THE HOLM TEAM Economics.
R.R. #1, HP-8, Bowen Island, B.C., Canada V0N 1G0 Phone: (604) 947-2893
Fax: (604) 947-2321
email holm@farmertofarmer.ca
December 9, 2003
Deputy Premier Shirley McClellan
Minister of Agriculture, Food and Rural Development
Province of Alberta
Dear Minister McClellan;
RE; USING NAFTA TO OPEN THE US BORDER TO CANADIAN BEEF
First of all, I apologise for my delay in getting back to you. Several weeks ago, when in Edmonton, I promised your secretary I would send you a briefing note on this issue upon my return to British Columbia.
At the invitation of the Alberta Women’s Institute, I was in Alberta November 14 to 18 to speak to farmers in central and northern Alberta on the Farmers’ Resolution to Exempt Water from the NAFTA. At the end of each talk, I was asked to include a short presentation on the BSE/NAFTA issue (why Canada should be using NAFTA to open the border to Canadian beef).
As an Agrologist and agricultural economist, I am concerned that continued closure of the US border to Canadian beef will have severely negative effects on industry structure and performance. . Given the extreme market concentration pre and post farm gate (feed, packers), continued closure of the US border to Canadian beef imperils the independence of our ranchers and feedlot operators – the backbone of Canada’s beef industry. And that’s not good for public policy, which has as its objective the economic, environmental and social sustainability of communities. Also a farm journalist, I have written several columns (attached) in an attempt to untangle the rhetoric.
As international trade lawyer Michael Woods, (Gottlieb & Pearson) confirms in his letter of September 15, 20003 (attached), Canada has a “prima facie” case under NAFTA Chapter 20 to request a panel ruling against Washington’s continued closure of their market to Canadian beef.
Further, NAFTA panel rulings (Pope and Talbot) suggest grounds for a Chapter 11 (investor-state) action by ranchers, feed lot operators or other industry participants who have suffered economic damage as a result of Washington’s expropriation of their market share to the benefit of American industry players.
Strategic decision-making for agriculture depends on good information in the hands of farmers. A NAFTA Chapter 20 challenge is clearly one option, and it is of concern to many that this information is not getting out to ranchers. (One industry spokesman actually suggested they were “keeping a lid on it” because they were afraid that if Canada played the NAFTA card, the Americans would retaliate by implementing country of origin labeling for beef. This is dealing from a very weak position; Canada’s ranchers and Canada’s communities deserve a more enlightened and assertive defense.)
Your October 24th response on behalf of Premier Klein to questions raised by David Zradicka concerning invoking NAFTA to defend Canada’s ranchers is similar in tone and content to that of BC Agriculture Minister John van Dongen (“…Canada’s cooperative approach is making progress and at this time offers greater chances of success…”), Agriculture Minister Lyle VanClief (“…It is a significant victory for Canada to have been able to re-open trade so quickly…”) and former Ontario Agriculture Minister Helen Johns (…we’re lucky – Washington could keep that border closed for years…”).
(So similar, in fact, are the responses, one could be forgiven for assuming a spin campaign by Ottawa, which despite lip service to markets, continues to pick economic winners and losers based on politics, not policy; effective because few Canadians understand NAFTA well enough to object…)
Before I left Edmonton, I spoke with your office to inquire whether there was an opportunity to provide you with a personal briefing on this issue. I believe that was the day the provincial legislature opened for its Fall Session, and you — predictably — were booked well into the evening! So with apologies for the delay in getting back to you, a belated response to the points raised in your letter of October 24th:
McCLELLAN: “…at this time we do not see justification under international trade rules for retaliatory action against the US.
RESPONSE:
Calling for the convening of a NAFTA Chapter 20 Panel ruling can hardly be considered to be “retaliatory action against the US.” Chapter 20 is the agreed-upon arbitrator of conduct under the NAFTA and its panel rulings are a process both Canada and the US have jointly agreed to support.
McCLELLAN: In closing its border to Canadian beef and cattle… the US has acted consistently with the guidelines of the World Organization for Animal Health Office of International Epizootics (OIE).”
RESPONSE:
Non-NAFTA countries may rely on OIE protocols to defend restrictions on Canadian beef. NAFTA countries may not; they are held to a “higher standard.”
The OIE protocols were based on “precautionary principle”. Despite the protestations of Canada’s environmental community, NAFTA does not recognize “precautionary principle” but relies, instead on sound science and risk assessment.
