1. Breakfast Series - Capitalizing on Free Trade Agreement Export Markets
BC Food Processors Association
Burnaby, BC
November 10, 2016
Presented by: Monica Gervais
Senior Manager,
Trade Policy and Negotiations Branch
BC Ministry of International Trade
Thank you for inviting me to speak here today about capitalizing on Free Trade Agreements and how they assist for market entry.
Like any business area, trade policy has a LOT of acronyms – I will try and keep them to a minimum and define them as I go, but if I say an acronym you don’t know, please interrupt me.

2. BC’s Ministry of International Trade Impacts of FTAs
Overview
BC’s Ministry of International Trade
Impacts of FTAs
Canada-Korea Free Trade Agreement (CKFTA)
Canada-European Union Comprehensive Economic and Trade Agreement (CETA)
Trans-Pacific Partnership (TPP)
Qs & As
During my presentation today I will give you a brief overview of the services of the BC Ministry of International Trade and identify how we can assist you to reach markets.
Then I’ll touch on 3 free trade agreements: the Canada-Korea, Canada-European Union and the Trans Pacific Partnership.
I’ll try to provide you with examples where these FTAs will benefit food processors but I caution that this is a very high level look at these FTAs and you may wish to obtain professional and legal advice before exporting into these markets.

3. BC’S MINISTRY OF INTERNATIONAL TRADE
Fosters connections with governments and businesses in priority markets, particularly in Asia
Engages BC exporters to connect to customers globally who may be served by BC’s goods and services
Attracts strategic investment to BC’s priority industry sectors.
Leverages investment capital programs (venture capital and infrastructure) to support a competitive business environment
Promotes multiculturalism in our communities and uses it as a bridge to our priority markets
Fights protectionism and enhances market access
The Ministry of International Trade provides trade and investment programs and services to help British Columbia increase its exports.
We develop international partnerships, increase awareness of B.C.’s competitive advantages.
We foster connections with governments and businesses in priority markets, particularly with priority markets in Asia.
We assist B.C. exporters to connect to customers globally.
Attract businesses and head offices to BC.
And in the branch I work in, we leverage trade agreements and negotiations to remove barriers to trade, investment and labour mobility, which helps grow the economy and creates long-term jobs.

4. BC PRIORITY MARKETS BC’s Priority Markets: US
China, Japan, Korea, India
Broader Asia (eg. ASEAN) EU
BC has a network of Trade and Investment Offices around the world – just added one in Jakarta, Indonesia
In trade, size and proximity matter.
So most of BC’s trade is to the US and Asia– we share a border with the US, and we are Canada’s closest province to Asia.
If we add in the EU market, in 2015, BC exports to the EU, China, India, Korea, Japan and TPP countries accounted for 93% of BC’s global exports of goods.
But that is not the whole story—we are the Pacific Gateway and although our total international exports are roughly $40 billion annually, in 2015, Canadian exports through BC totalled just over $71.6 billion
As I mentioned, the US is our largest trading partner, followed by China, Japan, Korea.
If you count the EU as a trading partner, they stand in 5th place with exports of $1.5 billion in 2015, but by individual country, India is 5th.
BC exports to the US in 2015 were worth $18.7 billion –51% of BC’s total exports. This is 3 times the value of BC exports to BC’s 2nd largest trading partner (China).
BC is Canada’s western most province, and the closest Canadian jurisdiction to the Asia Pacific – so with size and proximity again, after the US, BC’s top trading partners are China, Japan, Korea, and India.
BC exports to China - $6.2 B
BC exports to Japan - $3.7B
BC exports to Korea - $1.9B
BC exports to EU - $1.5B
BC exports to India - $628m
BC exports to ASEAN - $835M
BC has a network of TIR offices around the world. Purpose is to attract trade/investment from these countries to BC, and to help BC companies when they are in these markets.
Quick show of hands, who here has accessed the Province’s Trade and Investment Offices around the world? I hope we were helpful.

