1. OTN BARBADOS OFFICE
1st Floor, Speedbird House, Bridgetown BB11121,
Ref: 31000.3/1-2010-07-28 BARBADOS
Tel: (246) 430‐1670 Fax: (246) 228‐9528
Email: barbados.office@crnm.org
OTN JAMAICA OFFICE
2ND Floor, PCJ Building, Kingston 5,
JAMAICA
Tel: (876) 908‐4242 Fax: (876) 754‐2998
Email: jamaica.office@crnm.org
Trade Brief
CARICOM-Canada Negotiations: Prospects for
the CARICOM Agriculture and Fisheries Sector
BACKGROUND
The CARICOM agricultural sector is characterized by a combination of small and medium-scale enterprises both at the primary and secondary
stages of production. The historical domination of the sector by plantation export agriculture has all but disappeared in some countries but
retains its significance in a select number. The bulk of the sector consists of highly diversified, mainly domestic-oriented enterprises.
Intra-regional trade is similarly highly diversified but is limited, among other things, by issues of transportation, non-tariff restrictions and poor
facilities for bulking up and handling. Exports to both CARICOM and non-CARICOM destinations are characterized, for the most part, by low
volumes with certain notable exceptions.
The current agricultural and rural model in the Caribbean is based on a combination of historical plantation structures and low input peasant-
type production units and is under considerable pressure. Contributing factors include:
1. the continuous decline in the attractiveness of traditional export markets
2. increasing competition from larger scale producers in both export and domestic markets
3. the reduced ability of governments to provide protection to the sector due to commitments made to international development
financing bodies, and multilateral and bilateral trade commitments, and
4. high production costs.
Factor costs (both domestic and imported) are high by developing country standards. The labour constraint is particularly great in countries
with significant tourist and oil sectors. Land is also a scarce and increasingly expensive resource, and not only in the smaller islands. Water
resources are also scarce in some cases, and water management capabilities are often deficient. Financing costs vary considerably but are
generally high. Operations costs – energy, transportation and communications – are in some cases prohibitive. On the other hand, the human
resources available to the sector are of a reasonably high quality - literacy levels are high by developing country standards, and the ability to
absorb new technology is also reasonably high.
The Region’s agricultural policy has been conditioned mainly by perceptions of the sector’s lack of competitiveness and the concomitant need
to protect it from international competition. This has underpinned the region’s position in all international negotiations, including the WTO and
the EPA negotiations. Under CARICOM’s bilateral negotiations with neighboring countries agriculture has been effectively excluded. In the
EPA negotiations, some 70% of all agricultural tariff lines were excluded from CARIFORUM’s market access commitments. In the bilateral
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agreements with Cuba, Costa Rica and the Dominican Republic, CARICOM excluded most agricultural products and also listed a range of
products that could be traded only within certain seasons. This is in addition to the fact that CARICOM’s LDCs were not required to provide
reciprocal market access in the area of goods.
In respect of fisheries, most of the pressing issues relate to resource management, i.e. ensuring that the resources are sustainably exploited
and that existing pressures are relieved. CARICOM’s fisheries resources are very fragile and require constant monitoring, using objective,
science-based methodologies, if collapse is to be prevented. The resources are also very unevenly distributed with most being concentrated in
the coastal mainland countries – Belize, Guyana and Suriname. Exports are dominated by high-value products, such as shrimp, lobster and
conch while imports are predominantly of lower-value dried, smoked and canned products. Entry into major markets is duty free and the major
barriers to entry are connected with technical and food safety measures.
CARICOM’S INTERESTS
CARICOM’s major imports from Canada are fish and fish products (mostly salted or canned), potatoes, pig meat, wheat products, other food
preparations, peas and beans, salted beef, milk concentrates, turkey meat, and miscellaneous food preparations.
Imports of fish consist mainly of herring (about US$17 million), sardines (US$12 million), cod (US$2.1 million) and haddock and other fish
(US$1.9 million). The tariffs that CARICOM applies to these products are generally low or zero, reflecting the fact that these are considered to
be basic food staples.
It is also the case that, under the EPA, most of the products falling in the top tier of imports from Canada were excluded from liberalization.
Nevertheless, significant tariff lines were liberalized albeit in the 10 year and 20 year baskets. Most pork products, peas and beans (except
lentils) were excluded from EPA commitments as were milk products.
Therefore, in determining the shape of CARICOM’s market access commitments for agricultural and fisheries products in the CARICOM-
Canada negotiations, the impact of the “MFN clause” in the EPA, which commits the Region to extending no greater benefits to other major
trading partners than those extended to the EU, will undoubtedly be highly influential.
Fish
The Region as a whole is a net exporter of fish, in value terms, although most of the Eastern Caribbean countries are net importers. Most of
the exports are of high-value products such as shrimp, lobster and conch while the imports are predominantly of processed low-value
products, such as salted herring and sardines. Exports of fish and fish products under CARIBCAN are duty-free, therefore, is no additional
market access to be gained under the new trade agreement. However, CARICOM Member States would stand to benefit from a relaxation of
the rules of origin requirements their exporters would have to satisfy in order for their fish to qualify for the duty-free market access. CARICOM
therefore has an interest in seeking to secure such gains under a new trade agreement with Canada.
