Consultation on Trade with Asia-Pacific Nations

The Canadian Pork Council (CPC) and Canada Pork International (CPI) welcome the opportunity to participate in the Government of Canada’s consultation on trade with Asia-Pacific nations. The CPC serves as the national voice for 7,000 Canadian hog producers. CPI represents a very active partnership between producers and pork packing and processing establishments, as well as trading companies. CPI’s members represent nearly 99% of Canada’s pork exporting industry.

This industry has been serving international markets for more than 25 years and reaches consumers in more than 100 countries. Valued at $3.8 billion, exports represented nearly 70% of Canadian pork production in 2016. Enhanced market access is of critical importance to Canadian producers and we welcome the government’s efforts to expand economic ties in key Asia-Pacific markets. A failure to expand market access will make it extraordinarily difficult for the pork sector to grow exports and contribute to Canada achieving the target of $75 billion in exports by 2025 as outlined in Budget 2017.

The Government of Canada identifies Asia-Pacific as “a priority market” and notes it is working with the current Trans-Pacific Partnership (TPP) participants to assess alternatives (TPP-11 presumably being one of them). Canada’s pork producers support this direction as the Asia-Pacific markets are a cornerstone of our pork export success. The sector looked forward to the implementation of the Trans-Pacific Partnership (TPP) and was very disappointed when the United States withdrew its support in January 2017.

However, the implementation of the market access provisions of the TPP agreement by the remaining 11 countries (TPP-11) remain of great value to Canada’s pork sector. In 2016, Canadian pork exports to nine out of the ten countries that are members of TPP-11 totalled 380,000 tonnes valued at more than $1.4 billion. In this context, Canadian pork products are made available to more than 461 million potential consumers.

The Pacific region is experiencing significant economic growth and is also a region with a growing need for agricultural products. This growth and a rise in population are the main drivers for Canadian exports. The benefits of TPP-11 are positive. In fact, according to a 2017 Canada West Foundation study, they are even more so without the participation of the United States.

Second only to the United States, Japan accounted for $1,074 billion of Canadian pork exports—equivalent to 48% of shipments to non-U.S. destinations. Other pork exporting nations are well aware of the importance of this market. For example, the European Union recently concluded a free trade agreement with Japan that improves its pork access. Of note, Japan has been resisting the efforts of the United States and Canada to develop bilateral agreements. It is unlikely that Canada-Japan bilateral discussions will advance very far in the near term. Meanwhile, Canadian agri-food exporters continue to lose ground to not only European Union exports, but also those from Australia which has also been able to negotiate preferred market access.

The value the TPP-11 markets bring to the trade of Canadian pork is key to the expansion of our industry. While Japan is the most lucrative market, there is room to quickly improve Canadian market shares in Singapore, Vietnam and Malaysia. The implementation of TPP-11 would also facilitate the expansion of the Tariff Rate Quota that was agreed to as part of the Canada—Peru Free Trade Agreement.

Of the countries participating in the TPP-11, duty-free access to Vietnam would be an important gain for Canada as it offers the most potential for expanded Canadian pork exports. Vietnam currently consumes over 2 million MT of pork annually, one of the highest per capita pork consumption rates in the world. Local production will not be able to supply market growth given difficulties in controlling swine diseases and a growing trade in live swine and pork with China.

Canada exported 3,468 tonnes of pork products to Vietnam in 2015. These exports dropped to 1,383 tonnes in 2016 but have rebounded 1,410 tonnes in 2017 (January—July). Trade with Vietnam is expected to continue to grow. However, lower tariffs would enable Canada to become much more competitive in this price-sensitive market. Producers from the United States and the European Union have a preferred position in the pork market which will only increase as tariffs are removed. Canada will not be able to compete in Vietnam unless it enjoys tariff parity with other exporters.

The TPP-11 also has the potential to serve as a platform for Canada to enhance market access in other countries that have shown interest in joining the initiative including Korea, Indonesia, Taiwan, Thailand and Philippines. Further opportunity exists to eventually extend the agreement to members of the Asia-Pacific Economic Cooperation (APEC) and the Pacific Alliance (PA); regional agreements to which Canada is already a member. If TPP-11 does not come into effect, these and likely many of the Association of Southeast Asian Nations (ASEAN) countries will be increasingly drawn toward other regional trade deals including the China-led Regional Comprehensive Economic Partnership.

If TPP-11 is not implemented, Canada will face further erosion of its ability to compete in Japan and other rapidly growing Asian markets. The Government of Canada’s own analysis, before American withdrawal, showed important economic gains from Canada’s participation but, most importantly, also a significant loss if Canada was not a member.

The CPC and CPI urge the Government of Canada to announce its intention to take a leadership role in the TPP-11 negotiations with the intention of completing a deal in the very near term. Canada’s pork producers request that the Government of Canada work to ensure a TPP-11 agreement is implemented without changing the negotiated outcomes on market access that were agreed to in the original TPP agreement.