“Recent statements about the possible dissolution of NAFTA or potential renegotiation of NAFTA are deeply concerning to us because of the unnecessary risk it places on our producers. While there may be general agreement among the countries to improve some parts of the NAFTA trade framework, we urge you to recognize that the terms of the agreement affecting cattle producers are strongly supported as they currently exist and should not be altered.”
- Joint statement from the presidents of the National Cattlemen’s Beef Association, Canadian Cattlemen’s Association, Confederación Nacional de Organizaciones Ganaderas to the three national leaders to not tear NAFTA apart.
It is not often that we see an entire industry stand united across borders but in the case of the integrated North American agriculture sectors, there’s clear solidarity heading into the NAFTA renegotiation.
For the most part, Canadian agriculture sectors have the same positions as their American neighbors. Canada has one or two sacred cows (or at least their milk), but the majority of the industry wants to be left whole and would settle for exactly what we already have if asked.
Canada is a country of 36 million people, approximately a tenth of the 323 million in America. Trade is vital for long term economic health of the Canadian economy. We are an export nation, plain and simple. And NAFTA has been very kind to Canadian agriculture, plain and simple.
With talks set to begin in Washington this week, agriculture is hoping it can find a place where it does not become a trade off.
For Canada, it’s normal to live with the economic insecurity of relying on our neighbours to the south. “If the U.S. economy sneezes, the Canadian economy catches a cold” is a paraphrased version of a famous quote that many Canadian students are taught. This natural reliance on trade with the U.S. has motivated Canada to diversify its economy and pursue free trade with Europe (CETA), Asia (TPP), and China in the last decade.
At the same time the 5525 mile (8891 kilometre) border between Canada and the the United States is the largest in the world. It also is the envy of many countries looking to export to United States and the goods have to travel around the world to just reach a U.S. port.
While NAFTA 1.0 has been good to Canada, the federal government has embraced this opportunity to modernize it from the beginning. Canada has attempted to park domestic partisan politics and implemented an all-hands-on-deck commitment to ensuring state governors and Members of Congress understand the value of NAFTA on both sides of the 49th parallel. Provincial premiers, Senators, Members of Parliament and former dignitaries with any influence or leverage have been on the ground in the United States to ensure that NAFTA is valued and not forgotten as a key to prosperity, no matter what the President says in his emotional stump speeches.
According to the Office of the United States Trade Representative, “Canada is currently our 2nd largest goods trading partner with $544.0 billion in total (two way) goods trade during 2016. Goods exports totaled $266.0 billion; goods imports totaled $278.1 billion. The U.S. goods trade deficit with Canada was $12.1 billion in 2016.”
It’s also been kind to American job growth as nine million American jobs depend on trade and investment with Canada.
So what do the different Canadian agricultural industries want from the new version of NAFTA?
The integration of the Canada and United States beef industry has occurred under NAFTA. Feeder cattle, live cattle, breeding stock, and boxed beef flow back and forth to the benefit of farmers and ranchers. This benefit goes deeper, for example, as Northwest U.S. packing plants that employ American workers remain viable by slaughtering Canadian live cattle.
The Canadian beef industry has small red tape-related requests:
- Elimination of the re-inspection of meat at the border and recognizing the equivalency of Canadian and American meat inspection systems;
- Allow Canadian beef exported south to be assigned a U.S. grade;
- Eliminate the requirement to prove that live cattle exported to the US are born after March 1999;
- Eliminate the requirement for Canadian cattle to bear a permanent identification in the U.S. while there is no such requirement for U.S. cattle.
Canada’s pork industry would have many of the same priorities and positions as beef.
The Canadian wheat industry has little issue with NAFTA, but has discussed an issue that is more of benefit to U.S. exporters than Canadian farmers. When US wheat is imported into Canada, although it is generally priced according to quality parameters, it is automatically assigned a feed grade under Canada’s grading system. Along with U.S. wheat groups, Cereals Canada and the Western Canadian Wheat Growers want eligible imported U.S.-grown wheat to be assigned a Canadian grade. This is similar to the Canadian beef industry grading desire mentioned above.
Simply, to be left alone.
Canadian and American agriculture groups see eye to eye on many issues. That’s not the case with dairy.
This past spring’s Grassland dairy issue brought national attention in the U.S. to Canada’s supply management system and Canada’s new national ingredient strategy for pricing milk protein.
Expect Canada to hold firm on its sacred milk, emphasizing how Canada imports five times the amount of U.S. dairy products that it exports to the U.S. Canada will also point at U.S. programs subsidizing American dairy farmers while the global market copes with excess supply.
Former U.S. Ag Secretary Tom Vilsack and the U.S. Dairy Export Council will argue volumes of dairy moving both ways could be much higher (similar to the beef trade) if Canada was not so protectionist and restrictive on dairy trade. The main target will be Canada’s new ingredient strategy and its new class for ultrafiltered milk pricing, which has made imports from northern states less competitive.
President Trump attempting to appease Wisconsin, Minnesota and New York dairy farmers is one agricultural issue that could assist in derailing the NAFTA talks. In Canada, all major political parties are unified in supporting current dairy policy.
As Conservative Trade Critic and former Canadian agriculture minister, Gerry Ritz stated in an interview with Kelvin Heppner, “President Trump is all about buy America, hire America. That’s exactly what we do with our supply management system…so a bit of his own medicine coming back at him.”
America’s sugar is Canada’s dairy.
The Canadian sugar industry is looking for increased access to the US market, as Martin Rice of the Canadian Agri-Food Trade Alliance recently noted. This is an issue that has received virtually no attention from media, likely because most people know that U.S. sugar is highly protected and gaining access has little potential. Sacred sugar will likely remain that way.
The value of NAFTA to agriculture is well-documented, but questions and uncertainties remain heading into the highest profile mainstream trade negotiation in memory.
In 2016, Canada was the number one destination for U.S. agricultural products at 23 billion USD. NAFTA has not been a one way deal where Canada has been the only benefacter.
Clearly, farmers in Canada and the US have much to lose in a NAFTA renegotiation, and agricultural industries on both sides of the border will attempt to hold together, no matter what the steel, auto, and online retail sectors desire.