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Meeting of the 7th Committee on agriculture and of the Canada-EU Agriculture Dialogue - 13 November 2024

Brussels

Report

Summary

The seventh meeting of the European Union-Canada Comprehensive and Economic Trade Agreement (CETA) Committee on Agriculture took place in Brussels on 13-14 November 2024, together with the Canada-European Union Agriculture Dialogue. Both parties reaffirmed their commitment to maintaining a positive collaborative approach, noting the positive contribution of CETA, and the importance of the EU-Canada relationship between reliable and like-minded trading partners.

CETA Committee on Agriculture

Review of bilateral trade

Canada and the EU conducted a review of bilateral trade data. The EU trade surplus in agri-food products stood at €1.7 billion in 2023. Both sides commended the expansion of two-way trade since the start of CETA and noted that the growth in agri-food trade has contributed to the perceived success of CETA. Canada indicated that its largest exports to the EU in 2023 were wheat, corn and soybeans and the EU stated that wines and spirits remained the top export to Canada. However, there was increasing diversity within the range of products traded with CETA continuing to provide significant opportunities for both parties.  

Canadian cheese tariff rate quotas (TRQs)

The EU expressed its continued concerns about the administration of the CETA Cheese of All Types TRQ and disappointment that the comprehensive review is not yet finalized. The EU emphasised that this is one of the key concerns of several Member States as the quota is seen as one of the key outcomes of CETA. Therefore, it is in both Canada’s and EU’s best interest that its implementation is viewed as effective and transparent.

The EU acknowledged the high fill-rate of the quotas but highlighted its concerns about aspects of quota administration, in particular the reportedly high level of transfers and alleged transfer costs. The EU claimed this reduces the competitiveness of EU cheese on the Canadian market. Canada reiterated its position that the administration of the CETA Cheese TRQs is fully in line with its commitments and has provided significant benefits to stakeholders from both Parties. Canada invited the EU to continue to discuss specific concerns at a technical level. The EU welcomed Canada’s assurance that it was moving ahead with finalizing the comprehensive review and would be pleased to continue the discussion.  

The EU also raised the issue of the WTO cheese quota and welcomed Canada’s confirmation that there were no changes to the pools under the WTO Cheese TRQ for the 2025 TRQ year.

CAN milk pricing system

The EU considers that Canada’s milk class pricing system may represent a barrier to trade leading to cross-subsidisation of exports of dairy protein products, which have seen significant growth in recent years, with Canadian SMP blends trading below the prices of leading global exporters, e.g. New Zealand, US and EU.  The EU pointed to the imbalanced trade flows of milk protein concentrate between the EU and Canada, the shift in trade flows globally and questioned the continued expansion of Canadian processing capacity.

Canada responded that only on-farm prices were regulated under the Milk class pricing system and explained that there was no link between this system and dairy protein exports. Canada agreed to provide follow up information in response to the EU’s question concerning a new programme announced by the Canadian government in 2023 which is aimed at improving the investment environment for dairy processing in Canada.

Revision of Food and Drug Regulations in Canada

Canada indicated that proposed amendments to certain regulations concerning food additives and compositional standards, microbiological criteria and methods of analysis for food are anticipated to be published in the Canada Gazette, Part II in fall 2024. There were no immediate plans to amend cheese compositional standards. The EU expressed concern that the requirement for minimum percentages for protein in cheese that must be derived from liquid milk restricts the use of high protein ingredients in cheese making with implications for EU’s trade to Canada. 

Ethanol imports from Canada

EU noted that Canada’s exports of ethanol to the EU have grown sharply since 2019, with Canada becoming an increasingly important ethanol exporter. Exports to the EU represented 60% of the ethanol volume exported by Canada in 2023. At the same time imports of ethanol into Canada from the US are also expanding.

Trade data shows that Canada exports small amount of ethanol to the EU. For example, in 2023, Canada exported 72 million litres of ethanol to the EU, representing a small percentage of Canada’s total capacity of near 2 billion litres. Driven in large part by increasingly stringent regulatory requirements, Canada’s domestic demand is outpacing its production, explaining the increase in US imports to support Canadian domestic demand. Canada does not foresee significant growth in ethanol exports to the EU. The EU welcomed Canada’s offer to continue the discussion at a technical level.

EU grain/oilseed tariffs on imports from Russia and Belarus

The EU explained that its imposition of tariffs on Russian and Belarussian grains and oilseeds in May 2024 may provide an opportunity for Canadian producers to partly fill the gap particularly for durum wheat, dried peas and flaxseeds, as the EU will need to source from alternative markets. Canada pointed to the high stocks of durum in 2024/25 crop year. Meanwhile flax seed production had declined since the Protocol requirements imposed by EU and others. Canada indicated that since flax is a high value crop, production could increase given the right signals.

