International Beef Industry Congress - BSE

[rsomer]

The 2003 International Livestock Congress was held this July in Calgary. Proceedings of the Livestock Congress can be found at: http://www.livestockcongress.com/

Philip Seng, President/CEO U.S. Meat Export Federation presented a speech on the USMEF perspective of our present crisis which provides an important insight into the American position. It may be seen at: www.usmef.org/speeches/03_Other/03_0711_Seng_IntBeefCongress_Canada.pdf

Mr. Seng points out that the U.S. and Canada have put up "firewalls" to trade in beef from countries that experienced BSE outbreaks for 15 years. Although these firewalls may not have reflected the latest science, it served both our countries purpose. He warns that if Canada continues to imply that the Canadian case of BSE may in fact be an American case of BSE, both countries will stand to lose world market share. Peter Seng maintains that a consumer backlash may be possible if the U.S. opens the border to Canadian beef too soon as well as the U.S. would stand to lose two of the top three export markets for U.S. beef. However if the U.S. moves too slowly to reopen the border, the Canadian industry from farm to packing plant could be irrevocably damaged. Lastly, he points out that if Canada moves to strengthen our beef quality assurances, then consumers may become suspicious of the safety of the U.S. product or the U.S. will be forced to change to meet Canadian objectives.

Peter Seng concludes by suggesting that we need to work through the OIE (http://www.oie.int/eng/en_index.htm) to resolve the Canadian crisis rather than setup a "North American Beef Commission" to ensure that all of our North American beef is safe and wholesome.

I would suggest that the "purpose" Mr. Seng mentioned went beyond food safety and herd health to being in some cases a non tariff trade barrier, but Canada and the U.S. were equally guilty. I agree that the OIE should review its protocols for BSE which were established in 1990 and based on the outbreak of BSE in Britain. If the present OIE protocols remain unchanged international trade in beef will slowly but surely come to a halt as country after country find a positive test case. The alternative is in the face of unreasonable trade restrictions major beef exporting countries will cover up positive test results in order to protect their industry. Certainly change is needed however it will take considerable time before the OIE accomplishes this needed change. The Canadian industry does not have that much time and the USMEF would be well aware of that when they suggest the OIE as the solution. In the interim it seems that the U.S. "purpose" remains being served. The United States and the USMEF should be aware of their NAFTA commitments which Mr. Seng overlooked in his speech. NAFTA’s predecessor CUSTA established a preferential trade relationship between Canada and the United States which should have served to remove political influence as a impediment to trade between the two countries. We need to look to NAFTA to serve as the cornerstone of a solution to the politically motivated closure of the U.S. border to our beef. Or does NAFTA only serve the U.S. "purpose" anymore?

[pandiana]

'NAFTA’s predecessor CUSTA established a preferential trade relationship between Canada and the United States which should have served to remove political influence as a impediment to trade between the two countries. We need to look to NAFTA to serve as the cornerstone of a solution to the politically motivated closure of the U.S. border to our beef. Or does NAFTA only serve the U.S. "purpose" anymore? '
The information on NAFTA was news to me but very interesting. Considering the mosquito and the elephant metaphor, I don't believe Canada can inflict any degree of influence on the US policies. If there were enough mosquitoes....?

[rsomer]

Prior to NAFTA, export of natural gas and oil to the United States was regulated by the federal government. As a result there was potential Canadian political influence on trade to the United States. After CUSTA/NAFTA the American market has access to our oil and gas on the same terms and at the same price as our domestic market. Political influence was to be separated from trade policy. When CUSTA was signed, included was a commitment to arrive at a new set of countervail and anti-dumping rules as well as the elimination of border inspections for meat which still hasn't happened fifteen years later. CUSTA was to provide for a lessening of politically motivated trade irritants yet it seems governments are reluctant to give up a degree of control over politically influential sectors of their economy. We do have a unique trading relationship with the United States and the recent partial opening of the border to our beef may be an example of a benefit of NAFTA. It remains to be seen how fast the U.S. rule making process proceeds allowing a further opening of beef trade between our two countries. In the longer term the degree to which the Canadian beef industry has guaranteed access to the U.S. market will determine the future of the Canadian feedlot and packing plant industry.

[pandiana]

The US has little to lose in pissing off the Canadian producer, whether it is in cattle, lumber or fish. We are just too small. In fact, over the past few months I think the BSE incident has rated two short stories in the New York Times. Our problems with BSE was a stroke of luck for the US in that it provided a boost to their agriculture sector which, like ours, has been ailing for years.

The bottom line is the dollar. As long as there is money to be made by producers on either side of the border, there will be interest in trade. Political influence is used to lobby in support of this trade. For example, a lot of the cattle moving in and out of Canada are American owned. The low Canadian dollar has served Canada and US investors well over the last decades in allowing us to produce a competitively priced commodity (at the expense of the primary producer on both sides of the border, one could argue). Maybe the low dollar is justification for countervailing duties?

I would be interested to know what part you think that "the recent partial opening of the border to our beef may be an example of a benefit of NAFTA". In general, I think that trade agreements are fodder for trade lawyers and politicians.

[rsomer]

"The recent partial opening of the border to our beef may be an example of a benefit of NAFTA". I understood from comments made by our politicians that this is the first time a BSE free country like the United States has agreed to accept imports of beef from a country with a confirmed case of BSE. As well Mexico has agreed to accept Canadian beef. I don’t believe the United States is importing any beef from Japan. It would seem some credit for what progress has been accomplished may be due our "unique trading relationship" i.e. NAFTA.

In general, I agree with your comments. I see the purpose of trade agreements is to establish a basis whereby countries of differing economic strengths can establish a means of trading with each other to their mutual benefit.
However we as Canadians quickly learned after CUSTA was signed that the level playing field was sloped in the United States favour. Still, I think trade agreements like CUSTA/NAFTA are vital, so much so that Canadians need to start defending their NAFTA access to the prosperous American marketplace instead of just accepting that we somehow don’t deserve a fair deal.