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Five things food businesses should know as CETA comes into forceThursday, September 21, 2017 > 10:09:54
As the new free-trade agreement between the European Union and Canada enters into force, FoodNavigator looks at what this means for food manufacturers
The Comprehensive Economic Trade Agreement (CETA) between Canada and the European Union provisionally enters into force tomorrow (21 September).
Welcoming the news, European Commission president Jean-Claude Juncker said that the deal represents the opportunity to further Europe’s economic interests and values.
This agreement encapsulates what we want our trade policy to be - an instrument for growth that benefits European companies and citizens, but also a tool to project our values, harness globalisation and shape global trade rules.”
Trade Commissioner Cecilia Malmström was equally upbeat. Things are about to change for our exporters. The provisional entry into force allows EU companies and citizens to start reaping the benefits of this agreement right away. This is a positive signal for the global economy, with the potential to boost economic growth and create jobs.
The provisional application of CETA follows its approval by EU member states, expressed via the Commission and European Parliament. It will enter into force “fully and definitively” when all EU Member States have ratified the agreement.
Currently, Canada is the ninth largest export market for European food and drink manufacturers, with annual exports of €3.4bn – or 3% of the EU’s total exports. Meanwhile, Canada was the EU's 20th largest non-EU supplier of agri-food and seafood products in 2015, with a 2.1% share that is worth about €900m.
Here are five key things European food makers need to know about the CETA agreement.
1. Cutting tariffs, opening quotas
CETA removes Canadian customs duties and opens up the Canadian market to European food and drink products.
When fully implemented, the agreement will remove 99% of all customs duties on goods moving between the two trading blocks. Europe will be able to export nearly 92% of its agricultural and food products to Canada duty-free and duties on wines and spirits will also be removed.
The EC said this will make European products cheaper – and therefore more appealing - to Canada's market of high-income consumers.
In particular, the EC believes there is an opportunity for European companies to grow exports to Canada of wines and spirits, fruit and vegetables, processed foods, ‘traditional specialities’, and cheese.
There will be “limited quotas” for a few sensitive products such as beef, pork and sweetcorn for the EU and dairy products for Canada.
In cheese, currently EU exporters benefit from a duty-free quota of 8,000 tons. This will be increased “over time” to 18,500 tons.
Tariffs will be removed from chocolate and confectionery products, as well as breads, pastries and biscuits, which faced tariffs of up to 10% and 15% respectively before CETA.
2. Protecting Geographical Indications (GIs)
The agreement will also progress the EU’s aim of expanding international recognition of its system of Geographical Indications, which was developed to protect products that are of particular significance to a region or country.
“Promoting and protecting Europe’s flagship food and drink products in countries outside the EU is a top priority for CETA, as for any EU trade deal,” the Commission said.
CETA provides 143 European products with the status of GIs in Canada, giving them a similar level of protection from “imitations” as they receive under EU law.
Products protected by the deal include Chianti from Italy, Gouda from the Netherlands, Schwarzwälder Schinken from Germany and Pruneaux d'Agen from France. Protections span alcoholic drinks, cheeses, meat and fish, confectionery, fruit and nuts.
3. Canada targeting value-added food sales
According to Ottawa’s assessment, seafood presents Canadian companies with some of the “largest and fastest growing” opportunities. In particular, the Canadian government flagged export opportunities for suppliers of salmon, shrimp, lobster and scallops.
Elsewhere, maple-based products and sales of fresh, frozen and processed berries could do well in European markets.
Canadians have also set their sights on the EU market for processed and value-added food items. The country currently supplies C$831m (€566m) in processed foods to European markets – and it is expected that CETA will enable Canadian food processors to grow this figure.
“While the EU is an important market for commodity exports, it is one of the few markets in the world that Canada can grow exports of value-added products", Canada’s Agriculture Department noted.
“Products where Canada has a strong presence in the processed food sector have been able to maintain strong market share in these products because other non EU countries are more focused on some key products where Canada has less interest. There is, however, strong competition in beef products, naturally healthy product ingredients, honey and various oilseed products.”
4. EU downplays fear over food standards
Prior to CETA’s adoption, there was an outcry in the EU from campaigners who feared the deal would lower food safety standards in the bloc.
A report backed by 13 campaign organisations, including the Transnational Institute (TNI) and War on Want, highlighted concerns over issues ranging from animal welfare and farm income to regulatory harmonisation. Canada and the EU have different maximum residue levels for pesticides, the report noted.
The European Commission was, however, quick to downplay such concerns following the conclusion of CETA negotiations. “All imports from Canada have to meet EU rules and regulations. For example, only hormone-free meat will ever be imported into the EU", the EC insisted.
Germany-based non-profit Foodwatch, however, suggested that this means the freezing of consumer protection standards because provisions can no longer be unilaterally changed. Important achievements, such as the European precautionary principle, are undermined by the Treaty,Foodwatch economist Lena Blanken suggested, flagging concerns over chemical controls.
5. Food sector largely welcomes move
Food industry associations from both sides of the Atlantic welcomed CETA.
FoodDrinkEurope director general Mella Frewen described the deal as one of the “most ambitious and progressive agreements ever negotiated”
“It will strengthen the trade and investment relations between two of the world’s most advanced economies and like-minded partners, for the benefit of growth and jobs", Frewen said.
In Canada, however, CETA received more of a mixed reception. During an export event organised by trade body Food and Consumer Products of Canada, Adam Taylor, director of Ensight Canada, noted there are some areas that will have “major implications” for Canadian CPG companies. In particular, the recognition of GIs will mean, for example, feta that does not come from Greece will require a 'feta-like' label.
Nevertheless, Don Newman, senior counsel at Ensight Canada, pointed out: Overall CETA is a good deal for Canada, it is an ambitious 21st-century agreement that makes Canada the only G7 country with preferential access to the EU.”