Thank you very much, Mr. Chair, for the invitation to be here.
The Canadian Agri-Food Trade Alliance is very interested to talk with you about how critical North American trade has been for our agrifood exports. First I'd like to explain a bit about CAFTA and how agrifood exports have grown because of improved market access through NAFTA. The agrifood sector has tremendous opportunity for growth, and I'd like to finish off with a few examples of how changes to NAFTA could bring even more growth.
First I want to explain a bit about CAFTA. CAFTA is a coalition of organizations that all seek a more open and fair international trading environment. Our members represent producers, processors, and exporters from the beef, pork, grains, cereals, pulses, soybeans, canola, as well as the sugar and malt sectors. Two CAFTA members are here with me today. Together, CAFTA members represent about 80% of Canada's agrifood exports, or about $55 billion in exports every year. That supports hundreds of thousands of jobs in communities right across the country.
Competitive access to international markets is critical for our sector. As an example, more than 90% of farmers rely upon international markets for their livelihood. The free and fair trade ushered in by NAFTA has been an incredible success for Canadian agriculture and indeed for agriculture throughout North America. Over the 25-plus years of NAFTA and the Canada-U.S. Trade Agreement, Canada's agrifood exports have grown by five times, from $10 billion in 1988 to $56 billion in 2016—a five-fold increase since the beginning of NAFTA.
Together, the U.S. and Mexico represent a little over half of Canada's agrifood exports. Of course, because trade is a two-way street, it has been good for the U.S. and good for Mexico as well. Indeed, Canada's imports from the U.S. have increased by six times since the beginning of NAFTA, and imports from Mexico have increased by ten times since NAFTA came into effect.
NAFTA has allowed us to take advantage of our strengths and to be more competitive. It has encouraged highly coordinated supply chains across all three countries. For example, we export live piglets from Canada to the U.S. They're fed corn and soybeans that are locally produced, and then the meat is processed, and some of it comes back into Canada for further processing and export around the world and indeed throughout North America. It's been clear, then, that NAFTA has been a success.
The first priority for the Canadian government must be to maintain this success by keeping the fair and free access that we currently have. This means we must have access that is free from tariffs, free from border taxes, and free from protectionist non-tariff measures and regulations. That's not to say that NAFTA can't be improved; we've identified several areas in which we could have even more growth coming from agriculture in this country.
Here are some examples.
For all agrifood products, greater regulatory alignment in plant and animal health products would provide producers equal access to these products and would remove barriers to trade. This alignment would include closer co-operation on new breeding techniques, new product approvals, maximum residues limits, and policies that accommodate a low-level presence of biotech crops.
For meat, despite Canada and the U.S. considering each other's systems equivalent, Canadian meat sent to the U.S. still faces greater barriers than U.S. meat coming to Canada. For example, after clearing U.S. customs, Canadian meat is sent for a second inspection after it has already been inspected once here in Canada.
For sugar, as the committee has heard earlier this week, the U.S. has a significant protectionist regime in place. Canada has a competitive advantage for sugar as an ingredient for food processing, but U.S. protectionism has blocked our export opportunities. In fact, U.S. import quotas have steered manufacturing of sugar-containing products away from Canada.
For canola, despite having a globally competitive industry on both sides of the border, further-processed products, such as margarine and shortening, can't cross the border without tariffs. This should be fixed.
For wheat, significant changes to the Canadian system over the last 10 years have substantially addressed the long-standing concerns of the U.S. around cross-border trade. While many of these concerns have been addressed, there are remnants of the former system in the Canada Grain Act. Industry supports the reintroduction of legislation to amend the Canada Grain Act, so Canadian grades can be given to wheat varieties registered in Canada, no matter where they have been grown.
In closing, we couldn't agree more with the advisory council to finance minister Morneau on how the agrifood sector has a tremendous opportunity for growth that can contribute to Canada's economy. The vast majority of this growth will come from exports.
As I've described, we've shown how international access to markets can really allow us to be competitive and to grow. Maintaining the free and fair trade we have in NAFTA, improving it, and achieving and implementing agreements with countries in the Asia-Pacific, like Japan and China, will help us achieve the $75-billion agrifood export target set in budget 2017.
I thank you for the opportunity and look forward to your questions.