When agricultural groups in the U.S. talk about NAFTA they usually focus on selling agricultural products to buyers in Canada and Mexico or agricultural products entering the U.S. from Canada and Mexico. Little thought is given to trade in input supplies like fertilizer, petroleum products and equipment. U.S. farmers have not been able to buy labeled agricultural pesticides in Canada for use on U.S. farms. In December of last year representatives of the Montana Grain Growers Association were the first to buy and bring to the U.S. under an “own-use import” program a herbicide called Far-GO distributed by Gowan Company LLC of Yuma, Arizona.
Far-GO (Avadex in Canada) controls wild oats and is a “pilot chemical” volunteered by the company as a case study for importation under an own-use import program, which allows imports by a U.S. farmer who intents to directly use the product. Canada has a similar program for U.S. registered products. According to the testimony of James B. Gulliford, Assistant Administrator of the U.S. EPA Office of Prevention, Pesticides, and Toxic Substances, to the House Agriculture Committee, Sub-Committee on Conservation, Credit, Rural Development and Research on September 28 of last year, more products should be ready for the program by this spring.
This effort towards harmonization of pesticide regulations between Canada and the U.S. is being led by the NAFTA Technical Working Group on Pesticides which was formed in 1996. Its Subcommittee on Pesticide Harmonization – NAFTA Labels has done much of the pick and shovel work of seeking stakeholder input. The subcommittee includes farmers from the northern tier of U.S. states, officials from state Departments of Agriculture and pesticide registrants from the U.S. EPA has worked on regulatory harmonization since 1993. The own-use import program is only a short-term strategy; the long-term strategy is a NAFTA label that would regulate use in both countries. EPA and the Canadian Pest Management Regulatory Agency are already working with registrants on NAFTA labels for several products that have been volunteered for US/Canada labels.
While this progress is great news, the own-use import program is truly only a short-term solution. According to testimony to the House Agriculture Subcommittee by CropLife America, the trade association for manufacturers, distributors and formulators of crop protection chemicals, there were 16,115 registered pesticide products in the U.S. in 2004 containing 1,015 active ingredients. Canada had 5,274 registered pesticide products containing 525 active ingredients. While only a small percentage of the products are likely to be used in agriculture and a still smaller number will be the most important, the numbers are still too large for the own-use program. The process also needs to deal with new products and uses. Since 1997, EPA has registered 149 new active ingredients and 2,489 new uses.
Interest by farmers and ranchers in cross border trade in pesticides is rooted in simple economics. Growers in both countries look across the border and see that some pesticides are cheaper in the other country. Since they compete with those farmers in the same NAFTA markets and international markets, they logically want access to the lower cost products. A 2003 study by North Dakota State University estimated that the price differences cost North Dakota farmers over $20 million per year, about 8.3 percent of pesticide expenditures in 2002. This was an update of a 2001 study that showed extra costs of $24 million per year. A 2005 study put the extra costs at $41 million for North Dakota growers. A Montana State University study from 2004 analyzed price data collected in southern Alberta and northern Montana for 12 agricultural chemicals. Some chemicals were lower priced in the U.S., while others were lower in Canada. The biggest difference was a chemical that was higher by 56 percent of the U.S price. Eight chemicals had price differences that were 19 percent to 30 percent of the U.S. price.
The pesticide industry also has an economic interest in regulatory harmonization. Increases in the amount of data and complexity required for registration are increasing costs for manufacturers, and harmonization that reduces costs would be of benefit. It could expand markets for products by making more products available to farmers in both countries. To achieve further harmonization, CropLife America believes that differences in copyright, patent and trademark laws must be addressed, as well as user safety, customs regulations and labeling. These changes could shorten the time from submission of applications to product approval, reduce duplication of testing and increase cooperation among regulatory officials.
NAFTA is not the only trade entity addressing harmonization. The Organization for Economic Cooperation and Development (OECD) of developed countries has international chemical testing guidelines, and the Food and Agriculture Organization of the UN (FAO) has developed the International Code of Conduct on the Distribution and Use of Pesticides.
If NAFTA is to reach its full potential to reduce production costs, increase market opportunities and improve the standard of living for citizens in all three countries, efforts like the harmonization of pesticide regulations must be pursued as far as possible without infringing on the sovereignty of the government of each country. Harmonization with Canada would likely form the basis for harmonization with Mexico. These regulations combined with efforts by the OECD, FAO and other international groups could lay the groundwork for working with other U.S. free trade agreement partners. If the U.S. cannot reach harmonization of regulations on pesticides with Canada where both countries have so much in common, there is little hope of reaching agreements on similar issues with other countries.