Canola Market Impacts Under Alternative TPP Scenarios

Abstract

This study estimates the impact of the TPP on Canada's oilseed sector as a whole and on the canola sector in particular. The results are based on a general equilibrium analysis of the trade flows for oilseeds, vegetable oil and meal. The overall analysis is conducted using the GTAP general equilibrium framework, which represents the oilseed sector as a whole; we disaggregate the results into canola and "other" oilseed sector products. This is accomplished in part using a partial equilibrium model to identify the direct trade impacts, subject to constraints regarding the relationship between changes in seed, oil and meal production. The impacts on the oilseed sector generated by the GTAP model take into account the overall economic effects of the TPP, including on production of other agricultural and industrial products, and thus the competition within Canada for land, capital and labour across sectors, as well as competition between Canada and other TPP suppliers in TPP markets. Our results suggest that the main impact on the canola sector will be on processing rather than the growing sector. Obtaining immediate tariff elimination versus a gradual phase-out substantially increases the present value of the TPP concessions.

Keywords: Canola, Canada, TPP, tariff elimination

JEL Classification: F14, L70