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Trans-Pacific trade deal opens new markets for Canada’s beef producers

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A recently ratified agreement between the government of Canada and 10 other countries will provide tariff-free and/or competitive access to key markets in the Asia-Pacific region.

On Oct. 25, The Government of Canada became the fifth member nation to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

CPTPP countries that ratified before Canada were Japan, Mexico, Singapore and New Zealand. The sixth nation to ratify the deal was Australia on 31 October. Because the provisions of the agreement specify that it enters into effect 60 days after ratification by at least 50 per cent of the signatories (six of the eleven participating countries), it will come into force on 30 December 2018.

Canada’s agricultural producers had urged the federal government to be one of the first six to ratify the agreement, allowing Canada to benefit from the early rounds of negotiations and tariff cuts. For beef producers, early ratification is considered key to securing the best terms with the growing markets in Japan, Vietnam and Malaysia.

The Japanese market in particular holds huge potential for Canadian beef producers. The CPTPP will reduce the current 36.5 per cent tariff to 27.5 per cent on Canadian fresh beef and 26 per cent on Canadian frozen beef. Further cuts will eventually bring the tariff down to nine per cent for fresh beef, while frozen beef will ultimately be completely exempt.

The National Cattle Feeders’ Association (NCFA) and Alberta Cattle Feeders’ Association (ACFA) are delighted the Canadian federal government worked so diligently to ratify the deal. The government used a rare walk-around process to pass the 14 Orders in Council required to complete the process.

“Canada is a trading nation,” Jim Carr, Minister of International Trade Diversification, said in a statement announcing the ratification. “The CPTPP will add nearly half a billion consumers to the growing list of places where Canadian businesses can compete and succeed on a level playing field. The ratification of the CPTPP represents another important step toward trade diversification to help the middle class and those working hard to join it to compete and succeed in the global marketplace.”

5 priorities for cattle feeders in 2019 

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Canada’s cattle feeders are urging politicians to consider the needs of beef producers in their platforms for the 2019 federal election. 

Agriculture and Agri-Food is a $100-billion industry that employs more than two million Canadians. The government has identified the sector as one of a few with the potential to spur economic growth.

Canada is in a prime position to benefit from increasing global demand for agricultural products, but the industry requires government support in removing constraints and barriers to growth. 

The National Cattle Feeders’ Association (NCFA) cites five urgent challenges:

Rural infrastructure

Most agricultural operations are in rural municipalities with a limited tax base to provide infrastructure. With little federal funding, some municipalities have implemented counterproductive measures, such as the livestock head tax in Lethbridge County. This is eroding the competitiveness of cattle feeding in southern Alberta.

It is crucial that the federal government identifies critical infrastructure investments in rural communities and dedicates financial resources to make them happen.

Labour shortage

A chronic labour shortage of about 60,000 workers is costing primary agriculture producers about $1.5 billion in unrealized farm cash receipts each year. 

Farmers have been forced to turn to the Temporary Foreign Worker Program to fill positions that cannot be filled by Canadians, but the process is expensive, time-consuming and complicated. 

The program’s processes need to be streamlined and clear a pathway set for permanent residency for temporary foreign workers.

Regulatory barriers

The industry is ever-evolving with new technologies and industry developments. But when regulations don’t keep pace, it hinders our ability to compete in the global marketplace.

In 2016, NCFA released a detailed study entitled The Competitiveness of the Canadian Cattle Feeding Sector: Regulatory and Policy Issues(PDF)

, Costs and Opportunities. It highlighted six areas – enhanced traceability, export regulation and impediments, veterinary drug harmonization, inspection practices, transportation and labour – where reforms could generate an additional $495 million in revenue across the beef value chain.

International market access

Canada exports 45 per cent of its beef production, and those exports are primarily to the U.S. To grow, the industry needs to expand into other markets, including the Asia-Pacific region and Europe.

Agreements such as the North American Free Trade Agreement (NAFTA), the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Canada-EU Comprehensive and Economic Trade Agreement (CETA) should be a government priority. They will have a tremendous impact on our ability to trade effectively with these regions.

Consumer education and trust

Government and industry need to work together to ensure consumers are able to make informed choices when it comes to their food, whether the issue is environmental impact, health, or production methods.

Public education should be a pillar of any new national food policy, and Canada Food Guide revisions should reflect the most recent scientific, medical and nutritional research.

In an earlier blog post, we featured John Weekes, an independent business advisor who has worked with NCFA on international trade issues. You can learn more about his work in Meet the international trade expert who is helping support the beef industry abroad.

How a beef plant is setting a new standard in food safety

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A beef processing plant which opened this year just north of Calgary is setting new industry standards for food safety, animal care and environmental stewardship.

This week, we’re exploring the food safety innovations introduced at Harmony Beef, which opened in Balzac, AB., in February 2017.

Hazard analysis and critical control points

The management team at Harmony Beef is committed to meeting or exceeding the stringent requirements of the Canadian Food Inspection Agency’s Food Safety Enhancement Program.

