Political agreement on Canada–EU trade deal will impact EU beef market
01 December 2013
In mid October 2013, “Canada and the EU announced that they have reached an ‘agreement in principle’… on a comprehensive bilateral trade pact.” The political agreement sets the stage for “technical negotiations to finalise the legal text of the agreement, which is expected to take between 18 and 24 months”. The EC estimates that trade in bilateral goods and services “could increase by 23 percent, or €26 billion, annually as a result of the agreement”. Most of these gains would be from liberalising trade in services.
The negotiations were initially scheduled to take 2 years, but took 4 years, with market access for beef and dairy products proving particularly difficult. Under the final deal, “a 50,000 tonne increase in the EU’s quota for beef imports” has been agreed, while the Canadian authorities have agreed to double the import quota for dairy products from which the EU benefits, providing access for an additional 17,700 tonnes of dairy products.
The European Dairy Association has welcomed this increase in EU access to the Canadian dairy market, although the details of the import licensing arrangements still need to be worked out. Dairy Farmers of Canada (DFC), in contrast, has “roundly condemned” the deal, maintaining that it “gives away the Canadian Cheese market”, particularly for fine cheese, with the EU being granted “an additional exclusive access of 32% of the current fine cheese market in Canada”. DFC complains of unfair competition from “subsidized EU cheeses”.
For its part, the EU farmers’ organisation Copa-Cogeca has expressed “major concerns that Canada will gain increased market access for substantial volumes of beef meat and pig meat under the deal”. Cogeca President Christian Pees maintained that “the EU has agreed to give increased market access for large volumes of beef meat and pig meat, which is unacceptable even if it is hormone-free.” Mr Pees claimed that beef is a sensitive product in the EU and that EU beef production is under threat as a result of the EU–Canada agreement. Copa-Cogeca called for a more careful division of the tariff-rate quota between chilled, fresh and frozen beef “in favour of frozen beef”.
In addition to beef and dairy market access arrangements, the agreement also covers fruit and vegetables, processed foods, oils and shellfish, as well the mutual recognition of registered geographical indications (GIs). Overall, the agreement is scheduled to “eventually remove over 99 percent of tariffs, with most of these being lifted upon the agreement’s entry into force”.
Some analysts see the deal as a template for a future agreement between the EU and the US. Indeed, EU Commissioner Karel De Gucht openly acknowledged that the deal “will influence discussions with the US”.
Editorial comment
From an ACP perspective, the most direct impact of the EU–Canada agreement is likely to be in the beef sector. The agreement will see a further extension of preferential access for high-quality beef to the EU market. This trend has been under way for some time. The EU–Canada deal on beef comes on top of the August 2013 announcement of an extension of the agreement to import 45,000 tonnes of hormone-free beef from the USA (see Agritrade article, ‘ EU tariff-rate quota for US beef extended’, 8 September 2013).
The new agreement, once it comes into force, is likely to increase competition in the high-quality component of the EU beef market, a market which ACP exporters such as Namibia are increasingly seeking to target, given the general increase in costs in serving EU markets linked to stricter application of SPS and food safety standards.
The expansion in access for third-country imports of high-quality beef is likely to make it increasingly difficult for countries like Botswana to follow the Namibian path of responding to preference erosion by marketing differentiated beef cuts into specific components of the EU market (see Agritrade articles ‘ Meatco’s strategy for moving up the value chain’, 2 December 2012 and ‘ Benefits of quality differentiation spread to Namibian smallholder beef...’, 10 June 2012). For ACP newcomers seeking to emulate the Namibian experience, the EU market is likely to be increasingly crowded.
