Canada

The Canadian delegation informed the Committee on the latest developments with the North American Tomato Trade Working Group (NATTWG). Since its inception in March 2002, the NATTWG has held two meetings, the most recent being October 12, 2002 in New Orleans. The Group, initiated by the industry, is designed to act as a forum to discuss tomato-related trade issues before they become serious trade problems. At the October 12 NATTWG meeting the Canadian tomato industry raised its concern with a Florida industry proposal to include greenhouse and hydroponic tomatoes under Florida=s marketing order. U.S. participants indicated that Florida tomato producers requested that the United States Department of Agriculture (USDA) expand its marketing order coverage to include greenhouse and hydroponic tomatoes since this industry has grown over the years. Canadian officials expressed concerns that the marketing order would prohibit the export of certain varieties of Canadian greenhouse tomatoes. U.S. participants responded that USDA will continue to review Florida’s request, and that no statutory/regulatory timelines were at play in this regard. As with all public comments, the United States promised to consider letters of concern received from groups during the public comment period, if rulemaking proceeds. The NATTWG=s next meeting to discuss the formalization of draft by-laws has been tentatively scheduled for early 2003 in Canada. Future meetings will be chaired and rotated annually among the three NAFTA countries.

(b) Canada-U.S. Potato Committee

The Canadian delegation reported on the most recent Canada-U.S. Potato Committee meeting held November 3-5, 2002, in Las Vegas. The Committee’s annual meetings have been taking place since the 1970s. It was noted that the Committee continues to work well in facilitating bilateral potato trade by managing bilateral policy issues or irritants through information sharing, cooperation, and dialogue. In particular, the Potato Committee discussed each country’s effort to develop a management plan for Potato Mop-Top Virus (PMTV) and also supported a motion that urged Canadian and U.S. governments to complete respective PMTV surveys and provide management options for industry review by early December 2002. The Potato Committee was also supportive of a zero-for-zero initiative for potatoes and potato products in the WTO agriculture negotiations, and considered Mexico as a natural ally in this regard. This issue may also be raised at the World Potato Congress in March 2003. Canada expressed concerns that some countries may use Sanitary and Phytosanitary (SPS) issues as non-tariff barriers against potato trade. Representatives from both countries noted that the bilateral Potato Committee and the Tomato Trade Working Group were good models for industry cooperation.

(c ) Seed Certification Laboratory Accreditation

The U.S. delegation expressed its concern over the issue of certification of U.S. seed for sale in the Canadian market. In particular, attention was drawn to the absence of a Canadian response to comments submitted by U.S. authorities in March 2002 regarding the ability of U.S. seed labs to assign grades to seed destined for the Canadian marketplace. At least one U.S. lab has received provisional recognition by Canada, but its authority to assign Canadian grades remains unclear. The Canadian delegation agreed to review the seed grading issue with the appropriate U.S. authorities with a view to resolving outstanding concerns.

The U.S. delegation raised its concerns regarding End-Use Certificates (EUCs) in Canada and asked whether they could be eliminated. The Canadian delegation noted that the current investigations by the U.S. government into the practices of the Canadian Wheat Board were viewed as a costly and divisive exercise. It was further noted that the investigations have diminished the likelihood of the Canadian industry agreeing to the elimination of EUCs. On a related issue, the Canadian delegation advised that it would temporarily suspend the Quarterly Grains Consultations until the outcome of the current U.S. investigations was known. The U.S. delegation expressed disappointment at Canada’s decision to suspend the Quarterly Grains Consultations and asked that this decision be re-considered.

The two delegations noted that the regulatory agencies of both countries have expressed their willingness to cross-train employees to better understand issues surrounding U.S. wheat, which transits through Vancouver, provided there were adequate demand for the resulting service. The U.S. delegation suggested that this information be communicated to the industry. The U.S. delegation expressed its view that Canada’s segregation requirement is detrimental to U.S. exports. With regard to the Wheat Facilitation Program, U.S. participants requested an end to the monitoring of U.S. wheat. The U.S. delegation also indicated that the North Dakota Wheat Commission has agreed to a pilot project to identify impediments for U.S. wheat exports and expressed its appreciation to Canada for the information provided on transportation. Canadian participants declined to discuss transportation since the issue is under a legal action.

The United States also raised the issue of state-level “pre-emption” on pest control issues, where states have acted ahead of APHIS measures (e.g., European corn borer). They linked this to the same type of measure arising in Alberta with respect to Fusarium, and signaled that sub-national “pre-emption” could be headed toward becoming a general CCA issue. The U.S. delegation also thanked the Canadian delegation for the information concerning Alberta’s measures to combat Fusarium in grain.