Scientific standards and risk assessment trump precautionary principle for NAFTA countries, and Canada was cleared by a panel of international experts last June 26th.
(Several weeks later, US Secretary of State for Agriculture Ann Veneman publicly confirmed the safety of Canada’s beef supply.)
McCLELLAN: “…In fact, in re-opening its border to imports of some Canadian beef, the US has departed from the standard treatment given to every other country with BSE and has given Canada what could be considered “special treatment.”
RESPONSE:
Canada is not “every other country” – we are a NAFTA country. NAFTA is about “special treatment.” And we’re not getting it.
McCLELLAN: “…The US has gone further and has begun its internal rule-making process to consider opening its border to imports of live cattle from Canada. This process is expected to be complete in early 2004.”
RESPONSE:
Washington’s “internal rule making process” to “consider” live cattle imports requires gazetting, receiving public comment, etc. etc.
The time line for this process is fully in the hands of Washington. As Minister Lyle VanClief notes in his letter of November 26th:
“…The published rule has a 60-day comment period, during which interested parties can make submissions. Following their comment period, the USDA will need time to fully review the submissions. A final rule may then be issued in which the US could decide to reopen the border to live cattle and other Canadian products affected by the ban.”
In an US election year, increasing market access for Canadian beef is a low priority. Under NAFTA Chapter 20, agricultural products enjoy a 215-day fast track. Had Ottawa called for a panel ruling on Canada day, the border would be open in a few weeks time.
McCLELLAN: “…The US has also joined Canada and Mexico in asking the OIE to consider changing its guidelines so that countries with adequate animal surveillance and BSE control measures are not automatically shut out of global markets if BSE is discovered in their cattle herds.”
RESPONSE:
Canada’s trade rights are vested in NAFTA, not OIE protocols under WTO.
While easing BSE restrictions for all countries may be a worthwhile pursuit, it is the LEAST expeditious route for Canada.
Canada’s rights are vested in NAFTA and should be defended under NAFTA.
McCLELLAN: “…Given the way in which the US has cooperated with Canada in resolving the BSE crisis, trade retaliation by Canada at this time is problematic in that it could end all progress in further opening the US market.”
RESPONSE:
Canada did not have a “BSE crisis” – we had one positive test.
The US did not cooperate with Canada; Washington is actively transgressing their obligations under NAFTA.
It’s not “trade retaliation” to defend the NAFTA rights of Canada’s ranchers to protect their market share from expropriation by Washington to the benefit of US industry players.
Effective negotiating strategy means playing all our cards (including the 215 day NAFTA Chapter 20 one that says “while we continue to try to do this nicely, the clock is ticking…”) to provide essential leverage and control the time line.
McCLELLAN: “…A win is never assured and the costs in terms of litigation, potential retaliation and reversal of progress in opening markets could be exceedingly heavy.”
RESPONSE:
Chapter 20 calls for a panel to rule on the black and white wording of the NAFTA; there is no lack of clarity on what the Americans should have done, nor on what they have done. If the American border was not fully reopened in response to a Chapter 20 ruling, Canada could retaliate with punitive tariffs against sensitive US sectors (e.g. prescription drugs…)
McCLELLAN: “…I believe the diplomatic approach has the best potential for now to bring the needed results in further opening markets…”
RESPONSE:
Ottawa’s failure to defend Canada’s ranchers and feed lot operators in the face of the millions of dollars being lost daily as a result of Washington’s failure to open the US border to Canadian beef consistent with its NAFTA obligations may well be actionable by the provinces and the industry.
Hopefully, when Canadian Prime Minister Paul Martin and US President George Bush meet at their upcoming international conference in January, the US border will be opened to Canadian beef as a show of détente. If not, Canada’s beef – and lamb and goat – ranchers and the communities that depend upon them could be twisting in the wind for a long time.
This is not acceptable on a public policy level.
I trust this information will be of assistance to you in your efforts to defend the interests of Canada’s farming sectors. Please feel free to call me if you would like to discuss further any of the above.
