Pacific Alliance Free Trade Agreement

On February 1, 2018’s House of Commons’ Standing Committee on International Trade meeting, Canadian Pork Council (CPC) Second Vice-Chair René Roy outlined how trade plays a vital role in the industry’s prosperity and how it impacts the Canadian economy.

The purpose of the CPC’s appearance in front of the committee was to share the perspectives of Canada’s pork producers on the matter of a potential trade agreement between Canada and the Pacific Alliance.

Below is a copy of Mr Roy's presentation:

Good morning,

I would like to thank you for the opportunity to appear before the standing committee and provide the perspectives of Canada’s pork producers on the matter of a potential trade agreement between Canada and the Pacific Alliance.

I am a producer from Saint-Jules, Quebec and here today as a member of the Board of Director’s and 2nd Vice Chairman for the Canadian Pork Council, the national voice for over 7,000 hog producers in Canada. 

The meat industry is, by far, the largest component of this country’s food processing sector.

Our producers raise animals from coast to coast, with the largest pork production and processing facilities clustered in Quebec, Ontario and Manitoba. Direct farm gate sales of Canadian pork in 2016 totaled $4.1 billion dollars and created over 31,000 farm jobs in rural Canada. The pork industry is a major contributor to Canada’s GDP.

Additionally, food processing creates more jobs than any other segment of the Canadian manufacturing sector. Providing employment for 65,000 workers, meat packing and processing plants are often either the primary or a major employer in towns and cities located across Canada.

Mr. Chairman, the members of this Committee are no doubt aware that export markets are absolutely critical to the current and future prosperity of the Canadian livestock and meat sector. Meat processors and exporters must identify foreign markets for more than 70% of Canadian pork.

Therefore, it should not be surprising that pork producers have been ardent and steadfast supporters of all initiatives that contribute to opening new export markets and expanding access to existing markets.

The Canadian Pork Council and producers welcomed the news out of Japan that an agreement was reached on the Comprehensive and Progressive Transpacific Partnership (CPTPP).

And we would like to thank Prime Minister Justin Trudeau, International Trade Minister François Champagne, Agriculture and Agri-Food Minister Lawrence MacAulay, Minister of Foreign Affairs Chrystia Freeland, the negotiating team and all other Canadian representatives that supported the request that this trade deal be concluded as soon as possible and contributed to making it happen.

Producers are confident Canadian pork will soon have competitive access to key markets in Japan, and in developing markets such as Singapore, Vietnam and Malaysia. The signing of this agreement in March and its ratification shortly thereafter, will only signal further investment in the sector.

Because of improved access to key markets, Canadian pork producers can keep doing what they do best knowing that their livelihood and that of thousands of other Canadians in rural and urban communities who work in the pork industry are supported by this latest agreement.

Canadian producers also welcome the Canadian government’s efforts to expand economic ties with the Pacific Alliance through a free-trade agreement.

A key reason for the growth of Canadian pork exports has been the establishment of free trade agreements with strategic partners. As you know, at present, Canada benefits from bilateral trade agreements with each of the members of the Pacific Alliance. The FTA with Mexico as part of the North American Free Trade Agreement (NAFTA) was brought into force on January 1, 1994. The FTA with Chile was implemented July 5, 1997, and the FTAs with Peru and Colombia were brought into force on August 1, 2009, and August 15, 2011, respectively.

We see the potential agreement between Canada and the Pacific Alliance as an opportunity to improve exports in several areas. However, recognizing the importance of questions I would like to highlight just a few key points and leave it to my colleague Mr. Lavoie to expand further.

When considering negotiating objectives, the Canadian Pork Council requests three things:

  • The first, that the allocation process in Colombia for Canadian pork products be simplified;
  • The second, that the Colombian government recognize the Canadian swine herd as trichina-free, permitting exports of chilled pork to that market;
  • And third, that the quota for Canadian pork products be drastically increased and the existing tariff rate reduced in Peru.