(h) Sugar

Canadian officials expressed concern over the scope of the Sugar Containing Products Monitoring Process under section 5203 of the 2002 Trade Promotion Authority Act, and sought insight into implementation of the provision. The U.S. delegation noted Canada=s comments and expressed the view that the provision was a trade monitoring report issued by USDA and that the report would be made available to the public.

5. Livestock / Meat Issues:

(a) Restricted Feeder Cattle Program

The U.S. delegation noted that this issue has been problematic since 1998 and expressed the desire from both countries to allow for year-round access. The U.S. delegation also inquired about the status of the March 2002 proposal for year-round access, which was submitted after the initial project and designed to allow shipments in the summer months. The Canadian delegation indicated that a decision on the March 2002 proposal was delayed because of disease concerns and that a risk assessment, which was undertaken by APHIS in North Dakota and Montana and submitted in February 2002, did not provide adequate protection for wildlife. The Canadian delegation stated that it is Canada's intention to prevent the introduction of U.S. endemic cattle diseases that do not exist in Canada and reported that Canada is currently unwilling to accept U.S. feeder cattle outside the October 1- March 31 period. However, it was also indicated that the evaluation process is still ongoing and interested groups continue to assemble scientific information on the issue. Canada will continue to expeditiously consider any future proposals.

(a) Veterinary Drugs Comparison

The U.S. delegation indicated that the U.S. Food and Drug Administration’s Center for Veterinary Medicine (CVM) has reinvigorated the process to have a side-by-side comparison and wanted to know whether Canada was ready to publish its maximum residue levels (MRLs). The Canadian delegation informed participants that a meeting was held in June 2002 between CVM and its Canadian counterpart, the Veterinary Drugs Directorate (VDD) of Health Canada to discuss, amongst others, the issue of MRLs. Canadian participants expressed an interest in having the MRLs Comparison Table published, but indicated that the publication should be as complete as possible. Canadian participants promised to follow-up on this issue. The U.S. delegation informed participants about CVM and VDD’s suggestion to establish a bilateral working group outside the auspices of the NAFTA Technical Working Group on Veterinary Drugs to expedite work relating to harmonization of MRLs. The Canadian delegation recommended that CVM and VDD be invited to the April 1, 2003 CCA in Montreal, Canada, to talk about their work on this issue. Both delegations agreed that the CCA should continue to strongly encourage their respective regulatory agencies to finalize an updated table.

(a) Dairy Animal Vet Drugs

The U.S. delegation noted that the U.S. milk industry has expressed concern that Canadian fluid milk imports may contain residues of veterinary drugs that are not approved for use in the United States. It noted that a listing of drugs of potential concern had been forwarded to the Canadian Embassy in Washington, requesting information about their use in Canada to help in the assessment of whether or not further action was required. The Canadian delegation noted that this was a technical issue of whether or not tolerance levels had been established for residues in both meat and milk versus only one or the other. Both delegations agreed to foster dialogue at the appropriate technical level and to continue to work toward future harmonization of tolerances where appropriate. The U.S. delegation emphasized its need to have questions answered in an “extremely timely fashion.”

(a) Vet Inspection Services at the Ports of Morgan/Monchy

The Canadian delegation noted that further integration of live-cattle trade would be facilitated if U.S. veterinary inspection services were available at the Port of Morgan, Montana, which is about 200 miles from the nearest U.S. border crossing that offers these services. Currently, U.S. live cattle can move north through the counterpart Canadian border at Monchy, Saskatchewan, but they are unable to move south through the Port of Morgan due to the lack of U.S. veterinary services. Shipping cattle to U.S. border points that offer these services increases costs and acts as an impediment to finishing cattle in the region. The U.S. delegation noted that USDA had not received a formal request for the provision of veterinary services at the Port of Morgan. The U.S. delegation also mentioned that it was not sure whether there is enough traffic to warrant additional resources and asked Canada for statistical data that will show the movement of animals through this port. The U.S. delegation also indicated that services are currently available at the port and that interested persons should inform the veterinary officers responsible for that area about their needs. The U.S. delegation said it will provide contact information for the submission of requests and stated that this issue should be pursued at the working level.

(a) Movement of Horses into the United States

The Canadian delegation asked for an update and indication of when the United States would amend its regulations on the movement of horses from Canada into the United States pursuant to the U.S. commitment in the 1998 Record of Understanding. The United States is concerned about the permanent movement of horses from third countries through Canada. Information has been provided by Canada on the special veterinary status of Canada, and that for all intents and purposes, the disease risk is equivalent to that of the United States, and therefore there is no objective served by U.S. inspection. The U.S. delegation indicated that it would provide Canada with information on further action. The Canadian delegation noted that they have been working with the United States and that there is firm understanding to go ahead with the proposal regarding dourine, and that the United States needs to move forward with this issue.

