Other Trade Topics and Issues

United States Interim Rule on Agriculture Inspection and Inspection Fees

On August 25, 2006, the United States Department of Agriculture (USDA) published an interim rule that amends US foreign quarantine and user fee regulations. The rule is effective November 24, 2006.

The regulatory change will:

remove the current inspection exemption for fruits and vegetables from Canada;
set out increased inspections at ports of entry with Canada for all commercial vehicles, and airline passengers, entering the US from Canada; and
authorize the collection of fees from commercial conveyances and airline passengers entering the US from Canada to recover inspection costs.

As a result of this action, fruits and vegetables imported from Canada will be subject to the inspection that the US applies to fruits and vegetables from other countries. Commercial conveyances, as well as airline passengers arriving on flights from Canada, will be subject to inspection and user fees. Canada has been exempt from such inspection and user fees since 1991 reflecting the assessment that imports of fruits and vegetables from Canada represent a low risk.

For 2006, the standard US fees for inspections are:

commercial vessels - US$488,
commercial trucks - US$5.25 per crossing or a $105 annual fee per truck
rail cars - US$7.50
international air passengers - US$5
aircraft - US$70.25 per plane.

USDA says it is taking this action because there is an increased need to verify shipments and to recover costs such inspection activities at the US/Canada border. USDA cites an increasing number of interceptions at the US-Canada border of prohibited material that originated outside of Canada that presents a high risk of introducing plant pests or animal diseases.

The federal government solicited views of provinces via the Federal-Provincial Agriculture Trade Policy Committee as to the potential impact of the implementation of this interim rule for consideration in consolidating a Canadian position.

Ministry responded by soliciting the assessment of members of the BC Agri-Food Trade Council and Ministry industry experts to identify concerns about potential impacts on BC industry and exports. These were conveyed to the federal government. The Province is also working with the Pacific North West Economic Region (PNWER) to respond to the US rule.

Canada has submitted formal comments on the proposed rule to US authorities. Canada has requested that that the rule be withdrawn to permit bilateral discussions to identify any legitimate issues that may exist and to collaboratively address them in ways that do not disrupt trade.

United States Farm Bill

Since 1933, US government financial support to its agriculture sector has been provided through a federal “Farm Bill” renewed and revised every five years.

Historically, the US Farm Bill has directed support to producers of 13 “named” or “program commodities” - wheat, corn, barley, oats, sorghum, rice, cotton, soybeans and other oilseeds, sugar, tobacco, and peanuts, and dairy products. Support has been provided, depending on the commodity, through direct payments, price regulation, non-recourse loan guarantees, production restrictions (acreage set-asides) and domestic and international surplus disposal programs. Main beneficiaries of the most recent Bills were grains, oilseeds, cotton and sugar.

Distribution of USDA 2005 Farm Bill Payments by Crop

(Source: USDA 2007 Farm Bill Theme Paper – “Risk Management”)

The current Farm Bill, the Farm Security and Rural Investment Act of 2002, was adopted during a period of substantial budgetary surplus. It authorized US$189 billion in total spending over ten years, the highest level of budgetary support for US agriculture in history. The Congressional Budget Office estimated it would increase spending over the previous Bill by US$8.28 billion annually.

The 2002 Bill was seen by many, both within the US and internationally, to be a reversal from previous steps toward less trade-distorting support in the US. Brazil successfully challenged Farm Bill support for cotton at the WTO in 2004 and 2005. Support for other commodities is seen to be similarly exposed.

Congressional and Administration consultations and public and industry debate on the new 2007 Farm Bill, to take effect as early as May 2007, are now well underway and intensifying.

The new US Farm Bill has important implications for British Columbia and BC has a distinct interest in how the debate plays out. The US is a major market for BC agriculture and food products. US industries are major competitors in US, Canadian and third-country markets. US support programs that create advantages for US industries are a concern if they tilt the competitive balance and distort trade. The Ministry is therefore following the development of the new Farm Bill closely.

Information on the development of the 2007 US Farm Bill is available on the United States Department of Agriculture website, including “Theme Papers” and the latest news and results of consultations.

Information is also available on the websites of many US non-governmental associations.

Trinational Agricultural Accord

The Trinational Agricultural Accord, established in 1986, provides for an annual meeting of the ten Canadian provincial ministers of agriculture and food, United States’ State Secretaries/Commissioners/Directors of Agriculture, and Mexican State Secretaries of Agriculture to exchange information on agriculture issues of concern, and to adopt action plans on those matters that can be addressed at the province/state level.

The annual meetings are organized on both a trilateral basis and a bilateral basis (Canada-United States; Canada-Mexico; United States-Mexico); and rotate among the three countries. More information on recent and future meetings can be found here.

At the 2005 annual meeting, Trinational Working Groups were established for three areas:

Rural Development
Regulatory Harmonization
Trade Remedies

These Groups meet between the annual meetings and report out at the annual meetings.

British Columbia has the lead for Canadian provinces in the Trade Remedies Working Group. Trade remedy reform is a high priority for British Columbia.