Canadian Cattlemen’s Association (CCA) representatives were in Mexico City for round seven of the North American Free Trade renegotiation discussion February 25 to March 5. CCA Director of Government and International Relations John Masswohl was on site the first three days for the agriculture session discussions. CCA Past President Dave Solverson arrived March 1 for the Ministerial sessions and was able to meet with officials from the Department of Foreign Affairs including chief trade negotiator, Steve Verheul and staff from Minister Chrystia Freeland’s office.
Upon arriving at the negotiation site, Solverson was scrummed when Mexican media noticed his Farmers for Free Trade NAFTA lapel pin. Solverson took the opportunity to talk about the importance of NAFTA and the integrated agricultural supply chains in North America.
The round was the latest in the series to modernize and renegotiate the NAFTA.. Subjects of concern to beef producers include tariffs, rules of origin, dispute settlement mechanisms, regulatory practices (both technical barriers and sanitary phyto-sanitary requirements), government procurement and review vs sunset for the NAFTA agreement.
So far, we have not been advised that there is any proposal to impose a customs duty on cattle or beef trade so long as the NAFTA remains intact. However, we have expressed concern over the possibility of the U.S. proposing a “border tax” across the board.
NAFTA’s “rules of origin” determine which products are eligible to be traded duty free amongst the NAFTA countries. Under these rules, either beef that is “wholly produced” in the NAFTA territory or transformed from a live animal into beef in a NAFTA country is eligible for NAFTA treatment. It also means that importing beef from a non-NAFTA country and shipping it to another NAFTA country does not provide a back door. The CCA has advised the negotiators of our strong desire to ensure the existing rules of origin for beef remain as they are and so far, we expect they will.
There has been good exploratory discussion amongst the negotiating teams regarding streamlining regulatory practices to remove cumbersome procedures for cattle or beef crossing the border, but so far, no concrete commitment for change. We also understand that the government procurement discussions have so far consisted of the U.S. seeking to scale back the limited access Canada already has to U.S. government purchasing rather than being receptive to allowing better access for Canadian beef to U.S. federally funded purchasing.
The CCA also wishes to maintain dispute settlement provisions in the NAFTA and seeks to improve enforceability of NAFTA panel decisions. The Canadian beef sector has from time to time relied on dispute settlement, typically under the World Trade Organization (WTO), and strengthening the NAFTA option would provide a meaningful alternative to the WTO. The outcome of these and the sunset/review issues remain unresolved, but with common ground being sought.
Masswohl said overall, round seven had positive discussions and the hope is that progress will continue into round eight, to be held in the U.S. in early April. Obviously, that timeline would extend the negotiations beyond the notional deadline of March 31. As we have seen time and again in previous negotiations, deadlines can come and go, but if progress is being made, the parties are likely to continue to meet with a view to reaching an agreement. We do note that as we approach closer to the Mexican federal election in July, the parties will have to make a decision regarding how, when or whether to keep negotiating.