Canadian sugar industry favours TPP

Atlanta – Canadian sugar industry representatives are in Atlanta this week supporting the Trans Pacific Partnership (TPP) agreement as players try to wrap up negotiations, reports the Canadian Sugar Institute in a news release.

The sugar industry is seeking an outcome that will grow Canadian investment through exports in the TPP region.

“Canadian refined sugar and sugar-containing product manufacturers have been disadvantaged in past trade negotiations as protections for sensitive sectors have prevented export gains”, said Sandra Marsden, president of the Canadian Sugar Institute, in the release. “In fact, our exports of refined sugar and value-added sugar-containing products to the United States were reduced, not improved, as a result of the NAFTA and WTO. The TPP represents the only meaningful opportunity to improve this situation since US quotas were first imposed in the early 1980s.”

“Canadian sugar prices follow world prices and have helped to attract investment in food processing in Canada given much higher prices in the U.S. and other countries where prices are supported for domestic sugar producers. However, Canada’s competitive advantage is being undermined by the reduced access provided to these market in previous trade agreements.”

Canada continues to face highly restrictive tariff rate quotas into the U.S., Japan and other markets on refined sugar and various sugar-containing products. In contrast, Canada has minimal or zero tariffs.

“Looking at food products that depend on sugar as an input, Canada’s trade surplus with the U.S. has seen a massive decline in the past decade – from a surplus of 1.34 billion to 0.6 billion,” said Marsden. This includes products where Canada should have a competitive advantage, such as chocolate products, cereals and other sweetened grain products, tea mixes, jams and preserved fruits, tea and coffee mixes, ketchup and other tomato products and various sauces and seasoning mixes, notes the Institute in their release.

“The decline in Canada’s trade balance with the U.S. in large part reflects investment moving out of Canada to take advantage of integrated markets such as the US-Mexico sugar and sugar-containing products market. Canada was left out of that arrangement under the NAFTA. The TPP is the only opportunity to address this trade imbalance.”

The Canadian Sugar Institute’s points in favour of TPP are:

• With a decline of $ 700 million in Canada’s trade surplus in foods containing sugar, Canadian exports clearly pose no threat to U.S. producers.

• Canada’s exports of refined sugar were reduced under the WTO from 55,000 tonnes in 1994 to the 10,300 tonne limit that continues today, representing an annual loss of $43 million. Canada has received no benefit from U.S. sugar market growth of 2 million tonnes since 1994.

• Canada’s exports of quota-controlled sugar-containing products were reduced under the NAFTA and WTO by 100,000 tonnes, equivalent to annual $130 million loss for Canada.

• United States import demand is increasing. The USDA projects that an additional 1.4 million tonnes quota sugar imports will be needed by 2025. New TPP access for Canada is extremely important to Canada but miniscule in relation to this growth and the 11 million tonne sugar market in America.

• The Canadian industry produces high quality sugar and sugar-containing products and has a long history of shipping in an orderly manner without any disruption to the U.S. sugar market.

• The Canadian sugar industry has experienced a capacity reduction of approximately 160,000 tonnes, an unsustainable 12 per cent decline since 2004.

The Canadian sugar industry produces more than 1.2 million tonnes of refined sugar annually with a value of shipments of over $1 billion dollars, stated the Institute, further noting that Canadian sugar is an essential input for major sugar using food processors across the country which account for over $18 billion in sales, one quarter of all Canadian food manufacturing sales and $5 billion in exports.