Yours sincerely,
Wendy R. Holm, P.Ag,
c.c.: David Zradicka, Calgary, Alberta
Mr. Harvey Cenaiko, MLA, Calgary-Buffalo
The Honourable John VanDongen, BC Minister of Agriculture
The Honourable Lyle Vanclief, Federal Minister of Agriculture
The Honourable Ralph Klein, Premier of Alberta
R.R. #1, HP-8, Bowen Island, B.C., Canada V0N 1G0 Phone: (604) 947-2893
Fax: (604) 947-2321
email holm@farmertofarmer.ca
December 9, 2003
Deputy Premier Shirley McClellan
Minister of Agriculture, Food and Rural Development
Province of Alberta
Dear Minister McClellan;
RE; USING NAFTA TO OPEN THE US BORDER TO CANADIAN BEEF
First of all, I apologise for my delay in getting back to you. Several weeks ago, when in Edmonton, I promised your secretary I would send you a briefing note on this issue upon my return to British Columbia.
At the invitation of the Alberta Women’s Institute, I was in Alberta November 14 to 18 to speak to farmers in central and northern Alberta on the Farmers’ Resolution to Exempt Water from the NAFTA. At the end of each talk, I was asked to include a short presentation on the BSE/NAFTA issue (why Canada should be using NAFTA to open the border to Canadian beef).
As an Agrologist and agricultural economist, I am concerned that continued closure of the US border to Canadian beef will have severely negative effects on industry structure and performance. . Given the extreme market concentration pre and post farm gate (feed, packers), continued closure of the US border to Canadian beef imperils the independence of our ranchers and feedlot operators – the backbone of Canada’s beef industry. And that’s not good for public policy, which has as its objective the economic, environmental and social sustainability of communities. Also a farm journalist, I have written several columns (attached) in an attempt to untangle the rhetoric.
As international trade lawyer Michael Woods, (Gottlieb & Pearson) confirms in his letter of September 15, 20003 (attached), Canada has a “prima facie” case under NAFTA Chapter 20 to request a panel ruling against Washington’s continued closure of their market to Canadian beef.
Further, NAFTA panel rulings (Pope and Talbot) suggest grounds for a Chapter 11 (investor-state) action by ranchers, feed lot operators or other industry participants who have suffered economic damage as a result of Washington’s expropriation of their market share to the benefit of American industry players.
Strategic decision-making for agriculture depends on good information in the hands of farmers. A NAFTA Chapter 20 challenge is clearly one option, and it is of concern to many that this information is not getting out to ranchers. (One industry spokesman actually suggested they were “keeping a lid on it” because they were afraid that if Canada played the NAFTA card, the Americans would retaliate by implementing country of origin labeling for beef. This is dealing from a very weak position; Canada’s ranchers and Canada’s communities deserve a more enlightened and assertive defense.)
Your October 24th response on behalf of Premier Klein to questions raised by David Zradicka concerning invoking NAFTA to defend Canada’s ranchers is similar in tone and content to that of BC Agriculture Minister John van Dongen (“…Canada’s cooperative approach is making progress and at this time offers greater chances of success…”), Agriculture Minister Lyle VanClief (“…It is a significant victory for Canada to have been able to re-open trade so quickly…”) and former Ontario Agriculture Minister Helen Johns (…we’re lucky – Washington could keep that border closed for years…”).
(So similar, in fact, are the responses, one could be forgiven for assuming a spin campaign by Ottawa, which despite lip service to markets, continues to pick economic winners and losers based on politics, not policy; effective because few Canadians understand NAFTA well enough to object…)
Before I left Edmonton, I spoke with your office to inquire whether there was an opportunity to provide you with a personal briefing on this issue. I believe that was the day the provincial legislature opened for its Fall Session, and you — predictably — were booked well into the evening! So with apologies for the delay in getting back to you, a belated response to the points raised in your letter of October 24th:
McCLELLAN: “…at this time we do not see justification under international trade rules for retaliatory action against the US.
RESPONSE:
Calling for the convening of a NAFTA Chapter 20 Panel ruling can hardly be considered to be “retaliatory action against the US.” Chapter 20 is the agreed-upon arbitrator of conduct under the NAFTA and its panel rulings are a process both Canada and the US have jointly agreed to support.
McCLELLAN: In closing its border to Canadian beef and cattle… the US has acted consistently with the guidelines of the World Organization for Animal Health Office of International Epizootics (OIE).”
RESPONSE:
Non-NAFTA countries may rely on OIE protocols to defend restrictions on Canadian beef. NAFTA countries may not; they are held to a “higher standard.”
The OIE protocols were based on “precautionary principle”. Despite the protestations of Canada’s environmental community, NAFTA does not recognize “precautionary principle” but relies, instead on sound science and risk assessment.
