Good afternoon. Thank you for the invitation to be here. My name is Dave Carey. I'm an executive board member of the Canadian Agri-food Trade Alliance, or CAFTA. Joining me today is Adam Taylor, our interim executive director.
As this committee has heard from us before, CAFTA represents the 90% of farmers, ranchers, processors and agri-food exporters who depend on trade. The sectors CAFTA represents support over one million jobs in urban and rural communities across our country.
On behalf of our members, we thank the committee for initiating this study on non-tariff barriers. This has been a long-standing ask from CAFTA, and we are hopeful the study will show why the reduction and elimination of non-tariff trade barriers is so vital to the agri-food sector and those who rely on it for their livelihood.
Our remarks will provide a brief overview of non-tariff trade barriers in agricultural trade, and our individual members will focus more on the product-specific non-tariff barriers that are holding Canada back from reaching its full potential in many of our most important FTAs and, by extension, the markets that these agreements are supposed to unlock.
Simply put, non-tariff trade barriers or non-tariff measures, NTMs, remain the most significant source of disruption impacting Canada's agriculture and agri-food trade in our broader national economy.
These trade barriers tend to be used for specific products in specific markets, making it harder to identify, quantify and resolve them.
The three main types of NTMs are direct government support to a sector, sanitary and phytosanitary measures, and regulatory and technical requirements.
The total impact of direct subsidies and other non-tariff measures is equivalent to 42% of the total value of global agricultural production, generating a $17 trillion global impact.
The OECD has calculated that an average of $817 billion U.S. of state support was provided to agriculture annually from 2019 to 2020, a 13% increase from just a year earlier.
The Food and Agriculture Organization of the United Nations published a report in 2021 that found that over two-thirds of agricultural support is considered price-distorting and largely harmful to the trade environment.
The bulk of agricultural subsidies are within the EU, the U.K., China, the U.S. and India. When looking at both industrialized and developing countries, some trade watchers predict that overall, global subsidies could reach $2 trillion by 2030.
These subsidies don't only disadvantage agricultural producers in Canada; they also create higher prices for consumers and are working against global food security and efforts to combat climate change.
Similarly, sanitary and phytosanitary and wider technical and regulatory measures are also a significant, persistent and costly challenge for Canadian agri-food exporters.
SPS and related regulatory barriers have increased substantially, going from one million measures registered in 2000 to more than four million registered in 2021.
SPS barriers are most prevalent in the agricultural and agri-food sectors and have at times been used by countries as protectionist tools, disadvantaging imported products over domestic ones.
As you might expect, technical and regulatory barriers come in many forms and often persist long after tariffs fall to zero, acting as a barrier to taking advantage of a new market even if there is an FTA is in place.
While the impact of each non-tariff measure varies by product, our own research shows that the average price of NTMs in agriculture and agri-food is approximately 10%, which accounts for $362 billion in global costs and $4.7 billion in costs to Canada.
These sanitary and technical barriers also hinder small and medium-sized exporters from accessing international markets, since they generally do not have the resources to comply with these measures.
Overall, non-tariff measures increase the cost of agricultural goods and have a significant impact on the price paid by consumers. In a time of record food prices, we need to open access to agricultural trade to make food more affordable and accessible.
This study gives us an important opportunity to truly understand how the persistence of these barriers in many of our most significant FTAs is hurting Canadian agri-food exporters and consumers. We hope it also clearly demonstrates why greater focus on the elimination of non-tariff measures needs to be top of mind for those negotiating and implementing Canada's free trade agreements.
CAFTA calls on the committee to take this time to truly identify and quantify these barriers and work with us to develop solutions to resolve them. Doing so is critical to job creation, economic growth, rural economic development and keeping food plentiful and affordable here at home and around the world.
We look forward to playing an active role as this study takes shape and we thank all members in advance for taking this important work so seriously.
Thank you. We welcome your questions.