Wheat in the ASEAN region: Opportunities for Canadian companies in the Philippines, Singapore and Vietnam

This report considers the market opportunities for Canadian wheat in three countries in the Association of Southeast Asian Nations (ASEAN) region: the Philippines, Singapore, and Vietnam. The other members of this region are: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar and Thailand.

This information is useful for Canadian exporters in this sector that are interested in the ASEAN market and taking advantage of enhanced trading opportunities with certain ASEAN members, such as those created by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Note: Unless otherwise noted, the information in this report has been compiled using 2017 UN Comtrade data and refers to wheat as defined by Harmonized System Code (HS) 10.01 – Wheat and meslin.

This report was commissioned and overseen by the High Commission of Canada to Singapore, and was prepared by a consultant. Although every effort has been made to ensure that the information is accurate, Agriculture and Agri-Food Canada (AAFC) assumes no liability for any actions taken based on the information contained herein.

Summary

The following sections summarize the market potential for Canadian wheat exports by country, presenting key market metrics and an overview of market opportunities and challenges.

The Philippines wheat market potential summary

Canada’s wheat exports to the Philippines have grown, albeit from a low base. Demand can be volatile and price sensitive. Canada’s market share remains small.

Opportunities:

• There are potential opportunities for value-added flour producers. Under the Philippines Food Fortification Program wheat fortified with Vitamin A and Iron is a mandatory requirement. Discussions are reportedly ongoing to include folic acid fortification as part of Philippines law and program.
• With the entry of new mills, competition has intensified. Partly as a result of the increased competition, there has been a diversification of mill products. Industry players have moved to diversify flour production, customizing according to end user requirements. Philippine flour mills are now producing higher-quality wheat flour, including bread flour, noodle flour, all purpose flour, cake flour and biscuit flour.
• Technical support can go a long way to strengthening relationships and building goodwill.
• Outside of direct wheat and milled products, opportunities also exist in the Philippines for:
  • bagging equipment and related technologies
  • logistical support systems, including conveyors, unloaders, silos and similar offerings
  • milling equipment
  • pest control

Challenges:

• The wheat market in the Philippines is subject to volatility in three areas:
  • changes to the price and supply of good quality wheat
  • increases to fuel, freight and logistics costs
  • depreciation of the Philippines currency, the Peso
• There are adverse logistics costs that could discourage Canadian wheat exporters. Shipping wheat to the Philippines from origins outside the region is more expensive. Australian wheat has a marked freight cost advantage, especially when freight rates move higher.

Singapore wheat market potential summary

Singapore’s small milling wheat market is dominated by a single miller. End user demand is expected to grow more slowly in the future, in line with slowing population growth and a mature market. Although Singapore has a small domestic market for consumption of Canadian wheat, it is still regarded as a key market.

Procurement decisions for Canadian wheat from major customers are made in Singapore. These key end users include Prima (who procures for their large milling facility in Sri Lanka), Wilmar (for plants in China) and Interflour. There are also large traders including Cargill, Olam and Agrocorp.

Opportunities:

• Prima Ltd, which imports over 95% of Singapore's wheat, works closely with companies and trading partners to develop and tailor products to individual customer needs and keep abreast of any changes in product preferences.
• The Malaysian market is easily accessed by road from Singapore via the Johor-Singapore Causeway and the Malaysia-Singapore Second Link bridge.
• Singapore is home to the regional procurement offices of large agribusiness trading houses.

Challenges:

• As Prima Ltd operates Singapore's only flour mill and imports over 95% of the country's wheat exports, the company is a significant player in this industry. More than half the flour sold to local retailers, food service companies and food manufacturers is produced by Prima.
• As estimated by Euromonitor International, Singapore has the slowest rate of demand for flour in the ASEAN region, at only +1.9% annual growth from 2013 to 2017.

Vietnam wheat market potential summary

Vietnam, with its booming economy, is considered to be a very promising wheat market for Canada, particularly now that the CPTPP is in force—and the US has opted out of the regional trade agreement.

Opportunities

• Import volumes of wheat may be further boosted by Vietnam's efforts to expand its exports of flour products to neighbouring markets—as well as the positive growth prospects for animal husbandry and aquaculture.
• Wheat is the preferred animal feed alternative when pricing is favourable, compared to imported corn. Feed wheat has higher protein content than other energy sources, such as corn, rice or cassava.
• The CPTPP will help rebalance competitive dynamics in relation to tariffs for Canada in Vietnam. Vietnam already has a competitive free trade agreements with major wheat suppliers, such as Australia and Russia.

