FCC sees benefits in new Trans-Pacific trade pact

CNS Canada — The future of trade for the Canadian agriculture industry is looking bright from the perspective of Canada’s federal ag lending agency, with progress on the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

According to Farm Credit Canada (FCC), anytime Canada can get less-restricted access to markets it is good for agriculture.

“We can open up markets more to what we have, especially when we have big competitors like the U.S. who stay out of it. I think it’s a good thing,” said J.P. Gervais, chief agriculture economist with FCC.

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CPTPP was originally known as the Trans-Pacific Partnership (TPP) and had 12 members, which dropped to 11 following the withdrawal of the U.S.

The 11 remaining nations, including Canada, agreed last week they will sign the revised CPTPP trade agreement officially in March.

Details of the revised agreement haven’t been released yet, but it is expected to be similar to previous versions. The agreement will see tariffs reduced on Canadian pork, beef and wheat to Japan and other markets, in some cases eliminating duties altogether.

Given the previous known details, Gervais believes the deal will be good overall for Canadian agriculture. The pork industry is poised to benefit from new access to Japan, which is currently one of the industry’s most important markets.

“To lower (the Japan import) tax right away… that’s a pretty good benefit for us. It should make it easier for us to capture market share in Japan given that the U.S. is our biggest competitor when it comes to fresh and chilled pork exports,” he said.

There are opportunities to grow exports to other CPTPP countries, but Canada will have to work to groom these relationships. It will take work to convince buyers to switch to purchasing Canadian products, according to Gervais.

“(CPTPP is) just opening up, lowering these barriers and (allowing us) to steal a bit of market share from other countries, other suppliers that don’t have the same access… it’s not going to happen overnight, we’re going to have to make an effort to develop those relationships,” he said.

The trade agreement as well has the potential to change current trade patterns within CPTPP members. Australia — a CPTPP member — had preferential access to the Japanese market through a previous trade deal, but Canada will now receive the same access.

“To me that’s significant enough to change the trade flows. Now to what extent, it’s going to take a bit of time to get a bit of work to actually come up with some numbers. But there’s millions of dollars of exports at stake here for sure,” Gervais said.

One agriculture sector displeased by the trade deal has been the dairy industry. Under the trade agreement CPTPP members will be able to import an amount equal to 3.24 per cent of Canada’s current annual milk production.

If dairy imports from CPTPP countries reach that level, it could make for a $246 million loss annually in Canada’s dairy sector.

Gervais, however, doesn’t see it as completely bad for the dairy industry. The dairy industry has grown domestically over the last few years, with cheese, butter and yogurt consumption increasing.

“I think that’s a real positive story, so I am pretty confident that the dairy industry will be able to thrive despite maybe a little bit more competition coming into Canada,” he said.

— Ashley Robinson writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Ashley Robinson writes for MarketsFarm specializing in grain and commodity market reporting.

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