Good morning, committee members and staff.
I'm pleased to be here representing the Saskatchewan Cattlemen's Association, and Saskatchewan's more than 18,000 beef cattle producers.
My name is Ryan Beierbach. I'm the chair of the Saskatchewan Cattlemen's Association board of directors. I ranch near Whitewood, Saskatchewan, along with my wife Tania and our three children.
Ryder Lee is with me. He is the SCA's CEO.
I am aware that this is the third day of your western tour. You have probably heard some of the things I will say today. Please recognize that this repetition reflects the consistent support of cattle producers for the Trans-Pacific Partnership as well as producers' recognition of the need to expand and improve market access.
If Canadian market access does not continue to grow along with that of our beef-exporting competitor nations, then cattle producers in Canada will be left behind, and this will show in reduced profit levels for producers like me and those I represent.
The trade opportunity presented by Asia and its growing population, along with its growing wealth, seems well understood today. The TPP is another step for Canada to access that market. I'd like to reinforce this point.
I'd also like to reinforce the point that this agreement is about keeping pace with our competitor beef-exporting nations. My base fear about the TPP is that it will not be implemented. If the TPP is not implemented, then Canada will lose out on the Japanese market. Japan was a $100-million export market for Canadian beef in 2014. That was revenue from almost 19,000 tonnes. In 2015 that number was down to 14,000 tonnes, worth $93 million. That is a 24% drop in tonnage. This trend will continue to worsen without an improvement in Canada's access to Japan.
Australia already has negotiated a free trade agreement with Japan. They enjoy an 11% tariff advantage over Canadian beef. Imagine competing with a wholesaler who starts with an 11% differential in purchasing options.
The worst part is that this gap will widen if Canada does not get improved tariff treatment. Once the TPP is implemented, the Japanese tariff on Canadian beef will immediately match the rate for Australia and will reduce to 9% over 15 years. We feel that this could provide opportunities to double or nearly triple our exports, to $300 million. Without the TPP or a bilateral agreement with Japan, Canada will likely lose around 80% of the value of our beef exports to Japan.
This drives home a key point that I want to leave you with today. For beef exports to Japan there is no status quo. We either implement an agreement and take advantage of the new situation or we do not implement and we can say goodbye to nearly all of our existing exports to Japan.
I would also like to remind you that this Japan competition isn't just between us and Australia. Mexico, New Zealand, and the United States are also members of the Trans-Pacific Partnership, and they are significant beef exporters. I would not like to consider Canada's being part of the 38.5% tariff while our major competitors take over the high-value Japanese market. I want you as a group to understand how much of a disappointment and real cost that would be to me and the Saskatchewan beef cattle producers I represent.
Looking beyond Japan, the TPP presents some other opportunities. The signatories include Vietnam, which we believe will become more and more important as their population moves up the prosperity ladder. When people have more disposable income, they tend to spend some on improved diets, including more beef. Vietnam has a tariff of 15% to 20% on beef cuts, and those will be eliminated three years after implementation. They will also eliminate their 10% tariff on offals over five years.
We also need to consider future signatories. Many countries have indicated an interest in joining. It is those who are in at the start who will be able to dictate the cost of entry for new signees.
One country presenting opportunity is South Korea. We already have a free trade agreement with Korea, but so do the United States and Australia. All three countries have similar tariff phase-out periods, but Canada is three years behind the United States and one year behind Australia. All three will eventually get to zero, but we believe the TPP can be used to speed up the phase-out. We think the price of admission for Korea into the TPP should include tariff elimination on Canadian beef to match the rate U.S. beef receives.
Thank you for the opportunity to present. We're glad to answer any questions.
We wish you safe travels.