Prime minister Paul Martin used the BSE border closure to tell an elite American business audience this month that the United States’ protectionism hurts it more than it hurts Canada.
Most of the attention after his speech to the Economic Club of New York focused on tough talk about the softwood lumber issue but Martin’s message was a more general warning that American protectionism is eroding faith in and benefits from the North American Free Trade Agreement.
He chided the Wall Street crowd about the two-year border closing to live beef trade because of a 2003 BSE case in Alberta.
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Canada and the U.S. had developed an integrated North American beef and livestock market until BSE was discovered and the border slammed shut, Martin said.
“But long after scientific evidence demonstrated unequivocally that Canadian beef was safe, some very loud and persistent American ranchers succeeded in keeping the U.S. border closed (and) this is when the problem became a crisis not just for Canadian ranchers but for a continental industry.”
He said Canada responded to the crisis by building a bigger and more efficient packing industry to the detriment of U.S. packing plants and jobs.
“Rather than looking only to the U.S. market, we will be your direct competitors in China, Japan and Korea,” Martin said. “It’s the law of unintended consequences at work.”
Meanwhile, although the border now is open to trade in younger animal meat cuts and animals younger than 30 months, the continued closure to older animals, meat from older animals and animal genetics continues to impose a hefty cost on Canada’s cattle and dairy industry.
Dairy Farmers of Canada estimates that the lack of trade in breeding stock and genetics into the U.S. takes away at least $100 million in annual sales. Closure of the border to older cull cows and their products reduces the value of cull sales by $50 million or more each year.
But Dennis Laycraft of the Canadian Cattlemen’s Association said increased domestic capacity and displacement of imports of manufacturing beef has increased domestic prices for older animals by 15 cents per pound or more, which offsets some of the export loss.
“The real test will be this fall when we get into heavier culling of cows and bulls,” he said.
