Mr. Chairman, committee members, I'd like to spend the rest of our time highlighting one emerging challenge that all commodity exports will increasingly face in the years to come, as current zero thresholds that are on the books in importing companies collide with analytical methods to test against those tolerances that have now ranged down into single parts per billion.
As you know, crop protection products—herbicides, fungicides, and insecticides—have been critical to improving agricultural productivity. Unfortunately, new crop protection products and their rapid adoption have challenged market access as importing countries could take years to establish legal tolerance for residue levels in grains, oilseeds, and pulses. This is further complicated as countries have zero or near zero default tolerances that apply when the country hasn't got around to setting a legal tolerance.
As an example, in 2011 the pulse industry had a high-profile glyphosate breach and MRL gap encountered on lentils to the EU. The issue was that Canadian farmers were using a crop protection product—glyphosate or, by another name, Roundup—that was fully approved in Canada for use on the crops, and the residues within the exports were well within Canadian food safety standards. However, the EU had never gone to the process of establishing an MRL, or maximum residue limit, for glyphosate on lentils, and consequently applied a near zero default MRL of 0.1 parts per million. This caused rejections as well as product recalls from retail shelves, so it was quite significant. As you know, detection of pesticide residues, even when well below levels considered safe by the world's leading regulatory bodies, can create headlines that undermine the consumer perceptions of the safety of Canadian agrifood products.
I want to emphasize that all of this happened solely as a result of the lack of regulatory harmonization. I want to be clear to all committee members who may not be familiar with the policy and processes around the establishment of crop protection product tolerance levels. Canada is among the toughest regulators in the world when it comes to establishing safety margins, and the product pulled from EU retail shelves was easily compliant with Canadian standards. Underscoring that there was no food safety risk in this particular case was that EU regulators, after they consulted with their own health authorities, increased their default MRL, which was near zero at 0.1 parts per million, by a factor of 100, to 10 parts per million after the dust settled.
The pulse industry then did a lot of work to identify the extent of similar hidden risks across other products and markets where trade is at risk solely due to regulatory gaps and not food safety concerns. That analysis revealed that the value of trade at risk is approximately $900 million for pulses and close to $3 billion for the cereal crops and oilseed crops grown in rotation with pulses. This is categorized as markets that have one or more MRL gaps or missing MRLs.
The four countries of the Pacific Alliance each have a different process to establish MRLs, none of which is effectively aligned with each other's or Canada's. Mexico uses a combination of MRLs established by the U.S. and by the UN body Codex. Peru uses Codex exclusively. Chile has begun to develop its own MRL list as of 2010 but considers Codex and U.S. MRLs. Colombia is currently reviewing its MRL policy but has relied on Codex.
What does this mean for exporters in practical terms? Of the 19 crop protection products registered for and commonly used on lentils in Canada, Canada has MRLs for 19, Colombia has MRLs for 3, Peru for 5, Mexico for 17, and Chile for 6. The key issue is that because absent MRLs get interpreted as zero or near zero tolerances, shipments that are fully compliant with Canadian safety standards would be rejected by the importing country. This creates enormous uncertainty for trade. While the asynchrony between Canada and importing countries is not new, the potential for trade disruption is increasing as testing becomes less expensive, capable of detection at lower levels, and more prevalent in response to increasing consumer interest in food safety, driven by issues such as the EU horsemeat scandal.
The opportunity as we look ahead is to use FTA negotiations and all other multilateral forums to attain the commitment of importing countries toward regulatory harmonization of MRLs. This is occurring now within the TPP, of which three of the four Pacific Alliance countries, except for Colombia, are currently members.
The long-term solution is represented by a best practice currently used by Canada, the EU, the United States, and Australia, and increasingly Brazil, to improve the coherence of crop protection regulation by participating in OECD global joint reviews, which involves splitting the workload of pesticide evaluation among participating regulatory authorities, exchanging data, and peer reviews.
A short-term to medium-term solution is to establish interim MRLs, which could involve the importing country applying an MRL of the exporting country, or some other OECD-referenced country, according to internationally accepted processes. A precedent already exists. The UN World Food Programme uses as the importing country's MRL the MRL that is in place in the exporting country.
In closing, the pulse industry has also been working with other Canadian agriculture stakeholders to identify specific work that can be done by the Canadian industry to complement the work we are asking of government. Agriculture industry stakeholders understand the value of partnerships and are ready to work together to achieve measurable outcomes.
Thank you, Mr. Chairman and members of the committee.