DAIRY FARMERS:
CARING FOR FUTURE
GENERATIONS
BECAUSE
CANADIAN MILK MATTERS
TPP, CETA, WTO
OUTCOME AND
ASSESSMENT
Yves Leduc
Director, Policy and Trade
DFC Annual Policy Conference
February 2016
THE TRANSPACIFIC PARTNERSHIP
 Builds on 2005 Trans-Pacific Strategic Economic Partnership
Agreement NZ, Brunei, Chine and Singapore (known as P4)
 Discussions to broaden the scope and include United States in 2008
 Canada invited to join in 2012
 Conclusion of negotiations October 5, 2015 in Atlanta
 Draft version of text released November 5, 2015
 Text will be translated into French and Spanish (equal legal status)
 TPP Agreement signed on February 4, 2016 in Auckland, triggered
ratification process
 Date of implementation: January 2017 at the earliest
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.
THE TPP ZONE:
12 COUNTRIES & 36% OF WORLD’S GDP
Country
Australia
Population
million
GDP
Billion $
GDP per capita
$
23.6
1,593
67,735
0.4
17
40,387
Canada
35.5
1,973
55,577
Chile
17.4
285
15,995
Japan
127.1
5,103
40,164
30.3
89
2,936
119.7
1,415
11,827
4.5
219
48,383
31.4
224
7,135
Singapore
5.5
340
62,165
United States
319
19,239
60,300
Vietnam
90.6
205
2,264
805.0
11% of world’s population
30,702
36% of world’s GDP
Average = 38,139
3.2 times the world’s average
Brunei Darussalam
Malaysia
Mexico
New Zealand
Peru
Total
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POSSIBLE OUTCOME FOR CANADIAN DAIRY
 Government of Canada estimates new access 3.25% of 2016
production forecast*
 DFC estimated impact:
• Low-end DFC estimate (best case scenario) is essentially in line
with Canadian government estimates
• Between 3.37% and 3.97% of 2016 production forecast*
• Between $190 million - $246 million of lost revenues/yr
• Difference due to considered assumptions
 Positive aspects
•
Uncertainty is behind us
•
TRQs are capped
* AAFC’s production forecast is lower than the CDC forecast for 2016
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TPP RATIFICATION PROCESS
 Signature
• by 12 TPP members on February 4, 2016
• Signature is not ratification
 Ratification
• TPP members can initiate respective ratification process
• TPP members have to ratify agreement within two years for
agreement to enter into force
• If not ratified by all 12 within 2 years, a minimum of 6 countries
representing 85% of the TPP GDP will suffice to partially
implement the agreement
 at minimum US and Japan must ratify
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ANNOUNCED COMPENSATION PACKAGE
Package over 15 years:
•
Income guarantee program – $2.4 billion
• App $1.9 billion for dairy
•
Quota value guarantee program - $1.5 billion
• Not likely to yield any payment
•
Processor modernization program - $450 million
•
Market development initiative - $15 million
 Little information on details/mechanics of package
 New Government has yet to decide to ratify, so yet to commit to
compensation announced by previous government
 DFC to continue dialogue with government on the topic, in best
interest of the sector
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POSSIBLE OUTCOME FROM CETA
 New TRQ of 17,700 tonnes
•
6 equal instalments
•
Year 1: 2,950 tonnes (pro-rated based on entry date)
•
Year 2: 5,900 tonnes starting January 1st of year 2
 TRQ Administration
•
Modalities remains to be defined
•
Consultation process postponed several times
 No export subsidies
 Geographical Indications
– Legal framework to be developed
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CETA STATE OF PLAY
 Legal scrub still ongoing…
 Translation into 24 official languages
 Ratification by Canada & EU postponed to spring 2016 – but not
before the text finalized
•
All EU member states have to ratify the agreement
•
Canadian negotiators confident EU will invoke provisional entry into
force
•
Will the agreement be ratified in 2016?
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CETA – STATE OF PLAY
 Irritants:
– EU: Investor State Dispute Settlement (ongoing controversy)
– TTIP is casting a shadow on finalization of CETA
 What does it mean for the Canadian dairy sector?
– Realistically, implementation is now pushed to January 2017 at the
earliest
 Possible that both CETA and TPP enter into force concurrently, or
within a few months from each other
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TRADE DEALS: POSSIBLE IMPACT ON DAIRY
 CETA estimated impact:
•
1.48%% to 1.83% of 2016 production forecast*
•
$92 million to $111 million in lost farm revenues/yr**
 Combined TPP & CETA impacts
•
•
4.85% to 5.8% of 2016 production forecast*
$282 M to $357 million in lost farm revenues/yr

Package announced includes compensation for both CETA & TPP
* For comparison purposes, AAFC forecasted production is used here to update the combined
estimated impacts of TPP and CETA
** Using revised model & assumptions developed for TPP
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WTO: NAIROBI MINISTERIAL CONFERENCE
 WTO Members agreed to immediate elimination of export
subsidies for developed countries
– Flexibility provided to Canada, Switzerland and Norway as
per footnote 4:
“This paragraph shall not cover processed products, dairy
products, and swine meat of a developed Member that
agrees to eliminate as of 1 January 2016 all export subsidies
on products destined for least developed countries, and that
has notified export subsidies for such products or categories
of products in one of its three latest export subsidy
notifications examined by the Committee on Agriculture
before the date of adoption of this Decision. For these
products, scheduled export subsidies shall be eliminated by
the end of 2020, and quantity commitment levels shall be
applied as a standstill until the end of 2020 at the actual
average of quantity levels of the 2003-05 base period.
Furthermore, there shall be no export subsidies applied
either to new markets or to new products.”
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