Reducing tariffs likely to lead to more exports abroad and greater choice at home
OTTAWA, July 31, 2013 /CNW/ - Canada should be a leader in reducing trade barriers on food products - instead of being one of the strongest holdouts in the developed world. A new Conference Board of Canada report, Liberalization's Last Frontier: Canada's Food Trade, argues that the food industry and Canadian consumers would benefit if import duties on food were significantly lowered.
"The benefits of freer trade in food are similar to those from trading any other product," said Michael Burt, Director, Industrial Economic Trends. "The Canadian food industry can become more prosperous by serving fast-growing markets, which benefits all Canadians. And consumers benefit from a greater variety of food products at lower cost - including staples like year-round fruits and vegetables, coffee, sugar and tea. The only thing preventing Canada from gaining these benefits is ourselves."
Among the 34 countries in the Organisation for Economic Co-operation and Development, Canada is one of the very few that export considerably more food than they import, along with Australia, New Zealand and Chile. Unlike these countries, however, Canada still maintains very high tariff barriers on all dairy products, chicken, and eggs. And Canada has high barriers on wheat and barley.
Canada is currently negotiating two key trade agreements - the Trans-Pacific Partnership and the Comprehensive Economic and Trade Agreement between Canada and the European Union. This report looks at the expected future effects of reducing barriers based on the findings of recent studies.
The Trans-Pacific Partnership currently involves 12 countries. If it could be expanded into a 21-member Free Trade Area of the Asia-Pacific (FTAAP) over time, Canadian output and exports from the food sector would be eight and 18 per cent higher by 2025, respectively, compared to a baseline scenario.
In the event that an FTAAP is unrealistic, Canada could form bilateral free trade agreements with key emerging markets, starting with China (New Zealand and Chile already have such agreements).
A 2011 sustainability impact assessment (SIA) by the European Commission dealt with two scenarios involving liberalized food trade between Canada and the European Union. Under the scenario of full trade liberalization of the food sector nearly all Canadian food products would see increased output.
In light of these and other findings by the Conference Board, the report recommends that the federal and provincial governments re-evaluate supply-management policies in terms of trade gains. Extremely high barriers in dairy, egg and chickens are holding back opportunities for growth in other less-protected agricultural commodities, like pork and beef. A forthcoming Centre for Food in Canada report will consider potential options for reforming supply management policies.
The principal goal of the Centre is to engage stakeholders from business, government, academia, associations, and communities in creating a Canadian Food Strategy —one that will meet the country's need for a coordinated, long-term strategy on industry prosperity, healthy and safe food, consumer security, and environmental sustainability.
SOURCE Conference Board of Canada