Canada-Peru Free Trade Agreement: A Second-Rate Deal for Canada

In his capacity as opposition spokesperson in the Senate for Bill C-24, the Canada-Peru Free Trade Agreement, Charlottetown Senator Percy Downe has concluded that Canada negotiated a much weaker deal than the free trade agreement signed in December 2007 between the United States and Peru.

“The Canadian Government failed to negotiate meaningful provisions to protect the intellectual property rights of Canadians, nor is enough done to safeguard the interests of our agricultural sectors, and this trade agreement links trade to foreign aid,” said Downe.

“With so many free trade agreements being pursued by Canada, including the recently announced negotiation with the European Union, it is important that the Canadian Government negotiate trade deals that benefit all Canadians, not one that leaves our country at a competitive disadvantage with the United States,” continued Downe.

The potato industry, so important to the economy of Prince Edward Island, is only one of the many examples of Canadian agricultural sectors that have been put at a disadvantage compared to their United States counterparts. Peruvian tariffs on potatoes are eliminated immediately for the United States, but Canadian potato producers, with the exception of seed potatoes, have to wait ten years to obtain the same benefit.

Downe also believes that this trade deal is linking trade with foreign aid. While Peru has been added as a country of focus with the Canadian International Development Agency, other countries with significant need for development assistance have been dropped, such as Cambodia, Kenya and six other African countries.

Less than 1% of Peru’s Gross National Income (GNI) comes from foreign aid, as compared to Rwanda and Malawi who were recently dropped by the Canadian Government, where 20% of their GNI comes from foreign aid.

With regard to the Canadian beef industry, negotiators obtained only a tariff-free rate quota allowance of 100 tonnes in year one, increasing to 122 tonnes by year five and beyond. While tariffs on high-quality cuts of Canadian beef fall to zero immediately upon implementation, boneless cuts will not receive any overall tariff reduction treatment from Peru.

As Canadian beef producers continue to wait for improved access to markets around the world following boarder closures in 2003 related to cases of bovine spongiform encephalopathy (BSE), also known as mad cow disease, the Government of Canada must ensure that producers have every opportunity to compete in South America once trade resumes.

For pork products, there will be a gradual, but complete, phase-out of tariffs, with an interim tariff-free rate quota allowance. For the first ten years, Peruvian tariffs remain in place, but the quota increases. Only in year 11 will tariffs be reduced, not falling to zero until year seventeen.

Under Peru’s agreement with the United States, pork producers receive a five year tariff phase-out period (compared to 17 years for Canada) and lower-grade beef cuts receive a 12-year tariff phase out period.

“Canada deserves a first rate free trade deal with Peru, and the Government of Canada should reopen negotiations with Peru to obtain, at a minimum, the same benefits the United States was able to obtain,” concluded Downe.

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For further information:
Senator Percy Downe: 613-943-8107
Or toll free at 1-800-267-7362
www.sen.parl.gc.ca/pdowne