Canada livestock farmers big winners in EU deal, dairy a loser

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Canada's hog and beef cattle farmers, stinging from a trade dispute with the United States, look to be among the biggest Canadian winners in a free trade agreement sealed with the European Union on Friday.

The deal looks less promising for Canadian dairy farmers, consumers of pharmaceutical drugs and government suppliers, who will face new stiff competition from Europe.

The deal will make Canada the only G8 country - and one of the only developed nations anywhere - with preferential access to the world's two largest markets, the EU and the United States, home to a total of 800 million people, compared to Canada's 35 million.

"The Canadian government has secured real and substantial access to one of the world's few billion-dollar export markets, and they did it ahead of our major competitors," said Canadian Agri-Food Trade Alliance executive director Kathleen Sullivan

Taking advantage of the deal hinges on Canadian meat processors investing in plants that meet strict European requirements, including for example, no use of wood, said Martin Rice, executive director of the Canadian Pork Council.

It will also require more Canadian farmers raising cattle without growth hormones to satisfy European requirements.

Beef and pork groups were pushing Ottawa to negotiate large enough quotas to make such changes by farmers and meat processors like Cargill Ltd, JBS USA, Maple Leaf Foods and Olymel LP economically sound.

Canada wins duty-free access for up to 80,000 tonnes of pork a year, up from an existing quota for 6,000 tonnes, and 65,000 tonnes of beef.

Canada is the world's third-biggest pork exporter and the seventh-largest shipper of beef and veal.

The gains for meat producers come as Canadian shipments of cattle and hogs to the United States have dropped off dramatically due to a dispute over meat labels.

And a deal with Europe, ahead of meat-exporting rival United States, also helps offset Canada's current disadvantage in trade with South Korea, where the United States has a free trade deal in place. Talks have bogged down on a Canada-South Korea deal.

The EU will also reduce tariffs on Canadian wheat, durum, oats and canola oil. Canada is the world's second biggest wheat exporter and the top canola shipper.

Manufacturers, including auto makers, stand to gain from access to the huge European market, said John Boscariol, who heads the international trade and investment law group at McCarthy Tetrault.

CANADA DAIRY, DRUG CONSUMERS, SUPPLIERS MAY LOSE

Canadian dairy farmers are less impressed with the deal, which gives Europe greater access to a highly protected dairy sector that features a system of production quotas for its farmers and a wall of tariffs against imports.

That system remains intact. But European dairies like Parmalat SpA will be able to ship an additional 16,000 tonnes of cheese and 1,700 tonnes of industrial cheese tariff-free annually, giving European producers some 8 percent of Canada's cheese market. Prime Minister Stephen Harper said Ottawa would still compensate dairy farmers who may be hurt by the deal.

The new cheese quotas are on top of Europe's existing quota of 13,500 tonnes, which already accounts for two-thirds of Canada's cheese imports, said Therese Beaulieu, spokeswoman for Dairy Farmers of Canada.

Stronger intellectual property rights in the deal may boost profits for brand-name drug-makers but hurt producers of generic drugs, said Scott Sinclair, senior trade policy researcher with the Canadian Centre for Policy Alternatives research institute.

"Canadian consumers, provincial drug plans and others are definitely big losers in this," he said.

Companies that supply Canadian governments with services such as road, water pipes and sewer maintenance will also face stiffer competition, Boscariol said, although they will also gain access to the European market.

"When you open that up to the European behemoths like Siemens and others, I think it's going to change the landscape."

 


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