Canada-United States-Mexico Agreement (CUSMA) and the Canada Grain Act
On November 30, 2018, Canada, the United States, and Mexico signed an agreement to replace the North American Free Trade Agreement (NAFTA) with the Canada-United States-Mexico Agreement (CUSMA).
The Act to implement CUSMA was approved by the Canadian Parliament on March 13, 2020. It is expected that the agreement will be formally ratified and come into effect before the end of the current crop year.
The Act to implement CUSMA includes amendments to the Canada Grain Act that
- allow grain grown in the United States to receive an official Canadian grade if it’s of a variety that is registered in Canada
- remove the requirement of a country of origin statement on inspection certificates for grain grown in the United States
- make it mandatory for people, including licensed grain companies, who sell grain to a CGC-licensee to a declaration of eligibility
Taken together, these changes support our commitments under CUSMA and improve flexibility, while preserving the integrity of the Canadian grain quality assurance system.
Questions and answers
1. What will be Canada’s new obligations on grain in CUSMA?
As part of the new agreement, Canada agrees to allow grain grown in the United States, but of a variety that is registered in Canada, to receive an official Canadian grade.
Additionally, Canada agrees to remove requirements for official inspection certificates to indicate that grain grown in the United States is of foreign or mixed origin. Statements of origin for phytosanitary or customs requirements will not be affected.
2. Will these changes also apply to grain grown in Mexico?
Grain grown in Mexico is not covered under this part of the agreement, which is only between Canada and the United States.
3. What will be required to implement these changes in the grading system?
The Government of Canada has included amendments to the Canada Grain Act that are required to implement the changes in the Act to implement CUSMA.
Once the changes to the Canada Grain Act come into force, consequential amendments to the corresponding Canada Grain Regulations will also be implemented to reflect the new rules.
4. Why are these changes included in CUSMA?
The United States had expressed concerns about discriminatory treatment of American-grown wheat, particularly as it relates to statutory grading.
Previously, the Canada Grain Act excluded any type of imported grain from receiving statutory Canadian grades based on origin. This meant that grain grown in the United States and delivered to a primary elevator in Canada could not receive an official Canadian grade, even if the grain was of a variety that is registered in Canada.
The United States perceived this as a barrier to trade with Canada and a trade irritant. These changes will address their concerns while preserving the integrity of the Canadian grain quality assurance system.
5. How will these changes affect the Canadian grain industry?
Small volumes of American-grown grain regularly move through the Canadian licensed elevator system, and the changes under CUSMA are not expected to significantly influence this trend. The volume of American producer deliveries to the Canadian grain handling system is related to several factors beyond the grading system including delivery distances, transportation costs, and currency exchange rates.
6. How will these changes affect the quality of grain exported from Canada?
These changes will not impact the overall quality of grain exports. Canada has a grain quality assurance system in place and any American-grown grain included in shipments from Canada will need to meet the same rigorous quality standards as Canadian grain. This will maintain our reputation as a consistent, reliable exporter of safe, high-quality grain.
There are also consequential changes to the Canada Grain Act included in the Act to implement CUSMA that will protect Canada’s grain quality assurance system and allow for appropriate oversight to address different regulatory environments in Canada and the United States.
7. How will these changes affect Canadian producers?
The changes in the treatment of American grain will not have an impact on Canadian producers. However, some of the consequential changes to the Canada Grain Act will have implications for Canadian producers. For example, the Act to implement CUSMA proposes measures to protect Canada’s grain quality assurance system and allow for appropriate oversight to address different regulatory environments in Canada and the United States. This includes mandatory requirements for all producers to declare information with respect to the variety of grain and pesticides applied when delivering to an elevator.
8. Will all American-grown wheat be included in Canadian wheat classes?
No. Only varieties that are registered in Canada and assigned to a specific wheat class by the Canadian Grain Commission will be able to receive an official Canadian grade.
9. Will American producers have to fill out a declaration of eligibility form?
American producers who deliver grain in Canada will have the same obligations as Canadian producers.
In western Canada, when producers deliver wheat to a licensed elevator, they are required by grain handlers to declare that the delivery they are making is eligible for a specific western Canadian class. These declarations will now be mandatory for both Canadian and American producers.
10. What will this mean for Canadian consumers?
These changes will not impact Canadian consumers. All American-grown grain that is delivered into Canada will need to meet the same rigorous quality standards as Canadian grain. Canadians can continue to expect grain and milled products that are dependable and safe.
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