Canada/Colombia trade pact takes effect Monday

Exports of Canadian wheat, barley, lentils and meat expect to gain clout in a significant market from a free trade deal between Canada and Colombia coming into force Monday (Aug. 15).

The free trade agreement, which the two countries signed in 2008 pending ratification by their respective governments, got royal assent in Canada in June last year following approval in the House of Commons.

Wheat, barley and lentils are currently among Canada’s main exports to Colombia, along with non-ag exports such as newsprint (paper) and off-road dump trucks. Colombia’s principal exports to Canada include coffee, bananas, coal and fuel.

Prairie farmers export over $100 million worth of wheat and $23 million of malting barley to Colombia each year, the Canadian Wheat Board noted in 2008.

Canadian wheat and barley bound for Colombia have historically been subject to import tariffs as high as 15 per cent (today three per cent) and, as of Monday, will be duty-free, the board said Wednesday.

“We will now be on a level playing field with Argentina into the fast-growing Colombian market,” CWB CEO Ian White said, noting the U.S. has yet to ratify its free-trade agreement with Colombia, but is expected to do so some time this fall.

According to Pulse Canada, Colombia is Canada’s eighth largest market for pulses and special crops, with exports totaling over $82 million and 110,000 tonnes in 2010. The country has also been one of Canada’s top two markets for green lentils, taking $46 million worth in 2008.

Pulse Canada on Wednesday said the deal coming into force would “immediately” remove import duties on Canadian peas, lentils, chickpeas, canaryseed and buckwheat and re-establish “competitive, duty-free access for Canadian beans, which were previously subject to a prohibitive 60 per cent tariff.”

That 60 per cent tariff is to be removed for the first 4,000 tonnes of beans shipped to Colombia, with the exempted amount growing over 12 years until the market is completely open, Pulse Canada said Wednesday. Import duties for mustard and sunflower entering Colombia will also be removed over time, the pulse industry group said.

“Once implemented, this (agreement) will benefit Canada’s producers and exporters, reduce or eliminate tariffs on nearly all current Canadian exports, and provide a more predictable, transparent and rules-based trading environment for Canadian investors,” the federal government said Wednesday in its release.

The government described Colombia, population 45.5 million, as a “dynamic emerging market” and “an economy with high growth potential,” with which two-way merchandise trade in and out of Canada was worth over C$1.4 billion in 2010.

“Faster”

Colombia until now has maintained an average applied tariff on agricultural products of 16.6 per cent, the government said in 2008.

Lower tariffs through this deal were expected to contribute to enhancing the competitive position of Canadian exports in the Colombian markets, and create opportunities for exports such as the above-noted crops, beef, pork, liquor and wines, animal feed and non-tropical fruits such as apples, peaches and berries.

The Canada/Colombia agreement calls for elimination of all non-agricultural tariffs, including those on fish, but also emphasizes “faster tariff elimination” for those products of “highest importance” to Canadian industry, such as Canada’s main ag exports.

From Canadian pork producers’ perspective, this agreement creates a 5,000-tonne tariff-rate quota (TRQ) and the elimination of the in-quota tariff over five years. The TRQ is to increase each year and the in-quota tariff will be eliminated over the first five years of the agreement’s implementation, according to the Canadian Pork Council (CPC).

In the case of beef, the trade deal calls for duty-free access starting Monday for up to 5,250 tonnes per year of Canadian beef and offals. Remaining tariffs on beef will be eliminated over a 12-year period, the Canadian Cattlemen’s Association said Wednesday.

Canada’s own over-access tariffs on its supply-managed products such as eggs, poultry and dairy goods will be exempt from tariff cuts under this deal, the government said in 2008.

Human rights

Prime Minister Stephen Harper, in announcing the date of the agreement coming into force, also noted plans for “increased Canadian assistance to strengthen human rights in Colombia,” aiming to address what’s been a sore spot for domestic and international critics of this trade deal in the past few years.

The long list of pledges for Canadian support of related projects includes $488,000 this year toward implementation of Colombia’s National Land Restitution Policy, backing seven pilot projects overseen by the International Organization for Migration and the Colombian Ministry of Agriculture.

The pilot projects will run in the Montes de Maria region in the country’s northern province of Sucre, allowing about 750 families forcibly displaced by armed groups to receive legal land titles and return to their land.

Related stories:

Colombian ports reopened to Canadian cattle, April 10, 2010

Stalled Colombia FTA stymies Prairie wheat exports, Sept. 25, 2009

Canada, Colombia conclude FTA talks, June 9, 2008

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