Think-tank recommends removing border inspections
Canada and the United States should move toward regulatory harmonization, particularly within the red meat industry, says a recently released report from two independent think-tanks.
The U.S. might not have implemented mandatory country-of-origin labelling if the two countries had achieved this earlier, the report added.
“If only we could have co-operated in 2003 on this issue we could have saved hundreds of millions of dollars,” said Alexander Moens of the Fraser Institute, who co-authored the report with Amos Vivacious-Leon of the Competitive Enterprise Institute.
“We know from the soft wood limber dispute, nearly a billion dollars was spent in legal fees on both sides.”
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The report assessed the financial costs of COOL on fresh food products sold at retail. It has been law since 2008 and caused Canadian hog and cattle exports to decline by more than 40 percent.
Canada and Mexico won a World Trade Organization challenge against COOL last November. The WTO ruled the U.S. law was inconsistent and violated international obligations because it gave less favourable treatment to imported Canadian cattle and hogs compared to U.S. domestic products.
The U.S. appealed that decision and a ruling is expected June 29.
The law required U.S. processors to sort and separate foreign born livestock at an estimated cost of $45.50 to $59 per head, while sorting American cattle cost $1.50.
Segregation costs for handling mixed origin hogs were an estimated $6.90 to $8.50 per head while that of American-only pork products increased to 25 cents per head.
The report advocated establishing “mutual recognition” of regulatory regimes for cattle, beef and pork, with a label stating “Produced in the U.S. and Canada.” It also recommended creating a bi-national group that would work to ensure that future standards or regulations are negotiated jointly.
Moens said such a move could be a challenge because of resistance on both sides of the border from anti-free trade groups.
“It is going to be very difficult. We are in the middle of an (U.S.) election campaign so expect very little,” he said. “Next year may be an opportunity. First of all, we have to see how the WTO rules at the end of this month, but it won’t be easy.”
The law could be amended in the 2012 U.S. farm bill.
A bi-national committee could act as watchdog. If one country wants to change or add standards, the committee could examine the proposal and ensure it creates no differences between the two countries.
Many of these changes are bureaucratic and have an almost sacred aura for some, but they are needed because of the high value of trade between the two countries, said Martin Unrau, president of the Canadian Cattlemen’s Association.
“It is going to be harder to do than we think,” he said.
International committees are talking about streamlining regulations, harmonizing meat grades and adopting the same nomenclature so all cuts are called by the same name.
The CCA advocates equivalency rather than harmonizing standards. Harmonization means doing things the same way while equivalency strives to reach the same outcomes.
“If we look at harmonization, we will be constantly butting heads with countries because everybody wants to say my way is better than yours. At the end of the day, if we can reach that agreement that we have reached the end goal, especially with food safety, we can make more headway that way,” he said.
