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Ottawa vows to crack down on chickens smuggled into Canada from the U.S.

Posted by Flaman Agriculture Oct 19, 2015

  • 17 Oct 2015
  • National Post - (Latest Edition)
  • By Damon van der Linde Financial Post dvanderlinde@nationalpost.com Twitter.com/DamonVDL

fowl or fair

With TPP in place, Ottawa vows to crack down on chickens smuggled into Canada from the U.S.

It seemed like just another unassuming day at the chicken warehouse — until the authorities moved in. They had come for chickens that were passing themselves off as low-grade poultry. It was a lie.
United States Department of Agriculture agents raided the warehouse last year in upper New York State and found the evidence they were looking for: pallets stacked with chicken ready for export to Canada. Chicken that could have eventually found its way to Swiss Chalet rotisseries and supermarket deli counters across the country.
The crime? These chickens weren’t labelled as broiler chickens — the meaty and juicy birds we roast up or fry for the dinner table — they were slapped with stickers calling them something else: spent fowl.
Spent fowl are chickens, too. But they’re tough and scrawny hens. It’s not their fault: They were born to lay eggs or to breed chicks, so their meat — a.k.a. mechanically separated chicken — isn’t much good except as an ingredient in chicken hot dogs and pot pies. That’s why Canada lets it in tariff free.
Now, broiler chickens — that’s the market Canada’s supply-managed poultry producers have locked up, subjecting the tastier fowl to import quotas or tariffs of more than two times the meat’s original value. Or at least they thought they did — until investigators realized that the lock was broken: U.S. broilers were being snuck across the border disguised as spent fowl. And that’s just one of several ways that Canadian poultry producers say a market they were promised a tight grip on is being infiltrated by grey-market foreign fowl.
And it appears to be happening at a remarkable scale: Farmers say the industry is hemorrhaging more than $100 million a year due to importers circumventing the country’s quota system. They do it by intentionally mislabelling chicken as something else and using tactics that range from clever loopholes to outright fraud.
“These types of actions are like tax evasion versus tax avoidance: One’s illegal and one’s a smart business practice,” said trade expert Adam Taylor, director of ENsight Canada, a government relations firm.
Now, with the federal government committing in the Trans-Pacific Partnership deal, announced earlier this month, to permit an increase in chicken imports of 2.1 per cent, it’s also promising to finally crack down on those who keep finding new ways to get around the rules of the supply-management system, which farmers say have been unenforced for years.
“We accept it as a great first step,” says Mike Dungate executive director of the Chicken Farmers of Canada. “This has been a problem for a long time and something needs to be done.”
At the heart of the matter is how the Canadian Border Service Agency classifies what actually counts as “chicken” when it comes to the quota system.
For instance, there’s an import classification that includes value-added products like TV dinners, which might come packaged with veggies and rice along with some chicken. If the package is less than 87 per cent chicken, it qualifies as a general “meat product” and the chicken quota does not apply.
If it’s is more than 87 per cent chicken, the quotas kick in: the current trade rules state that only 7.5 per cent of Canadian domestic consumption can be imported with little to no duty. This year, if the national total of imported chicken exceeds 80.2 million kilograms, any further imports will be slapped with a whopping 238 per cent tariff.
If they’re spotted, that is. Some importers have been able to slip past the punitive tariffs by getting creative. A distributor might take a box of nothing but chicken wings, or chicken breast, and throw in a packet of marinade or sauce heavy enough that it equals 13 per cent of the total weight. That keeps it from facing quotas.
“(Importers) say it’s no longer chicken,” Dungate says. “This is where we would argue the ludicrousness is.”
But the thing is, the sauce would almost always have to be left as a separate item, rather than actually being put on the meat: in that kind of quantity, Dungate says, it would be far too much sauce for consumers to want to eat.
“People don’t want their wings drenched in sauce ... just in order to get it in freely traded,” he said.
As part of the TPP agreement, the federal government has promised to modify the definition of these combined products so that chicken products with added sauce packets are no longer able to avoid the tariffs.
But, apparently that’s only for products with sauce packets. And Dungate says he has already seen importers developing new methods so that the added weight looks like something other than a “packet” — by simply putting the weighty sauce in a different sort of container.
“Now, they put the chicken in a plastic tray and cover it with a film and in another one there is the sauce,” he says. “The know absolutely what they’re doing.”
Taylor says that when it comes to import quotas, businesses will always look for creative ways to slip through. And when they figure out a successful manoeuvre, it takes some time for authorities, and the national industry, to catch on.

