Vol. 145, No. 24 — November 23, 2011
SOR/2011-242 November 7, 2011
EXPORT AND IMPORT PERMITS ACT
Order Amending the Allocation Method Order (Beef and Veal)
Whereas the Minister of Foreign Affairs has, pursuant to subsection 6.2(1) (see footnote a) of the Export and Import Permits Act (see footnote b), determined an import access quantity for beef and veal;
Therefore, the Minister of Foreign Affairs, pursuant to paragraph 6.2(2)(a) (see footnote c) of the Export and Import Permits Act (see footnote d), hereby makes the annexed Order Amending the Allocation Method Order (Beef and Veal).
Ottawa, November 4, 2011
Minister of Foreign Affairs
ORDER AMENDING THE ALLOCATION METHOD ORDER (BEEF AND VEAL)
1. (1) The portion of subsection 3(1.1) of the Allocation Method Order (Beef and Veal) (see footnote 1) before paragraph (a) is replaced by the following:
(1.1) Despite subsection (1) and subject to subsection (2), the method for allocating the import access quantity for beef and veal that may be imported into Canada in the 2012 calendar year is as follows:
(2) Subparagraph 3(1.1)(a)(ii) of the Order is replaced by the following:
- (ii) the 12-month period beginning on August 1, 2010 and ending on July 31, 2011; and
COMING INTO FORCE
2. This Order comes into force on January 1, 2012.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
Issue and objectives
On May 20, 2003, the Canadian Food Inspection Agency announced that it had discovered a single case of bovine spongiform encephalopathy (BSE), commonly known as mad cow disease, on an Alberta farm. Following this announcement, many countries, including the United States, imposed restrictions on the importation of cattle, beef and their products. While several of these restrictions have been lessened or lifted, many still affect the beef industry.
The present change in the Allocation Method Order (Beef and Veal) is necessary to continue addressing the needs of the affected industry sector. By making this ministerial order, the Government intends to minimize disruption to industry and to comply with the Export and Import Permits Act.
Specifically, beef and veal tariff rate quota (TRQ) applicants will have the choice between a 16-month period (January 1, 2002, to April 30, 2003, pro-rated to a 12-month period) and a more recent 12-month period (August 1, 2010, to July 31, 2011) to serve as a base for the establishment of their allocations.
Description and rationale
Prior to 2004, the TRQ for beef and veal was allocated based upon the companies’ throughput of non-Free Trade Agreement (FTA) beef during the previous 12-month period of November 1 to October 31 each year. The market fallout from the BSE situation resulted in ample supplies of inexpensive Canadian beef being available to domestic processors. Many traditional beef importers decided to switch to domestic beef to help alleviate the situation.
In order to avoid penalizing these traditional importers, a decision was taken to amend the Allocation Method Order (AMO) to base the 2004 allocations on usage of non-FTA beef during a 16-month period prior to the BSE discovery (January 1, 2002, to April 30, 2003). The decision made by the Minister at the time was supported by the Tariff Quota Advisory Committee (TQAC) and the Ad Hoc Beef and Veal Industry Committee (Ad Hoc Committee). The decision was valid for one year only.
Given that the North American beef market remained disrupted, the TQAC and Ad Hoc Committee recommended a similar amendment to the AMO in 2005, 2006, 2007, 2008, 2009, 2010 and 2011. The industry members of the TQAC made a consensus recommendation aimed at allocating most of the TRQ to established industry members without penalizing those who had switched their usage to Canadian beef during 2004, 2005, 2006, 2007, 2008, 2009 and 2010. They acknowledged that the needs of new industry entrants should be addressed and recommended reserving some portion of the TRQ for such new entrants. It was decided to give all TRQ applicants a choice between one of two possible base periods for 2005, 2006, 2007, 2008, 2009, 2010 and 2011. The periods were the 16 months from January 1, 2002, to April 30, 2003 (pro-rated to a 12-month period), or a more recent 12-month period from August 1 to July 31 of each year. The Minister’s Allocation Method Order (AMO) for 2005, 2006, 2007, 2008, 2009, 2010 and 2011 reflected the substantive intent of the consensus recommendation from the TQAC and Ad Hoc Committee. Again this required amendments of the AMO for 2005, 2006, 2007, 2008, 2009, 2010 and 2011.
The revised base period may result in minor changes to import allocation quantities in 2012, but it will not affect our international trade commitments. The revised period change will provide applicants with a choice to apply for an allocation based on the optimal period under their individual circumstances.
A Canadian market review and forecast of the beef industry provided by Agriculture and Agri-Food Canada indicates that the market has basically recovered from the effects of BSE for Canadian cattle producers but not for processors. With the U.S. border open to Canadian live cattle exports and producers receiving record high fed cattle prices resulting from a tight supply and strong demand situation, the BSE impacts on cattle producers have basically been alleviated. Processors, however, are still unable to realize the full value on carcasses due to the remaining market closures, and continue to experience higher operating costs than the United States on Specified Risk Material (SRM) removal/disposal requirements. The strong Canadian dollar has also resulted in increased operating costs. While North American grinding beef supplies are always difficult to predict, forecasted supplies indicate that Canadian import trade will still remain below the TRQ in 2011.
Since this amendment has been made annually for the past seven consecutive years, industry stakeholders have developed an expectation that the option of two base periods will remain open to them (at least in the short term). In anticipation of continued progress in the recovery of the industry, consultations with the TQAC will be launched concerning the possibility of dropping the amendment in future years. However, it is the opinion of the stakeholders that the amendment to the AMO for 2012 is required at this time to ensure business continuity while industry consultations are undertaken concerning the possibility of phasing out this approach in coming years. Not making this change would result in further disruption to the industry, as companies are already in the advanced stage of planning for 2012.
The Minister for International Trade concurs with the TQAC recommendation that the method used for 2005, 2006, 2007, 2008, 2009, 2010, and 2011 allocations be continued in 2012.
Members of the TQAC committee were consulted concerning the proposed amendment. The committee is made up of representatives from all the major beef and veal industry associations, including the cattlemen, packers, processors, distributors, importers, retailers and food-service operators, Agriculture and Agri-Food Canada, Finance Canada and the Department of Foreign Affairs and International Trade.
The TQAC recommended giving all import allocation applicants the choice between two possible base periods for the 2012 allocation: a 16-month period (January 1, 2002, to April 30, 2003, pro-rated to a 12-month period) and a more recent 12-month period (August 1, 2010, to July 31, 2011).
Ms. Katharine Funtek
Trade Controls Policy Division (TIC)
Trade Controls and Technical Barriers Bureau
Foreign Affairs and International Trade Canada
125 Sussex Drive
S.C. 1994, c. 47, s. 106
R.S., c. E-19
S.C. 1994, c. 47, s. 106
R.S., c. E-19