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China trade can be boosted

Agri-food exports could thrive but Canada needs to push to reduce tariffs and other trade barriers

China trade can be boosted

China is a growing market for Canadian agri-food exports and could become even more important if it reduces tariffs and other trade barriers, says the Canadian Agri-Food Trade Alliance.

The call came as four federal cabinet ministers were in China to discuss improved relations. While a free trade deal with China seems far away, proposals to advance commercial links on a sector-by-sector basis could benefit the agri-food sector, CAFTA said.

Trade Diversification Minister Jim Carr, Finance Minister Bill Morneau, Agriculture Minister Lawrence MacAulay and Treasury Board president Scott Brison are in Beijing for the Canada-China Economic and Financial Strategic Dialogue. MacAulay attended other events beforehand.

Carr and Morneau co-chaired the Canada-China Economic and Financial Strategic Dialogue (EFSD). During it, the two countries agreed “to double agricultural trade by 2025, focus on priority sectors like agriculture and energy, and committed to strengthening economic and commercial co-operation as well as continuing exploratory discussions towards a potential comprehensive trade agreement,” Global Affairs Canada said.

The prospects for increased trade were underlined by $1.67 billion in commercial deals signed by 48 Canadian companies during a trade show in Shanghai prior to the EFSD in Beijing. The two countries agree to work on regulatory co-operation and give financial companies more occasions to work together and to seek opportunities in both countries.

President Jeff Nielsen of Grain Growers of Canada welcomed agreement by China to identify agriculture as a priority sector and committed to double agricultural trade between Canada and China by 2025.

“Grain farmers know how important a strong trade relationship with China is, given that it is already a top export market for most crops,” he said. “The commitment made by the two governments underscores that they appreciate the strength of the relationship and the potential that exists for future growth.”

Agriculture will only achieve its full potential if more work is done to resolve the tariff and non-tariff barriers that are holding back trade between the two countries, he said.

However, EFSD should strengthen two-way trade of grains, oilseeds and pulses, encourage long-term commercial supply arrangements in key agricultural commodities and carry out approval processes for biotechnology traits in a scientific and timely manner, he said.

“It is important that the government has committed to an ambitious trade diversification agenda, with China at the centre of it,” Nielsen said.

GGC would support free trade negotiations “as well as pursuing a sector-specific approach that could resolve market access barriers, examples of which include canola and soybean biotech trait approvals, challenges with the import quotas for wheat and corn and approval of imports of Canadian raw oats for food and feed use.”

CAFTA said, “Canada’s agri-food exports to China have grown tremendously, exceeding $7 billion in 2017 and now account for more than a third of total Canadian exports to that country. Clearly, agri-food is an essential sector to consider within the Canada-China trading relationship.”

There is the potential for important additional growth in agri-food exports if existing barriers are addressed, it said. “Tariffs are a priority for agri-food exporters because they are much higher for agriculture products entering China than for other goods, with the average agriculture tariff being 15.1 per cent versus 8.6 per cent for industrial goods.

“Tariffs on Canada’s key export interests are as low as three per cent on feed and malt barley but are generally much greater — nine per cent on canola oil, 10 per cent on malt, 20 to 25 per cent on many beef and pork products and 30 per cent on certain sugar-containing products,” it said.

“Under existing WTO rules, it will be very difficult to address these tariffs other than by a comprehensive free trade agreement.” CAFTA supports free trade negotiations with China, “we would also welcome an immediate intensified focus on addressing sectoral issues — such as achieving greater predictability through adherence to international standards and norms for livestock production and meat inspection as well as for the approval of new seed technology and food-testing protocols.

“Canada needs to diversify its export markets and China needs reliable high-quality sources of agriculture and food products,” CAFTA said. “Canada is a trading nation and remains focused on reaching its target of increasing Canada’s global agricultural exports to $75 billion by 2025.

“With a population of 1.4 billion and a growing middle class, pursuing new market opportunities in China is essential to the continued growth of the Canadian economy, and to Canadian farmers, processors and exporters.”

Before the Bejing meetings, MacAulay attended the first-ever China International Import Expo (CIIE) in Shanghai hosted by the president of the People’s Republic of China, Xi Jinping.

MacAulay and Canadian industry representatives “met and connected with top Chinese and international importers to promote Canadian agri-food and seafood.”

The minister signed a memorandum of understanding with Hema, Alibaba’s innovative offline retail store that distributes Canadian products, to discuss further opportunities for the Canadian agricultural sector. Agreement was reached on measures to increase the visibility and further promote Canadian products in Hema stores.

Agriculture Canada said trade with China in agriculture, food and seafood products is almost $10 billion, an increase of almost 50 per cent during the last four years.

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