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Prairie grain growers have a big stake in NAFTA talks

Trade deal has produced great benefits and can be made even better

The North American Free Trade Agreement has been a boon for Canadian agricultural producers, facilitating cross-border trade and commerce, and fuelling the economic performance and growth of this highly export-driven sector.

It has achieved this mainly through the continued reduction of tariffs on agricultural goods, but also through measures addressing non-tariff trade barriers, sanitary and phytosanitary regulations, regulatory co-operation councils, and clearcut rules of origin.

Turning our back on the agreement, and losing these important measures would be devastating for the agricultural sector at large, and especially so for the grains sector. Accordingly, the Alberta Wheat Commission’s primary recommendation to the government is for, at a minimum, a continuance of these measures and of the agreement as a whole.

The importance of this message is supported by some simple statistics. Nearly 65 per cent of Canadian wheat is exported annually. The U.S. is the single largest market for Canadian farmers’ wheat, importing an average of more than two million tonnes annually over the last five years. Mexico also represents a significant export market for Canadian wheat, and is the seventh-largest importer of our wheat. NAFTA is the cornerstone of these trading relationships, and provides the framework within which this cross-border commerce occurs. And the benefits are not only in Canada’s favour — all three countries benefit immensely from the increased trade resulting from the agreement.

Agriculture will be near the top of the list in the talks to renegotiate the deal, which start this month. Two key issues, identified both in President Donald Trump’s prolific use of Twitter and in the United States Trade Representative’s Summary of Objectives for the NAFTA Renegotiation, are likely to come to the forefront: Canadian grain grading, and the use of tariff-rate quota (TRQ) systems in supply-managed agricultural sectors.

AWC’s submission to the Government of Canada addresses both of these issues head on, and provides recommendations around how they should be managed so as to mitigate the impact on wheat producers.

As producers of wheat and other grains dependent on export markets for their livelihood, AWC supports the reduction or removal of all tariff and non-tariff trade barriers on all agricultural commodities. This position was made clear in our submission to the government consultations. The submission acknowledges the government’s resolute defence of Canada’s supply-managed sectors, but offers a cautionary reminder that government actions in this area should keep in mind the potential impact on other, far larger, and more representative sectors of agriculture.

In short, AWC’s submission neither advocates 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.

Upon arrival at a Canadian elevator, American grain is given the lowest possible grade. This grade is assigned even if the grain is of a registered Canadian variety. In our view, this represents a barrier to the free flow of grain across our border.

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 into Canada, and similar qualities of American and Canadian grain, allowing American-grown grain to be graded according to the same standards as Canadian-grown grain, provided that it is a registered Canadian variety, would not negatively affect Canadian producers.

Accordingly, AWC’s submission recommends that, should this issue be raised during negotiations, Canada should express a willingness to make the necessary changes to the grain grading process. An added benefit of this position is that co-operating with our American counterparts on this issue could help Canadian negotiators achieve their goals in other areas.

Despite the current successes of NAFTA, and beyond addressing these contentious issues, there is much that Canada can achieve in the coming negotiations that will make the agreement even more robust and advantageous for Canada’s grain farmers.

AWC identified a number of these areas in its submission, including improved sanitary and phytosanitary regulation measures (similar to those found in the Trans-Pacific Partnership trade agreement); improved regulatory co-operation, maximum residue limit 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 that addressed these issues would encourage further economic growth in the grain sector in the years to come, and ensure that the agreement is prepared to address the issues of tomorrow.

Maintaining a healthy trading relationship with both the U.S. and Mexico should be a top priority for Canadian negotiators. They should emphasize our willingness to cooperate and our commitment to free and fair trade. Our grain system has changed significantly since the implementation of NAFTA to address long-standing U.S. concerns, such as the elimination of single desk marketing, removal of kernel visual distinguishability, and allowing registration of U.S. varieties in Canada.

NAFTA negotiations should proceed with the same spirit, and should seek to address issues and arrive at solutions in a way that ensures the future prosperity of all countries, sectors, and stakeholders.

Sam Green is the Alberta Wheat Commission’s policy analyst.

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