Before I wrap up, Mr. Chairman.

It is plain to see how hog producers and processors benefit from improved market access.  However, we can’t forget the impact it has on Canadians.  Studies regularly show that the top concerns of Canadian consumers are the rising cost of food and keeping healthy food affordable.

A globally competitive, Canadian pork industry will ensure Canadians have access to locally-produced, high quality, competitively-priced, pork and pork products.  However, we can’t meet this expectation if we are locked into the domestic market.

I would like to thank the committee for the invitation to appear before you today and for your attention.

I would be pleased to answer your questions.

In September 2017, the Canadian Pork Council participated in the Free Trade Agreement with the Pacific Alliance consultation process in order to voice the opinion of Canadian hog farmers.

The Canadian Pork Council (CPC) and Canadian Pork International (CPI) welcome the opportunity to participate in the Free Trade Agreement (FTA) with the Pacific Alliance consultation process. The CPC serves as the national voice for 7,000 hog producers in Canada.  A federation of nine provincial pork industry associations, its purpose is to play a leadership role in achieving and maintaining a dynamic and prosperous Canadian pork sector. CPI membership includes the national and provincial associations of hog producers, as well as, federally registered pork packing and processing establishments, and trading companies. CPI members represent nearly 99% of the Canadian pork exporting industry. This industry has been serving international markets for more than 25 years and currently reaches consumers in more than 100 countries. Canadian producers recognize the importance of trade and welcome the Canadian government’s efforts to expand economic ties with the Pacific Alliance through a free-trade agreement.

A key reason for the growth of Canadian pork exports has been the establishment of free trade agreements with strategic partners. At present, Canada benefits from bilateral trade agreements with each of the members of the Pacific Alliance. The FTA with Mexico as part of the North American Free Trade Agreement (NAFTA) was brought into force on January 1, 1994. The FTA with Chile was implemented July 5, 1997, and the FTAs with Peru and Colombia were brought into force on August 1, 2009, and August 15, 2011, respectively.

Canada has enjoyed success in the Pacific Alliance markets.  In 2016, Canada exported: 117,171 tonnes of pork valued at $195 million to Mexico; 11,665 tonnes valued at $31 million to Chile; 5,140 tonnes valued at $10 million to Colombia; and 256 tonnes with a value of $575,434 to Peru.  The FTAs with Mexico and Chile have evolved to the point where there are no longer restrictive Tariff Rate Quotas (TRQ) on Canadian pork exports.

To improve exports to Colombia, access for chilled pork meat must be gained. Unfortunately, Columbia does not recognize the Canadian swine herd as being trichina-free. Our largest competitor in the market, the United States, benefits from trichina-free herd recognition.  This allows the industry to ship chilled pork products and access the more profitable retail market.

Addressing the TRQ allocation process is also a priority. The current Columbian approval process is extremely unfavourable to Canadian exporters. American pork exporters are privileged with a first-come-first-serve allocation process which is less cumbersome for Columbian importers. Canadian exporters also face increased duty fees during the performance review period, when preferential duty rates are not applicable to Canadian pork products. American competitors are not subject to the same duty and can export to Colombia duty-free year round. The Canadian pork industry requests that the process be streamlined to allow Canadian exporters the opportunity to expand their exports. The Canadian pork industry would also benefit from the addition Pork Fat HS Code 02.09.00.90 Category Z.

To increase exports to Peru, the insufficient TRQ of 600 tonnes must be increased. Applicable duties at 25% will remain in place for one more year before entering year 11 of the FTA when the base rate will be reduced in equal stages over the next seven years. This could be accelerated.

In considering negotiating objectives, the CPC and CPI requests that:

  • the allocation process in Colombia for Canadian pork products be simplified;
  • the Colombian government recognize the Canadian swine herd as trichina-free permitting exports of chilled pork to these markets;
  • the quota for Canadian pork products be drastically increased and the existing tariff rate reduced in Peru.