Canada’s trade pact with the U.S. and Mexico, which came into effect 20 years ago back in January, has long been a point of pride for free-trade advocates.
Federal Agriculture Minister Gerry Ritz, in Mexico this week meeting with his U.S. and Mexican counterparts, told reporters the North American Free Trade Agreement (NAFTA) “has proven the great things unfettered trade can accomplish.”
As in most long-term relationships, though, differences have arisen as well — and U.S. mandatory country-of-origin labeling (COOL) tops that list, Ritz said Wednesday during a media teleconference.
Asked how he squared good news around NAFTA with COOL, Ritz responded there would always be hiccups. “Someone has gotten ahold of a politician’s ear and they’ve made a change that is not beneficial to the overall free flow of trade.”
Agriculture trade has quadrupled to over $1 billion a week between the three since NAFTA came into force, Ritz said. Science-based rules, and the ability to retaliate, are needed, he added.
Ritz said he reminded U.S. Agriculture Secretary Tom Vilsack Canada is ready to implement retaliatory measures and “will not blink on this issue.”
But nothing new came out of his discussions with Vilsack, Ritz said, expressing doubt the U.S. administration would reverse its position on mandatory COOL before the trade challenge launched in 2008 by Canada and Mexico at the World Trade Organization reaches its finish.
A compliance panel of the WTO’s Dispute Settlement Body (DSB) is now reviewing changes the Obama administration made to COOL, after the DSB and WTO Appellate Body ruled the label law to be out of order in 2011 and 2012 respectively. The compliance panel is expected to rule by the end of July. [Related story]
“I think the (U.S.) administration of today is mired down to the point where they’re going to ride this right to the bottom,” Ritz said.
But Ritz told reporters he’s buoyed by the fact the WTO is taking the trade challenge seriously, and that the U.S. judicial system is taking another look at the appeal brought forward by Mexican, Canadian and U.S. industry. [Related]
There was a growing recognition that mandatory COOL was harming U.S. industry far more than it would help U.S. consumers, Ritz said. U.S. jobs and the economies of the livestock sectors in all three countries are at risk, he added.
Two major processing plants have closed in the U.S., he said, and “there are two more on shaky ground. That’s very concerning to Canadian producers because… some 70 per cent of our processing capacity is American.”
Canada has publicized a list that includes potential trade sanctions against U.S. products. Ritz said U.S. industry had told Canadian officials “that the pressure that we’d put on with our comprehensive, politically-incorrect retaliatory list” helped moved government representatives against mandatory COOL.
Over 100 U.S. congressmen and senators signed on to the industry’s judicial challenge, he said.
“This is a wrong-headed political response, as I say, to a problem that does not, and never did, exist,” Ritz said of mandatory COOL.
Ritz also met with Mexican Agriculture Secretary Enrique Martínez and urged him to publish a retaliatory list of potential tariffs against the U.S. over mandatory COOL.
But Mexico has a “legislative quirk” that prevents officials from releasing a list until the WTO ruling comes down, said Ritz.
Mexican officials, he suggested, could make public statements referring to their retaliatory list over a previous U.S. ban on long-haul trucks from Mexico.
“If they were to come forward and say something about, ‘You know our list will be that comprehensive, plus modernized to today’s issues,’ that would certainly be helpful,” said Ritz.
Ritz also discussed tolerance of low levels of genetically modified material in grain exports with Martínez and pressed him to lift Mexico’s ban on beef from cattle over 30 months of age.
Last month four processing plants in Mexico were the first to obtain export certificates allowing them to ship beef to Canada. [Related]
Three other Mexican processing plants are very close to be certified, Ritz added, noting a fourth had also applied, but has since burnt and is being rebuilt.
Asked whether there are estimates on how much beef Canada expects to import from Mexico, Ritz said it was more of a case of willing buyer, willing seller.
There are “agreements under the WTO that we’ll take a certain tonnage of beef from other countries. Mexico would be a part of that.”