Thank you, honourable Chair and members of the committee.
It is a pleasure today to present the Canadian sugar industry's perspective on trade opportunities in the Indo-Pacific.
The Canadian Sugar Institute's members represent refined sugar production in four provinces in Canada, including cane sugar refining at major ports in B.C., Ontario and Quebec, and sugar beet processing in Alberta. The industry also has two sugar-containing product processing facilities in Ontario.
The CSI supports Government of Canada initiatives to diversify and grow export markets for sugar and for food products containing sugar. We consistently advocate for the reduction of tariff and non-tariff barriers in high value markets, while strongly supporting the continued advancement of multilateral liberalization. This is particularly important in our sector, where global and regional trade are characterized by a high degree of government intervention that distorts production and trade.
Canada’s sugar industry, in contrast, operates under world market conditions without subsidies and prohibitive tariff walls. Relative to countries in the ASEAN, India and many other protected markets, our market is open with only a modest tariff of about 6%. This contrasts, for example, with tariffs of 94% on sugar in Thailand, 95% in Indonesia and 100% in India. Given these massive tariff and non-tariff barriers on sugar in these regions and the dominance of Thailand and India in global and regional sugar production, there has been no opportunity for Canada to export refined sugar to these countries.
In this context, the future prospects for achieving meaningful export gains are very limited for sugar. For this reason, we don't support the elimination of our modest refined sugar tariff. It is small by international standards, but it provides some insulation against foreign trade distorting policies.
On the other hand, there may be long-term opportunity for the processed food industry, which our industry relies on as suppliers. We contribute in a major way to investment in food processing in Canada, accounting for about 25% of total food manufacturing, and representing about $22 billion in revenue and close to $10 billion in exports. In fact, about 40% of Canada’s sugar production is exported in food products.
While the United States is the most important export market for our customers—for the food processors that use our sugar—diversification is also important. In that context, the potential for further growth and value-added food products is important to our industry.
Currently, imports into Canada significantly outweigh exports for the vast majority of food products containing sugar, as well as processed foods overall. While opening markets to Canadian agricultural commodities is important, it is also essential to address the trade imbalance in value-added processed foods.
Key priorities for us for negotiations with Indonesia, ASEAN and India include continued advancement of Canada's long-standing position that refining confers origin to raw sugar. This rule of origin is essential in recognizing that 90% of Canada's refined sugar depends on the Canadian refinery industry for Canadian consumers and food processors.
We'd like to eliminate foreign tariffs on sugar and foods containing sugar, given the substantial imbalance in tariff protection in these economies. In most cases, Canada’s import tariffs are duty-free, or very small, while tariffs in these potential markets are disproportionately high or prohibitive.
Another priority is to address the trade imbalance in value-added processed foods. It is important that negotiating outcomes address the significant and complex array of non-tariff measures that prevent Canada from exporting value-added processed foods to these countries.
Briefly, and specifically in the context of the ASEAN negotiation, as mentioned, market access prospects are limited for Canadian sugar, and products that are high in sugar, given Thailand’s surplus production and dominance in the region and trade distorting policies. This dominance threatens to divert more refined sugar products to Canada without any offsetting export opportunity. For food products containing sugar, a comprehensive negotiation that substantially reduces tariff and non-tariff barriers could provide long-term opportunity as the market develops and demand grows for packaged foods and beverages.
With respect to—