The Impact of the FTA and NAFTA on the Canadian Fruit and Vegetable Sector zyxwvutsrqponml E.W. Goddard zyxwvutsrqponmlkjihgfedcbaZYXWVUT University of Guelph, Guelph, Ontario, Canada All G 2Wl The horticulture industry has grown in impor- tance in the agricultural sector significantly over the past twenty years. As a percentage of farm cash receipts from crops horticulture has grown from 17% in 1977 to 27% in 1993 (Table 1). However, it is worth noting that floriculture makes up a large and increasing proportion of the horticulture industry (up from 25% in 1977 to 38% in 1993). In spite of this there have been respectable increases in fruit and vegetable production in the country. The fruit and vegetable industry is not dis- tributed equally across the country’s pmv- inces. Ontario, Quebec and British Columbia maintain large shares of the fruit and vegetable industry. The relative importance of different provinces has been moving around over time as highlighted in Table 2. In many commodi- ties Ontario’s dominance has decreased over the past fifteen years. The question that remains open is whether recent changes in our international trading environment (FTA, GATT and NAFTA) will significantly affect the growth and viability of our fruit and vegetable sector. To this end traditional and ‘new’ trading environments for fruits and vegetables in Canada will be de- scribed in the following paper. The market conditions for selected fruits and vegetables will be described over the recent past. INSTITUTIONAL ARRANGEMENT FRUIT AND VEGETABLE SECTOR PRE-TRADE LIBERALIZATION In general, the types of international institu- tional regulations affecting the fruit and vege- table sectors fall into two categories; market access and technical regulations. In Canada, market access has traditionally been restricted under tariffs. The tariffs have been used in one of two ways, either to protect harvest season production (tariff in harvest season, not rest of year) or to protect further processed product. An example of this is the high tariffs on tomato paste. This type of tariff was justified to en- courage the development of a local processing industry. The technical regulations affecting trade in fruit and vegetables fall into three sub-catego- ries: food safety, phyto-sanitary, and techni- cal. On food safety grounds trade is restricted on the basis of product characteristics such as pesticide residues. Across North America countries have different standards of accept- ability, different enforcement mechanisms as well as different assessments of risks associ- ated with standards. Under phyto-sanitary type restrictions trade is restricted to protect domestic producers from unwanted harmful insects and diseases. Canada also uses techni- cal restrictions to impede trade in fresh and processed fruits and vegetables. Examples of some of these technical restrictions are can size restrictions and restrictions on fresh prod- uct imported in bulk as opposed to in con- sumer ready packaging. These various types of trade restrictions may have contributed to the development of a domestic fruit andvegetable industry. Domes- tic production has increased over the past 20 years. Given that Canada is a cold country and given improvements in shipping technology, imports have also increased over the same period. Canadian imports of most fresh fruit and vegetables have been satisfied by supplies from the U.S. and Mexico almost exclusively. Examples of Canadian import figures for cu- cumbers, tomatos and strawberries are shown in Fig. 1. For these three commodities import Can. J. Agric. Eton. 42: 463-472 463 Table of Contents