“One man’s trade circumvention is another’s clever business practice… that’s often the debate,” he said.
But Dungate says the spent fowl ruse is the most difficult one to detect in protecting against illegal chicken imports. In one instance, he says a Canadian meat distributor received a pallet of broiler chickens from an importer, and noticed that one label had been stuck on top of another.
“It was not quite adhered and they pulled it back and saw it labelled ‘spent fowl’ out of the U.S and approved by the United States Department of Agriculture,” he said. Presumably it had been properly relabelled as more expensive broiler chicken only after it was safely across the border. Unlike the sauce trick, these are the ploys that get exposed strictly by accident.
But it’s happening at such a scale that the Chicken Farmers of Canada say they’ve discovered that there is more spent fowl meat recorded as being brought into Canada than is produced in the entire United States.
In 2012, the amount of spent fowl imported to Canada was equivalent to 101 per cent of U.S. production — that is, all the mechanically separated chicken produced for American consumption and export — and this year that amount has already reached more than 84 per cent.
“That would mean that the Americans would not be eating (any) Chicken McNuggets,” said Pierrette Ringuette, a Senate Liberal who tabled a motion in 2014 to study the trade between the U.S. and Canada under NAFTA.
Dungate also says a lot of what is being brought in as spent fowl is labelled as breast meat — the most valuable cut of a chicken. He says in 2012, 48 per cent of spent fowl imports were breast meat, while this year it’s up to 72 per cent.
He says that looks very suspicious, given that breast meat is not a traditional cut for spent fowl, since the birds have so little meat on them.
“How is it that we could be importing more than they produce? This is why we think there is a huge amount of fraud,” he said.
To put an end to this practice, the Canadian Department of Foreign Affairs says imported spent-fowl meat will require certification from the U.S. Department of Agriculture to verify that the product actually is what its label says.
But that requires thorough co-operation from the U.S. side. The U.S. Poultry and Egg Association says a number of spent-fowl producers are willing to help out, but the American group says that all it can say about these supposedly subversive imports is what it has heard from Canadians.
“All we know is that there have been suggestions or accusations this has happened,” said association president Jim Sumner. “We have no idea who is doing it, but we have asked our government to investigate and to make sure this is not happening because it would be fraudulent if it was.”
Dungate claims that these unsavoury imports have already cost Canada 9,000 jobs in the poultry industry, but notes that the objective is to find fixes that are sustainable for enforcing the quotas in the long term.
“We’re not trying to add a level of red tape to our business. If we just try to tackle one specific issue, it’ ll pop up someplace else and it’ ll just keep on moving,” he said. “We’re prepared to ... suck it up until we get a permanent solution.”
The CFC has already invested more than $250,000 in a joint effort with Trent University to develop a DNAtesting device — it works like a hole punch for poultry —that can determine whether meat is spent fowl or broiling chicken. That would allow customs agents to spot imposter chickens at the border.
But Ringuette, the New Brunswick Senator, says she would have liked to see more decisive action on the part of the government to address rules that have existed since NAFTA came into effect in 1994.
“If the current government cannot enforce NAFTA, how can they commit to enforce the TPP and that we will believe them?” she said. “As far as I’m concerned, (chicken farmers) have been extremely patient.”
That may be because investigating a fraudulent chicken can be a lot harder than you’d think — not merely a matter of pointing the finger at the producer named on the label.
When the USDA charged that American spent-fowl exporter for the mislabelled chicken in upstate New York, the company argued that the stickers were also bogus: It hadn’t used those kinds of export labels in years, and the slaughter dates they had written down on them were for a week that the plant had been closed for cleaning. The charges were dropped.
“Clearly somebody had gotten ahold of some old labels, put in a slaughter date, had no idea this plant was closed down and got caught,” said Dungate.
No one el s e was ever charged for that chicken.
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Provincial response to TPP varies - SK applaudes, AB needs to review, MB nothing

