Thank you, Mr. Eyking and members of Parliament.
Thank you for the introduction. Thank you also for inviting Fertilizer Canada to speak with you today in relation to the state of trade among Canada, the United States, and Mexico. We are pleased to appear before you and to provide the committee with information about our association's mandate as well as to present our recommendations in the context of the North American Free Trade Agreement's negotiation.
I am Clyde Graham, senior vice-president of Fertilizer Canada.
Fertilizer Canada represents the manufacturers and wholesale and retail distributors of potash, nitrogen, phosphate, and sulphur fertilizer and related products. Collectively, our members employ more than 12,000 Canadians and contribute over $12 billion annually to the Canadian economy through advanced manufacturing, mining, and distribution facilities nationwide. As the foundation of Canada's agri-food sector, Fertilizer Canada continues to make changes that positively impact the environment, the economy, and the social fabric of Canadian life.
NAFTA is of significant interest to our members and their farm customers. Farmers in agribusinesses on both sides of the 49th parallel depend on imports and exports of fertilizer in an integrated North American sector.
Fertilizer Canada has consistently supported regional and bilateral free trade agreements, including the Canada-European Union Comprehensive Economic and Trade Agreement and the proposed trans-Pacific partnership. We're also engaged in the exploration of China and other agreements that are potentially in the works.
We certainly support an expanded and modernized North American Free Trade Agreement to protect and enhance free trade within North America. We would like to bring forward several key recommendations to support the Canadian government's goal to modernize and strengthen NAFTA. In essence, while we support an enhanced NAFTA, I think we would certainly like the Government of Canada to take a “do no harm” approach. What we have is pretty valuable, and we'd like to sustain it and make it better.
Foremost, we need to protect the interests of our farmer customers in Canada, the United States, and Mexico, who depend on access to cost-effective fertilizer products and services. Canada is the world leader in potash fertilizer production and export, accounting for 52% of global potash reserves. Canada is also the ninth-largest producer of nitrogen fertilizer in the world. Almost half of the nitrogen fertilizer produced in Canada is exported to the United States and its farmers.
Additionally, the United States exports between $800 million and $900 million in fertilizer products to Canada each year, mainly phosphate and nitrogen fertilizers, including monoammonium phosphate and urea. Canada maintains a significant trade surplus in fertilizer with the United States—about 4:1. Maintaining or improving integrated supply chains within the United States and Mexican markets is imperative to Canadian manufacturers during the NAFTA renegotiations.
Fertilizer Canada also recommends that we support regulatory harmonization and co-operation. A consistent science-based approach will prevent the creation of protectionist trade barriers under the guise of environmental, health, and sanitary or phytosanitary rules. Strengthening regulatory co-operation will reduce regulatory approvals required for products produced and sold across the region.
To achieve this, we recommend modernizing customs procedures and expanding the range of skilled workers and professionals for free movement within NAFTA. That is certainly an area we would like to recommend strongly, as executives, other professionals, and skilled workers move within companies that are integrated in North America in the fertilizer industry, and that's an important value for the entire North American economy.
Last, we recommend that the following provisions be maintained or adopted during the NAFTA renegotiations.
Maintain the current zero duty rate on fertilizers and chemical commodities listed in the harmonized tariff schedules for chapters 28 and 31. Maintain the exemption of the merchandising processing fee on imports of NAFTA declared goods. Maintain current tariff shift rules of origin for fertilizers and chemicals listed in the harmonized tariff schedule, chapters 28 and 31 to avoid unnecessary administrative burden, and adopt a chemical reaction rule for the qualification of chemicals to align NAFTA with other modern free trade agreements and provide administrative efficiencies.