Canada launches trade talks with Japan, eyes Thailand deal

Canadian ag commodity groups are hailing the decision by Canada and Japan to launch formal negotiations toward a free trade agreement.

Prime Minister Stephen Harper made the announcement Sunday in Tokyo during a meeting with his Japanese counterpart, Yoshihiko Noda, two days after announcing Canada will pursue "exploratory discussions" toward a free trade deal with Thailand.

A bilateral free trade deal with Japan could increase Canada’s gross domestic product by US$3.8 billion and boost exports to Japan by as much as 67 per cent, the federal government said in a release.

In its talks with Japan, Canada would seek the "elimination of Japan’s tariffs across a broad range of sectors, including on agriculture, fish and seafood, forestry and industrial goods."

Sunday’s announcement follows the two countries’ agreement in February last year to study of the potential for an "economic partnership" deal.

Canada’s main exports to Japan in 2011 were valued at $10.7 billion and consisted of mineral fuels and oils, oilseeds, mineral ores, wood and meat, the federal government said. Canada’s imports from Japan in 2011 were worth $13 billion, mainly in motor vehicles and machinery.

According to the Canadian Meat Council, out of Canada’s $3.95 billion in agri-food and seafood exports to Japan in 2011, meat products alone accounted for $975.9 million, including, $893.8 million in pork products, $65.9 million in beef and veal products and $16.2 million in horsemeat.

Japan in 2011 was Canada’s second largest export market for pork products and fourth largest export market for beef and veal products and for horsemeat, the CMC said in a release.

"However, as Canada still accounts for only about 24 per cent of Japanese pork imports and three per cent of beef imports, Japan continues to present major untapped opportunities for Canada’s livestock farmers and meat processors."

Rob Meijer, president of beef export development agency Canada Beef, said Harper’s announcement has the industry hopeful that a deal "will ultimately lead to Japan allowing full market access to Canadian beef. This would mean a significant increase in the premium value and volume of exports."

Canada’s exports of beef to Japan in 2010 were worth $81.4 million, Canada Beef said in a release Sunday. "Modest projections show that full market access could exceed 20,000 tonnes valued at $125 million dollars annually."

Another beef group, the National Cattle Feeders Association, pegged Canada’s beef exports to Japan in 2010 at 17,175 tonnes, but said the potential is "much larger, considering the 30,000 tonnes of Canadian beef that reached that market in 2001."

Japan shut its ports to Canadian beef after the discovery of Canada’s first domestic case of BSE in an Alberta cow in May 2003. By December 2005, Japan moved to allow boneless and bone-in beef and offal from cattle under 21 months of age, and in December last year, Japan was reported to be reviewing its domestic and import regulations for beef.

"Momentum created"

Among exports from Canada to Japan, canola was the second most valuable in each of the last five years, the Canola Council of Canada said in a separate release Sunday, citing Industry Canada data.

Oil from Canadian canola represents over 40 per cent of Japan’s vegetable oil consumption, the council said. About 2.3 million tonnes of canola were shipped to Japan in 2011, worth about $1.4 billion.

“Concluding an agreement could increase market access for canola and increase the value of our products in one of our largest markets," council vice-president Cory McArthur said. “We look forward to negotiating an agreement that offers real gains for freer and more predictable trade.”

It’s also important, McArthur said, "that the momentum created by engaging Japan carries over to (Canada’s) ongoing efforts to join the Trans-Pacific Partnership… The expanding economies of the Asia-Pacific region are vital to canola exports.”

“Japan pays premium prices for premium quality and this means more dollars in farmers’ pockets," Richard Phillips, executive director of Grain Growers of Canada, said in a separate release.

Japan is Canada’s third largest market for wheat, with exports in 2011 totalling $471 million, and is also Canada’s sixth largest market for durum, the GGC said. Canada is also Japan’s largest malt supplier, with a 28 per cent share of malt imports.

“An economic partnership agreement will open the doors to discuss issues like tariff escalation where our value-added exports are often facing higher tariffs than the raw products,” said Phillips. “Whether it is pulse flour, or canola oil, for example, we are looking for the opportunities a level playing field can provide.”

Thailand

Canada’s "exploratory talks" with Thailand, announced Friday, are expected to examine the "potential economic benefits of a free trade agreement and how such an agreement would enhance the existing relationship between the two countries."

The federal government said it also plans to engage with "Canadians and stakeholders, including provincial and territorial partners," on the scope of such a deal.

Canadian exports to Thailand in 2011 were valued at $839 million, mainly in wood pulp, cereal and fertilizer, while imports from Thailand last year totalled $2.7 billion, mostly in electrical and electronic equipment, machinery, meat and fish preparations.

“A free trade agreement with Thailand — one of the fastest growing economies in the world — stands to significantly benefit farmers and businesses across Canada," Harper said Friday.

Related stories:
Japan’s beef import restrictions under review: Feds, Dec. 9, 2011
Canada wants in on Trans-Pacific trade pact, Nov. 14, 2011
Meat, grain sectors hail trade proposal with Japan, Feb. 23, 2011

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