5. CANADA-SOUTH KOREA FREE TRADE AGREEMENT (CKFTA)
Entered into force on January 1, 2015.
Canada’s first free trade agreement with an Asian trading partner
BC exporters were at a disadvantage before as the EU, the US, and Australia had concluded deals
According to the Canadian government, the CKFTA may increase BC and Canadian goods exports to South Korea by 32 percent
Tariff eliminations, mechanisms to address non-tariff barriers, access to government procurement opportunities, most liberal temporary entry provisions taken by S. Korea
Entered into force on Jan First FTA in Asia…and remains the only FTA in Asia.
As a result of the CKFTA, South Korea removed tariffs on 81.9 percent of goods (98.2 percent when fully implemented) and Canada removed tariffs on 76.4 per cent of goods immediately (97.8 percent of tariff lines when fully implemented). Note: On some goods, elimination will take place over a period of up to 15 years.
Prior to CKFTA South Korea had quite high tariffs on BC and Canadian goods.
This includes immediate eliminations for per cent of industrial goods, 98.7 per cent on metals and minerals, 100 per cent in aerospace, 88 per cent on medical devices, 57 per cent for forestry products, 70 percent of fish/seafood (within 5 years) etc.
For example, there were immediate eliminations for LNG (previously 3 per cent), some lines of Pacific and Atlantic salmon (20 per cent), and white ice wine (15 per cent).
The agreement facilitates movement between Canada and South Korea for business visitors, traders and investors, intra-company transferees, professionals and their spouses.
Real example that shows you what an FTA can do:
BC Agrifood & Seafood Exports to South Korea
Export value of shipments to South Korea increased from $33.5 million 2014 to $54.4 million in 2015
Export value of shipments to South Korea increased 63% from 2014 to 2015
- 64% increase in value of agrifood shipments from $29.3 million to $48.1 million
- 52% increase in value of seafood shipments from $4.1 million to $6.3 million
BC more competitive in Korea now, when we had been falling behind – US, EU, and Australia already had FTAs with Korea. CKFTA is a real example of what FTAs can do.

6. CKFTA – Processed Foods
TARIFFS & RULES OF ORIGIN
Immediate elimination:
White ice wine (elimination of a 15% tariff)
Frozen French fries (elimination of tariffs of up to 18 percent)
Phase outs:
White and red wine (including red ice wine) - 15% tariffs eliminated by – 3 year phase out
Most food preparations – tariffs of up to 30% eliminated by years
Processed foods - tariffs of 8-50% eliminated by year phase-out
All fish and seafood products - tariffs of up to 47% will be eliminated by 2026, with 70% duty-free by 2019
Clear and simple rules of origin that reflect Canadian production realities and methods and minimize administrative burdens; access to advance rulings on the origin or tariff classification of products; and a Rules of Origin and Customs Committee.
Prior to the CKFTA, Canadian exports of processed food products and beverages faced high tariffs when entering South Korea. The CKFTA will eliminate many of South Korea’s tariffs on processed foods and beverages.
Rules of origin are clear and producers will have access to advance ruling on products.
As well, there is a joint committee to address issues.

7. CANADA-EUROPEAN UNION COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA)
Market of 500 million high end consumers
Comprehensive: tariff and non-tariff barriers, goods and services, regulatory cooperation, investment, labour mobility, and procurement
Expected to be in force in 2017
Competitive advantage: only G7 with preferential access to the two largest economies—the EU and the US
Canadian public opinion has been overwhelmingly positive. Four out of five respondents (81%) in a CTV news poll said they are supportive; 89% in BC
CETA is a 21st-century, gold-standard free trade agreement and is Canada’s most ambitious trade initiative ever. It is broader in scope and deeper in ambition than the historic North American Free Trade Agreement.
Covers all sectors.
PTs were invited to sit at the negotiating table, providing a unique opportunity to engage with the EU, federal government, other PTs.
When CETA enters into force, Canada will be the only G-7 country to have preferential access to the world’s two largest markets, the EU and the United States.
Just approved in by the EU Council and signed by both parties at a summit held October 30 in Brussels.
The CETA has been introduced into the Canadian Parliament and implementing legislation has been tabled for discussion. Bill C-30.
Once both Parliaments approve the CETA, Canada and the EU will pick a date for implementation, expected to be sometime in 2017.
Background:
The European Union was B.C.’s fifth largest export destination with $1.5 billion in goods being exported in While this accounts for a small percentage of B.C.’s overall exports, it remains an important market with 500 million high-end consumers.
The CETA is being considered a ‘mixed agreement’, which would require Member State approval but would allow provisional implementation of at least 90% and up to 95% of the Agreement after the EU Council and EU Parliament approves it. The remaining 5-10% would be implemented after Member State approval. The EU Council has deliberated the CETA over the summer and has had meetings at the officials’ level with Member States to determine what can be provisionally implemented. The EU Commission believes that all of the CETA should be provisionally applied but Member States disagree. GAC expects tariffs, quotas, government procurement, and intellectual property provisions to be provisionally implemented, while some transportation services, mutual recognition agreements, some labour and environmental protection provisions, and the investor-state dispute settlement (ISDS) chapter are expected to be implemented after Member State approval.

