Thank you, Mr. Chairman, and thank you for the opportunity to appear before you again.
The Canadian Cattlemen's Association also appreciates and applauds the government's efforts to open markets for Canadian exports and Parliament's willingness to seek our input into the content of these new agreements.
The last time I was here to speak about Korea, I stressed the importance of Canadian beef being treated at least as favourably in our agreement as U.S. beef is treated in the Korea-U.S. agreement. With respect to Colombia, we're really in a very similar situation right now.
Upon learning the results of the U.S.-Colombia agreement and consulting with Canadian officials as to the status of our negotiations, the CCA, along with the Canada Beef Export Federation and the Canadian Beef Breeds Council, felt it was important that we travel to Colombia and meet with our counterparts. We did that in early March, and we had excellent meetings with the Colombian Cattlemen's Federation—they're known as FEDEGAN—and we also met with the various breeders' associations. We met with key officials in charge of what is the Colombian equivalent of the Canadian Food Inspection Agency. We also met with beef processors, food service representatives, and large retailers.
Our impression is that Colombia has the potential to be an important future market for beef exports. It's a market with a growing middle class. Furthermore, it's a country that seems to be emerging from a history marred by many serious issues. The cattle industry in particular appears to be on the verge of getting its long-standing foot-and-mouth disease problem under control, and it seems eager to position itself to start to become a player in the global marketplace. All of this leads us to believe that a free trade agreement with Colombia could be a positive development for Canadian cattle producers.
But as far as beef is concerned in the proposed Canada-Colombia free trade agreement, I would have to say that the jury is still out. Colombia has agreed to provide U.S. beef with much better access than they're currently offering to Canadian beef. Colombia has agreed to consider three categories for U.S. beef. First, all high-quality U.S. beef—so that's any cut coming from a carcass that grades as “prime” or “USDA Choice”—will enjoy unlimited, immediate, duty-free access into Colombia. The standard-quality U.S. beef—so that's the lesser grades—will receive duty-free access up to a limit of 2,100 tonnes until the tariff is completely eliminated over five years. Finally, U.S. variety meats and offals, including liver, will receive duty-free access up to a limit of 4,642 tonnes until the tariff is completely eliminated over 10 years.
We don’t think it's really advisable to discuss the particulars of what Colombia has offered to Canada, in that this is a public forum, but I can tell you that what they are offering Canada right now is far less than what they have given the U.S.
When we visited Bogota, we made a proposal to FEDEGAN, outlining the terms of access that would be acceptable to the Canadian cattle industry, and so far we're waiting to hear their reply. I have been in e-mail contact with them frequently and I know they're working on a reply, but so far the ball remains in their court.
Nevertheless, I want to give you a flavour of the meetings we had with FEDEGAN. FEDEGAN indicated that they very much wanted to establish a free trade agreement with Canada. Currently, their only export market for Colombian beef is Venezuela. But when they receive their FMD-free status—and they are expecting to get that status at a meeting that's going to occur in Geneva later this month—they are hopeful that new export opportunities for their beef will arrive.
FEDEGAN also explained that they represent both the dairy and the beef cattle industry in Colombia, and that since Canada will not allow access for any dairy products, they find it difficult to agree to Canada’s requests for improved access for beef. This seems to be a common issue that we hear in many of Canada’s free trade negotiations and at the WTO, that Canada’s narrow defensive interests are undermining the interests of our much broader, export-oriented sectors. FEDEGAN also explained a number of reasons why they felt Canada should not get as good a deal as the United States.
We refuse to agree that Canada is a lesser market for our trading partners or that we should settle for less. We may not be as large as the United States, but Canada is a sophisticated, high-income market that could be of great potential for many Colombian products. Furthermore, if Colombian beef or other products are sufficiently processed in Canada, they may meet the requirements of the NAFTA rules of origin and allow those further-processed products to be exported to the United States under the terms of that agreement.
But beyond the principle that Canada should not settle for less, the Canadian beef industry has very strong economic reasons, which I outlined the last time I was here, why we can't accept a deal that is inferior to the access provided to U.S. beef. Every time the U.S. gets better access for its beef than Canada, it becomes more difficult to justify slaughtering cattle in Canada, and we increase our reliance on shipping live cattle to the U.S. and letting them add the value there.
Competitiveness of our processing industry is a major area of concern, and consolidation of the industry is now a daily reality. The rapid ascent of the Canadian dollar has exposed significant competitive challenges in the Canadian beef processing industry, from government regulation, inspection fees, labour availability, etc. If U.S. meat packing facilities have export opportunities for a broader range of beef cuts than Canadian facilities, an already challenging competitive situation becomes worse.
The last time I was here I used the analogy that if we settle for field goals every time the U.S. scores a touchdown, sooner or later we're going to be out of the game. So we don't want to see that continue to happen.
For the time being, the Canadian Cattlemen's Association supports continuing the negotiation of an agreement with Colombia. With the right terms of access, we could be a strong supporter of a Colombia-Canada free trade agreement. But we really want to caution the government not to be too eager to agree to terms that do not provide parity in beef access with the United States.
Thank you.