Inputs
Most agricultural inputs, such as machinery and fertilizers, are usually located in the non-agricultural sections of a tariff schedule. It would
therefore be an important consideration for various agri-industries that the liberalization of such inputs is undertaken, to the extent practicable,
to support the competitiveness of the agricultural sector.
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CARICOM’S EXPORT INTERESTS
As demonstrated in the table below, given the provisions of CARIBCAN and the Canadian preferential tariff for LDCs, the tariffs faced by
CARICOM exporters to Canada are minimal. The overwhelming proportion of products (both agricultural and other) enters duty-free and
without other restrictions. For agricultural products, however, there is a list of “supply-managed” products on which Canada imposes quota
restrictions. While some of these products are temperate crops e.g. wheat and barley, the remainder are dairy and meat products, which
conceivably could be exported from CARICOM (see section on tariff rate quotas).
Main Canadian Agricultural and Fisheries Imports from CARICOM
(2004-2006 US$ Average)
Canada Tariff Code Description Value of Imports from Canada Tariff Treatment
HS 2007 CARICOM
MFN GPT CARIBCAN
2905.11.00 Methanol (methyl alcohol) 52,288,115 5.5 % 3% Free
2208.40.10 Rum 11,960,306 24.56 Fre Free
¢/litre e
0306.11.00 Rock lobster and other sea 6,900,022 5% N/A Free
crawfish
3102.10.00 Urea, whether or not in 6,703,818 Free Fre Free
aqueous solution e
0807.20.00 Papaws (papayas) 4,497,998 Free Fre Free
e
2208.70.00 Liqueurs and cordials 2,201,192 12.28 Fre Free
¢/liter e
0302.69.00 Other fish, fresh or chilled 1,396,040 Free Fre Free
e
2203.00.00 Beer made from malt. 1,363,543 Free Fre Free
e
0714.20.00 Sweet potatoes 1,257,566 Free Fre Free
e
0714.90.90 Other roots, fresh, chilled, 1,024,621 Free Fre Free
frozen or dried e
Source: Canada Customs. ‘N/A’ denotes that the product is excluded from the scheme.
Tariff Rate Quotas
Canada operates a number of tariff rate quotas (TRQs) for agricultural products. TRQs allow certain quantities or values of a product to enter a
country at a reduced duty rate over a specific period of time. After the specific quantity or value threshold is met, additional items may be
imported but the rate of duty will be higher. It follows that in the case of Canada’s TRQs for agricultural products, imports are subject to low
"within access commitment" rates of duty up to a predetermined limit (i.e. until the import access quantity has been reached), while imports
over this limit are subject to significantly higher "over access commitment" rates of duty.
For most products, the privilege to import at the ‘within access commitment’ rates of duty is allocated to firms through the issuance of import
allocations (or "quota-shares"). Those with quota-shares will, upon application, receive specific import permits giving access to the within
access commitment rates of duty as long as they meet the terms and conditions of permit issuance.1
Some of the products are
1
see http://www.international.gc.ca/controls-controles/prod/agri/tarif.aspx?menu_id=22&menu=R
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 Turkey
 Chicken
 Egg and egg products
 Fluid milk
 Butter
 Yogurt
 Ice Cream
 Cheese
 Wheat
 Beef and veal
Of these, CARICOM exported cheese and margarine during the 2004-06 period. The exports were:
Cheese
Heading Exports Duty
paid
0406.30.10 US$118,815 Free
0406.90.11 US$768 Free
Jamaica was responsible for these exports, which were “within access commitment” and therefore duty free.
Margarine
Heading Exports Duty
paid
1517.10 US$8223 Free
.10
1517.10 US$18,915 82.28
.20 ¢/kg
1517.90 US$452 Free
.99
These exports were from Haiti and Guyana. There is therefore scope for improvement in market access conditions for this margarine.
Other products on the control list with potential for export include chicken, eggs and egg products, yogurt, ice cream, and beef and veal. There
were no recorded exports of these products from CARICOM during the 2004-6 period. Yogurt and ice cream are products for which there are
now several regional manufacturers. There is also the potential to export beef to Canada from Belize and Guyana.
