The European Union (EU) this month moved forward on major bilateral trade agreements in two key markets for U.S. dairy products, Canada and Japan. The pacts include market access concessions on cheese and other dairy products and protections on geographical indications (GIs) designed to secure the EU’s sole use of many common cheese names, placing U.S. dairy companies that market cheese products to these countries at a significant disadvantage.  

The U.S. dairy industry does not oppose legitimate GIs, but IDFA believes a fair trade deal would not impose restrictions on market access and intellectual property rights by including inappropriate GIs. IDFA has consistently called on U.S. officials and legislators to preserve the use of common names by the U.S. dairy industry, as well as other sectors relying on typical food terms, for both domestic and international use.

Canada

After earlier delays, Canada and the EU this week agreed to begin the process of implementing the Comprehensive Economic and Trade Agreement (CETA) on September 21, 2017. The agreement will be provisionally applied on that date, meaning it will go into effect without waiting for the long process of ratification from the parliaments each European member state.

CETA was signed on October 30, 2016, and will eliminate roughly 98 percent of tariffs between the two markets. It also restricts the use of five generic cheese names to products from the EU: asiago, feta, fontina, gorgonzola and muenster.

In the pact, Canada agreed to reallocate 800 of its 20,412 metric ton tariff-rate quotas for cheese to the EU, which further restricts the limited access that U.S. cheese exporters have to the Canadian market.

The agreement will be fully implemented once the government of every EU member country ratifies it. To date, Latvia, Denmark, Spain and Croatia have signed the agreement into law, along with Canada and the European parliament.

IDFA has repeatedly asked the U.S. government to push back against the EU’s protectionist efforts, most recently in comments to the Office of the U.S. Trade Representative regarding the renegotiation of the North American Free Trade Agreement. IDFA will continue to push the administration to fight for the use of common cheese names in the Canadian market.

• Read “U.S. Dairy Industry Decries Market Barriers Raised in EU-Canada Trade Deal.”

Japan

Japan also recently signed an agreement in principle with the EU to eliminate 99 percent of tariffs between the two countries. The Economic Partnership Agreement also contains more than 200 agricultural GI protections, such as common cheese names like asiago, feta, fontina, gorgonzola and Roquefort.

“The EU-Japan bilateral agreement could be an ominous portent for U.S. dairy exports to Japan. The Department of Agriculture projects that U.S. milk production will grow by 23 percent over the next 10 years,” said Beth Hughes, IDFA director of international affairs. “Given that today we are exporting 15 percent of our total production, there needs to be increased export opportunities for approximately 80 billion pounds of milk over the next ten years.”

Tariff Reductions

In the agreement’s reduction of 99 percent of tariffs to the Japanese market, the EU gained significant market access for its dairy products.

The agreement would eliminate all tariffs on hard cheeses over 15 years. Japanese negotiators also agreed to increase the tariff-rate quota for soft cheeses from 20,000 metric tons to 100,000, which was initially a sticking point in the discussions. This new quota would grant increased access for other cheeses including mozzarella, blue veined cheese and soft cheeses such as camembert, brie and feta.

The agreement also includes several tariff rate quota changes for whey products, skimmed milk powder (SMP), SMP butter and condensed milk.

For more information read “Key elements of the EU-Japan Economic Partnership Agreement,” on the European Commission trade website.

IDFA staff and members met in June with U.S. Trade Representative Robert Lighthizer to stress the importance of pursuing bilateral trade deals with countries in the Asia-Pacific region, especially Japan, Malaysia and Vietnam.

“Bilateral agreements, especially in the Asia-Pacific region, are critical if we are to attain our future export potential and continue to support American jobs,” said Hughes. “This agreement enhances the EU as a competitor to the U.S. for dairy exports to Japan now and in the future.”

Members with questions may contact Hughes at bhughes@idfa.org.