Challenges

• Strong marketing efforts by competitors, including the United States. In Vietnam, as elsewhere, millers are conservative in their procurement practices. Over many years, the US has brought Vietnamese millers to America for orientation and training, which has built trust in US wheat.
• U.S. wheat is perceived by some Vietnamese mills as being of better quality than Canadian wheat. More confidence building may be required by Canadian industry to convince local millers of the high quality of Canadian wheat.
• Over-capacity in the milling industry and the entry of foreign-owned mills has led to fierce competition and increased price sensitivity. Vietnam's decision to drop duties on Russian wheat lead to a surge in shipments from that country, demonstrating the importance of competitive pricing.
• Phytosanitary issues. An increased focus by Vietnam in strengthening their food safety, including plant health control measures, has lead to a number of non-compliant shipments from various trading partners, including Canada.

Trends in wheat consumption and import demand

In recent years, demand for wheat for flour and feed wheat have been growing. Data from Euromonitor International suggests that growth in end user demand for milling wheat has been strongest in the Philippines and weakest in Singapore. There is also a significant and growing demand for feed wheat in Vietnam and the Philippines.

The Philippines and Vietnam both rank in the top 20 global wheat import markets by volume. Constrained by its population size, Singapore is a relatively small wheat market, only one twentieth the size of the Philippines’ import market in value terms (US$50.8 million versus US$1.3 billion).

The Philippines

The Philippines does not produce wheat commercially, making wheat one of its leading agricultural imports. It is also a large wheat consumer by ASEAN standards, second only to Indonesia.

Wheat consumption in the Philippines is expected to rise due to:

• continued population growth
• the Westernisation of diets
• rising disposable income
• robust growth in the livestock sector, especially as almost 50% of locally consumed wheat is for feed

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Year	Imports (Can$ - Millions)	Tonnes (thousands)
2000	580.7	2,655
2001	751.1	2,891
2002	820.0	3,104
2003	656.0	2,756
2004	497.7	2,158
2005	457.0	2,052
2006	614.0	2,758
2007	469.5	1,798
2008	772.2	1,707
2009	942.5	3,071
2010	563.5	1,976
2011	944.9	2,768
2012	973.9	2,999
2013	894.9	2,474
2014	1018.9	2,869
2015	1255.8	3,385
2016	1378.3	4,626
2017	1690.0	5,500

Source: UN Comtrade, Intercedent Asia

According to the Philippine Association of Flour Millers, total milling wheat industry capacity for the Philippines reached 16,890 tonnes per day, and 5,067,000 tonnes per year (300 days) in 2017. Milling wheat imports in 2017 amounted to 2,600,000 tonnes, with local milling industry capacity utilization being just 51.3%.

Following several years of rapid wheat consumption and import growth in volume terms, the Fitch Solutions Philippines AgriBusiness Report published in Q2 2019 predicted continued robust 5-6% growth per year in the Philippines' wheat demand through 2023.

Singapore

Having no agricultural land and limited local food production, Singapore imports almost all of the food it needs. The Singapore market for wheat is quite mature and relatively small at 250,000 tonnes per year. Growth in Singapore’s demand for wheat has been mainly due to the impact of large scale immigration. Non-residents accounted for only 3.2% of Singapore’s labour force in 1970; by 2000, this share had risen to over 28% and is now around 38%. That said, population growth a decreased, which may impact Singapore’s future domestic consumption.

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Year	Imports (Can$ - Millions)	Tonnes (thousands)
2000	31.4	127
2001	41.1	160
2002	35.9	141
2003	42.4	172
2004	41.6	157
2010	51.1	181
2011	65.0	170
2012	57.9	168
2013	64.4	172
2014	70.6	191
2015	66.1	173
2016	67.5	204
2017	65.9	250

Source: UN Comtrade, Intercedent Asia

Vietnam

In Vietnam, wheat is the second staple, after rice, with total wheat imports increasing in recent years to reach an estimated 4.7 million tonnes in 2017, valued at almost Can$1.3 billion. This sector is broadly supported by the strong feed demand and by the rising popularity of bakery and other wheat products among consumers. According to the Vietnam Grain and Feed Annual 2018 (USDA Foreign Agricultural Service), Vietnam imports roughly equal volumes of milling and feed wheat. In fiscal year 2018-19, imports were expected to be 4.5 million tonnes. Milling wheat accounts for two million tonnes of that, while feed wheat was at 2.5 million tonnes.

