Trade News is a periodic update that provides a concise compilation of current trade happenings and their impact on the dairy industry. This week's column by Beth Hughes, IDFA director of international affairs, discusses a Senate Finance Committee hearing on trade policy, negotiations surrounding the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), and the antidumping and countervailing duty case on sugar.

Senate Finance Committee Hearing

The Senate Finance Committee will hold a hearing May 1on President Obama's 2014 Trade Policy Agenda. U.S. Trade Representative Michael Froman will be the sole witness. Several questions on U.S. dairy trade in the context of TPP and TTIP are expected.

The House Ways and Means Committee held a similar hearing with Froman on April 3. He answered questions on access for U.S. dairy in TPP with Japan and Canada, concern over the European Union’s agenda on geographical indications (GIs) and Trade Promotion Authority. At this meeting, Froman made it clear that market access offers on agriculture from Japan and Canada have not been ambitious enough for U.S. negotiators.

Transatlantic Trade and Investment Partnership (TTIP)

The Congressional Dairy Farmer Caucus is currently circulating a letter to members of the House of Representatives asking the USTR and the U.S. Department of Agriculture to protect common U.S. cheese names in the TTIP negotiations and address a variety of European trade barriers that hold back U.S. dairy exports. IDFA believes it’s critical for legislators to hear from their constituents and urges members to ask your local Representatives to sign the letter and promote U.S. dairy exports.

The United States and the European Union will hold their fifth round of talks the week of May 19 in Arlington, Va. A stakeholder event on May 21will include presentations and a briefing by the chief negotiator from each side. IDFA plans to present on geographical indications and common food names.

Both sides are currently preparing their next tariff offers. After consulting with members who export to the EU, IDFA provided input to U.S. negotiators with the goal of getting the best deal for dairy exporters.

Trans-Pacific Partnership (TPP)

President Obama traveled to Japan and met with President Abe last week where they discussed the obstacles facing the market access chapter in TPP. USTR Froman said they made progress but no details were released. Gaps remain in the agriculture and automotive sectors, and some U.S. agriculture groups have called to remove Japan from the TPP negotiations altogether. Chief negotiators will meet in Vietnam in mid-May.

Sugar Antidumping and Countervailing Duty Case

On March 28, a coalition of domestic sugar producers filed antidumping and countervailing duty (AD/CVD) petitions with the U.S. Department of Commerce and the U.S. International Trade Commission (ITC) against Mexican sugar exports to the United States. The notice of the investigation appeared in the Federal Register on April 3. These proceedings have statutory timetables and a final decision regarding duties will likely be rendered by May 2015.

If these petitions are successful, IDFA members could face significantly higher costs for sugar. Agralytica, the economic consultant to the Sweetener Users Association, has forecast that prices could increase from 5 cents to as much as 13.5 cents per pound. An additional 5 cents is $100/ton or $5 million for a 100-million pound buyer. An additional 13.5 cents is $270/ton or $13.5 million for a 100-million pound buyer.

Adequate and available international supplies also play an important role in our domestic market. So, even if the price runs up as a result of the AD/CVD duties levied against Mexican sugar imports, there may not be adequate international supplies for other sources to supply the U.S. domestic market. This could create a situation where the U.S. domestic market is structurally short, forcing IDFA and sugar users to plead continually with USDA to allow entry for additional imports.

Also, because retroactive duties could potentially be levied, there is a very real risk that sugar users would feel negative market impacts almost immediately as importers become conservative. In addition, once these duties are imposed, they tend to persist for years and years.

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