Registration

SOR/2008-288 September 5, 2008

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, September 4, 2008

DAVID EMERSON
Minister of Foreign Affairs

ORDER AMENDING THE ALLOCATION METHOD ORDER (BEEF AND VEAL)

AMENDMENTS

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 2009 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, 2007 and ending on July 31, 2008; and

COMING INTO FORCE

2. This Order comes into force on January 1, 2009.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issue and o bjectives

The present change in the Allocation Method Order (Beef and Veal) is necessary to address needs of the affected industry sector by the 2003 discovery of a single case of bovine spongiform encephalopathy (BSE).

Objectives of government intervention by this ministerial order are the following:

• to minimize disruption to the industry; and
• to comply with the Export and Import Permits Act.

Description and r ationale

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. Many of these restrictions remain in place.

The market fallout from the BSE situation resulted, inter alia, in ample supplies of Canadian beef being available to domestic processors at competitive prices. Many traditional beef importers decided to switch to domestic beef to help alleviate the situation. In order not to penalize traditional importers for these decisions, the 2004 quota allocations were based on usage of non-NAFTA beef in the 16-month period of January 1, 2002, to April 30, 2003, which ended prior to the discovery of BSE. The decision made by the relevant minister for the 2004 allocation methodology was supported by the Tariff Quota Advisory Committee (TQAC) and the Ad Hoc Beef and Veal Industry Committee (Ad Hoc Committee). This required an amendment to the Allocation Method Order, according to which a company’s annual tariff rate quota (TRQ) allocation was based on its throughput of non-NAFTA beef during the previous 12-month period of November 1 to October 31 each year. This amendment was made in late 2003 for one year (2004) only.

Given that the North American beef market remained disrupted, since then, the TQAC and the Ad Hoc Committee recommended an amendment to the allocation method in 2005, 2006, 2007 and 2008. 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 and 2007. 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 and 2008. 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 orders for 2005, 2006, 2007 and 2008 reflected the substantive intent of the consensus recommendation from the TQAC and the Ad Hoc Committee, but varied slightly from the recommendation. Again this required amendments of the Allocation Method Order for 2005, 2006, 2007 and 2008.

Before the 2008 allocation method was adopted in November 19, 2007, the U.S. Department of Agriculture adopted the second BSE rule, which allows trade in all cattle born after March 1, 1999, and all beef products from Canada. However, since the final rule was adopted, markets have been slow to react, and it will take time for markets to adjust to this new reality. As a result, for the short term there will continue to be a surplus of over-30-month cows and meat from such animals on the Canadian market. In recent months, stakeholders have emphasized the need for predictability in terms of the TRQ allocation for 2009, including assurance that they might continue to use Canadian beef during this transition period in 2008 without fear of facing import allocation reductions in 2009. Therefore, the Minister approved the TQAC recommendation that the method used for 2005, 2006, 2007 and 2008 allocations be continued in 2009. Specifically, applicants will have the choice between the 16-month BSE period (i.e. January 1, 2002, to April 30, 2003, pro-rated to a 12-month period) or a more recent 12-month period (i.e. August 1, 2007, to July 31, 2008).

The present amendment of the Allocation Method Order (Beef and Veal) is necessary to address needs of the affected industry sector. The revised base period may result in minor changes to import allocation quantities in 2009. The revised period change will provide applicants with a choice to apply for a quota share based on the optimal period under their individual circumstances. Not making this change in the revised period would result in further disruption to the industry.

Consultation

The present amendment was discussed with members of the TQAC and the Ad Hoc Committee. Both committees are 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, as well as officials from Foreign Affairs and International Trade Canada, Agriculture and Agri-Food Canada and the Department of Finance.

The TQAC and the Ad Hoc Committee recommended unanimously to give all import allocation applicants a choice between one of two possible base periods for the 2009 allocation.

Implementation, enforcement and service s tandards

A notice to Importers will be issued by Foreign Affairs and International Trade Canada in fall 2008 informing industry stakeholders regarding the allocation method for 2009 beef and veal tariff rate quota.

Provision of false information in an application pursuant to the Export and Import Permits Act is an offence and may lead to prosecution under the Act.

Contact

Ms. Katharine Funtek
Director
Trade Control Policy Division (TIC)
Export and Import Controls Bureau
Foreign Affairs and International Trade Canada
125 Sussex Drive
Ottawa, Ontario
K1A 0G2
Telephone: 613-996-0640

Footnote a
S.C. 1994, c. 47, s. 106

Footnote b
R.S., c. E-19

Footnote c
S.C. 1994, c. 47, s. 106

Footnote d
R.S., c. E-19

Footnote 1
SOR/96-186

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