Navigating NAFTA: the path forward

With the renegotiation of the North American Free Trade Agreement slated to begin in a few weeks, the Alberta Wheat Commission has been assessing the potential impacts on the Canadian grains sector and communicating farmers’ concerns to the federal government.

Key to these efforts was AWC’s contribution to the government’s NAFTA consultations.

NAFTA has benefitted Canadian agricultural producers, facilitating cross-border trade and commerce and fuelling economic growth. The agreement has achieved this mainly by reducing tariffs on agricultural goods, but also by addressing non-tariff trade barriers, sanitary and phytosanitary regulations, and regulatory co-operation.

AWC’s primary recommendation to the government is that, at a minimum, these measures be maintained. Losing them would devastate the agricultural sector, especially grains.

This message is supported by simple statistics. Nearly 65 percent of Canadian wheat is exported annually. The U.S. is the largest market, importing more than two million tonnes on average over the last five years.

Mexico is also a significant importer. NAFTA provides the framework for this cross-border commerce, and all three countries benefit immensely.

Negotiations are scheduled to begin Aug. 16. The U.S. will likely drive the initial agenda, and agriculture is a top priority. Two key issues, as identified in U.S. President Donald Trump’s tweets and in a report by the U.S. Trade Representative, will likely be Canadian grain grading and tariff rate quota systems in supply-managed agricultural sectors.

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AWC’s submission to the government consultations addresses these issues, suggesting management strategies to mitigate impact on wheat farmers, whose livelihood depends on export markets.

Because producers of wheat and other grains are reliant on export markets for their livelihood, AWC supports the reduction or removal of all tariff and non-tariff trade barriers on all agricultural commodities.

Furthermore, AWC’s submission acknowledges the government’s resolute defence of Canada’s supply-managed sectors, but offers a cautionary reminder that this defence could affect other sectors of agriculture.

AWC’s submission doesn’t advocate for or against supply management, but warns that Canada’s refusal to negotiate changes to this system could negatively impact export-reliant sectors and commodities, such as grains.

At Canadian elevators, American grain of registered Canadian varieties receives the lowest grade. While Canadian elevators do purchase U.S. wheat based on its quality specifications and pay accordingly, assigning the lowest grade is an unnecessary irritant to U.S. farmers.

Given the relatively low volume of American grain imports and the similar qualities of both countries’ grain, grading U.S.-grown, Canadian-registered grain to Canadian standards wouldn’t negatively affect farmers in this country. Should this issue be raised during negotiations, AWC recommends Canada’s co-operation with the U.S.

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Canada can push to make the agreement additionally advantageous for its grain farmers in areas that include improved sanitary and phytosanitary measures similar to those in the Trans-Pacific Partnership, better regulatory co-operation, maximum residue limits and crop input approval synchronicity, an agreement on the treatment of modern plant breeding techniques, and co-operation on low level presence policies.

A modernized NAFTA would encourage economic growth in the North American grains sectors and address emerging issues.

Since NAFTA’s implementation, Canada’s grain system has seen the elimination of the single-desk marketing system, removal of kernel visual distinguishability, and the streamlining of the variety registration system to allow registration of U.S. varieties.

These have addressed long-standing U.S. concerns, and NAFTA negotiations should proceed in the same spirit: to ensure the prosperity of all stakeholders.

Maintaining a healthy, free and fair trading relationship with the United States and Mexico must be a top priority for Canadian negotiators.

Sam Green is a policy analyst with the Alberta Wheat Commission. 


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