Canola industry urges TPP implementation to keep Canadian canola competitive
October 31, 2017 – A meeting of Trans-Pacific Partnership countries in Vietnam next week provides a window of opportunity for Canada to take the next step in TPP implementation, increasing the value of canola exports and benefiting the entire canola value chain. The 11 country members are meeting in Da Nang, Vietnam for the Asia-Pacific Economic Cooperation Leaders’ Week, November 6-11.
“The canola industry is urging the federal government to advance the TPP during these discussions,” says Jim Everson, President of the Canola Council of Canada. “Implementing the TPP will increase value-added processing in Canada, maintain existing markets and ensure that Canada remains competitive to other oilseed producing countries.”
The United States has decided not to proceed with TPP negotiations. However, implementing an agreement with the remaining 11 countries would provide Canadian canola a competitive advantage over competing oilseed products entering TPP countries, such as U.S. soybean oil into Japan.
Japan is a long-standing and consistent market for canola seed, but tariffs of approximately 16%1 have prevented oil exports. As agreed to during the TPP negotiations, the TPP would open new markets for value-added canola products by eliminating canola oil and canola meal tariffs and establishing more effective rules to prevent non-tariff barriers. When tariffs are fully eliminated in Japan and Vietnam over five years, exports of Canadian canola oil and meal could increase by up to $780 million² per year.
In addition, Australia already has a free trade agreement with Japan that is eliminating tariffs on Australian canola oil. As a result, Canadian canola oil currently faces a 6% higher tariff than Australian canola oil³ – a competitive disadvantage that will grow each year that the TPP is not implemented.
“Australia is able to ship value-added product to Japan, while Canada cannot,” says Everson. “Each year that passes without implementation means that Canada falls further behind our main competitor in the Asia-Pacific region – risking our current $1.2 billion annual exports to Japan.”
The TPP is an important enabling step for the canola industry to increase value-added processing and productivity. The industry’s strategic plan, Keep it Coming 2025, includes the objective of nearly doubling the amount of canola processed in Canada over the next 10 years. Processing 14 million tonnes of canola in Canada requires that barriers to exporting canola oil and meal are removed – such as tariffs that the TPP would eliminate.
The Canola Council of Canada is a full value chain organization representing canola growers, processors, life science companies and exporters. Keep it Coming 2025 is the strategic plan to ensure the canola industry’s continued growth, demand, stability and success – achieving 52 bushels per acre to meet global market demand of 26 million metric tonnes by the year 2025. This year, the Canola Council celebrates its 50th anniversary. Visit CanolaHistory.ca to learn more.
1. ¥10.9/kg on crude oil and ¥13.2/kg on refined oil
2. Potential impacts of tariff elimination reflect a consensus of the canola value chain - which includes processors and exporters with in-depth knowledge of international market dynamics. Members were informed by research incorporating general equilibrium modeling that examined impacts of a TPP on each sector of the 12 countries’ economies under alternative scenarios. The study was completed by Dan Ciuriak, a former deputy chief economist for the Federal government’s department of Foreign Affairs and International Trade. For more information, view the report titled "Canola Market Impacts under Alternative TPP Scenarios”.
3. Currently Australian refined canola oil entering Japan faces a tariff of 10% (¥8.4 /kg) while Canadian refined canola oil faces a tariff of 16% (¥13.2 /kg)