One of the cornerstones of the program is HACCP System (Hazard Analysis and Critical Control Points), a systematic approach to food safety that helps prevent, find and correct hazards throughout the production process.

At Harmony:

    • The plant and production protocols have been designed to meet European standards, which exceed those in North America.
    • Temperature control and air flow systems in the building were designed to control any potential microbial growth and prevent contamination.
    • Critical control points, where inspections and interventions take place, include everything from slaughter to packaging.
    • Supervisory and food safety personnel have the authority to enforce compliance with food safety systems on anyone entering and/or working in the facility.
    • All water used in the plant is treated, and the outflow exceeds Canadian drinking water standards.

Opening up a world of opportunity

Because the new plant demonstrably complies with European food safety standards, it provides the opportunity to increase our trade with EU countries.

International trade is crucial to the growth and sustainability of the beef industry, and to the contribution it makes to the Canadian economy. But, as you can learn in the blog post, Canadian beef in demand: feeding the European market and why it matters, Canada does not meet its tariff-free quota for beef exports to Europe. In the post, feedlot operator Jason Hagel says processing plants in Alberta tend to focus on the U.S. market, leaving the European market under-served.

You can read about another international trade issue concerning Canada’s beef producers in Canadian beef trade with China takes a serious blow.

In upcoming weeks, we will explore the high standards of animal care, including low-stress handling, and the environmental innovations introduced at the Harmony plant.

Meet the international trade expert who is helping support the Canadian beef industry abroad

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John Weekes, an independent business advisor who has worked with the National Cattle Feeders’ Association (NCFA) on trade issues, is the subject of this week’s Meet the Team series profile.

John is an expert in international trade policy and a senior business advisor at Bennett Jones in Ottawa. He has been a huge asset to NCFA in developing a strategic approach to negotiating with government and stakeholders.

Supporting Canadian cattle feeders in Ottawa

During his career, John has been chief negotiator for the North American Free Trade Agreement (NAFTA), Canada’s ambassador to the World Trade Organization (WTO), chair of the WTO General Council, and ambassador to the General Agreement on Tariffs and Trade (GATT) during the Uruguay Round of GATT negotiations. His insider’s perspective on governments’ approach to trade matters has been invaluable to NCFA.

Trade files he has worked on include:

Country-of-Origin Labelling (COOL)

In 2002, the U.S. introduced a regulation requiring all beef (and some other agriculture products) to have a label stating where it was from. To be labeled as U.S.-sourced, the animal had to be born, raised and processed in that country. Processing plants in the U.S. were required to keep Canadian born and raised animals separate from those born and raised in the U.S., a requirement that was costly to adhere to. As a result, Canadian exports to the U.S. suffered, and some U.S. plants were forced to close. Many jobs were lost on both sides of the border, and COOL cost the Canadian beef industry billions of dollars. 

Canada appealed to the WTO in 2008 and, in December 2015, won. The U.S. Congress repealed COOL to avoid $1 billion in retaliatory tariffs authorized in the WTO ruling. 

As Canada’s former ambassador to the WTO, John was uniquely positioned to provide advice through the complex web of WTO tribunals and the excruciatingly long appeals process. John worked with NCFA and others on this, including advising federal government officials. His contacts within the U.S. were also helpful in getting NCFA’s messages through in Washington, and he helped us communicate with Canadian importers who might have been harmed if Canada retaliated against U.S. imports into Canada.

Canada-E.U. Comprehensive Economic and Trade Agreement (CETA)

This free trade deal between Canada and the EU came into effect on September 21, 2017. It will allow Canada to ship 65,000 metric tonnes of beef into the EU, without duty or tariffs. This could be worth hundreds of millions of dollars to Canada’s beef industry. John did a great job monitoring developments, needs and the political climate within the EU, and is continuing to contribute while the details are being finalized.   

Trans-Pacific Partnership (TPP) 

Canada was not part of the group that began this trade negotiation, but NCFA urged the Canadian government to become part of the TPP process, which it did. John offered advice on what Canada should secure in this negotiation. Now that the U.S. has chosen not to ratify the deal, John will lend his expertise to a new round of negotiations with other TPP partners, if talks go ahead.

North American Free Trade Agreement (NAFTA) 

As Canada’s former Chief Negotiator for NAFTA, John has an unrivaled understanding of the ins and outs of the agreement, and his opinions are sought by industry and government during the current and ongoing negotiations with NAFTA.

Why international trade matters

Canadian beef is renowned worldwide for its great taste and high quality. A healthy export industry contributes to a healthy Canadian economy. Expertise such as John’s is vital to NCFA in securing the conditions our beef producers need to develop profitable relationships with customers across the globe.

You can read more about international trade issues in ‘Canadian beef trade with China takes a serious blow’, ‘Cattle feeders head to Ottawa to support NAFTA negotiations’, ‘Feeding the world: why the agri-food industry must be an economic priority’ and ‘How people in 58 countries enjoy Canadian beef’.