Regional and Bilateral Trade

The Canadian Sugar Institute (CSI) supports the pursuit of free trade initiatives by the Government of Canada that will lead to significant gains in export market access for sugar and sugar-containing products from Canada as well as increased transparency and predictability in trade rules and administrative practices.

Sugar remains a highly sensitive commodity in key markets where production and trade continue to be dominated by significant government intervention. Restrictive tariffs, tariff rate quotas and rules of origin in export markets prevent meaningful export access for Canadian refined sugar. Comprehensive liberalization of sugar trade through multilateral (WTO) negotiations offers the best prospect of reforming sugar policies and securing predictable and meaningful market access for Canadian refined sugar.

Since the delay of the WTO Doha Round, the Government of Canada has accelerated its work to negotiate a number of regional and bilateral free trade ("FTA") agreements. The Canadian Sugar Institute evaluates all FTA negotiations for the potential to create export opportunities for Canadian sugar and sugar-containing food products as well as the potential to transfer foreign market sugar distortions into the Canadian market.

Central and South America

Brazil, Mexico, and Central American countries are the main sources of raw sugar for Canada’s sugar refineries. This supply of world priced raw sugar is essential to maintain a competitive sugar refining industry to serve Canadian consumers as well as food manufacturers who depend on the reliable local supply of Canada’s high quality refined sugar production.

Central and South American countries that supply raw sugar to Canada are not logical export markets for Canada’s refined sugar. On the other hand, surplus refined sugar from these countries can pose a threat to Canada’s open sugar market while other markets, notably the United States, continue to restrict imports.

One of the first bilateral FTAs to have a significant impact on the Canadian sugar industry was the Canada-Costa Rica FTA. This FTA included the phase-out of Canada’s $31 per tonne duty (about 5-8% duty) for Costa Rican exports of refined sugar to Canada but did not provide for meaningful access to the Costa Rican market. Given the negative precedent of this agreement and strong objection of Canada’s sugar industry, the Government of Canada continues to take the specific concerns of the industry into account to ensure that this agreement does not serve as a model for future negotiations.

Canada has concluded and continues to negotiate a number of other FTAs in the Central/South American region. FTAs with Colombia, Honduras, Peru and Panama have specific sugar provisions such as transitional tariff phase-outs or small, reciprocal quotas that help avoid the immediate negative effects of duty-free access on the Canadian sugar industry. None of these FTAs include market access for Canada’s refined cane sugar production because the “rule of origin” for quotas and tariff reductions applies only to Canada’s small domestic beet sugar production.

The Canadian Sugar Institute continues to inform government officials and politicians of the threat to Canada’s sugar industry of trade agreements with surplus sugar producers in South and Central America where there is little to no commercial export opportunity for Canadian refined sugar. While the Canadian Sugar Institute supports Government of Canada initiatives to diversify export markets and expand sugar-containing product exports, FTAs to date in this region have not resulted in meaningful export opportunity. 

European Union

The European Union is the world’s largest producer of beet sugar benefiting from domestic subsidies and high import tariff barriers. Support to the EU sugar sector dates back to 1968 with the first rules on the Sugar Common Market Organisation (CMO). 

The EU sugar program underwent a partial reform beginning in 2006 that led to a gradual reduction of sugar support prices, the phase out of intervention buying of surplus production, and the end of export refunds. A generous restructuring scheme reduced production quotas and concentrated production in more competitive regions, but left substantial surplus capacity. EU sugar production quotas were removed on October 1, 2017 as part of another partial reform; however, high domestic subsidies and import triffs continue to support surplus EU sugar production and distort import and export trade.

The EU import duty on refined sugar is 419 Euros per tonne, almost 20 times the Canadian duty of $30.86 per tonne. As a result of this high duty level, EU imports are mostly raw sugar and from least developed and developing countries with special preferential agreements.

The October 1, 2017 removal of domestic quotas led to a dramatic increase in EU beet sugar production and exports causing significant trade distortions in the world sugar market and adversely affecting many WTO Members. The maintenance of both direct payments and coupled income support subsidies to the EU sugar industry continues to contribute to EU sugar trade distortions. 

For more information on EU sugar policy, see European Commission, Agriculture and Rural Development on Sugar

Canada-European Union Comprehensive Economic and Trade Agreement (CETA)

The Canada-EU Comprehensive Economic Trade Agreement (CETA) was provisionally applied on September 21, 2017. For many agri-food products including sugar, the EU maintained high tariffs and restrictive "rules of origin". While Canada agreed to phase out its duties on refined sugar and sugar-containing products, the EU maintained its prohibitive tariffs and restrictive “rules of origin”. 

The EU provided refined sugar access for “originating” beet sugar from Canada with a tariff phase-out beginning in 2017 and concluding by 2024, but this does not provide commercial access. Canada’s refined beet sugar represents less than 10 percent of Canada’s production, is located inland in Alberta distant from the EU market and is exclusively produced from genetically modified seeds and cannot be commercialized in the EU.

The EU established "origin quotas" to allow imports of specific quantities of some food products if certain conditions are met. Origin quotas for "high sugar containing products", "sugar confectionery and chocolate preparations", as well as "processed foods" have not provided commercial market opportunity for Canadian exporters. 

In contrast to the EU, Canada does not maintain any quota barriers and has phased out duties on sugar-containing products. The result has been a worsening of the Canada-EU trade balance in SCPs since the CETA was implemented.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a partnership agreement among eleven countries. The CPTPP entered into force on December 30, 2018 for the first six countries to ratify the Agreement - Australia, Canada, Japan, Mexico, New Zealand, and Singapore. The agreement has since entered into force for all remaining countries (Vietnam, Brunei, Chile, Malaysia, and Peru). The CPTPP countries will also welcome the United Kingdom to the agreement after the appropriate ratification process has concluded. Costa Rica’s application to join the CPTPP is also actively underway. 

The CSI supported the CPTPP as an important starting point in developing further regional integration and increased liberalization of markets for Canadian sugar and sugar-containing products. However, market access outcomes in the CPTPP did not liberalize sugar trade in the region. The CPTPP resulted in the non-reciprocal commitment to fully eliminate Canada’s customs duty on imports of refined sugar which further exposes our open sugar market to international trade distortions. 

The CPTPP has also not resulted in increased exports of sugar-containing products. Market access outcomes have not met the agreement’s potential, due to continuing quotas and non-tariff barriers such as complex TRQ administration and import licensing. The CSI supports ongoing review of the agreement to reduce trade barriers for Canadian exporters.

Other FTA Negotiations

The Canadian Sugar Institute monitors and provides input to all other FTA negotiations based on the potential for export gains as well as anticipated Canadian market impacts. Every negotiation is unique given differences in market geography, size and development as well as unique sugar market policies, many of which distort domestic production and trade. The Institute supports the WTO as the best mechanism to achieve comprehensive sugar market liberalization in sugar to ensure the long-term stability and growth of the Canadian sugar industry.

For a listing of Canada’s trade agreements and negotiations, visit Trade and Investment Agreements.