How Two Cows Make a Crisis: U.S.-Canada Trade Relations and Mad Cow Disease

Abstract

Introduction In 2003, Canada and the United States announced their first cases of bovine spongiform encephalopathy (BSE), or mad cow disease. In May, a single infected cow was discovered in Alberta. In December, the U.S. Department of Agriculture (USDA) announced the U.S.'s first case: a dairy cow in Washington State had tested positive for BSE. Soon after, DNA testing showed that the Washington cow had been born, and most likely infected, in Canada. (1) In comparison to the European experience with BSE, two single cases among the vast cattle population of North America appear insignificant. Certainly, these cases have few implications for public health. However, the economic impact of both cases was significant for both countries, albeit far greater in Canada. Most particularly, both countries immediately lost their export market, and have yet to fully regain them. Initially, in the wake of these cases, U.S.-Canada relations remained cordial. The U.S. did not blame Canada for the BSE case, instead setting about reforming its own internal control measures. But, as the export ban lingered, relations began to deteriorate. The U.S. ultimately rejected the assessment of international experts that the U.S. and Canada treat BSE as a joint problem. In September 2004, the Canadian Conservative Party leader accused the U.S. of protectionism, and of using this case to punish Canada for its lack of full support in the war on Iraq. (22) The crux of the dispute between the two NAFTA partners has been over the U.S. decision to continue banning the import of live cattle from Canada--a decision that has had devastating effects on Canada's industry, which had become dependent on sending cattle to the U.S. for slaughter and processing. On December 29, 2004, the U.S. announced its intention to lift this ban in March 2005. However, in the wake of two further cases of Canadian BSE discovered in January 2005, and heavy opposition from some, but not all, U.S. stakeholders, a judge in Montana granted a preliminary injunction to halt lifting the ban. Canadian cattlemen, in turn, have threatened to take the U.S. to NAFTA and WTO tribunals. This article tells this story, focusing on issues of comparative and transboundary management in highly integrated agricultural systems. As one analysis puts it, BSE is a dramatic example of the importance of transboundary management systems, when human, animal, or plant health is threatened through inadvertent importation of dangerous diseases (Caswell and Sparling, 2004, pp. 1-2). It is also a broader story of the politics of transboundary in open economies, and of the ways in which these risks can undermine or potentially derail trade and integration agreements. In this case, the U.S. government rapidly closed the border for the beef trade with Canada. Subsequently, diplomatic efforts on both sides, aimed at establishing a standard of minimal risk to justify re-starting trade in live cattle have (at least at this time of writing) been derailed by political and economic interests in the U.S.. This case is likely to have broader implications for future U.S.-Canada relations in the context of agricultural trade. It also fails to inspire confidence in the ability of the three NAFTA partners--the U.S., Canada and Mexico--to resolve similar crises in the future. A detailed examination of the U.S. and Canada's response to these two cases of BSE in 2003 illustrates much of what these two countries have in common in terms of management policies--and also, the important ways in which they differ. The next part of this article discusses the separate but parallel development of BSE policies in each country, before detailing how the economic impacts on the Canadian beef sector lead to a significant divergence in each country's experience. This divergence led to a lengthy, and highly politicized, disagreement between them over the U.S.'s continued embargo of beef and cattle products from Canada. …