998 1999

Millions of CAN$

Imports Exports


Key data on selected FTAA countries, 1998

Population (millions) per capita GDP (US$)

Canada 30 19,439

United States 271 31,059

Argentina 36 8,257

Brazil 160 4,673

Chile 15 4,921

Colombia 41 2,515

Mexico 96 4,324

Venezuela 23 4,107Source: UNSD, Monthly Bulletin of Statistics


• 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


• 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


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


• 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


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


• 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


• 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


Prepared by: Jose Quiroga/Michael Swidinsky/Lars BrinkConsulted: Pamela Cooper/Alicja WielgusPresentationJuly 29, 2000File location: O/EPAD/Pa/Faa/J_QUIROGA/FTAA.pptOutput: Deck


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


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


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


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


T.P. for slide 6

While Canadian agri-food imports from South America have increased, exports to this region have declined


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

economic and policy analysis directorate 1 canada’s agricultural trade with ftaa countries...

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