Animal protein consumption has been increasing in Vietnam and the trend is expected to continue in line with the country's rapid economic growth and regional trends. Vietnam's national feed market is expected to grow about 3% annually and it remains the largest commercial feed market in ASEAN.

In the main cities, partly reflecting a legacy of French cuisine, people consume many wheat-based foods, including bread and baguettes. While consumption of wheat-based foods is still largely limited to the larger cities, it is quickly spreading to second-tier cities. As a result, the consumption of milling wheat is still small, but will continue to grow. Demand for wheat-based foods in Vietnam by consumers is further boosted by the following factors:

• the pace of urbanization
• an increased preference for convenience foods
• a growing presence of fast-food chains, such as McDonalds or Dunkin Donuts, as well as western-style cafes and convenience stores

Total wheat consumption is projected to see a strong growth at a 5% compound annual growth rate (CAGR) from 2019 to 2022 according to the Fitch Solutions Vietnam Agribusiness Report published in Q2 2019.

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Year	Imports (Can$ - Millions)	Tonnes (thousands)
2000	115.6	572
2001	156.9	709
2002	178.3	826
2003	176.2	758
2004	211.8	821
2005	243.1	1,018
2006	256.6	1,248
2007	369.1	1,223
2008	312.5	702
2009	394.8	1,386
2010	586.8	2,221
2011	805.3	2,431
2012	769.6	2,424
013	638.0	1,817
2014	716.6	2,076
2015	768.3	2,329
2016	1330.9	4,744
2017	1289.3	4,664

Regulatory requirements

This section provides important regulatory import requirements for wheat exports to the Philippines, Singapore and Vietnam.

The Philippines

Canada's Trade Commissioner Service in the Philippines reports no undue sanitary or phytosanitary non-tariff barriers that would impede imports of Canadian wheat. The health and phytosanitary regulations and procedures are broadly similar for all types of agri-food products. However, it is the responsibility of the importer to ensure products coming into the Philippines are in compliance with local health and phytosanitary regulations. The enforcing authorities check for compliance by inspecting the goods and relevant documentation.

The Philippines Department of Agriculture requires importers to obtain a sanitary and phytosanitary permit prior to shipment of any agricultural product. This requirement is an additional expense, can complicate the timing of exports, and prevents the rerouting to the Philippines for products initially destined for third markets. The regulation also prevents exporters from reselling their wheat exports in the Philippines should their original importer refuse to accept their shipment, or abandon it for any reason.

Singapore

Singapore is well known for its ease of doing business, including the near-absence of non-tariff barriers. As shown in the table below, Singapore ranks first in the world as having the least number of non-tariff barriers.

Note: The World Economic Forum asked: “In your country, to what extent do non-tariff barriers (for example health and product standards, technical and labelling requirements) limit the ability of imported goods to compete in the domestic market?”. A lower value is positive, meaning limited non-tariff barriers to trade.

Vietnam

The Vietnam Ministry of Agriculture and Rural Development (MARD)’s Plant Protection Department (PPD) is responsible for safeguarding the country’s crop production, including surveying and monitoring imported plant products coming from overseas. Vietnam’s concerns over the introduction of creeping thistle into the country has lead to increased supervision of imported plant products, including wheat, soybeans, peas, and others, from major foreign suppliers where the weed seed is prevalent, including Canada, the U.S., and the EU. Canadian wheat exporters are encouraged to consult their industry association should they have questions on this topic. Their association will be able to provide greater detail and coordinate with Agriculture and Agri-Food Canada as needed.

Competitive environment

Singapore, the Philippines and Vietnam are all net importers of wheat, producing none of their own. Leading competitive suppliers include the US and Australia. The US has a lower market share in Vietnam, which is perhaps surprising given Hanoi’s desire to manage its large overall trade surplus with the US. Russia, Eastern Europe and Latin America are also major competitors in the ASEAN wheat markets.

The Philippines

Canada's market share will likely remain under pressure due to increased competition from Black Sea and Latin American wheat sources. Australian wheat is also available to the Philippines at a lower cost when compared to Canadian wheat due to their free trade agreement, the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA).

The Philippines is a major importer of milling quality wheat. Imports of wheat in 2017 reached 5.5 million tonnes and the local flour industry is operating at roughly 50% of capacity. There are 21 flour mills with a total capacity of over five million tons. Milling wheat imports are exempt from "Most Favoured Nation (MFN)" tariffs, but are subject to a 12% Value Added Tax (VAT) on subsequent flour sales. Feed wheat imports are subject to a 7% MFN duty, but are not subject to VAT.

