The potential consequences of a U.S. exodus from NAFTA (North American Free Trade Agreement) looms over the Canadian manufacturing industry as talks continue between the U.S., Canada, and Mexico. But those worries have often overshadowed other key Canadian industries. In Alberta, beef producers also have a lot at stake with North American market access potentially on the line.
Producers and market analysts agree that not having access to the U.S. market would be catastrophic to the industry, as our largest trading partner takes up the lion’s share of Canadian beef exports.
The Canadian Cattlemen’s Associations (CCA) says that 2016 beef exports to the U.S. were worth $1.65 billion, which represented 73.5 per cent of all Canadian beef exports that year.
Alberta is also home to the largest beef cattle population in Canada. Approximately 41 per cent of all cows raised for consumption originate from our province.
What is less clear, however, is what would happen to Canadian beef exports should the president signal his intent to withdraw from NAFTA.
First, a unilateral attempt by President Donald Trump to have the United States exit the trade agreement would certainly be met by legal challenges from U.S. businesses, as the country’s constitution grants Congress, not the president, authority over trade agreements.
However, a U.S. congressional vote to formally leave NAFTA would likely end in both countries having to oblige by World Trade Organization commitments — a scenario where under WTO commitments, U.S. beef coming into Canada would be subject to much higher tariffs than Canadian beef going into the United States.
“It’s reasonable to expect that the United States would not let that situation persist for very long,” says John Masswohl, the CCA’s director of government and international relations.
If a trade dispute were to reach that point, Canadians could expect the United States to seek terms that would be fairer from their perspective.
Masswohl, however, also emphasizes that “we will have gone through a lot of procedures and turmoil to get to that point.
“We have multinational meat packers largely doing most of the slaughter in Canada, so they’re feeding our product into international supply chains,” says Ellen Goddard, an agricultural marketing and business professor at the University of Alberta. “I don’t think they’re going to stop slaughtering beef in Canada just because NAFTA disappears. What may happen is they may shift where our beef goes.”
One thing Goddard and the CCA both agree on is the importance of the Asia-Pacific market. While it’s hard to see a situation where the U.S. isn’t our number one customer, beef exports to countries belonging to the recently signed Comprehensive and Progressive Agreement For Trans-Pacific Partnership (CPTPP) will grow exponentially.
Lack of U.S. presence in the CPTPP agreement could also give Canada more export growth potential as Canadian beef will be subject to lower tariffs than U.S. beef in nations belonging to the multilateral trade deal.
Editor: Whitney Cullingham | firstname.lastname@example.org