If you’ve looked at a newspaper in the past three months, you’ve heard the news: Canada, the United States and Mexico are renegotiating NAFTA.
What is NAFTA? It’s the North American Free Trade Agreement. It’s a trilateral trade agreement between Canada, the United States and Mexico. At Egg Farmers of Canada, we are closely watching the renegotiation process, as it could potentially have an impact on Canadian egg farmers.
The U.S. administration formally notified Congress of its intent to renegotiate NAFTA on May 18. This kicked off a 90-day congressional consultation period, laying the groundwork for the start of talks with Canada and Mexico which began on August 15 in Washington, D.C.
The reopening of NAFTA is very complex, and is still evolving—no one understands it better than Judi Bundrock, EFC’s Director of International Trade Policy. We recently spoke with her to find out why trade and NAFTA are particularly important for Canadian egg farmers.
Why does NAFTA matter to egg farmers? As Judi points out, trade tools are essential in maintaining at least one of the three pillars that maintain Canada’s system of supply management. Each of these pillars are equally important in ensuring that the system operates smoothly.
“If you go back to the World Trade Organization (WTO) agreement on agriculture, there was agreement that all countries had sensitive domestic industries and that countries could choose from a variety of tools to preserve those industries. Because, after all, countries want to feed their own people,” says Judi.
In the case of Canadian supply-managed agriculture—that includes dairy, poultry and egg products—our country chose to use Tariff Rate Quotas (TRQs) to keep imports predictable.
“TRQs act like a dam,” Judi notes. “We are required to import a certain amount of product into the Canadian market—think of that as when the dam is open. Once that amount comes in at a low tariff, the dam closes.”
In the case of eggs, a closed dam means a tariff of 163.5% on imported eggs beyond the predetermined amount. The purpose of this tool is simply to discourage additional imports, allowing egg farmers to match the Canadian demand for eggs while factoring in required imports and domestic production.
It’s one pillar in a system that ensures Canadians enjoy affordable made-in-Canada eggs, while egg farmers receive a fair return for their cost of production—meaning stability for all. The import control pillar of supply management is thus critical to Canada’s national interest.
This is where trade negotiations like NAFTA come in. As the government looks to modernize NAFTA, their support is critical in maintaining the vibrancy of Canada’s agriculture sector. This was the case in many past trade agreements. To protect the integrity of supply management, any discussion about the size of TRQs and over-quota tariffs for dairy, poultry and egg products must be excluded.
Canadian egg farmers work hard every day to produce fresh, local eggs for Canadians with the highest standards of food quality and safety. By upholding supply management, our government can ensure that the Canadian demand for eggs is met by Canadian farmers—their friends and neighbours.
The negotiating schedule is flying by. The first round was held between August 15 and 20 in Washington D.C., with the second round held in Mexico City in early September. Ottawa is the host city this week, and the next round will be held in Washington, D.C. on October 11 to 15. As these negotiations continue, Egg Farmers of Canada will continue to follow along.
It’s also important to keep in mind that Canada is already the largest agricultural export market for the U.S. The U.S. enjoys a net agricultural trade surplus of $2 billion with Canada, meaning that the U.S. exports $2 billion more to Canada than Canada exports to the U.S. America also enjoys a trade surplus in eggs with Canada, worth approximately $40 million. Remember: the number of eggs that can be imported from the U.S. under existing NAFTA rules is not a fixed amount. It’s based on a percentage of the previous year’s domestic production and has been growing year over year.
The trade surplus is why the United Egg Producers—a cooperative whose members produce 90% of all eggs in the United States—have told the Office of the U.S. Trade Representative that they wish to maintain our access to agricultural markets in Canada, and that “NAFTA is working well for U.S. agriculture.”
This is the message that Egg Farmers of Canada and many of our agriculture colleagues are bringing to the NAFTA talks. “NAFTA works… do no harm! That’s what most Canadian and U.S. industries are saying,” explains Judi.
As we look ahead to the coming months, our dedicated team will continue to represent the interests of Canadian egg farmers following the negotiations. Our voice will be heard loud and clear: supply management is a Canadian success story, and a policy that is firmly in the Canadian national interest. Help us keep the #EhInEggs!