What the FTA means to agricultural exporters - Free Trade Agreement between United States and Canada

Business America, Jan 30, 1989 by Lynn Goldsbrough

The U.S.-Canada Free Trade Agreement signals a major step in eliminating a variety of border restrictions between the United States and Canada. Under the Agreement, both countries are liberalizing policies for farm trade that will give farmers on both sides of the border a larger market for their products.

U.S. and Canadian agriculture producers will have more opportunities to market their products with the elimination of tariff barriers and fewer nontariff barriers . All tariffs between the two countries will be eliminated within 10 years, although for 20 years they may be reimposed on certain horticultural products under special circumstances. The fresh fruit and vegetable sectors currently have some of the highest agricultural tariffs. One-third of all U.S. horticultural exports go to Canada, but tariffs currently limit access for anumber of U.S. fruits and vegetables.

Both countries have agreed not to use export subsidies on agricultural goods exported directly or indirectly to the other. Neither country's government nor government entities are allowed to sell agricultural goods to the other country at a price below the acquisition price plus handling, storage, and other costs.

Canada has ended transportation subsidies provided under the Western Grain Transportation Act for agricultural goods shipped through West Coast ports to the United States. This affects Canadian exports of millfeeds and rapeseed meal to the U.S. Pacific Northwest. Canada also will eliminate import licenses for U.S. wheat, barley, oats, and their products as soon as the level of government support for these products in the U.S. is equal to or less than that provided in Canada.

As a result of the Agreement, Canada and the U.S. have exempted each other from their meat import quotas. Canada has increased the base level for its import quotas for eggs, chicken, turkey, and products to a level reflecting shipments over the past five years.

Regulatory authorities in both countries are working to reduce technical differences in health and sanitary regulations that interfere with trade. Under the Agreement, scientific evidence is the only justification for regulations on animals and plant health, pest control, veterinary drugs,

packaging, labeling, food additives, and fruit and vegetable inspection.

The Agreement does not solve every problem. It reduces, but does not end, trade frictions. It minimizes, but does not eliminate, trade distortions, While the FrA facilitates U.S. exports of some agricultural products, it is not a replacement for continued marketing efforts and a demonstrated commitment to export sales.