Thank you, Mr. Chair.
Good afternoon, committee members. Thank you for inviting us to speak to the NAFTA priorities of Food and Beverage Ontario.
Food and Beverage Ontario represents a critical sector in the national economy. The Ontario food and beverage processing sector is one of the largest in North America, representing more than 3,800 provincial food processing businesses, which generated $42 billion in revenue and exported $6.9 billion in food goods last year. I refer you to our written submission for more details on this sector and the magnitude of our economic impact.
Our members are concerned about these negotiations because there is so much at stake for them. Over three-quarters of Ontario's agri-food exports are sold to the United States. Much of the reason for this trade dependency is location. As part of the vital Great Lakes regional trading hub, our companies are within a one-day shipping radius of some 142 million consumers. That is a market pull that simply cannot be ignored.
Further, the interests of our members are somewhat unique. The products that food processors deal in tend to be seasonal, cyclical, or perishable, or all three. In this respect, food goods are distinct from widgets, and just-in-time delivery has greater import when considering food goods with a finite shelf life. It is not only contract fulfillment that is at stake if timely delivery is not accomplished, but often the very value of the shipment itself.
Supply chain integration has been one of the key and enduring successes of NAFTA. The high level of integrated business operations established under NAFTA underlines the strong competitive position of Ontario's food and beverage sector. The food distribution chains that stretch across the continent are the reason that industry can meet consumer demand for a consistent supply of fresh, healthy, affordable food goods.
Let me re-emphasize the point. These goods tend to be seasonal, cyclical, or perishable, or all three; thus trade—particularly the unfettered movement of goods, services, and people between Canada and the United States—is critical to the ongoing success and competitiveness of the sector. Such border infrastructure as the Ambassador, Blue Water, Peace, and Lewiston-Queenston Bridges are the sector's lifelines.
I'm pleased to tell you that FBO is not alone in viewing NAFTA as critical and that this view is not distinctly Canadian. I had the privilege to participate with Ontario agriculture minister Jeff Leal in an ambitious U.S. advocacy tour that took us to Wisconsin, Michigan, Ohio, Pennsylvania, New York state, Illinois, and Missouri earlier this spring. We met with U.S. state government and business representatives, and I was struck by the commonality and the interests we share when it comes to NAFTA renegotiation.
The common thread in our discussions was that reopening NAFTA should do no harm. The NAFTA has largely benefited the food and beverage processing sector on both sides of the border. Any new provisions in the NAFTA 2.0 that undermine the current level of market access and supply chain integration would be detrimental to our industry and ultimately to consumers across North America.
Sure, there's room and opportunity for improvement. In modernizing NAFTA, it is hoped that there will be further streamlining of border crossings and further reductions in administrative burdens to allow for timely, efficient border processes.
In other words, this is an opportunity to reduce the cost and the burdens of doing cross-border business, an opportunity to thin the border, if you will. NAFTA 2.0 should be about simplifying customs procedures by reducing document and certification requirements, expanding the use of electronic filing, ensuring timely border inspections and release of goods, and allowing for expedited customs treatment of low-risk shipments.
Regulatory disconnects still occur around food safety and non-food safety issues. These need to be minimized. To accomplish this work, the work of the U.S.-Canada regulatory co-operation council should be expanded and made permanent.
In addition, NAFTA modernization may be an occasion to take regulatory co-operation a step further and entertain the establishment of a joint Canada-U.S. authority to oversee food safety risk assessments, with a joint bilateral office that would ensure stronger linkages between existing Canadian and U.S. authorities to allow for regulatory alignment on the following: science-based food safety risk assessments, using common data for hazard identification and characterization, exposure assessment, and risk characterization; best practices in food safety risk management along the farm-to-fork continuum; and collecting, analyzing, and communicating food safety knowledge for the benefit of consumers, government agencies, food producers, exporters, and importers.
NAFTA 2.0 represents an opportunity to enhance public protections, cross-border business competitiveness, and efficiencies in regulatory program delivery. In addition to the above, it is important that these negotiations reach a timely conclusion and that governments offer sufficient transparency in the negotiating process to keep stakeholder groups well informed regarding the process. The uncertainty and unpredictability regarding the breadth and length of NAFTA negotiations has already cast a chill on future business investment.
Finally, once a revised version of NAFTA is reached, governments must ensure a seamless transition to any changes in the agreement. Businesses will require sufficient lead time to understand, adapt, and modify, as necessary, established processes in supply chain relationships to achieve and ensure compliance.
Thank you again for the opportunity to present to this committee, and I welcome any questions you may have.
