Ron DeHaven Says BSE North American Issue

[rsomer]

Pandiana: the original CUSTA agreement did contain a provision which was to be signed at a future date that would have effectively removed political influence on trade between the two countries. When CUSTA was rolled over to NAFTA that provision disappeared and we are left with a significantly different agreement than what was originally envisioned.
Further to a North American market for beef, the future impact of the U.S. free trade agreement with Australia (which would see Australia have unlimited access for its beef into the U.S. after 18 years and increased access after a short initial period) has disturbing implications for a North American market. Prior to this the NAFTA partners had reciprocal free trade agreements with each other, now the U.S. has unilaterally formed a free trade agreement with Australia on its own.
I frankly do not see how this can work within the context of NAFTA. The U.S. reaps the benefits of its free trade agreement with Australia by having increased access to Australia for its goods and services while Canada and Mexico are forced to accept Australian goods by default of cross border trade.

[pandiana]

I am somewhat at a loss to understand why, because a cow/calf producer perceives that the feedlots may have got a better deal from the government largesse, that the cow/calf producer is antagonistic towards feedlots. Of course not. Envious maybe.

[pandiana]

Your comments, rsomer, further reinforce my feeling that for all primary 'resource' based industry NAFTA doesn't work.

We have traditionally fueled the manufacturing or in our case the fabricating industry similar to other 'third world' countries. Although this has been a recognized problem by our governments for decades they have always taken opted for expediency by selling out to the big players (Other than a brief period when we initiated crown corporations eg Petro Canada). They justify this by saying a lot of the money stays home in terms of jobs and spin off to service industries. However, it's not too hard to see that when looking at some of the corporate financial statements to see that more money leaves the country than is paid to all employees.

We have often talked about needing leverage as primary producers. The reality is we have it but are reluctant to use it. The US industry would soon grind to a halt without the raw material to keep it running.

It has been said that Canadians are not risk takers and therefore not willing to risk buying into their own industry. Is this what we are seeing still? Would we rather see the US come in and build our packing plants, control our production and skim off the cream for their 'risk-taking' shareholders?

[rsomer]

Interesting comment about Canadians not being risk takers. The reality is that the risk of building a packing plant is different for Canadians than for Americans. When Japan blocked imports of Canadian beef, our government did very little. Japan blocks American beef, trade delegations including Vice President Cheney go to Japan and set up talks with a deadline of this summer. Our Canadian government has been accused of not doing enough to get our border open with the U.S. The U.S. government is pulling out all the stops to get trade in their beef resumed. The U.S. treats American owned plants importing Canadian beef differently than they would treat a Canadian plant importing Canadian beef into the U.S. It is not that Canadians are risk adverse when compared to Americans, it is just the risk is different for Canadians. I would go so far as to say that if Canadian were to invest in a packing plant in Alberta, they should seriously consider incorporating in the U.S. and operate in Canada as a U.S. subsidiary. It is that bad.

As far as NAFTA goes, I noticed that Mexico was able to block imports of American beef after the Washington Holstein. It seems that the U.S. and Mexico are within their NAFTA rights to block trade in beef and live cattle due to BSE. I wonder if a link was ever established between oil and nvCJD if the U.S. would still accept our imports.