Canada’s inclusion in the 12-nation Trans-Pacific Partnership (TPP) could have a significant impact locally on several industries, most notably agriculture.
The partnership, signed in principle by Canadian officials on Oct. 5, is a wide sweeping agreement that includes the agriculture, automotive, forestry and pharmaceutical industries as well as impacts on digital economy, workers’ rights and government-owned enterprises.
In the supply management sector, including the dairy, chicken and egg industries, changes come in the form of foreign market access and income guarantees.
While the dairy market already has 10 per cent allotted for foreign products, the TPP will add another 3.25%. In other sectors, the TPP will allow 2.1% for chickens, 2% for turkeys, 2.3% for eggs, and 1.5% for hatching eggs.
“This is a huge opportunity for Canadian farmers in the Asia Pacific Rim and we’ve done it while protecting supply management,” said Wellington-Halton Hills MP Michael Chong in an interview with the Advertiser.
“We’ve always been true to that. A lot of people said it couldn’t be done; well, the government did it and managed to protect supply management, keeping the three pillars of supply management intact … This a win-win.”
The TPP also promises lower tariffs in the industry.
For example, the tariff on Canadian beef exports to Japan would be lowered from 39% to 9% over the next 15 years.
Income guarantee
Foreign market access could result in perpetual revenue losses for some Canadian farmers.
So the government has announced it will invest $4.3 billion for transition assistance, including a $2.4-billion income guarantee program over the next 15 years.
The income guarantee would be payments of $2,087 per milking cow, $0.35 per chicken, $0.24 per kilogram of turkey, $3.15 per laying hen and $0.07 per hatching egg.
“That’s a step up from what is currently the case,” said Chong. “Before we were asking farmers to prove the loss of income, now we’re not asking that any more. We’re guaranteeing these payments regardless of whether or not their income is affected.”
For quota guarantees, $1.5 billion is set aside, but according to Chong, that money won’t necessarily be paid out.
“In fact, we do not anticipate having to pay it out; it is an insurance policy that we’ve taken out in case quota values are negatively impacted,” he said.
Supply management industries will also have access to a $450-million “processor modernization fund” for upgrades intended to give Canadians a competitive edge, and a $15-million “market development initiative” for promotion of Canadian products.
However, Wellington Federation of Agriculture (WFA) president Gordon Flewwelling is cautious in his assessment of the compensation offered to farmers.
“I don’t know how it stacks up to what they are losing,” he said.
“If it covers their losses, I guess it’s okay, but we haven’t seen the figures of what they are going to give up in that regard. I think we have to wait a little bit to see what the true figures are.”
The Canadian Taxpayers Federation (CTF) is unhappy about the compensation package, saying it unfairly punishes taxpayers.
“The CTF fully supports the TPP and believes that fewer trade barriers and access to bigger markets benefits the overwhelming majority of Canadians,” said CTF federal director Aaron Wudrick.
“What we oppose is using taxpayer dollars to buy off favoured sectors. These handouts to special interests are not required by the TPP itself – they simply punish taxpayers.”
Sector reactions
Shortly after the TPP was announced, Canada’s agricultural sectors offered their varied reactions to the deal.
Dairy Farmers of Canada (DFC) officials said they would have preferred that no additional market access be negotiated.
“However, we recognize that our government fought hard against other countries’ demands, and have lessened the burden by announcing mitigation measures and what seems to be a fair compensation package, to minimize the impact on Canadian dairy farmers and make up for cutting growth in the domestic market,” DFC president Wally Smith stated in a press release.
“We have come a long way from the threat of eliminating supply management.”
Egg Farmers of Canada officials have stated they are cautiously optimistic.
“(The TPP) demonstrates that the Canadian egg industry will continue as an integral part of Canada’s agricultural future and will continue to deliver exceptional benefits to consumers in Canada, while at the same time allowing other sectors to benefit from the export market,” said Egg Farmers chairman Peter Clarke.
Grain farmers seemed optimistic about the agreement.
“With market development a key pillar of our organization, improved access to these important export countries is a great success for our farmer-members,” said Mark Brock chair of Grain Farmers of Ontario.
“The Ontario grain industry is export-oriented and agreements like the TPP that increase access to export markets are always encouraged. While this is a great step forward, we need the next governing party of Canada to demonstrate a commitment to risk management programs for grain farmers.”
Not yet official
While the TPP has been signed in principle, it will be voted on by the new parliament following the Oct. 19 election.
Chong said he is strongly in favour of the deal and warned that failure to ratify it could spell trouble for the agricultural industry.
“If this deal isn’t ratified by the next parliament, it puts Canadian jobs, Canadian industry at risk. It will put our … producers at a competitive disadvantage,” he said.
A full text of the TPP is not yet available and Chong was unsure if it would be provided prior to Canadians heading to the polls.
The other countries included in the TPP are Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam.