Canada also pointed to the November 6th discussions at the 16th Canada-EU Biotechnology Market Access Issues Dialogue regarding the Canadian proposal to terminate the Testing and Sampling Protocol for Canadian Flaxseed exported to the European Union, as well as discussions at the CETA Sanitary and Phytosanitary Joint Management Committee regarding the EU’s approach to contaminants in certain imports, including hydrocyanic acid (HCN) in flaxseed.

EU Regulation on deforestation-free products

Canada expressed its concern with the EU Deforestation-free Products Regulation and its due diligence and traceability requirements. Canada emphasized that the regulation’s demand for geolocation coordinates and full supply chain traceability will place significant burdens on exporters, especially given Canada’s vast land area and complex supply chains. The requirements may also disproportionately affect small- and medium-sized enterprises that lack the resources to comply. Canada also expressed concern about the regulation’s timeline and the potential delays in market access for Canadian exports.

EU provided an update on the Commission’s proposal of an additional phasing-in period of 12 months until 30 December 2025 (while the country benchmarking will be ready by 30 June 2025 at the latest). The proposal is expected to be adopted by Council and European Parliament before the end of 2024. Canada shared a detailed list of questions on EUDR, and the EU noted that many of Canada’s queries would be incorporated into future Frequently asked questions (FAQ) documents. 

Regarding the IT system that will support the EUDR, EU made a clarification in the newly published FAQs that that operators could submit only one due diligence statement for several shipments of intended quantities of product for up to a year. Furthermore, regarding due diligence statements for cattle, they also confirmed that a single geolocation point can be used for cattle establishments (farms, premises, grazing ground) rather than polygons (however for each establishment where the cattle have been held over their lifetime)

EU’s proposed Regulation on the protection of animals during transport

Canada is concerned that the EU’s proposed Regulation on the protection of animals during transport and related operations would impose unnecessarily restrictive obligations on operators and regulators transporting live animals destined for the EU market and is not fit for purpose for certain live animals, notably live lobster. The rules, designed with finfish in mind, fail to account for the unique physiology of crustaceans. Canada emphasized that mandatory inspections during transport, as proposed, we could compromise the controlled environments necessary for lobster welfare. Additionally, Canada flagged concerns with how the regulation might impact the transport of live terrestrial animals and does not take into account that certain practices reflect the imperative of transporting animals across Canada’s vast distances and harsh climate. Canada also noted the specific impact the regulations could have on the live poultry trade and how the proposed definition of “day-old chicks” is not in line with international standards. The EU took note of Canada’s concern and invited it to continue to submit its views in writing.  

EU regulatory approach to pesticides and contaminants

Canada expressed concerns over the EU’s approach to pesticide regulation and its impact on Canadian exporters. In particular Canada noted its concerns regarding the EU’s approach to lowering or deleting maximum residue levels (MRLs) due to environmental reasons rather than food safety concerns and sought further information from the EU regarding the application and implementation of Maximum Levels (MLs) for certain contaminants in foodstuffs. Canada also highlighted concerns regarding the recent European Parliament veto on proposed import tolerances for certain pesticides. Regarding specific contaminants, Canada expressed particular concern about hydrogen cyanide (HCN) in flaxseeds, deoxynivalenol (DON), and nickel, and requested further clarification from DG SANTE on these issues.

The EU acknowledged Canada’s concerns and noted that this issue had been addressed in the CETA SPS Joint Management Committee the previous week. The EU also referred to growing calls within the European Parliament EU to no longer allow imports of food containing residues of substances not approved in the EU, even if safe for so that the establishment/keeping of new/existing import tolerances or Codex maximum residue limits could become increasingly difficult to justify.

EU’s proposed Regulation on New Genomic Techniques

Canada expressed concerns over certain requirements (e.g., full traceability) in the EU’s proposed Regulation on New Genomic Techniques. Canada emphasized that such traceability requirements would create unnecessary trade barriers and operational complexities given the nature of global grain handling system which could ultimately undermine the use of these technologies which have the potential to improve crop yields and sustainability. The EU acknowledged these concerns but noted that substantive discussion had taken place at the 16th Canada-EU Biotechnology Market Access Issues Dialogue on 6 November.

EU Sustainability Labelling Framework

Canada requested an update on the proposal from 2020 on an EU ‘Sustainability Labelling Framework’, given that it had not seen an update in quite some time. The EU indicated that the Commission has not yet decided whether to pursue the sustainable food system and labelling initiatives, including nutrition and origin labelling. The new Commission might take a different approach to agriculture and food policy.

