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 progress on Trade Promotion Authority, Country-of-Origin-Labeling, negotiations surrounding the Trans-Pacific Partnership and the investigations by the Department of Commerce concerning imported sugar from Mexico.

Trade Promotion Authority (TPA)
Just before leaving town for a weeklong recess, the Senate passed the Trade Promotion Authority (TPA) bill on Friday night with a final vote of 62-37. Fourteen Democrats joined 48 Republicans in support of this bill. The Senate also renewed Trade Adjustment Assistance (TAA), a program to help retrain workers who have lost their jobs because of trade.

The 14 Democrats were Michael Bennet (CO), Maria Cantwell (WA), Benjamin Cardin (MD), Thomas Carper (DE), Chris Coons (DE), Dianne Feinstein (CA), Heidi Heitkamp (ND), Tim Kaine (VA), Claire McCaskill (MO), Patty Murray (WA), Bill Nelson (FL), Jeanne Shaheen (NH), Mark Warner (VA) and Ron Wyden (OR).

The House is expected to take up TPA the first week of June.

Trans-Pacific Partnership (TPP)
The chief negotiators for the 12 TPP partner countries met May 15-25 in Guam, aiming to pave the way for progress for the next ministers meeting. Some negotiations on market access are still underway, particularly between the United States and Japan on automotive issues and several sensitive agricultural products, including dairy. To date, Canada has not put forth an offer on dairy, poultry or eggs.

Because Trade Promotion Authority (TPA) has not passed the House yet, TPP ministers decided to postpone the ministerial meeting originally scheduled for May 26-28.

Country-of-Origin Labeling (COOL)
The World Trade Organization (WTO) ruled last week against the U.S. Country of Origin Labeling (COOL) rule.  IDFA issued a press release urging Congress to act immediately to ensure U.S. compliance with its WTO obligations because Canada and Mexico, America’s two largest export markets, will promptly move to institute retaliatory tariffs worth billions of dollars on U.S. food, agricultural and manufactured goods.

Canada and Mexico had challenged the rule for muscle cuts of meat at the WTO, arguing that COOL has a trade-distorting impact by reducing the value and number of cattle and hogs shipped to the U.S. market. The WTO found the United States to be in noncompliance with its international trade obligations. The ruling is a concern to the U.S. dairy industry because of potential retaliation against U.S. dairy exports.

Canada has already issued a preliminary retaliation list targeting a broad spectrum of commodities and manufactured products, including dairy, which would affect every state in the country. Mexico has not yet announced a preliminary retaliation list but has implemented retaliatory tariffs in the past, which may be indicative of future tariff actions.

IDFA has joined with business leaders from all sectors of the American economy in urging immediate congressional intervention to bring the United States into compliance on COOL. The House Agriculture Committee approved a bill, co-sponsored by more than 50 House members, to repeal the COOL requirements for beef, pork and chicken. Chairman Mike Conaway (R-TX) expects the full House to vote in early June.

Mexican Sugar Case
On May 15, the International Trade Commission (ITC) published a notice in the Federal Register concerning the final phase of its investigations into sugar from Mexico. Although a date has not been announced, the ITC is likely to vote a few days after the submission of final comments on October 16 to determine whether the U.S. sugar industry has been injured by Mexican sugar imports.

Significant dates for the final phase of the investigations are:

  • September 4 – Deadline to submit pre-hearing briefs;
  • September 11 – Deadline to submit request to appear at hearing;
  • September 16 – ITC hearing;
  • September 23 – Deadline to submit post-hearing briefs; and
  • October 16 – Deadline to submit final comments.

The case began in March 2014 when 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. Commerce finalized agreements in December with the Mexican government and Mexican sugar importers that would limit the amount of sugar that Mexican firms can export to the United States and require that sale prices reach certain minimums. These agreements suspended the department’s investigations.  

In January, two sugar refiners, Imperial Sugar and AmCane, petitioned the ITC to request a review of the suspension agreements to determine whether they eliminate completely any injury to the U.S. sugar industry. They also requested a continuation of the investigations.

In March, the ITC determined that the two suspension agreements between Commerce and the government of Mexico and Mexican sugar exporters eliminated the injurious effect of sugar imports from Mexico on the U.S. food industry as a whole. The ITC vote means the suspension agreements finalized in December will remain in effect.

At the end of April, Commerce ruled that the two sugar refiners, Imperial Sugar and AmCane, have the necessary standing to request the continuation of the investigations. Therefore, the department is continuing its antidumping and countervailing duty investigations of sugar from Mexico.

For more information, contact Beth Hughes, IDFA director of international affairs, at bhughes@idfa.org.