ATLANTA—Canadian sugar industry representatives are in Atlanta this week as countries seeking a 21st century Trans-Pacific Partnership (TPP) agreement try to wrap up negotiations.
Decisions made here are critical to Canada's refined sugar and sugar-containing products industry. A vibrant food processing industry depends on a reliable supply of refined sugar across the country. The sugar industry is seeking an outcome that will grow Canadian investment through exports in the TPP region. Food processing is Canada's second largest manufacturing industry accounting for about 235,000 jobs or 15% of manufacturing employment in Canada.
"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 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 US and other countries where prices are supported for domestic sugar producers", said Marsden. "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 US, 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 US has seen a massive decline in the past decade - from a surplus of 1.34 billion to 0.6 billion", added 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.
"The decline in Canada's trade balance with the US 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."
Contrary to claims made by US sugar opponents, Canadian industry requests for market access improvements will not disrupt the US sugar market.
The Canadian sugar industry has experienced a capacity reduction of approximately 160,000 tonnes, an unsustainable 12% decline since 2004. The time is now for Canada's trading partners to step up in the TPP and offer meaningful access to their protected markets. Ongoing protections for sugar and sugar-containing products in the US, Japan and other supported markets threaten further losses in Canada's value-added sugar and food processing industry.
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. The sugar industry contributes directly to the Canadian economy through its investment and employment at refined cane sugar operations in Quebec, Ontario and British Columbia, sugar beet farming and processing in Alberta and sugar-containing product manufacturing in Ontario. Canada's world market based refined sugar production has contributed in a major way to the development of a vibrant value-added food processing sector, Canada's second largest manufacturing industry. Food processing is now the top manufacturing industry in seven of ten Canadian provinces. 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.
Source: www.markets.financialcontent.com