Update on EU and Canada’s international trade negotiations

The EU briefed on its negotiations with Australia, Indonesia, India, Thailand, Philippines, Malaysia, Ukraine and Mercosur. On Ukraine EU pointed to the Autonomous Trading Measures currently in place.  Regarding Mercosur, a deal could be achieved but this is very sensitive for EU producers.  

Canada provided an update on its ongoing free trade agreement negotiations with Indonesia, Ecuador, and the Association of Southeast Asian Nations (ASEAN), including efforts to secure outcomes related to agriculture market access. Regarding Indonesia, Canada indicated that significant progress was being made towards a conclusion of the negotiations by the end of 2024.

Any other business

EU beef and pork tariff rate quotas (TRQs)

Canada sought confirmation from the EU that a request for any unused or unallocated beef and pork tariff rate quota following the initial allocation period would be actioned immediately by the EU, and that the licences would be issued automatically on demand by the EU. The EU indicated that licenses can be issued every month of the quota year, as long as the quota volume is not exhausted. The EU indicated that issuance of the licence is the responsibility of the import licence issuing authorities of the individual Member States. Canada noted that should timing of issuance of licenses following the initial application period become an issue in the future for Canada, it will raise the issue again at this Committee.

Equivalency Agreement for the trade of organic products with the EU

Canada enquired about the pending reply to Canada’s letter concerning the negotiations of the Equivalency Agreement for the trade of organic products. It emphasized the need to begin negotiations on a new Equivalency Arrangement for organic products as quickly as possible to ensure uninterrupted trade. The EU indicated it would follow up with the relevant team.

Canada-European Union Agriculture Dialogue

Update on the Strategic Dialogue on the Future of EU Agriculture

Canada asked for an update and information sharing on the Strategic Dialogue on the Future of EU Agriculture. The EU explained that the Strategic Dialogue will form the basis for the Vision document setting out the policy lines for agriculture and food policy in the EU, within the first 100 days of the new Commission. The current Common Agricultural Policy runs until 2027. The goals include supporting farm income in a more targeted way, strengthening farmers’ position in the food value chain, enabling them to produce sustainably, cutting red tape and leveraging innovation for a competitive food value chain.  It was agreed to hold a technical discussion after the new Vision document was published.

CETA evaluation by European Commission

The European Commission has ordered an external evaluation of CETA, which is expected to be completed by spring 2025. The objective is to publish an evidence based ex-post evaluation of CETA analysing its economic, social and environmental impacts after five years of provisional application. This includes an external study which will analyze the effectiveness and efficiency of CETA in all areas of its application, address criticisms and develop recommendations for improvement. The evaluation process will also include stakeholder consultations and Canada welcomed the opportunity for Canadian stakeholders to have the option to participate. The EU pointed to the importance of the evaluation results for Member States, particularly in the context that 10 Member States still had to ratify CETA.

Update on EU and Canada’s sustainability initiatives

The EU provided an update on the progress of key sustainability initiatives of which the Nature Restoration Law, the Soil Monitoring law and the new Water Resilience Initiative are the core of the EU’s Green Deal. 

Canada provided an update on its Sustainable Agriculture Strategy, which sets out federal goals on climate, emissions, biodiversity, soil health and water. It described its programming to support sustainable agriculture and on climate change.

In the discussion that followed, it was noted that new sources of income for farmers e.g. carbon farming could change the role of public support and possible new models of private/public sector involvement could emerge. The importance of data was also highlighted in the context of these discussions to measure progress and the effectiveness of measures in meeting goals and objectives. Both sides agreed to continue the discussion at technical level.    

Distribution of portfolios across Commissioners-designate 

Canada requested information on the distribution of portfolios across Commissioners-designate. EU explained that the changes proposed in the assignment of portfolios were unlikely to lead to significant changes in the responsibilities of Directorates-General. The European Parliament may also have a say over distribution of functions.

Canada-EU Dialogue on Sustainable Agriculture

Both sides acknowledged the success of the initiative and their desire to continue the dialogue in the future. A workshop between the two administrations on Food Loss and Waste, would take place the following day, and one more dialogue would take place at an unspecified date in the coming months. It was agreed that a potential EU stakeholder visit to witness firsthand the sustainability and innovation of Canadian farms would take place mid-2025 Both sides agreed to collaborate on developing a detailed program that reflects the shared interests of stakeholders and committed to engaging both Canadian and EU stakeholders.

Participants

Canada

Co-Chair: Agriculture and Agri-Food Canada, Director, Europe, Middle East and Africa Division

European Union

Co-Chair: European Commission, Directorate General for Agriculture and Rural Development, Head of Unit, The Americas

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