(f) Vancise Tort Case

The Canadian delegation noted that the Vancise compensation claim (see CCA Minutes March 22, 2002) was denied by the United States in May 2002 and indicated that in a similar situation in the past, Canada had provided compensation. Canada indicated its understanding that Mr. Vancise was asked to appeal the U.S. decision by November 9, 2002 and requested an update on the appeal. The U.S. delegation indicated this issue is no longer under judicial review in the United States and that it is yet to be known whether Mr. Vancise filed an appeal. The U.S. delegation also suggested that since the Vancise case is a legal issue, it should be taken off the CCA agenda and allowed to run its legal course. Canada acknowledged the U.S. suggestion but said the issue should remain on the CCA agenda.

(g) Bison Trimmings

The Canadian delegation noted that Canadian bison trimming exports were abruptly and indefinitely stopped last fall as a result of the enforcement of a USDA-FSIS ingredient policy. While an acceptable solution was agreed upon between Canadian industry and the FDA, the FDA has not acted on its undertaking to inspect two Alberta plants so that Canadian product trade in bison trimmings would be allowed to resume. The U.S. delegation agreed to follow up on this issue following the CCA.

6. Processed Food Product Issues:

(a) Nutritional Labeling

The U.S. delegation raised several questions regarding Canada’s proposed mandatory nutrition labeling regulation, including details on the regulation and its implementation. It was also flagged that U.S. industry had concerns over the possible trade implications of the regulation. The Canadian delegation responded that the final regulation will be published in December 2002 and that with regard to reference values, there is a joint FDA and Health Canada contract with the National Academy of Sciences (NAS) to produce a report after which the two countries could work together on this issue. U.S. officials also inquired as to the possibility of delaying the final publication of the Canadian regulation in order to continue discussions on labeling harmonization. The United States also strongly suggested that Canada delay its publication of the rule pending the completion of the NAS study and that given the trade implications, a transition period longer than the proposed two-year period should be considered. Canadian representatives responded that a delay was unlikely to occur since Canada would run the risk of having to re-propose the regulation and start the process over again. The United States asked that the issue remain on the CCA agenda and requested updates of the NAS report, especially with regard to how the two countries are moving toward harmonization.

(b) Metric Increments of Institutional Food Package Sizes

The U.S. delegation reiterated its concern with, and requested an update on Canada’s proposed regulation that would allow for increments in packaging sizing of 250 grams or millilitres, as opposed to the current 500 unit increments for processed products intended for the food service sector. The U.S. delegation indicated that this requirement will create a trade barrier and asked that the exemption that was made on French-fries for the hotel/restaurant sector be applied to this issue. According to the U.S. delegation, there is no consistency to this requirement since pickles and relishes are sold at any size. The Canadian delegation responded that the proposed changes would be a relaxation of the current rules and that this regulation allows for products, properly packed in increments of 250 grams and labeled as prescribed in the regulation, to be imported into Canada without the need for a Ministerial Exemption. Canadian representatives noted that their government was still consulting on this issue and indicated that input from U.S. interested parties was welcome.

(c) Breaded Snack Food

The U.S. delegation requested an update on Canada's position regarding the United States’ request to return the tariffs on breaded snack foods to pre-December 1999 levels. The Canadian delegation noted that Canada's position had not changed.

7. Pesticide Harmonization:

(a) Update on Pesticide Harmonization

Both delegations noted the continuing work on pesticide harmonization of the North American Free Trade Agreement Technical Working Group (NAFTA/TWG) on Pesticides, and that the Group is developing a second Five-Year work plan. The Canadian delegation also mentioned that funds have been allocated under the Agricultural Policy Framework for the establishment of a minor-use pesticides office in Canada. The U.S. delegation reinforced the need for the two countries to create hyperlinks on their respective websites to the website of the NAFTA/TWG in order to provide information regarding the Group’s activities.

8. Plurilateral Issues:

(a) WTO

The U.S. delegation reviewed the current situation in the WTO agriculture negotiations and encouraged Canada to join the United States in voicing strong ambitions for the Doha Agenda at the Special Session scheduled for the following week. The Canadian delegation indicated that it shared many of the U.S. concerns although it was disappointed that the U.S. proposal on domestic support, export credits, and food aid, was not more ambitious. Canada indicated it would be taking a pro-active stance in the upcoming discussions.

(b) Biotech

The U.S. and Canadian delegations exchanged information on current and prospective domestic and international developments of mutual concern in the biotech area. Both delegations reaffirmed the importance of continuing to share information and to coordinate on biotech issues that affect exports to third country markets. Canadian participants provided an update on the North American Biotech Initiative (NABI) meeting, which took place in Canada from October 30-31, 2002, and indicated that a tri-lateral teleconference on the Initiative has been scheduled in January 2003, to be followed by a May 2003 meeting in Mexico.

