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Mad Cow: A Case Study in Canadian-American Relations

Type: Research Studies
Date Published: March 30, 2006
Research Topics:
Trade, Canada-US Relations
The purpose of this paper is to examine the trade, regulatory, and political relationship between Canada and the United States through the lens of a single case study. On the basis of this case study, the author offers the following recommendations:

The fact that nearly.5 million cattle under 30 months were exported to the US in the second half of 2005 suggests that the Canadian-American trade in cattle and beef will likely return to its high levels before the BSE crisis struck. Therefore, subsidies introduced during the crisis to Canadian cow and calf producers, feedlots, and other incentives given to the meatpacking industry should be phased out quickly, as they may give rise to American trade action or complicate the USDA's re-opening of the border to older cattle. New federal or provincial subsidies to the industry for disposing of "specified risk materials" (i.e., organs such as the brain and spinal cord where the highest concentration of the BSE agent is found) should be avoided for the same reason.

Diversifying Canadian beef exports from North America to Asia is difficult and offers limited opportunities. Under NAFTA, Canada and Mexico both have free access to the American beef market (unlike the non-NAFTA countries which face quotas) and this market will again prove to be the most profitable one for Canada.

From 2003 to 2006, both Canada and the US added regulations on meatpacking and animal feed. Canada's regulations are stricter and produce more risk reduction for BSE than the US regulations. Given that contaminated feed and infected cows originating from Alberta still pose a small risk to free trade, it is important for Canada to keep this edge. Canada should follow this development with confidence-building measures such as joint USDA-Canadian Food Inspection Agency monitoring and inspection of Canadian facilities. Canada should ensure that the compliance rate of its feed mills consistently exceeds US rates.

Canada should also apply its efforts to developing a stronger NAFTA working relationship. Working closely with the USDA on practical harmonization steps is a key interest for Canada. Given the renewed closure of the Japanese market to US exporters after a December 2005 incident in which specified risk materials were found in a US shipment to Japan, the US is also keen to establish a stable regulatory regime.
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