Posted by Flaman Agriculture Oct 08, 2015

The government of Saskatchewan = "applauding today’s announcement " - see https://www.saskatchewan.ca/government/news-and-media/2015/october/05/tpp-deal

The Government of Alberta = "we need to review in detail" - see http://www.alberta.ca/release.cfm?xID=3863239B3C676-ABDC-3083-2BD033C7D3D9951B

The Government of Manitoba = no official release posted - see http://news.gov.mb.ca/news/index.html

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Alberta government "needs to review" TPP

Posted by Flaman Agriculture Oct 08, 2015

Agriculture Minister issues statement on Trans-Pacific Partnership

Alberta Agriculture and Forestry Minister Oneil Carlier issued the following statement in response to the conclusion of the Trans-Pacific Partnership Trade negotiations:

“Alberta is a trade-focused province and we support the responsible growth of trade opportunities for our export sectors. This is a wide-ranging agreement that we need to review in detail before we know what the overall consequences are for Albertans.”

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Saskatchewan Welcomes Trans Pacific Partnership Deal

Posted by Flaman Agriculture Oct 05, 2015

Released on October 5, 2015
Premier Brad Wall is applauding today’s announcement from Atlanta of an agreement, and Canada’s participation in the Trans Pacific Partnership (TPP), one of the most ambitious free trade agreements in history.
Negotiations involving 12 nations have just concluded on the TPP, which will represent a market of nearly 800 million consumers and a combined GDP of $28.5 trillion.  Member countries include Canada, the United States, Mexico, Japan, New Zealand, Australia, Singapore, Vietnam, Malaysia, Chile, Peru and Brunei.
“This is a huge deal for Canada as a trading nation and Saskatchewan as a trading province,” Wall said.  “The agreement builds on the strengths of the other free trade deals Canada has struck and opens up new opportunities for our exporters in the fast-growing and lucrative pacific markets.”
Saskatchewan exported more than $25 billion in goods to TPP countries in 2014, or 71 per cent of our international exports.  The premier said the TPP increases access to those markets for our exporters and keeps them on a level playing field with their competitors.
“International trade has always been vital to our province’s economy and our government’s Growth Plan calls for us to double our global exports by 2020,” Wall said.  “Agreements like the TPP and Canada’s free trade deals with the European Union and Korea will help us reach that goal.”
From 2007 to 2014, Saskatchewan’s total exports to the world increased by 77 per cent to more than $35 billion a year. Saskatchewan’s agricultural exports more than doubled in that same period.
Wall said the TPP agreement will open new markets and increase Saskatchewan exports even further.
“Our agricultural producers are looking forward to having an even stronger presence in pacific markets, in particular Japan,” Wall said.  “The TPP will encourage major growth and investment in our value-added agriculture sector through better access to these markets for our processed products, such as canola oil and meal, malt barley, beef and pork.”
Wall called on all the federal party leaders to commit to honouring the agreement if they are elected on October 19.
“This trade agreement is now in place with 11 of our most important trading partners representing 800 million people,” Wall said.  “It would be disastrous if Canada were to pull out now and leave Canada and Saskatchewan on the outside looking in when it comes to selling our exports to these countries.  I urge all the parties and leaders to support this important agreement when it comes before Parliament following the election.”

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Canadian business owners applaud signing of TPP

Posted by Flaman Agriculture Oct 05, 2015

The Globe and Mail is reporting this morning that . . .

A broad-cross section of Canadian businesses – from cattle ranchers and grain exporters to small-scale manufacturers – applauded Canada’s signing of the Trans Pacific Partnership, a monumental trade deal that will open up new export opportunities in a number of fast-growing markets along the Pacific Rim.

The deal – signed Monday following negotiations that stretched over the weekend between 12 nations representing 40 per cent of global GDP – has the potential to dramatically reshape Canada’s trade landscape. It will gradually reduce steep tariffs on a number of Canadian exports to mature markets such as Japan and Australia, as well as emerging markets such as Malaysia and Vietnam, even as it opens up Canada to imports from those countries.

Outside of a few sectors in Canada that will face bruising new competition from Japanese and U.S. companies – such as Canadian dairy farmers, domestic automobile-makers and car-parts manufacturers – many businesses were hopeful that the TPP deal would give their businesses and sectors new momentum, even if details were thin on Sunday evening.

