Thank you, Mr. Chair.

It's good to be back in front of this committee one more time.

As most of you know, my name is Keith Currie. I'm the president of the Canadian Federation of Agriculture, and I'm an eighth-generation farmer here in Ontario.

I just want to start by saying that Canadian farmers are committed to sustainability, and we do applaud the committee for taking a very proactive approach in studying this emerging issue.

I'll get straight to the point. Our main concern with discussions related to the implementation of border carbon adjustment mechanisms—or BCAs, as I'll refer to them—relates to their potential to establish non-tariff barriers to trade and undermine Canada's competitiveness, if not done correctly.

As an example, Canadian supply chains for inputs such as fertilizers, pest management products, and equipment are highly integrated with the United States. Given the absence of carbon price in the U.S., we are concerned that a Canadian BCA would increase the price of critical agriculture inputs here in Canada. A large portion of farm inputs, supplies and equipment are imported into Canada as manufactured products. Any additional carbon levy or import surcharge on these imported goods would add more carbon-related costs onto primary producers, further reduce farm operating margins, and negatively affect their competitiveness in global markets.

Furthermore, we have been very clear on our ongoing concern regarding the impact the carbon tax is having on Canadian farm profitability, sustainability and competitiveness. As this committee is well aware, we have always been and remain supportive of Bill C-234, which in its original form would have provided much-needed relief to Canadian farmers across this country. While we do believe measures like BCAs could play a part in levelling the playing field for Canadian farm businesses, the lack of international guidance or standards on this front could result in inconsistent unilateral approaches that establish protectionist non-tariff barriers to trade under the guise of sustainability.

Given these concerns, any consideration of BCAs in a Canadian context can only work if Canada were to form part of a coalition of countries and regions that implement BCAs, including the United States. In addition, we would need to see strong multilateral disciplines, including a rules-based approach underpinned by science-based standards. Without such international disciplines and widespread international adoption, BCAs would have limited value for Canadian agriculture exports, given the lack of developed domestic carbon pricing systems in key export markets.

Were Canada to explore a Canadian approach to BCAs that is not harmonized with U.S. policy, including the level of subsidy supports to affected industries, there is a significantly higher risk that Canadian producers would bear the higher prices. At the end of the day, Canadian producers are price-takers on the international market and do not have the ability to pass on any negative price impact stemming from BCAs or other similar mechanisms. As a result, any consideration of a BCA in a Canadian context would need to be coupled with additional support to help reduce carbon emissions domestically, including investment in research, extension and programs.

We also need to be aware that BCAs are likely to place upward pressure on food price inflation, which has already proven to be quite sticky when compared to other consumer goods, given the number of imports that occur from major emitters like China.

Finally, while Canada already has a well-established commitment to reciprocity when it comes to trade agreements, BCAs are somewhat new and unexplored territory. From our perspective, the same principles that guide our actions from a reciprocity perspective, such as equal treatment, rules-based order, and flexibilities where appropriate, need to be carried forward into any future development and implementation of a BCA.

In conclusion, from our perspective, any consideration of BCAs, whether in Canada or by major trading partners, cannot occur unilaterally or in a vacuum without the support of an internationally supported science-based framework.

Thank you. I look forward to the questions.