8. CETA – Processed Foods
Eliminates tariffs on key BC goods agrifoods products
94 percent of agriculture products going to the EU will be duty-free, including:
fresh and frozen fruit (9 to 12 percent)
frozen, fresh, and processed blueberries (tariffs up to 9.6 percent)
processed fruits and vegetables such as dried cranberries (14 to 17.6 percent)
cherries (up to 12 percent)
mushrooms (up to 18.4 percent)
Reduces non-tariff barriers: duplicative certification, labelling, Sanitary and Phytosanitary Committee, dispute resolution
Improves labour mobility: business professionals, technicians
Improves access to government procurement to the local government level: a $3.7 trillion market in the EU
Attracts investment
Supports collaboration, sharing knowledge and research in science, technology and innovation: food processing technology
Lots of articles on the CETA.
The CETA, when concluded, will eliminate over 98% of tariffs immediately upon ratification.
The impact of the CETA on British Columbia is expected to be largely positive.
We expect exports to increase while imports and inputs to be more competitively priced with tariff removals. Although the majority of BC’s top exports (coal) already enter the EU duty free, the EU continues to maintain tariffs on a large number of BC products, especially in agriculture and specialty wood products (plywood).
BC exports nearly $1 billion in fish and seafood products globally annually, but only $56 million to the EU in 2012, illustrating the impact of tariffs and/or non-tariff barriers on BC exports to the EU.
The CETA will improve market access for professional services – engineers, architects. The services sector accounts for three-quarters of B.C.’s overall economy with over $10 billion worth of the Province’s services traded abroad. Top service exports include professional services such as engineering, architectural and environmental services.
Will improve access to Government procurement. EU procurement market is estimated to be worth over $3 trillion.
We expect further collaboration and research in technology—particularly in the areas of common strengths such as clean technology and clean energy, aerospace and digital media.
Background:
- BC’s government procurement policies are already open and transparent with much lower thresholds than the CETA so provincial and municipal governments are familiar with open and transparent obligations.
- CETA allows provincial governments to continue regulating in the public interest, including for delivering public education services. Adverse effects on government policy and program options for public education are not anticipated. There are no tariff barriers that directly affect the trade of international and private education services between Canada and the EU. Given the already close cooperation and existing agreements with the EU and its member countries on international education short-term adverse impacts from CETA are not anticipated.