Singapore

The Singapore wheat market is dominated by suppliers from Australia and the US, which together account for 92.7% of its wheat imports by value. Canada is the third largest supplier, but from 2013 to 2017 it has seen its market share slip by a percentage point, from 5.3% to 4.2% of the import market.

For discerning customers, Canadian wheat is reportedly always one of the first choices in Singapore. Australian wheat has a somewhat different usage than Canadian wheat and is not a direct substitute. Prima, the largest purchaser of wheat in Singapore, will typically source from Canada and the US.

The US is a direct, high-protein competitive threat to Canadian wheat. Black Sea wheat, which is mid-to-low in protein, has been improving in quality and may make inroads into the Singaporean market. China does not export wheat to Singapore in any significant amount, but as a huge consumer of wheat, it can move the market in terms of global pricing.

With very little animal husbandry, the Singapore market for feed wheat is small.

Vietnam

Data from Global Trade Tracker, based on reporting countries' exports of wheat to Vietnam, indicate that:

• In 2017, Australia was the dominant supplier of wheat to Vietnam, with exports valued at over Can$540.8 million. However, in 2018 their exports to Vietnam were lower, valued at $305.9 million. Australia benefits from zero import duties on wheat under the AANZFTA, as well as advantageous logistics costs. Moreover, Australia also experienced a significant drought in 2018, which likely had an impact on their ability to export.
• In 2018, Russia surpassed Australia to become Vietnam's top wheat supplier. Russian wheat exports to Vietnam have significantly increased in the past few years, from Can$11.7 million in 2016, to Can$183 million in 2017, and to over Can$594.3 million in 2018. This increase could be related to Vietnam removing an import tax on Russian grain, a move which coincided with a bumper Russian harvest.

In terms of quality, Australia remains the preferred source for milling wheat. However, lower-quality wheat from Russia is increasingly being accepted in Vietnam, particularly if there is a significant price differential. The lower selling price of flour produced using Russian wheat is offset by the duty-reduced import price. Vietnam has now adjusted to using cheaper Black Sea-origin wheat, posing a threat to similar quality wheat. Vietnam also imports feed wheat from Eastern European countries, such as Romania, Bulgaria, and the Eurasia Economic Union countries.

Buyer preferences

Suffering from significant overcapacity, Vietnam and the Philippines are highly price sensitive wheat markets. In line with changing end user needs, premium-quality milling wheat is more in demand, especially in Singapore.

The Philippines

The market environment for flour millers in the Philippines is highly competitive, resulting in increased price sensitivity. Major importers are looking for bulk discounts from foreign exporters of milling wheat, while the top corporate buyers of wheat in the Philippines look for and expect a range of characteristics when purchasing products and dealing with businesses' notably:

• Consistent market development support
• Product consistency, such as even average moisture content in wheat
• Timely and predictable shipments, with logistical delays being poorly perceived
• Competitive pricing, particularly in consideration of other competitors that are more well-known in the market, such as the US

Due to the US’s aggressive efforts in the Philippines, it has been challenging for local companies consolidating wheat imports with other flour millers to import from other source countries. While established procurement managers are reportedly satisfied with the performance of US wheat, procurement managers new to their roles appear more open to importing from other countries that are known to export quality wheat.

Lastly, and according to the Trade Commissioner Service in the Philippines, it has reportedly been challenging for some of the major flour milling companies requiring both soft and hard wheat to import consolidated shipments of both wheat varieties from Canada.

Singapore

Quality requirements are very specific in the Singapore market. The key customer, Prima, prefers to use US wheat for its high-protein content. Quality remains a critical selection criteria.

End users, such as the large bakery chain Gardenia, ultimately drive product preference. Prima in Singapore works closely with these companies to develop and tailor products to individual customer needs and keep abreast of any changes in product preferences. Some customers do not have sufficient volume to buy direct and must therefore communicate their product requirements along the supply chain.

Vietnam

A key factor for buyers choosing between feed wheat and other feed ingredients is wheat's selling price compared to corn. This price dynamic recently resulted in large volumes of feed wheat imports into Vietnam. When the gap between feed wheat and corn prices narrow, millers prefer feed wheat due to a variety of reasons including protein content, colour and binding factors.

Stiff competition from foreign-owned mills has led to low industry capacity rates of about 60% in Vietnam milling. The intensifying competition in the wheat milling sector, ahead of anticipated future wheat demand, is adding to price sensitivity in the market.

