In October, 2018, the Trump administration announced that the United States-Mexico-Canada Free Trade Agreement (“USMCA”) had been signed, and farmers throughout the US breathed a sigh of relief. When the Trump administration pulled out of the North American Free Trade Agreement (“NAFTA”), US farmers were impacted by new trade barriers that arose between the former bloc countries, with an estimated annual average of $63 billion dollars of agricultural exports to Canada, Mexico and China caught in limbo while a new deal was negotiated. USMCA is a return to the NAFTA status quo in most areas of agriculture, though it does promise improvements for producers of certain agricultural commodities – specifically, USMCA creates new access for US wheat and dairy producers to sell products into the Canadian market. Despite these gains, however, the USMCA negotiations represent a squandered opportunity to tackle the increasingly important issue of food safety in the fresh produce supply chain.
In 2011, the US Centers for Disease Control and Prevention estimated that 31 major pathogens acquired in the United States caused 9.4 million episodes of foodborne illness, resulting in 55,961 hospitalizations, 1,351 deaths, and untold financial losses due to food recalls and insurance claims. These outbreaks have been especially visible in recent years, including a 2015 outbreak of E. coli traced to several Chipotle restaurants that led to national headlines and a 34 percent drop in Chipotle’s share price. As these diseases are most easily transferred through the handling of fresh produce, particularly leafy greens, Congress identified the increased regulation of safety standards in the fresh produce industry as a key priority.
Congress has responded to the threat of foodborne illness by implementing a new system of food protections through the 2011 Food Safety Modernization Act (“FSMA”). In addition to updating food safety requirements for domestic producers, the FSMA implemented strict standards for domestic importers of fresh produce. Among these were requirements that American importers ensure that their suppliers comply with FSMA standards. Considering that, annually, the US imports over 10 million metric tons of fresh produce from Mexico, or 43 percent of total produce imports, the application of these food safety standards to cross-border transactions is deeply important. However, there is no direct enforcement mechanism to ensure compliance amongst producers of imported food. Thus, the importers, who often consolidate orders from multiple locations, are tasked with regulation enforcement. Further, verification of compliance is also made difficult due to the fact that there are few standard methods to track produce easily and reliably, as it is often handled by multiple brokers and wholesalers before reaching importers.
If this consolidation only happened among importers, there may be mechanisms by which a domestic enforcement apparatus could work. However, in the last 30 years, market pressures have vastly increased the complexity of produce supply chains. Since 1995, grocery store chains have reported a 1.4 percent increase in retail sales of produce while their operating margin on produce has declined by 22 percent. This squeezing of margins, coupled with an increase in demand, has led many retailers and suppliers to consolidate in an attempt to source their produce from as few wholesalers and brokers as possible. This consolidation trend would seem to allow for easier tracking of fewer sources of produce, but it has had the opposite effect. With fewer wholesalers receiving larger orders, suppliers are often forced to turn to spot-market brokers who can supplement their stock to fulfill the demands of their customers. This intermingling of produce lots raises food safety challenges – challenges which could be mitigated by mechanisms that expand the FSMA’s oversight provisions beyond the US border, implementing a cooperative food safety effort between the US, Mexico and Canada.
USMCA introduces no such new safety mechanisms. Rather than expanding the scope of the FSMA’s robust food safety measures to include Mexico and Canada, USMCA points to the World Trade Organization’s Agreement on the Application of Sanitary and Phytosanitary Measures (“SPS Agreement”), which speaks broadly to the implementation of science-based food safety standards while leaving details to be worked out by national governments. Thus, USMCA avoids directly addressing the inherent vulnerabilities created by the discrepancies between the food safety and inspection regimes of the parties to the agreement.
In a trading bloc in which significant percentages of the agricultural commodities consumed in each bloc country originate from other bloc countries, and where inadequate oversight of those commodities can lead to illness and death, the lack of common regulatory standards is a critical flaw. As outbreaks of foodborne illnesses become more common and more visible, various actors have attempted to increase the traceability of their produce. There are currently countless startups that promise increased traceability and food safety capabilities, and the increased oversight of the FSMA in the US offers a robust food safety regime. However, the failure of USMCA to standardize food safety regimes between the member counties leaves open a wide and growing gap in the health protections individual governments can guarantee to their citizens.
Jacob is a second-year student at Columbia Law School and the founder of Trackter Systems, an agricultural logistics software company. He holds a B.A. in history from the University of Georgia, and still eats at Chipotle regularly.