(c) NAFTA Committees and TWGs

Canada noted that it was important to highlight the achievements of the Committees especially because of the upcoming 10-year anniversary of NAFTA in 2003, and that it was interested in reinvigorating the NAFTA institutional mechanisms dealing with agriculture. The U.S. delegation agreed that it would be a good idea for representatives from the three NAFTA countries to look into setting-up a meeting of the NAFTA Committee on Agricultural Trade. The Canadian delegation further noted that officials from the three countries have been discussing reconvening the NAFTA SPS Committee as well. Canada also noted the most recent Trinational meeting of Agriculture Deputy Ministers, and the commitment to identify and to provide a brief status report on the various NAFTA committees and working groups. The next Trinational Deputy Ministers’ meeting is scheduled for early 2003 in Washington, D.C.

9. Policy and Program Issues:

(a) Country of Origin Labelling (COL)

The Canadian delegation expressed its view that the COL provisions of the U.S. Farm Bill were fundamentally flawed and counter to the spirit of the CCA and ROU provisions. It noted Canada’s serious concerns have been expressed at the highest political and industry levels in both Canada and the United States, and that a response to the issuing of the interim voluntary guidelines is being prepared. It was also noted that Canada would make every effort to ensure that the United States meets all of its international trade obligations. The U.S. delegation responded that it was aware of Canada’s concerns and said that the interim voluntary guidelines were issued on October 8, 2002, with a 180-day comment period. The U.S. delegation also provided a web site address for information on this issue and informed participants that consideration for mandatory guidelines would start by April 2003. It was suggested that the Canadian government continue to involve itself in the rule-making process leading to the implementation of the law.

(b) Bioterrorism Statute

The Canadian delegation registered Canada’s concerns with the Bio-terrorism Act, which was signed in June 2002. While it was reaffirmed that Canada supports and appreciates the intent of the legislation and the rules that will follow, it was noted that there could be negative consequences for the bilateral trade relationship. The U.S. delegation noted Canada’s concerns and affirmed that it was aware and sensitive to the issues raised. The U.S. delegation informed participants that the Food and Drug Administration (FDA) is committed to meeting the statutory deadlines and that, provisions of the Act apply to both domestic and foreign entities. The U.S. delegation also indicated that implementing regulations and guidance, which have a potential effect on food shipments to the United States will be notified to the WTO. Both delegations agreed that further cooperation and discussion between the relevant regulatory entities would be beneficial.

(c) Agricultural Policy Framework (APF)

The Canadian delegation provided an update on the implementation of the APF, with the Framework to be implemented by April 1, 2003. The U.S. delegation asked how the breach assistance will be distributed and also asked questions about some of the APF funding for farm business risk management, including how Canada would notify such outlays under WTO domestic support provisions. In response, the Canadian delegation indicated that it has yet to be determined how the programs would be notified.

(d) Regulatory Co-operation

A number of examples of cooperation between Canadian and U.S. regulatory agencies were raised under this item to highlight the close working relationship between the two governments, particularly on regulatory matters. The Canadian delegation informed the CCA about the development of regulatory cooperation activities and initiatives outlined in the four meetings that have or will be taking place: the CFIA's President's visit to Washington, D.C., the North American Biotech Initiative Meeting in Ottawa, Canada-U.S. Biotech Initiative meeting in Washington, D.C. and the Ridge-Manley Smart Borders process. The U.S. delegation reported that the Animal and Plant Health Inspection Service (APHIS) and the Canadian Food Inspection Agency (CFIA) have been meeting to discuss ways to increase border security. APHIS and CFIA have met to consider joint actions on border cooperation, with the most recent meeting held on October 28-29, 2002. This is a priority for APHIS and soon APHIS will be selecting members to work in groups to meet with their Canadian counterparts to discuss plans for bilateral action for a variety of areas, including laboratories, critical infrastructure, and import requirements for third countries. In addition, the Committee was informed that APHIS and CFIA planned to meet in mid-December 2002 to formalize agreements on sharing facilities; joint participation in smuggling, interdiction, and trade compliance (SITC) activities; and joint approaches to imports from third countries.

10. CCA Business

a) Progress Report on the ROU/CCA Action Plan

It was agreed that the CCA minutes would continue to serve as a means of keeping PSAG members informed of the CCA=s activities. Both countries also agreed to the timely submission of minutes. The two countries stated that the Mechanisms for Resolving Agricultural Trade Disputes Between Canada and the United States paper would be a deliverable to PSAG during its April 1-3 2003 meeting in Montreal.

It was agreed that the next CCA meeting should be held on April 1, 2003 in Montreal to coincide with the next PSAG meeting. The International Food, Beverage, Wine and Spirits Exhibition (SIAL) show will also be held during that week in Montreal.

John Masswohl
Agriculture and Fisheries Counselor
Canadian Embassy in Washington

Fred Thomas
Director for North and Central America
Plant Protection and Quarantine
Washington, D.C.