North American Free Trade Agreement
In July 2017, the CPC took part in the NAFTA consultations held in Ottawa.
The Canadian Pork Council (CPC) welcomes the opportunity to share its views on the modernization of the North American Free Trade Agreement (NAFTA).
The hog industry is extremely important to the Canadian economy. It contributes 103,000 direct and indirect jobs that, in turn, generate $23.8 billion when farms, inputs, processing and pork exports are included. With well over 70 percent of the industry’s output exported to almost 100 countries, the Canadian pork sector is a classic example of what can occur with improved terms of trade.
Canadian hog producers have benefited greatly from NAFTA and as such would like to highlight a few key areas that must be considered in upcoming negotiations
Maintaining NAFTA Benefits
Since 2000, Canadian pork and pork product exports have increased by 387 percent in volume, while the value has grown from $700 million to over $4 billion. The U.S. is Canada’s largest export market importing 408,000 tonnes of pork valued at $1.4 billion. Mexico is Canada’s fourth-largest market. Canadian pork exports to Mexico totalled 314,000 tonnes of pork valued at over $587 million.
Additionally, in 2016, Canada shipped 4.8 million feeder pigs and 848,000 slaughter hogs to U.S. producers and processors. This is an excellent example of the strengths of each country’s industry complementing the other. Canada has an advantage in swine health since its cooler climate and lower herd density significantly reduces the development and spread of swine disease. On the other hand, U.S. producers have an advantage in finishing pigs because of ready access to low-cost supplies of U.S. corn and soybean meal.
The CPC’s counterpart in the U.S.—the National Pork Producers Council—has publicly stated that their producers benefit from North American trade. Mexico and Canada are the second and fourth export markets respectively for U.S. pork. Canada alone imported close to $1.2 billion of U.S. pork.
The integrated nature of our trade relationship enables the three countries to remain competitive internationally. It allows us to create jobs and exports and enhances our potential to increase our respective contributions to the Canadian, American and Mexican economies.
A successful modernization of NAFTA should serve as a model agreement that can be used by the partners to promote trade liberalization in other multilateral and plura-lateral negotiations. It should not include provisions that would limit or challenge trade, such as new tariffs, or new non-tariff barriers.
Maintain dispute settlement mechanisms
The CPC takes the U.S. and Mexican market relationship very seriously. We participate in trade missions and regularly meet with our U.S. and Mexican colleagues to discuss areas of common interest. Our relationship is mutually beneficial as our countries share many of the same animal health and trade policy goals. We are natural allies, which helps in advocating our messages in various multilateral trade forums including the World Trade Organization.
However, occasionally we do face disputes that have implications for cross-border trade. As such, it is important that Canada has access to an efficient, effective dispute resolution system. Chapters 19 and 20 of the NAFTA agreement provide the basis for such a system and these must be maintained if not strengthened.
Canada does have access to the dispute resolution system under the World Trade Organization (WTO). However, as we experienced in the dispute with the U.S. over mandatory country of origin labelling (COOL), this process can be cumbersome, time consuming and expensive. CPC and other livestock groups fought for eight years to have the American legislation changed. During that time, the WTO ruled four times that US COOL violates the WTO obligations of the United States. The regulation was only removed on the eve of Canada and Mexico preparing to place retaliatory tariffs on certain US imports.
Retaining COOL retaliation rights
Challenging the U.S. COOL was a long and expensive fight for Canadian producers. CPC is concerned that some American interest continue to advocate for a return of mandatory COOL. Given this, CPC encourages the federal government to retain its retaliation rights.
Improve cross-border transit
Consumers in Canada and the U.S. have similar food safety and animal health concerns and both countries follow almost identical science-based risk assessment frameworks for managing these issues. For example, each has implemented very similar HACCP-based food safety programs in federally inspected meat plants and these programs recognized as being equivalent.
Notwithstanding, although we speak frequently of an integrated North American market, the unfortunate reality is that Canadian meat entering the U.S. is subject to substantially greater bureaucratic requirements and cost compared with U.S. meat imported to Canada. Canadian pork entering the U.S. must still proceed to privately owned Inspection Houses that set their own fees while in contrast U.S. meat entering Canada can proceed directly to a federally registered establishment. This U.S. requirement slows trade without adding to food safety.
In addition, a “lack of staff” able to clear shipments of live animals to U.S. destinations should never be a reason for transports to stand idle at the border or be forced to drive significantly longer distances to alternative crossings. In the past, there have been gaps in the availability of the U.S. veterinarian at border crossings which has forced truckloads of pigs to be rerouted over long distances. That creates an animal welfare challenge and unjustifiably adds extra costs for Canadian livestock exporters.
NAFTA renegotiation and food safety
The three NAFTA partners share a common goal of keeping their people from becoming ill from the foods they eat. The task of managing the shared food safety risks to the North American food production only becomes more vital when factoring not only the integrated nature of the agri-food industry but also global supply chains.
The NAFTA renegotiation presents an opportunity to strengthen food (and feed) safety by creating a new joint organization or program that would:
- undertake science-based food safety risk assessments (hazard identification, hazard characterization, exposure assessment and risk characterization);
- develop best practices in food safety risk management and,
- collect, analyze and communicate food safety knowledge for the benefit of consumers, government agencies, food producers and importers.
While each country would maintain decision-making authority over its food and feed safety standards and inspection practices, the joint organization would be responsible for:
- ensuring a common scientific foundation for assessing and preventing emerging foodborne threats (microbiological, chemical and physical including, where relevant, those linked to animal health through the “one health” concept);
- recommending food safety risk thresholds for pathogens, residues, allergens, etc.;
- approving food safety interventions, technologies and analytical test methods;
- validating food safety best practices at all levels of food production, processing, distribution and preparation;
- sharing and interpreting food safety testing and surveillance data gathered across North America and globally in relation to imports; and,
- recommending innovative, outcome-based food safety inspection practices and compliance promotion strategies.
NAFTA has been extremely successful in bringing together North American regulators to harmonize or eliminate unnecessary regulatory burden in each jurisdiction. A modernized NAFTA agreement must continue to strengthen opportunities for communication and co-operation among North American regulatory authorities.
There is an opportunity to smooth the flow of pork between the Canada and U.S. by reducing regulatory barriers. We support the work of the Canadian government towards this end.
We look forward to working with the Canadian government in preserving and enhancing the gains our industry has achieved in the North American market, and strengthening our competitiveness around the globe.