It's Your Turn
Free Trade Area of the Americas (FTAA)
FTAA: Agricultural and non-agricultural market access
Market Access Negotiations for agricultural and non-agricultural products
Consultation Notice of November 13, 2002
Background
Canada is one of the 34 democratic countries of the Western Hemisphere engaged in negotiating the Free Trade Area of the Americas (FTAA). The 843 million people of the Americas make up almost one sixth of the world's population. The region has a combined gross domestic product (GDP) of about $19.7 trillion, more than one third of the world's economic activity and greater than the GDP of the European Union. The FTAA negotiations are scheduled to conclude by January 2005 and when completed, the hemisphere would be the world's largest free trade area. A free trade agreement will give Canada access to new markets in the young and dynamic economies of the Hemisphere. Above all, the FTAA is a vote of confidence in the region's future.
With a schedule set for 2005, the negotiations are now entering a critical stage with the beginning of market access negotiations, focussing mainly on negotiations of tariffs and rules of origin.
From the outset of these negotiations, the Government of Canada has continually involved all interested parties- the provinces/territories, civil society and the public- to ensure that an FTAA agreement is fully in line with Canada's priorities, interests and values. In that context, we would like to remind you that we continue to welcome your views in order to inform our market access negotiating strategy.
Canada-FTAA Trade
The FTAA constitutes, by far, Canada's largest trade relationship. Even when excluding NAFTA partners (the United States and Mexico), the Americas region is already a $3.8 billion export market for Canada. It is the destination for $53.2 billion in Canadian direct investment (16.6% of all Canadian direct investment abroad).
Both the Andean Community (Peru, Bolivia, Ecuador, Colombia and Venezuela) and Mercosur (Argentina, Brazil, Paraguay and Uruguay) are important trading partners for Canada with two-way trade totaling $3.67 billion and $3.1 billion respectively in 2001. Current trade in industrial sectors such as petroleum oils, pulp and paper, machinery, iron and steel and road vehicles is already significant and can be expected to grow even more with the FTAA. For agricultural products, Canada's top exports include grains, oilseeds, pork, pulses and French fries. Top imports include a range of tropical products such as fruits, vegetables, coffee and raw sugar. The negotiations will enable us to address key market access barriers in important markets in the Americas and thus, further increase trade flows with these countries. Should you wish to receive sectoral tariff information for FTAA countries, please do not hesitate to contact us.
Current Status of FTAA Market Access Negotiations
FTAA negotiations are entering into a critical stage with the exchange of tariff offers and requests for access into other markets. The initial tariff offers have to be presented between December 15, 2002 and February 15, 2003. Only countries that have already submitted their initial offer will have access to other countries' offers. Subsequently, countries will be submitting requests for improvements to the offers of other countries; this will take place between February 16, 2003 and June 15, 2003.
The modalities for tariff negotiations have been set and are:
- Base tariff will be the Most-Favoured Nation (MFN) applied tariff applicable in early Fall 2002
- Tariff elimination shall be linear (i.e. equal annual reductions), with the possibility of non-linear exceptions
- Four phases will be available for tariff elimination: immediate (A), no more than 5 years (B), no more than 10 years (C) and longer than 10 years (D).
Relationship Between the FTAA and Canada's Other Trade Agreements in the Americas
With the existing free trade agreements (FTAs) with the U.S., Mexico, Chile and Costa Rica, a large portion of our current trade (i.e., 99% of our exports) with the countries of the Western Hemisphere is already benefiting from preferential access. The FTAA will co-exist with pre-existing agreements, such as the NAFTA and thus, Canada's trade with its hemispheric free trade partners (U.S., Mexico, Chile and Costa Rica) will continue to be governed by the existing bilateral FTAs. The FTAA would substitute for these agreements with our free trade partners only if all the parties involved agree.
Since the FTAA is a free trade negotiation, the main issue in the negotiations will become the establishment of phase-out periods for specific tariffs. Canada's view is that the tariff elimination period for goods covered by this Agreement should, as a general rule, not exceed 10 years and that most tariffs should be eliminated as quickly as possible (with the exception of a few products such as supply-managed dairy, poultry and egg products).
We would be interested in receiving your input on the following issues:
- Export interests: Please identify products (by HS number preferably), and country of interest and any other information deemed appropriate (e.g. non-tariff barriers). Your views on tariff phase-out periods would also be useful.
Import sensitivities: Please identify products (by HS number preferably) where Canada should seek a longer phase-out period for its tariffs. For these products, please also identify the exporting country of primary concern. Rules of origin: We would welcome your views on the approach Canada should take, for example, whether Canada should adopt a NAFTA approach on rules.
Please send your input no later than noon November 29.
For further information on FTAA objectives and positions, please visit the Trade Negotiations and Agreements website at: http://www.dfait-maeci.gc.ca/tna-nac/ftaa1-en.asp.
Updated on November 13, 2002
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