Thank you very much for the invitation to appear before the committee and for your continued attention to international market access for Canadian beef.
The last time we were here talking about implementing the Canada-Europe agreement, we advised that the establishment of new market access through trade agreements is now our top priority, and that Europe and Japan are at the top of our priority list. Little did we imagine, that short time ago, that we would soon be preparing for a NAFTA renegotiation. My advice is that the Canadian beef producers strongly support keeping the NAFTA provisions on beef trade exactly the way they are.
In 2016, we exported 270,000 tonnes of beef and 760,000 head of live cattle to the United States for just over $3 billion. A further 16,000 tonnes of Canadian beef went to Mexico for $109 million. The U.S. is always our top export market, usually taking about 70% of our beef exports and nearly all of our live cattle exports.
Last year, Mexico was our number four beef export market. Sometimes they are number two or three. Mexico jockeys with Hong Kong and Japan for the numbers two through four spots. On the import side, Canadians bought $978 million of U.S. beef and $19 million of Mexican beef in 2016.
We currently enjoy unlimited duty-free beef trade between Canada, the United States, and Mexico. We can access those markets without any tariffs or quotas for either beef or live cattle trade. They can do likewise for the Canadian market. This is how free trade should work, and such access should be preserved.
NAFTA contains extensive product-specific rules of origin for determining which products are eligible to be traded duty-free amongst the NAFTA countries. Under these rules, either beef that is wholly produced in a 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. These rules of origin should be maintained just as they are.
We also advise maintaining dispute settlement provisions in NAFTA and seeking to improve enforceability of NAFTA panel decisions. The Canadian beef sector has from time to time relied on dispute settlement, more so under the WTO, but strengthening the NAFTA option would provide a meaningful alternative to the WTO.
We understand that at least one protectionist group in the United States is advising the Trump administration that a renegotiation of NAFTA is the ideal forum to reinstate country of origin labelling, or COOL, for beef and pork. Our adversaries state:
The reinstatement of COOL would be a relatively straightforward negotiation.... The United States should first require in the NAFTA renegotiation that both Canada and Mexico formally withdraw their COOL complaints that are pending before the WTO as well as their WTO-sanctioned authorizations to impose retaliatory tariffs.... The United States should then prepare a NAFTA Renegotiation Implementing Act...that includes the restoration of the previously repealed COOL statute....
Such a demand is not only counter to Canada's interest, it's a harmful policy for the United States, and it jeopardizes American jobs.
If the Trump administration should formally include such a demand in the NAFTA position, Canada should reject it unequivocally and work with U.S. allies to demonstrate how U.S. jobs depend on livestock trade with Canada.
CCA has been working with U.S. counterparts to develop a list of actions that could improve the Canada-U.S. beef trade. While most of these are of a regulatory nature and therefore not likely to fit as part of a NAFTA negotiation, we do feel that they are consistent with the spirit of NAFTA.
Specifically, we should eliminate the reinspection of meat at the border. Since Canada and the U.S. deem each other's meat inspection systems to be equivalent, inspection at the point of production should be sufficient.
We should enable Canadian beef exported to the U.S. to receive a U.S. beef grade and eliminate the requirement for Canadian cattle to bear a permanent identification in the United States while there's no such requirement for U.S. cattle.
We should eliminate the requirement to prove that live cattle exported to the U.S. were born after March 1999.
In closing, I would note that we have consulted with our U.S. counterparts on these objectives, and I am pleased to inform you that we are in alignment with the mainstream cattle producer organizations in the United States.
Thank you for your time. John and I would be happy to answer any questions later.