Beef Magazine | Oct. 31, 2013
Canadian beef makes gains in EU agreement, but US must aim higher
By Joe Schuele, U.S. Meat Export Federation
While the gains that the Canadian beef industry made in its free-trade agreement with the European Union look good on paper, the actual impact may fall short of expectations.
Canadian livestock organizations were understandably pleased when Canada and the European Union (EU) announced their free trade agreement Oct. 18. Negotiations had stalled on several occasions, with one of the most contentious issues being access to the EU for Canadian beef and pork products.
The full text of the EU-Canada Comprehensive Economic and Trade Agreement (CETA) is not yet available for review, but according to the Canadian Cattlemen’s Association (CCA), the EU will allow duty-free access for 50,000 metric tons (mt) of Canadian beef (carcass weight equivalent), which includes 35,000 mt of fresh/chilled beef and 15,000 mt of frozen beef. Canada will also continue to have access to the existing, shared duty-free quota for high-quality, grain-fed beef.
No change likely in EU restrictions on hormone use
The agreement isn’t expected to include changes in the EU’s restrictions on the use of hormones or beta-agonists in livestock production, and the extent to which it will address any other technical barriers isn’t entirely clear.
“Details remain to be worked out on the technical issues,” CCA said in a news release. “But for the first time, there is a written commitment between Canada and the EU, including a timetable, to resolve the technical barriers.”
This is a critical point as it relates to the Transatlantic Trade and Investment Partnership (TTIP) negotiations currently taking place between the U.S. and the EU. Many observers have suggested that CETA is a blueprint for the TTIP. But Thad Lively, U.S. Meat Export Federation (USMEF) senior vice president for trade access, cautions that while the gains Canadian beef made in CETA look good on paper, the actual impact may fall short of expectations.
“Duties are certainly one of the obstacles that have held back North American meat exports to Europe,” Lively says. “So from that standpoint, gaining greater access through duty-free quotas is a positive development. But when I look at the trade activity that is currently taking place, I have to question whether larger quotas are going to be enough to truly open the EU market.”
For example, Canada’s access to the EU’s duty-free quota for high-quality, grain-fed beef (originally 20,000 mt, now 48,200 mt) has been in place for fouryears. Yet through July, the EU had imported only 444 mt of Canadian beef in 2013. In the most recent quota year (July 1, 2012 to June 30, 2013), the U.S. was the largest user of the duty-free quota, shipping 16,750 mt. But even with Australia and Uruguay’s growing participation, only about two-thirds of the quota was utilized.
“This is why USMEF is very concerned about settling for larger quotas in a trade agreement with the EU,” Lively explains. “In theory, greater duty-free access appears to be a significant breakthrough that offsets the additional costs of serving this unique market and allows more producers and processors to capitalize on high-value opportunities in Europe.
“But in practice, the impact has been rather limited. That is why it is so important to tackle technical issues such as hormone use, beta-agonists and pathogen reduction technologies in the TTIP negotiations if we are truly going to open the EU market to U.S. beef. Otherwise Europe is likely to remain a niche market, regardless of how much our quotas are expanded,” he says.
Canada won’t realize the benefits negotiated under CETA until it in turn allows imports of beef produced in the EU, which is still banned due to BSE. Lively notes that this is a concession the EU will also press the U.S. to make in the TTIP.
“At the behest of European beef and veal producers, this is absolutely going to top the list of the EU’s demands,” Lively says. “EU-produced beef poses no threat to the U.S. industry, either from a commercial or animal health standpoint. This is really just another step toward putting BSE behind us as a trade issue, which is something any beef-exporting country should embrace.”
Joe Schuele is director of communications for the U.S. Meat Export Federation.