There is a trend for increasing demand for top-quality wheat used for higher quality wheat-based products introduced by western cafés and food outlets in Hanoi's and Ho Chi Minh City's trendy cafes and bistros. Consequently, demand is increasing steadily for premium quality milling wheat. Reportedly, millers already are familiar with the quality of Canadian wheat and can cite the various varieties.

Overview of importers and distributors

The Philippines

According to the Philippine Association of Flour Millers, there are currently 21 companies engaged in flour milling in the Philippines, up from eight mills in 1980s. Another two investments in mills are pending. According to the Philippine Association of Flour Millers, in the Philippines flour millers are affiliated with one of three groups:

Members of The Philippine Association of Flour Millers, including:

1. RFM Corp
2. Liberty Flour Mills Inc
3. Wellington Flour Mills
4. Pilmico Foods Corp
5. General Milling Corp
6. Universal Robina Corp
7. Philippine Flour Mills

Members of the Chamber of Philippine Flour Millers, including:

1. San Miguel Mills Inc
2. Philippines Foremost Milling Corp
3. Morning Star Milling Corp
4. Delta Milling Industries Inc

Independent millers, including:

1. Monde Nissin Corp
2. Atlantic Grain Inc
3. Asian Grain Inc
4. New Hope Flour Milling Corp
5. Great Earth Industrial Food Inc
6. North Star Flour Mill
7. Mabuhay Interflour Mill
8. Agripacific Corp (REBISCO)
9. BIG-C Agri Miller
10. California Flour Mill Group

Singapore

While Singapore is a relatively small end user market for wheat, its importance is greater than the domestic market size would suggest. This is due to the regional presence of large trading companies, including:

• Prima Ltd - Over 95% of wheat physically imported into Singapore is by Prima. Prima operates the country's only flour mill and sells to retailers and food processors. More than half of all the flour used in Singapore is from Prima, with the rest mainly imported from Malaysia and Indonesia. Prima also sources wheat for its regional mills, including a large facility in Sri Lanka.
• Interflour Group - The Interflour Group has no Singapore mill, but does operate 10 flour mills in Indonesia, Malaysia, Vietnam, the Philippines and Turkey with a total milling capacity of more than two million tons per year.
• Agrocorp International Pte Ltd - Agrocorp is a global agricultural commodity trading house founded in Singapore.
• Canadec Pte Ltd - An agri-food company marketing Canadian food produce, including grains pulses, and processed foods.
• Wilmar Trading Pte Ltd - Singapore-listed commodity trader, includes US agricultural trader Archer Daniels Midland Co among its biggest shareholders.
• Cargill Asia Pacific Holdings Pte Ltd - In Singapore, Cargill trades and markets wheat among other products
• Olam International Ltd - Singapore-based commodity trader Olam International in April 2019 announced it will buy Nigeria's Dangote Flour Mills for US$425 million.

Smaller traders will also buy wheat and distribute locally and regionally, but usually sporadically and in small volumes.

In Singapore, end users of milled wheat include large bakeries and noodle manufacturers.

Vietnam

According to Miller Magazine's Grain and Flour Market in Vietnam article, in the beginning of 1990s, flour was imported for Vietnam's flour and bakery products industry. Then came investment in domestic wheat milling capacity and wheat imports replaced flour imports. It is estimated that there are around 30 flour mills in Vietnam, half of which control 60-70% of the domestic market.

Other companies include:

• Malayan Flour Mills - Has operations in both Northern and Southern Vietnam.
• Sumitomo Corp - A new entrant and relatively new purchaser of wheat, mainly Australian wheat, since investing in flour milling with the CJ Group, a major food company based in South Korea.
• Wilmar - Produces and markets flour in Vietnam.

Supply chain dynamics

The Philippines

Most of the big players source directly from Canada. These would include companies such as San Miguel Milling Corp and the Universal Robina Corporation. There are also a number of smaller importers. New investment in milling in the Philippines is reportedly occurring as companies leverage the scale benefits of the ASEAN Economic Community.

In the Philippines, the leading end users of flour include:

• Universal Robina Corporation: Owns Baker John bread products, El Real pasta and macaroni, and Payless noodles.
• RFM Corporation: Owns Fiesta as well as Royal for pasta and macaroni
• Phil Foremost: Owns Amigo pasta and macaroni
• San Miguel Mills Incorporated: Owns La Pacita biscuits and crackers, and is the sole flour supplier to Kambal Pandesal bakery.
• General Milling Corporation: Owns Magnifico pasta
• Morning Star Milling Corporation: Owns Prima pasta

End users of milled wheat include large bakeries and noodle manufacturers. Within the bread industry, large producers, such as Gardenia or Julies, have a 20% share of the market players, small mom and pop bakeries making up the balance. Noodle sales are dominated by Monde Nissin (60% share), Universal Robina (17%) with small factories making up the balance.

