Thank you, members of the committee.
The Canadian Sugar Institute represents sugar refiners in Canada. We have cane sugar-refining operations in Vancouver, Toronto, and Montreal, and a sugar beet processing plant in Taber, Alberta. The industry also has two further processing facilities in Ontario that produce products such as iced tea, hot chocolate, and gelatin desserts.
Our industry has been in Canada since the mid-1800s and was founded on the principles of free trade. The Canadian sugar market is not supported by any domestic or export subsidies, and we do not limit imports through restrictive barriers, such as tariff rate quotas. The only protection we have is a $30-per-tonne tariff—about 8%—that serves as modest insulation from residual refined sugar prices on the world market. This is in sharp contrast to our most significant competitors, the U.S. and the EU, who have generous price supports amounting to two or more times the world price; export incentives; and small quotas protected by high over-quota tariffs. In the case of the U.S., these are 150%, and for the EU they are 175%, on both refined and raw sugar, and on many sugar-containing food products.
Canadian sugar attracts the world market. This provides consumers and food processors in Canada with a significant cost advantage. This price benefit, combined with the phase-out of duties under the NAFTA, on many finished sugar-containing products did result in significant investment in Canada and further food processing in industries such as sugar confectionery, bakery, and biscuit manufacturing.
In the years following NAFTA, annual sales growth was in the range of 4% to 8% for major sugar-using food manufacturers. Since 2004 that growth has slowed considerably. Domestic and export sales of sugar and sugar confectionery products in particular have been falling, as major multinational companies realign their businesses based on NAFTA and global goals. Since 2003, exports of sugar and sugar confectionery have fallen 12%, or by $215 million.
The reason I raise this is that in the absence of a WTO agreement to begin the process of sugar reform affecting both sugar trade and trade in many food products containing sugar, we have little optimism for improved market access and increased exports to the U.S., EU, and many other countries. As of January 1, 2008, the U.S. and Mexico have duty-free trade in sugar and sugar-containing food products. We still face zero or small quotas on refined sugar and many food products.
With the passage of the recent U.S. Farm Bill, the U.S. has cut off imports of an important product to our Taber, Alberta, plant and Canadian sugar beet producers—beet thick juice. The new sugar program in the Farm Bill also contains restrictive administrative provisions that will make it more difficult for us to export refined sugar at times of market openings. We also face more competition in the Canadian market, as large sugar-producing countries in Central and South America seek access improvements in Canada while U.S. market access remains essentially closed.
For all of these reasons, we strongly support a renewed effort to re-engage Canada's trading partners in the WTO towards a new agreement on agriculture. A comprehensive move towards reduced market access barriers and reductions in price supports and other domestic and export subsidies will strongly enhance the competitiveness of both the Canadian sugar industry and our customers in the food processing sector.
Thank you.