Canada–EU trade deal makes use of tariff-rate quotas in sensitive sectors

08 December 2013

A more detailed summary of the Canada–EU free trade agreement has been submitted by the Canadian government to the country’s federal parliament. The agreement was described by the Canadian Prime Minister as “biggest deal ever concluded by Canada”.  In terms of the agricultural component of the deal, the EU has set 93.6% of agricultural tariff lines at 0% from the date of the agreement’s entry into force. Tariffs are to be eliminated immediately on:

  • maple syrup (current duty 8%);
  • fresh and frozen fruits (current duties range from 3.2 to 14.4%);
  • processed fruits and vegetables (current duties range from 14.4 to 17.6%);
  • a range of processed food products (on which a wide range of ad valorem and fixed duties currently apply);
  • processed pulses and grains, which include baked goods, pulse flour, meal and powder (current EU tariffs start at 7.7%);
  • a range of other products, such as mushrooms, potatoes, peas, cranberries, raspberries and strawberries, as well as processed products such as jams, jellies and juices, fruit and nut bars, yeast.

Immediate duty-free access is also to be granted for:

  • a quota of 8,000 tonnes of sweetcorn;
  • 3,000 tonnes of Canadian bison meat;
  • 50,000 tonnes of beef (70% fresh and chilled, and 30% frozen products), with the immediate waiving of the 20% duty charged on imports from Canada under the current multi-supplier high-quality beef quota;
  • 81,011 tonnes of pork, including Canada’s existing country-specific quota;

In addition, a transitional duty-free quota of 100,000 tonnes has been agreed for low- and medium-quality common wheat, pending the phasing out over 7 years of duties on grains, which currently range from C$114 to C$190 per tonne.

It is maintained that “the majority of Canadian agricultural goods will meet the main product-specific rules of origin, thus qualifying for duty-free treatment”, while derogations are allowed for a range of quota-restricted products that have a high proportion of imported inputs (e.g. products with a high sugar content, like chocolate and sugar confectionery, and a range of processed foods). The quota volumes granted in this area are to be “reviewed every five years when fill rates are above 60%”.

In terms of access for EU food and agricultural exports to the Canadian market, Canada has agreed 92.0% of agriculture tariff lines to be set at 0% at the date of entry into force, with 7.1% of tariff lines excluded from any liberalisation (including poultry and eggs). For supply-managed products, there will be no reduction in over-quota tariffs. In the dairy sector there will be no tariff-rate quotas (TRQs) established, except for cheese, with one quota of 16,800 tonnes (16,000 tonnes of new access and 800 tonnes as Canada’s share of the WTO TRQ) and another of 1,700 tonnes for industrial cheese. The milk protein substances tariff where the US already has tariff-free access to the Canadian market will be phased out. No additional access is provided for any other Canadian supply-managed products. The Canadian federal government is committed to monitoring the impact of the new agreement with the EU and will, if necessary, “provide compensation should a negative impact be observed”. The Canadian federal government is also to “explore other ways of addressing circumvention of import-control measures”.

Since some details of the agreement still need to be fine-tuned, ratification is likely to require up to 2 years. 

Editorial comment

A notable feature of the Canada–EU trade agreement is the use of TRQs to manage trade in sensitive agricultural products in ways that are consistent with established national trade policy tools (e.g. Canada’s use of supply management tools). Managing trade in sensitive products in this way has been a major challenge in the EPA agro-food sector negotiations, but to date little use has been made of TRQs in expanding EU access to ACP markets, in a managed way consistent with national ACP trade policy objectives and measures. Potentially more extensive use could be made of this trade policy tool, to address ACP concerns related to sheer economic weight of the EU agro-food sector compared to those in individual ACP economies.

This could then prevent the kind of import surges that have occurred under the EU–South Africa Trade, Development and Cooperation Agreement (TDCA) in the poultry sector, where EU exports of poultry meat have risen from a mere 7,938 tonnes in 2009 to an estimated 140,000 tonnes in 2013. This increase in EU exports to South Africa has put considerable pressure on the South African poultry sector and has led to an application for the invocation of safeguard measures under the TDCA.

Copyright 2018, CTA. Technical Centre for Agricultural and Rural Cooperation (ACP-EU)