So many variables are at play in the renegotiations of the North American Free Trade Agreement that a new deal is a long way off. Still, beef and pork producers are being especially vigilant, advocating against disruptions in trade that might be dredged up in the talks’ wake.
The issue at hand for Canadian producers is not exclusively about tariffs, but rather the possibility of the U.S. re-enacting their highly contentious Country of Origin Labeling (COOL) requirements for beef and pork products entering the country.
It is really a wildcard, said David Thompson, vice-president of Conestoga Meat Packers, a pork producer and exporter based in Breslau, about the talks, which started two weeks ago. The company supplies its meat products to retailers in Canada, the U.S., Mexico, and some 20 countries worldwide.
It’s unlikely that COOL legislation will be making a comeback in the U.S., says Dan Darling, president of the Canadian Cattlemen’s Association (CCA), but added that they had to be vigilant.
“Things can pop up. We can be given up for some other commodity being fixed,” he said, suggesting COOL might be brought back for concessions elsewhere in the negotiations.
The COOL legislation, which was imposed on muscle cuts ground up beef and pork imports into the U.S. in 2009, required all these products to be labelled with their country of origin. Proponents of COOL said this gave consumers valuable information on where their food was coming from, letting them make intelligent and safe decisions at the grocer.
Critics, however, not just in Canada but Mexico and even the U.S. as well, accused COOL of blocking the entry of Canadian and Mexican meats into the American markets by imposing costly constraints on the industry. Meat products from these countries, which flow across borders with relative ease, had to be separated and labelled apart from U.S. products, raising the costs of imports and, consequently, driving up the prices of foreign meats at the U.S. supermarkets.
“I think everyone in the pork industry felt the impact of COOL and the complexities that it brings,” said Thompson. Along with added costs, the labelling unnecessarily dissuaded consumers in the U.S. from purchasing Canadian products, says Thompson.
“It’s penny-profit for all sides of the supply chain,” explains Thompson. “So any added complexity or potentially the perception that what’s being offered isn’t as beneficial, well that just eats away at profits and makes it very unappetizing … for our potential U.S. customer.”
He also questioned the safety benefits of telling U.S. consumers that their meat products came from Canada. “Product coming from Canada, they know – anyone in the industry knows – that it is of a minimally equal caliber of food safety and overall nutrition, if not better.”
Regardless of the opposition, the COOL legislation in the U.S. remained in place for six years while the three NAFTA-members came to an impasse. Eventually, the Canadian and Mexican governments took their case to the World Trade Organization (WTO), arguing that the labelling requirements were against existing free trade agreements between the three countries, and won.
In December 2015, the WTO ruled in favour of both countries. Moreover, it gave Canada and Mexico the right to “retaliate” against the U.S. for the damage done to their meat industries. Canada was given the chance to impose $1-billion worth of tariffs to a range of U.S. products entering the country (Canada had requested $3 billion), until the U.S. repealed COOL legislation, which it did soon after.
Canada still holds the ability to impose those retaliatory taxes on U.S. exports, and while it does the U.S. is unlikely to try to re-enact COOL – at least not without Canada’s consent first. But cattlemen from all three countries, Canada, Mexico and even the U.S., are presenting a united front on the matter, urging all sides to respect the status quo.
“That NAFTA over the last 23 years has worked extremely well for agriculture and these three countries, and we want to make sure there wasn’t any changes made that would stop that trade from happening,” said Darling, the Canadian Cattlemen’s Association president.
“Both our organization (CCA) along with our provincial members, and US producers … and Mexico, have all called on their governments to make sure that there’s not any changes that is going to hurt trade between the three countries. Basically our message is, for the most part, we want to see very, very, very little change in the NAFTA agreements.”
The Canadian, Mexican and U.S. cattlemen’s associations signed a joint letter last month addressed to the three heads of state, requesting as much.
“After President Trump received that letter, he kind of pulled back a little bit; prior to that letter, he was talking about just pulling right out of NAFTA and basically re-inventing the wheel. And after he received that letter – and I’m sure some correspondence with some other commodities as well – he changed his mind and proceeded with renegotiations, which is a big change.”
Darling says that his organization will continue to advocate for Canadian producers to all parties in the negotiations, which will be held for the most part out of the public spotlight.