9. CETA – Rules of Origin
Wholly Obtained Products – Products that wholly originate in the territory of Canada or the EU are eligible for preferential market access under CETA (e.g. harvested fruits, vegetables, and grains; extracted minerals; and fish caught within Canadian or EU territorial waters).
Cumulation of Origin – Products that originate in Canada or the EU are considered to originate in the other Party when they are used in the production of a subsequent product there. Enabling provisions on cross-cumulation mean that, subject to future agreement between the Parties, materials sourced from a country with which both Canada and the EU have an FTA may be considered toward the originating status of products traded under CETA.
Canadian companies who intend to export to the EU under CETA and want to obtain an advance ruling on the origin of their products would need to contact a customs authority in the EU.
The EU refers to advance rulings on origin as BOIs – Binding Origin Information. (Rulings on tariff classification are referred to as BTIs – Binding Tariff Information.) 
BOIs are free and should be sought from the customs authority in the EU member state the goods are being exported to.
EU Contact for advance rulings:
There are two main categories of origin in the rules: products wholly obtained or produced in a Party; and products whose production involves materials from more one or more non-Parties.
Wholly Obtained Products 
Products that wholly originate in the territory of Canada or the EU are eligible for preferential market access under CETA. In general terms, products are wholly obtained in Canada if only Canada has been involved in their production. Even the smallest addition/input from a country other than Canada disqualifies a project from being wholly obtained, vice versa for the EU. Wholly obtained products apply mainly to things occurring naturally and to products made entirely from them. These include harvested fruits, vegetables and grains; extracted minerals; and fish caught within Canadian or EU territorial waters.
Cumulation of Origin
The CETA rules of origin recognize and encourage production that occurs in both Canada and the EU. The relevant provisions specify that a product that originates in one Party is considered to originate in the other Party when used as a material in the production of a subsequent product there. Provisions on cross-cumulation are also included. This means that materials sourced from a country with which both Canada and the EU have an FTA may be considered toward the originating status of products traded under CETA. This provision is subject to future agreement between Canada and the EU on specific conditions (TPG).
Insufficient Production
The Rules of Origin Chapter establishes that certain very simple operations (e.g. washing, cleaning, packaging, sharpening and sorting), when undertaken on a non-originating material, are insufficient to confer origin on a product, irrespective of the applicable product-specific rules of origin.
Tolerance
The tolerance provision (referred to as de minimis in Canada’s other FTAs) specifies that a minimal amount of non-originating material may be used in production without affecting the originating status of a product. For example, if the rule of origin for wooden chairs does not allow for the use of non-originating wood, some non-originating wood may nonetheless be used, provided that its value is less than 10% of the value of the chair.
Transport through a Non-Party
In order to receive preferential treatment during transportation from Canada to the EU, products must not be altered or transformed while in transit through a non-Party, apart from operations performed in order to preserve them in good condition.
Accounting Segregation of Fungible Materials or Products
Fungible products are products that have identical characteristics and can therefore be intermingled (e.g. crude oil). Reflecting common business practices, CETA allows exporters of products containing fungible materials to use an inventory management system in their claims for preferential treatment. Without this provision, producers would be required to physically segregate originating and non-originating materials or products if they intended to take advantage of CETA.

10. TRANS-PACIFIC PARTNERSHIP
Signed February 4, 2016
800 million people with a combined GDP of $28 trillion, and future members lining up to join
All aspects of trade covered
Key markets for BC exports:
In 2015, BC’s domestic exports of goods to TPP members were worth $23 billion, or roughly 65% of BC’s international goods exports
Elimination of tariff and non-tariff barriers
Strong and enforceable rules
for labour, the environment, state-owned enterprises, intellectual property, rules of origin and sanitary and phytosanitary measures
the US, Japan,Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru.
TPP signed on February 4, 2016
- Huge market of 800 million people, combined GDP of $28 trillion.
- All aspects of trade covered (including market access for goods and services, investment, financial services, and government procurement)
Key market for BC exports: In 2015, BC’s domestic exports of goods to TPP members were worth $23 billion, or roughly 65% of BC’s international goods exports. Lot of potential for BC goods
tariffs will be eliminated over time for BC forestry, agrifoods and industrial goods, and non-tariff barriers will be eliminated across the board
Strong enforceable rules for labour, environment, SOEs, IP, rules of origin, sanitary and phytosanitary measures
I’m sure you’ve seen in the news articles about the TPP, opposition in the US – both GOP and Dem.
Ratification may be difficult now with the US election cycle starting.
Contingency – if all 12 Parties have not ratified the agreement within 2 years, it can be implemented with a minimum of 6 countries that make up 85% of TPP economies.
Background:
In Canada – TPP must be tabled in Parliament for debate for 21 days. After this point, the federal government can ratify the agreement.
MIT consulted with close to 100 representatives of B.C. companies and industry associations and collected public submissions on the TPP through its website. -

