Government Bull

Commentary, Agriculture, Rolf Penner

The ever-worsening disaster in Canada’s cattle industry – with losses now estimated at two billion dollars and rising – has stakeholders disheartened, discouraged and more than a little disgruntled. A new cattlemen’s group, out of southern Alberta but expanding fast, has had enough of our federal government’s weak response to the crisis. Using NAFTA regulations that forbid discriminatory treatment, they are launching trade actions against the American government with a better chance of opening the border to Canadian beef.

They scorn the current buzz in Ottawa about “made-in-Canada” solutions, which include more credit and bailout packages. As the respected agricultural commentator Morris Dorosh recently put it, they demonstrate that Canada has a government “of the wimps, by the wimps and for the wimps.”

Assistance already in the pipeline has proven troublesome. Its unintended distortions of supply and demand reveal an astounding level of economic ignorance in Ottawa. Consider, for example, the counter-productive strategy that encourages more processing by meat packers while keeping cattle off the market to force these same packers to bid up the price. It’s like trying to “suck and blow” at the same time.

Canadian Cattlemen for Fair Trade (CCFT), have declared that the time for talking is over. Initially started by a few feedlot owners, the group now includes participants from all areas of the cattle industry. Taking the bull by the horns, the CCFT is doing what no other industry association or politician in Canada has the “onions” to do – take on the United States federal government.

On August 12, they put the U.S. on notice that they are filing a class-action lawsuit under Chapter 11 of the North American Free Trade Agreement (NAFTA) and will be demanding at least $150 million, and probably more as additional claimants join on, in compensation for the extended border closure. NAFTA has provisions that allow investors of member countries the right to sue foreign governments if they get “less favorable treatment” than they provide to their own investors.

The border closure qualifies under the definition because the Americans have never restricted or stopped the movement of Canadian cattle within the United States that arrived there before the border slammed shut. Between 1999 and the May 20, 2003 closure, U.S. cattlemen moved some five million head of Canadian cattle across the line. They have carried on “business-as-usual” with these animals and sent them through American feedlots to slaughter plants and onto consumers’ dinner plates without so much as a raised eyebrow.

In addition, a leader of a risk assessment team from Harvard University, commissioned by the U.S. Department of Agriculture, is on record as saying, “Our science supports opening the border.” Even more damning is this statement: “I don’t think it’s become a political issue – I think it’s been a political issue all along.” Aside from the science which debunks American “health” concerns about BSE, the contradictory behaviour of allowing these animals to move within the food chain proves the ban is discriminatory.

While a chapter 11 victory can only provide compensation and cannot force the border open, the CCFT thinks that the claim could grow to half a billion dollars or more if enough join in. That prospect will pressure Americans to resolve the debacle. Our trade agreements already contain mechanisms to open the border under arbitrary and capricious circumstances, if our politicians had the resolve to use them. As one wag put it, someone needs to spike the parliamentary water coolers with a little Viagra.

Suits could be filed under chapters 20 or 7b of the NAFTA agreement and through the World Trade Organization (WTO). “Canada would certainly have the international case law to back its claim,” according to Todd Weiler, a NAFTA and WTO expert advising the CCFT. “It’s largely the same jurisprudence that we will be using in our case.”

“The Australian ban on Canadian salmon, the European ban on Canadian and US beef grown with hormones, and Japanese testing requirements on fruit were all examples of where the science wasn’t there to back up health claims that were really about protectionism,” Weiler explains. “WTO panels struck them all down. Using the same law, a NAFTA panel can award my clients compensation. Using the same law, the Canadian government could have the live cattle ban struck down too. There is a very solid case here.”

Our cattlemen should not have to fight this battle alone. Ottawa has been quick to back other stakeholders in trade disputes, like the Canadian Wheat Board, but is hesitant when it comes to cattle. It prefers to wait for Americans eventually to take pity on us, even though the ban on live cattle imports breaks both the spirit and the letter of our trade agreements.

The CCFT is saying that’s not good enough. Canada has the means to right this wrong. Our federal government should be joining in to support their actions.