Potential China, Canada free trade agreement seen as feed industry boost

10-Apr-2017 - Last updated on 11-Apr-2017 at 13:28 GMT

The Canadian government is seeking industry and stakeholder input on a potential free trade agreement with China.

Global Affairs Canada announced it is collecting comments and conducting consultations on the topic through June 2, and the feedback forum is open to all Canadians including those in the feed industry and industry associations. The request follows September’s announcement by Canadian Prime Minister Justin Trudeau that Canada and China had started exploratory discussions for a potential free trade agreement.

The Animal Nutrition Association of Canada (ANAC), the trade association for the feed industry, told FeedNavigator that it is reviewing “the impact the arrangement might have for our members,” but that it has not established a specific position at this point.

The goal of collecting feedback is to establish the best way to proceed regarding the potential agreement, the Global Affairs Canada agency announced. Details to be decided include aspects of improving market access; and establishing legal certainty and transparency for businesses.

“The government is soliciting views from businesses, civil society organizations, labor unions, academia, individual Canadians, Indigenous groups, and provincial and territorial governments on objectives, key interests and potential concerns, which will help outline the parameters of a potential initiative,” said Global Affairs agency.

Trade details

As a single country, China is Canada’s second largest trading partner, said the department. And it is an important market for Canada in the Asia-Pacific.

In 2016, two-way trade between the countries was about $85.3bn and in 2015, two-way foreign direct investment reached $33bn, the department said.

China is expected to see an annual economic growth rate of about 5.4% for the next 15 years and the market offers opportunities for Canadian companies, said the department. The growing middle class in China has established a market demand for agricultural and agri-food products, in addition to other goods.

Industry responses

The move to establish a free trade agreement with China has already seen support from some members of the feed grain industry in Canada, including the Canola Council of Canada.

The group said that improved market access could account for up to 33,000 additional jobs related to the export of canola.

Reducing tariffs on canola has the potential to increase exports of seed, oil and meal by up to $1.2bn a year or 10% of the current annual production, the council said. China is seeing a growing market in animal proteins, and canola meal offers a quality protein source for animal feed and aquaculture.

“In these uncertain times for global trade, Canadians should be very encouraged by the opportunity for a more stable and open trading relationship with China,” said Brian Innes, vice president, government relations with the council.

“There’s tremendous growth potential for canola exports to China,” he said. “Getting rid of tariffs would make canola more competitive with other oilseeds and have a global impact on the value of canola.”

At the moment, Chinese tariffs on canola meal and seeds are 5% and 9%, respectively, said the council. The rates are higher than the 3% set for on soybeans, which increases the price of canola seeds about $32 per ton.

Additionally, a stronger relationship with China has the potential to improve non-tariff trade barriers, including the approval of new genetically engineered canola traits, the council said.