11. Elimination of Agriculture & Agrifood Tariffs
KEY MARKETS
Elimination of Agriculture &
Agrifood Tariffs
Japan – World’s 3rd largest economy; 3rd largest destination for BC goods exports; prohibitive import tariffs on most products. Eliminate 32% immediate; 9% provided preferential access through quotas; remaining over 20 years.
Vietnam - One of the most rapidly emerging economies in Southeast Asia; BC goods exports to Vietnam have more than doubled since 2010; prohibitive import tariffs on most products. Eliminate 31% immediate; 67% in 15 years.
Malaysia – 3rd largest economy in ASEAN; rising middle class; Petronas. Eliminate 92% immediate; 7% in 15 years; TRQs.
Australia – Opportunities in sectors like forestry, agrifoods and services; Government procurement; Leverage Canadian investments; Renewable energies. Eliminate all except 1 immediately; 1 line (bamboo shoots) eliminated within 4 years.
New Zealand – Leverage Canadian investments; Renewable energies. Eliminate 99% immediate.
TPP Agreement highlights
In Japan, close to 32 percent of tariff lines on agriculture and agri-food products will be duty-free upon entry into force.
A further 9 percent of tariff lines will be provided preferential tariff treatment through permanent quotas and country-specific quotas for Canada. The remaining tariff lines will be provided tariff elimination or reductions over a period of up to 20 years, or reductions of the in-quota or out-of-quota tariff.
Vietnam will eliminate tariffs on close to 31 percent of its tariff lines upon entry into force. A further 67 percent of tariff lines will become duty-free within 15 years, with the remaining being provided preferential treatment through other means (tariff elimination only on in-quota tariff lines).
Malaysia will eliminate tariffs on nearly 92 percent of its tariff lines upon entry into force. A further 7 percent of tariff lines will become duty-free within 15 years, with the remaining being provided preferential treatment through permanent tariff rate quotas.
Australia will eliminate all of its tariffs on agriculture and agri-food products upon entry into force, except for one tariff line which will be eliminated within 4 years.
New Zealand will eliminate tariffs on almost 99% of its agriculture and agri-food tariff lines upon entry into force, with the remaining being eliminated within 5 years.
The TPP Agreement will give Canadian products preferential market access to all TPP countries. It will also ensure that Canadians have a competitive advantage over competitors outside of the TPP, benefitting the entire sector, from producers to processors.

12. TPP Processed Foods
Tariff eliminations in key Asian markets: Japan, Malaysia, Vietnam
Strong Sanitary and Phytosanitary rules to address non-tariff barriers to trade; establishes a committee to discuss issues
Rules of origin – cumulation within TPP members
Technical barriers to trade – obligations for conformity assessment, accreditation; organic products – information exchange, cooperation; pre- packaged food and food additives – obligations to ensure confidentiality of formulas; streamlining labelling for wine producers
Exclusion from one of the largest free trade agreements to ever be negotiated that includes our NAFTA partners would put Canadians at a competitive disadvantage
Tariff Eliminations
The average agricultural tariffs that Canada faces in these countries are 17.3 percent in Japan, 17 percent in Vietnam and 10.9 percent in Malaysia.
Rules of Origin
 Clear rules of origin that reflect Canada’s production realities and supports the integration of Canadian businesses into TPP and North American supply chains. In this regard, the TPP provides for the accumulation of materials and production among TPP countries, which is especially important for Canada.
Sanitary-phytosanitary measures
 Affirms TPP Parties’ rights and obligations of the WTO SPS Agreement, and establishes a series of new commitments including with respect to regionalization, equivalence, and science and risk analysis.
 Establishes a Committee on SPS Measures where SPS issues can be discussed by experts to facilitate trade, enhance cooperation among Parties and to resolve issues at an early stage.
Technical barriers to trade
 Contains obligations which foster closer cooperation between those TPP members’ organizations responsible for standardization, conformity assessment and accreditation.
 Facilitates the trade of organic products by encouraging information exchange, cooperation, and participation of Parties on matters related to organics.
 Helps to ensure the confidentiality of proprietary formulas for pre-packaged foods and food additives.
 Provisions for wine that streamline labelling requirements and help reduce costs for Canadian wine producers. Specifically, the Agreement will protect the definition and traditional production method of authentic icewine (where it is exclusively made from grapes naturally frozen on the vine).
Geographical Indications
 Rules to promote transparent and fair administrative systems for the protection of geographical indications, with respect to the opposition and cancellation of future geographical indications.

13. FTA IMPACTS Removes tariffs and non-tariffs barriers
Provides predictable rules
Recourse for disputes
Please let us know about any tariff or non-tariff barriers affecting market access
Contact us if you are looking for assistance in these or any other markets
Tariffs and non-tariff barriers - on movement of goods and people
Rules – trade facilitation, labour mobility, investment, procurement
Recourse for disputes – joint committees, dispute settlement, consultation

14. Ministry of International Trade
Monica Gervais
Senior Manager, International Trade Policy
I hope you found the presentation informative.
I would be pleased to answer your questions.