Overcoming North American Trade Hurdles

1. Overcoming North American Trade Hurdles Barry Carpenter

2. 2014 Global Meat Trade Exports in Million Tons 30 25 20 15 10 5 0 Poultry Pork Beef USDA-FAS: 2014 Livestock and Poultry: World Markets and Trade

3. Beef Statistics USDA-FAS: November 2013 Livestock and Poultry: World Markets and Trade

4. Livestock Marketing Information Center, Data Source: USDA-FAS

5. Source: USDA-FAS, CattleFax

6. Source: USDA-FAS, CattleFax

7. Pork Statistics Globally, pork is expected to reach near record highs USDA-FAS: November 2013 Livestock and Poultry: World Markets and Trade

8. Livestock Marketing Information Center, Data Source: USDA-FAS

9. Lamb Statistics • Globally • Main world exporters are New Zealand and Australia, by a large margin • United States • Minimal • Exports are down 6% • Most exports go to Mexico and Canada • Canada • Minimal • Top 3 export markets are Thailand, France and US • Mexico • Net importer • Export mainly to US and Russia Data Source: USDA-FAS

10. Broiler Statistics USDA-FAS: November 2013 Livestock and Poultry: World Markets and Trade

11. Livestock Marketing Information Center, Data Source: USDA-FAS

12. Trade Agreements and Groups • NAFTA • Canada, US and Mexico • Started January 1, 1994 • Worlds largest free trade area • 450 Million people • 17 Trillion in goods and services

13. Trade Agreements and Groups • US-Canada Regulatory Cooperation Council (RCC) • Created February 4, 2011 • Working on reducing trade hurdles between US and Canada • Joint Action Plan released December 7, 2011

14. North American Trade History

15. Hurdles and Challenges • Overall major hurdles and challenges in all areas • Streaming trade processes • Eliminating re-inspection at borders • Country of Origin Labeling (COOL)

16. Hurdles and Challenges: Policy and Government • Certification and border inspection needs to be streamlined • Common meat nomenclature

17. Hurdles and Challenges: Policy and Government – COOL Timeline • 2002 – Made mandatory in Farm Bill • 2008 – Amendments to address key problems • 2009 – Final rule takes effect • 2009 – Mexico and Canada file official complaint with WTO • 2011 – Panel finds in favor of Mexico and Canada • 2012 – WTO finds US out of compliance • 2012 – May 23, 2012 compliance date set • 2013 – USDA proposes and finalizes rule with no significant changes

18. Hurdles and Challenges: Policy and Government – COOL

19. Hurdles and Challenges: Policy and Government – COOL

20. Hurdles and Challenges: Policy and Government – COOL

21. Hurdles and Challenges: Policy and Government – COOL

23. Hurdles and Challenges: Policy and Government – COOL Beef Increased Processing Costs in the US Pork Increased Processing Costs in the US Establishments running mixed origin hogs Increase $6.90 – $8.50 a head Establishments running only US hogs Increase only $0.25 a head • Establishments running imported cattle • Increase $45.50 - $59.00 a head • Establishments running only US beef • Increase only $1.50 a head

24. Hurdles and Challenges: Policy and Government – COOL If US does not comply, September – December 2014 WTO retaliation proceedings continue and retaliation against US is authorized

25. Hurdles and Challenges: Policy and Government – COOL • Possible WTO punishments: • US Taxpayer compensation to Mexico and Canada • The authorizations of trade sanctions against the US • Mexico and Canada have voiced support in favor of this punishment

26. Hurdles and Challenges: Animal Health • A common protocol for disease outbreaks needs to be developed • Recognized zones for disease control • Mutual veterinary services • Method to ensure both countries are protected from disease • Still allow bilateral trade in disease free zones

27. Hurdles and Challenges: Animal Health • A common protocol for veterinary drug plans needs to be developed • Align Maximum Residue Limits and tolerances • Develop method to inform each other about newly introduced drugs • While maintaining each countries ability to make decisions on new products

28. Hurdles and Challenges: Meat and Food Safety • Have equivalent meat product inspection system • Common approach to food safety • Align food safety systems while protecting human health • Open sharing of information • Government oversight • HACCP • Data • Microbiological • Chemical residue

29. Hurdles and Challenges: Meat and Food Safety • Testing practices and procedures • Same food safety laboratory accreditation criteria • Same of acceptable testing regulations • Reliable evidence of test results • Canada lags the US in terms of rapid pathogen testing methods

30. Hurdles and Challenges: Meat and Food Safety • Mexico is behind US and Canada in food safety and system sophistication • January 2014, Mexican government announced that they will provide $50 million to abattoirs and processers

31. Hurdles and Challenges: Cultural

32. Hurdles and Challenges: Cultural

33. Conclusion: Big Picture • Major hurdles facing North American trade: • Country of Origin Labeling • Hurting trade in Mexico, Canada and US • Against WTO regulations • Unnecessary as it is not improving food safety of meat products

34. Conclusion: Big Picture • Streamlining all processes and regulations • Multiple regulations from each country is confusing and difficult to follow • In some cases, the same test is conducted multiple times by each country, which is unnecessary • Eliminating re-inspection • Waste of money by both countries conducting the same inspection • Unnecessary

35. Conclusion

36. Thank you! Questions?