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
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.