Singapore

The supply chain dynamics are fairly straightforward for milling wheat in Singapore in part due to the concentrated buying power of the country's sole miller, Prima Ltd.

Snapshot of Singapore's wheat distribution and supply chain dynamics

There are a variety of paths for how wheat could be distributed in Singapore. For example, an exporter can use Singaporean flour mills to reach domestic users of bakery products, or they could interact with other members in the regional supply chain such as trading companies or regional flour mills. This chart shows a few of the options:

Description of above image

Chart showcasing a range of four paths for how wheat could be distributed.

• Path 1: “Wheat exporter” to “Singapore-owned and operated flour mills (Example: Prima Ltd.)” to “Domestic distributors” to “Domestic (Singaporean) end users of bakery products”
• Path 2: “Wheat exporter” to “Singapore-owned and operated flour mills (Example: Prima Ltd.)” to “International distributors” to “Domestic (Singaporean) end users of bakery products”
• Path 3: “Wheat exporter” to “Singapore-owned regional flour mills (Example: Interflour)”
• Path 4: “Wheat exporter” to “Singapore-based trading companies”

Vietnam

Vietnam's supply chain for wheat is complicated and laborious. Millers have to pay for their wheat upon loading, but may not get paid for their flour until six months later. As the cost of wheat is the biggest supply chain cost, millers are focused on procurement and some companies have centralized wheat procurement teams, usually headquartered in Singapore. They look to extract value right across the supply chain, including freight and logistical efficiencies like combo loading.

Vietnam's flour consumption is low compared to other countries in the region and bakery products account for only 25% of wheat flour use. The rapid growth of the economy, the increase in disposable income and the culture of eating bread/bakery goods suggest that consumption will continue to grow.

CPTPP implications

As of April 2019, seven signatories of the CPTPP agreement, including Singapore and Vietnam, have implemented the second round tariff cuts. A third round of tariff cuts will take place on January 1,2020, except for Japan which operates on a fiscal year (April 1,2020).

Four other CPTPP countries still await domestic ratification before implementing their tariff cuts: Brunei, Chile, Peru and Malaysia. The CPTPP will enter into force 60 days after a signatory notifies the CPTPP Depository that it has completed its ratification procedures.

Going forward, economies that meet the high standards of the CPTPP may join the Agreement by accession, potentially furthering the economic benefits for Canada. To date, no economy has formally requested to commence the accession process. Economies that have publicly expressed interest in acceding to the CPTPP include: Thailand, South Korea, the United Kingdom, and Taiwan.

The Philippines is not a member of the CPTPP, leaving Canadian wheat at a competitive disadvantage versus Australian wheat. Under the ASEAN-Australia-New Zealand FTA (AANZFTA), both milling and feed wheat imports to the Philippines from member countries are duty-free. Some business groups in the Philippines have expressed anxiety about the ability of its exports to compete with those of Vietnam under the CPTPP.

Canadian companies are encouraged to visit CPTPP for Agri-Food Exporters to find more general information on this agreement and how it can benefit your exports to its markets.

CPTPP wheat tariff reduction in Vietnam

Under the CPTPP, Vietnam has dropped its 5% import tariff on Wheat (HS 10.01) since Jan 15 2019. Currently, Canadian wheat and meslin are duty-free to Vietnam. This provides Canada with a competitive gain as compared with non-CPTPP countries.

Some competitors already enjoyed preferential tariffs on wheat exports to Vietnam. Australian wheat has zero duty access to Vietnam under the Australia-Vietnam Free Trade Agreement, which came into force in 2016. The Vietnam-Eurasia Economic Union (VN-EAEU) FTA, effective in October 2016 also allows duty-free wheat imports from Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan.

CPTPP wheat tariff reduction in Singapore

Canadian wheat exports to Singapore was duty-free before the CPTPP and will continue to be under it. There are no scheduled tariff reductions on wheat, and consequently no change in Canada's competitive position.

Generally, Singapore is virtually a free port (except for tobacco, alcohol, vehicles and gasoline). The only significant benefit of the CPTPP in the merchandise agri-food sector is that Canadian beer will be exempt from a $16/litre alcohol tariff.