“From our perspective, agreements that work to remove tariffs and other barriers to our products are good news,” said Wayne Guthrie, a senior vice-president for sales and marketing at Canfor Corp., one of Canada’s largest forestry companies. “About $1-billion in Canadian forest products were subject to tariffs last year, so we are hopeful the TPP will improve access and eliminate unfair treatment of Canadian products in key Pacific markets.”

For many exporters in Western Canada, the best part of the new trade deal was clearly better and cheaper access to Japan, the world’s third-largest economy after the United States and China – the latter of which is not part of the TPP. Betty Lou Pacey, who founded a firm that offers optical fiber lights and other lighting products in Vancouver, said that just last week she had a meeting about hiring new staff – including one who could speak Japanese. “I do feel that it will provide opportunities for us to grow as a company,” Ms. Pacey said of the new trade deal.

For ranchers in Alberta, too, TPP offered the prospect of reduced tariffs and better access to 127-million Japanese consumers, many of whom are wealthy and discriminating buyers of seafood and beef. For Doug Sawyer, a fourth-generation cattle farmer near Pine Lake, Alberta, the trade deal promised a chance to catch up with cattle ranchers in Australia, which had already struck a bilateral partnership with Japan that reduced the steep tariffs that protected Japan’s dwindling number of ranchers – who produce extremely high quality, intensely marbled wagyu beef.

“This is a huge deal for the beef industry,” said Mr. Sawyer, who also sits on the foreign trade committee of the Canadian Cattlemen’s Association.

“Before our exports were to Calgary. That was a big ‘to do,’ ” he said with a laugh, before noting that roughly 50 per cent of what Canadian beef producers put on the market is exported around the world. “At present, we’re selling about $100-million a year into Japan at a 38.5-per-cent tariff. As the deal progresses, and the tariffs come down, we feel we could double or triple that,” he said.

The Mining Association of Canada welcomed the deal, saying it provide greater access for metals and minerals producers. The sector exported an average $158.6-billion (U.S.) per year to members of the TPP deal. Canadian exporters face tariff walls in key countries, including 40 per cent in Vietnam and 50 per cent in Malaysia.

“This will be beneficial to Canada’s mining sector,” association president Pierre Gratton said. “I am not expecting any downside.… The risks to our sector would come from Canada pulling out.”

But not all Canadian industries looked forward to TPP coming into effect. For some producers in Canada’s protected dairy sector, the deal could spell disaster. It is for this reason that Canadian dairy farmers and auto-makers lobbied intensely against the bill, as did Japan’s farmers – who fear their smaller operations would be bankrupted by large U.S. agri-businesses flooding their market with cheaper, inferior products.

But Yuen Pau Woo, a fellow at Simon Fraser University’s Jack Austin Centre for Asia Pacific Business Studies, notes – like Mr. Sawyer, who is already behind Australian competitors – that even if the fine print of the trade deal is not yet known, Canada would likely be left behind if it had been frozen out of the TPP.

“It is impossible to know if Canada negotiated a good deal or not until we see the final TPP agreement. But we will almost certainly be worse off outside the deal than in it because of the erosion of our NAFTA preferences,” said Mr. Woo.

Of course, not every industry sees immediate benefit from the TPP. At Burnaby, B.C.-based Ritchie Bros. Auctioneers Ltd., the world’s largest auction house for used industrial equipment, CEO Ravi Saligram said TPP could “buoy the overall Canadian economy” as businesses make new investments and build new infrastructure to handle the increase in trade, but that it wouldn’t have a clear impact on Ritchie’s.

“We don’t expect it will have an immediate or direct impact on our business,” Mr. Saligram said. “Cross-border transactions in used machinery, which Ritchie Bros. specializes in, are impacted most by non-tariff trade barriers such as differing emission standard certifications, and it’s still unclear whether these barriers would change with the new proposed trade agreement.”

And although the biggest markets for Canadian grains, pulses and oilseeds remains China and India, not signing the TPP agreement would still have left producers on the Prairies out of fast-growing markets such as Vietnam and Malaysia, as well as at a disadvantage selling into mature economies such as Japan and the U.S.

“We cannot afford to be left out,” said Jean-Marc Ruest, Winnipeg-based Richardson International Ltd.’s senior vice-president for legal and corporate affairs.

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