Scientific standards and risk assessment trump precautionary principle for NAFTA countries, and Canada was cleared by a panel of international experts last June 26th.
(Several weeks later, US Secretary of State for Agriculture Ann Veneman publicly confirmed the safety of Canada’s beef supply.)
McCLELLAN: “…In fact, in re-opening its border to imports of some Canadian beef, the US has departed from the standard treatment given to every other country with BSE and has given Canada what could be considered “special treatment.”
RESPONSE:
Canada is not “every other country” – we are a NAFTA country. NAFTA is about “special treatment.” And we’re not getting it.
McCLELLAN: “…The US has gone further and has begun its internal rule-making process to consider opening its border to imports of live cattle from Canada. This process is expected to be complete in early 2004.”
RESPONSE:
Washington’s “internal rule making process” to “consider” live cattle imports requires gazetting, receiving public comment, etc. etc.
The time line for this process is fully in the hands of Washington. As Minister Lyle VanClief notes in his letter of November 26th:
“…The published rule has a 60-day comment period, during which interested parties can make submissions. Following their comment period, the USDA will need time to fully review the submissions. A final rule may then be issued in which the US could decide to reopen the border to live cattle and other Canadian products affected by the ban.”
In an US election year, increasing market access for Canadian beef is a low priority. Under NAFTA Chapter 20, agricultural products enjoy a 215-day fast track. Had Ottawa called for a panel ruling on Canada day, the border would be open in a few weeks time.
McCLELLAN: “…The US has also joined Canada and Mexico in asking the OIE to consider changing its guidelines so that countries with adequate animal surveillance and BSE control measures are not automatically shut out of global markets if BSE is discovered in their cattle herds.”
RESPONSE:
Canada’s trade rights are vested in NAFTA, not OIE protocols under WTO.
While easing BSE restrictions for all countries may be a worthwhile pursuit, it is the LEAST expeditious route for Canada.
Canada’s rights are vested in NAFTA and should be defended under NAFTA.
McCLELLAN: “…Given the way in which the US has cooperated with Canada in resolving the BSE crisis, trade retaliation by Canada at this time is problematic in that it could end all progress in further opening the US market.”
RESPONSE:
Canada did not have a “BSE crisis” – we had one positive test.
The US did not cooperate with Canada; Washington is actively transgressing their obligations under NAFTA.
It’s not “trade retaliation” to defend the NAFTA rights of Canada’s ranchers to protect their market share from expropriation by Washington to the benefit of US industry players.
Effective negotiating strategy means playing all our cards (including the 215 day NAFTA Chapter 20 one that says “while we continue to try to do this nicely, the clock is ticking…”) to provide essential leverage and control the time line.
McCLELLAN: “…A win is never assured and the costs in terms of litigation, potential retaliation and reversal of progress in opening markets could be exceedingly heavy.”
RESPONSE:
Chapter 20 calls for a panel to rule on the black and white wording of the NAFTA; there is no lack of clarity on what the Americans should have done, nor on what they have done. If the American border was not fully reopened in response to a Chapter 20 ruling, Canada could retaliate with punitive tariffs against sensitive US sectors (e.g. prescription drugs…)
McCLELLAN: “…I believe the diplomatic approach has the best potential for now to bring the needed results in further opening markets…”
RESPONSE:
Ottawa’s failure to defend Canada’s ranchers and feed lot operators in the face of the millions of dollars being lost daily as a result of Washington’s failure to open the US border to Canadian beef consistent with its NAFTA obligations may well be actionable by the provinces and the industry.
Hopefully, when Canadian Prime Minister Paul Martin and US President George Bush meet at their upcoming international conference in January, the US border will be opened to Canadian beef as a show of détente. If not, Canada’s beef – and lamb and goat – ranchers and the communities that depend upon them could be twisting in the wind for a long time.
This is not acceptable on a public policy level.
I trust this information will be of assistance to you in your efforts to defend the interests of Canada’s farming sectors. Please feel free to call me if you would like to discuss further any of the above.
Yours sincerely,
Wendy R. Holm, P.Ag,
c.c.: David Zradicka, Calgary, Alberta
Mr. Harvey Cenaiko, MLA, Calgary-Buffalo
The Honourable John VanDongen, BC Minister of Agriculture
The Honourable Lyle Vanclief, Federal Minister of Agriculture
The Honourable Ralph Klein, Premier of Alberta
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