While CARICOM would have an interest in seeking to secure full duty-free and quota free access for all its exports, the Region will continue to
be mindful that in its bilateral trade agreement negotiations, such as under the negotiations of the Canada-Costa Rica agreement, Canada has
preserved its defensive domestic interests by excluding all its ‘supply-managed’ products from liberalization.2
Safeguards
Special safeguards for agricultural products, over and above general safeguards, are to be found in many trade agreements. In the case of the
Canada-Costa Rica agreement, there is such a provision (Annex III.3.2) which allows each party to apply a tariff rate quota if imports exceed a
certain trigger level for the particular good. The trigger levels are increased by 5% each year for ten years. The maximum over-quota tariff rate
2
See Canada’s schedule under the Canada-Costa Rica Free Trade Agreement -
http://www.international.gc.ca/assets/trade-agreements-accords-commerciaux/pdfs/canada_schedule-e.pdf
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cannot exceed the MFN rate in place at April 1, 2001, or the MFN rate at the time the safeguard is applied, whichever is lower. Costa Rica has
some 12 tariff lines in its safeguard schedule3 while Canada apparently does not have such a schedule.
In the EPA negotiations, CARIFORUM had proposed a special agricultural safeguard covering all agricultural and fisheries products which was
heavily resisted by the EC. In the end, CARIFORUM was satisfied that, given the fairly moderate market access commitments that it was
required to make in agriculture, the special safeguard had been rendered unnecessary. In the negotiations with Canada, CARICOM would
likely consider a similar calculus in determining whether a special safeguard is necessary.
Export Subsidies
Based on the provisions of the Canada-Costa Rica agreement (Article III.12), Canada is likely to call for the elimination of export subsidies on
agricultural goods traded under the agreement. The EPA also has a similar provision (Article 28) but CARIFORUM was able to negotiate the
right to apply any subsidies authorized under the WTO agreements on Agriculture (Article 9.4) and Subsidies & Countervailing Measures
(Article 27). It would be consistent with the Region’s interest for CARICOM to seek to preserve that right under a trade agreement with
Canada.
Non-tariff Issues
The Canadian market for imported wine and spirits operates in a highly regulated environment and is characterised by government
monopolies. Provincial liquor boards have sole authority to import wine into Canada. The exception is the Alberta Liquor Control Board, which
has privatised its entire retail network. The other provincial liquor boards import, warehouse and distribute imported wines to their various retail
outlets. However, private individuals and restaurateurs, hoteliers et c. may obtain approval to import unlisted products through the Liquor
Control Boards.4
In 1988, a GATT panel ruled that certain practices of the Canadian provincial liquor boards were inconsistent with the national treatment
provision of the GATT. As a result, both the EC5 and the US6 now have agreements with Canada, which specify in detail how the sales of
alcoholic beverages should be treated, in particular, as it relates to listing (i.e. authority by the provincial authority to sell a product) and mark-
ups (basically taxes imposed by the provinces).
On the other hand, the Protocol on Rum between Canada and CARICOM, which came into effect in 1998 basically states that Canada will use
its good offices with the provincial authorities towards facilitating the accord of national treatment to rum that is the product of Member States of
the Caribbean Common Market in respect of measures affecting the listing, delisting, distribution and mark-up of distilled spirit7. Given the
substantially improved provisions that other countries have been able to negotiate with Canada, CARICOM has an interest in seeking similar
or better disciplines aimed at facilitating its exports of alcoholic beverages within Canada.
In addition to the above, there is also an interest in seeking an amendment to the Canadian Spirit Drinks Trade Act (S.C. 2005, c. 39) under
which rum may only be sold under the name “Caribbean” if it has been made from sugar cane products of a Commonwealth Caribbean
country, or it has been imported in bulk from a Commonwealth Caribbean country and subjected to blending either with other Caribbean rum
or Canadian rum. The main difficulties with this are (i) that the current legislation prevents Caribbean producers from making use of raw
materials acquired from elsewhere (a practice that is becoming more crucial over time as the availability of molasses from the Region’s sugar
industry declines); and (ii) that the law allows for the mixing of Caribbean rum with non-Caribbean products, a practice that is not in the best
interests of the region’s producers.
3
http://www.international.gc.ca/assets/trade-agreements-accords-commerciaux/pdfs/03-C3-Appendix-
III.3.2-e.pdf
4
http://www.austrade.gov.au/Canada-Doing-business/default.aspx
5
http://www.delcan.ec.europa.eu/en/eu_and_canada/official_documents/agreements/eu-ca_ag_tcab.shtml
6
http://tcc.export.gov/Trade_Agreements/All_Trade_Agreements/exp_002800.asp
7
See http://www.crnm.org/index.php?option=com_docman&task=doc_download&gid=571&Itemid=113
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DEVELOPMENT PRIORITIES
Canada has been a long-standing development partner of CARICOM. This has been evidenced through the CARIBCAN arrangements as
well as through the significant development support that has spanned many decades, including specific support to fisheries at both regional
and national levels.
Consistent with its trade policy approach, CARICOM will seek to secure a specific chapter or section of the agreement devoted to cooperation
in agriculture and fisheries. The areas of interest are based on the priorities identified by COTED Ministers (agriculture) as part of the
CARICOM Regional Transformation Programme for Agriculture (RTP), and the Jagdeo Initiative. CARICOM will likely seek cooperation to
support programmes and mechanisms that would assist, inter alia, regional food security, water management, and fisheries conservation and
management.
CARICOM-Canada Trade and Development Agreement