ManageMent’s Discussion anD analysis In 2008, as part of its new “Global Commerce Strategy,” the Canadian government announced a strengthened focus on  regional and bilateral trade negotiations, including the expansion of Canada’s bilateral trade network with countries in  South and Central America. Lantic has been actively supporting the work of the CSI in informing government officials and  politicians of the threat to Canada’s sugar industry of such trade agreements. Of particular concern is the threat of imports  from surplus sugar producers such as in South and Central America where there is no commercial export opportunity for  Canadian refined sugar. On August 15, 2011, Canada and Colombia implemented an FTA. Since Colombia is a large surplus sugar producer, this  FTA includes a gradual phase-out of sugar tariffs (17 years), avoiding the immediate negative effects of a duty-free quota on  the Canadian sugar industry. The refining of sugar does not confer origin in this FTA so Canadian refiners do not expect to  realize any exports to Colombia. FTAs have also been concluded with smaller sugar producing countries in Latin America,  including Honduras, Peru and Panama. These agreements include transitional tariff phase-outs or small, reciprocal quotas  with annual growth. Negotiations with other Central American countries are expected to resume in the future. The Government of Canada has continued to make the Canada-European Union Comprehensive Economic and Trade  Agreement (“CETA”) negotiations a priority. On October 18, 2013 Prime Minister Stephen Harper and European  Commission President José Manuel Barossa announced, in Brussels, that they had reached an agreement in principle on  CETA. Under the agreement, Canada is expected to have significant financial benefits from exports of sugar-containing  products (“SCP”) which should contribute to the long term prosperity of Canada’s sugar industry.The initial SCP volume  is set at 30,000 metric tonnes growing in 5 year increments to 51,840 metric tonnes over 15 years.The CETA is a positive  development for the Canadian sugar market that is otherwise distorted by widespread government intervention in the EU.  It is expected that it may take up to two years for the CETA to be ratified by all parties. It is too early to determine how the  quota allocation will be administered within the Canadian refined sugar industry. Regardless, the Company is committed to  ensure maximum utilization of this new export opportunity in a premium market which will be beneficial to the Company  in the future. Other significant FTA negotiations include the Trans Pacific Partnership (“TPP”), Canada-Japan and Canada-India. All of  these agreements involve significant input from the CSI and the Canadian sugar refiners to ensure the long-term stability of  the Canadian refined sugar industry. On October 9, 2012, Canada joined the TPP negotiations which include 10 other countries, being Australia, Brunei, Chile,  Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. The Canadian sugar industry welcomes  Canada’s participation in the TPP which has the potential to address market access barriers for sugar and sugar-containing  products among TPP members. The TPP countries are diverse in terms of sugar policies and trade but collectively represent  an important opportunity to advance trade in refined sugar and sugar-containing products. The Company continues to remain concerned that the inclusion of refined sugar in Canada’s various regional and bilateral  negotiations may result in substantial new duty-free imports from these countries, while not providing offsetting export  market opportunities. The only real potential for significant, long-term export gains is via a global agreement through the  World Trade Organization (WTO). Accordingly, the WTO Doha round negotiations have been on hold since July 2008  with no specific date for conclusion. The CETA and TPP negotiations provide the best medium term prospect of improved  export opportunity for the Canadian sugar industry. We will closely monitor the ratification process of the CETA, which, as  mentioned, could take up to two years. Annual Report 2013 33