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TPP II deal good news for agriculture

FCC’s top agriculture economist says there’s the potential for big benefits, but it will take time

Farm Credit Canada says a new trade deal with Asia is good news for the nation’s farmers.

FCC says the new Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) will mean better market access and that’s always good news for agriculture.

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

Since the beginning of the trade agreement negotiations CPTPP has changed. Originally it was known as the Trans-Pacific Partnership (TPP) and had 12 members which dropped to 11 following the withdrawal of the U.S. after Donald Trump was elected. In late January the 11 remaining nations, including Canada, agreed to sign the revised trade agreement officially in March.

The official details of the revised trade 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.

From the previous known details Gervais believes the deal will be good overall for Canadian agriculture. The pork industry is poised to benefit from the 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,” he said.

There are opportunities to grow exports to other CPTPP countries, but Canada will have to work to groom these relationships.

“(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. Previously 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 which has been 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 to Canada’s dairy sector.

  • Read more: Dairy farmers get no assurances on NAFTA

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 in to Canada,” he said.

About the author

CNSC

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

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