Canadian wheat farmers will soon have tariff-free access to an important premium market in Peru, according to news reports from the South American country.
In a story carried by Reuters News Agency last week, Peru trade minister Mercedes Araoz said most of the final details of a free trade agreement with Canada were worked out at a meeting Jan. 21.
However a spokesperson for Canada’s department of international trade said Jan. 24 that a deal has not yet been finalized.
“We are very close and we hope to conclude it soon,” said Michael O’Shaughnessy. He declined to provide any estimate as to when the deal might be concluded.
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_____ UPDATE _____
Canada signed free trade agreements Jan. 26 with Peru and the European Free Trade Association, a group of four small EU countries. Both deals include the eliminations of import tariffs on a variety of agricultural products including wheat, durum, special crops, pork and oilseeds. Two-way trade between Canada and Peru in 2006 totalled about $2.4 billion, and with the trade association, $10.7 billion. This story was written prior to the Jan. 26 signing. The Western Producer has different deadlines for different sections of the paper. |
Canadian wheat and durum sold to Peru face a 17 percent import tariff, which would be eliminated under a trade deal. That would keep Canadian wheat competitive with wheat from the United States, which in December signed its own free trade pact with Peru.
News that a deal may be imminent was welcomed by a spokesperson for the Canadian Wheat Board.
“The board has been trying for several years to make a strong case as to how badly disadvantaged Canadian farmers would be if the U.S. got a deal and we didn’t,” said Maureen Fitzhenry.
The U.S. has negotiated a number of bilateral trade deals in recent years, and Canadian exporters have urged the Canadian government to follow suit or risk being shut out of valuable markets.
CWB director Larry Hill said the board would prefer a multilateral trade agreement under the World Trade Organization, but with the U.S. aggressively pursuing bilateral deals, Canada has no choice but to follow suit.
“If American grain going into any country has a preferential tariff, that means we have to lower our price accordingly to stay in that market,” he said.
The board sold 429,000 tonnes of grain to Peru in 2006-07, including 357,000 of wheat, 58,000 of durum and 13,000 of barley. The previous year’s total was 706,000 tonnes, including a record 585,000 of wheat.
The value of all Canadian exports to Peru in calendar year 2006 was a record $288 million, with wheat and durum accounting for $124 million, or 43 percent of the total.
Fitzhenry said Peru is a good market for Canada because it’s closer than many other markets, which means lower shipping costs and higher returns.
Other agricultural commodities exported to Peru that would benefit from a free trade agreement include pulses, special crops and pork.
Free trade talks are also underway with Colombia, another important growing market for Canadian agricultural exporters. Colombia bought 400,000 tonnes of wheat, 30,000 of durum and 73,000 of barley from Canada in 2006-07.
Agricultural groups in Canada say it’s their understanding that negotiations with that country are not as advanced as those with Peru. O’Shaughnessy declined to comment.
Martin Rice of the Canadian Pork Council said his industry has a significant market in Colombia and is anxious for a deal to be concluded. However, he said reaching an agreement with that country may be more difficult than with Peru, especially when it comes to the pork sector.
“There is a fairly big domestic pork industry in Colombia and consumption has pretty well doubled in the last 10 years,” he said. “There’s more sensitivity.”
In recent years Canada has consistently shipped 2,000 to 3,000 tonnes of pork to Colombia annually, worth an estimated $3 to $5 million a year.
Rice said that could double under free trade.
