Future of Canadian Sugar Industry Dependent on Outcome of TPP Negotiations

Canadian sugar industry representatives are in Atlanta this week as countries seeking a 21^st 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.  A few key facts:

• With a decline of $ 700 million in Canada’s trade surplus in foods containing sugar, Canadian exports clearly pose no threat to US 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 US 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.
• US import demand is increasing – 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 US 11 million tonne sugar market.
• 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 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.

For further information contact:

Sandra Marsden, President, Canadian Sugar Institute

smarsden@sugar.ca

www.sugar.ca 

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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.