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Dairy Facts 2016

Trade News Update: T-TIP Negotiations Make Progress

Oct 28, 2015

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 the Transatlantic Trade and Investment Partnership (T-TIP), the Trans-Pacific Partnership (TPP), country-of-origin labeling, the Mexican sugar case and geographical indications.

Transatlantic Trade and Investment Partnership (T-TIP)

The 11th round of negotiations between the United States and the European Union were held last week in Miami. The two sides exchanged revised market access offers that would increase the number of tariff lines that would ultimately be duty free to as high as 97 percent. However, the EU's most sensitive agricultural products, including dairy, beef, pork and chicken, are not expected to be covered by the market access offers.

The top priorities for IDFA in the T-TIP negotiations include a reduction in tariffs and non-tariff barriers, stronger sanitary and phytosanitary measures, and protection for U.S. exporters to continue marketing cheeses with common names.

There will most likely be a high-level stocktaking meeting in December, with a negotiating round scheduled for late January or early February.

Trans-Pacific Partnership (TPP)

On October 5, the 12 TPP partner countries announced the conclusion of the deal. The full details of the agreement have not been made public yet, but the U.S. Department of Agriculture has released a series of fact sheets detailing market access for U.S. dairy products into Japan, Canada, Malaysia and Vietnam, as well as concessions made for New Zealand and Australian dairy imports to the United States.

Under Trade Promotion Authority, there are specific timelines and requirements before Congress actually votes on TPP. The earliest timeframe for a vote would be next spring, but because of the presidential campaigns, Congress will likely wait to take it up in the lame duck session later in 2016.

For TPP to be implemented, six of the original 12 signatories must ratify it, provided that they account for at least 85 percent of the combined gross domestic product (GDP) of the signatories. The deal would enter into force 26 months later.

Country-of Origin Labeling (COOL)

In July 2015, Senator Pat Roberts (R-KS) introduced a legislative proposal to prevent costly retaliatory tariffs by Mexico and Canada by repealing U.S. Country-of-Origin Labeling (COOL) requirements for muscle cuts of beef and pork. The amendment mirrors the U.S. House legislation, H.R. 2392, which passed in June and would bring the United States in compliance with its World Trade Organization (WTO) obligations.

Senators Debbie Stabenow (D-MI) and John Hoeven (R-ND) have also introduced a bill, S. 1844, which calls for a voluntary labeling program. If COOL requirements are not removed by Congress, the U.S. dairy industry faces potential export losses through retaliation by Mexico and Canada.

The WTO arbitrator is expected to release its decision by November 27, but it may be pushed back until December 7. The WTO Dispute Settlement Body will then be informed of the arbitrator's decision and, upon request of Mexico and Canada, grant authorization to suspend concessions, unless the Dispute Settlement Body decides by consensus to reject the request.

Once authorization has been granted, Canada and Mexico would be able implement retaliatory tariffs on their own schedule.

Mexican Sugar Case

On October 19, the U.S. International Trade Commission (ITC) voted 6 to 0 that Mexico’s sugar industry harmed American producers by dumping subsidized sugar onto the U.S. market. This decision effectively concludes the antidumping duty (AD) and countervailing duty (CVD) investigations of imports of sugar from Mexico.  

That means that the suspension agreements signed last December by the United States and Mexico will remain in effect for at least the next five years. The countervailing duty agreement includes provisions to prevent an oversupply of sugar in the U.S. market, including calculating an export limit for Mexico, preventing imports from being concentrated during certain times of the year and limiting the amount of refined sugar from Mexico. The antidumping agreement establishes reference, or minimum, prices to guard against undercutting or suppressing U.S. prices.

A fact sheet issued by Commerce lists the key terms of both agreements.

IDFA will continue working with Congress, the Administration and other stakeholders to enact a more market-oriented sugar program in the United States. 

Geographical Indications (GIs)

The World Intellectual Property Organization (WIPO) recently held budget deliberations in Geneva, which provided the U.S. government another opportunity to argue against the expansion of WIPO’s Lisbon Agreement to include tighter protections for some geographical indications (GIs).

The U.S. government has repeatedly argued that the Lisbon Agreement system has never paid for itself and is subsidized by other WIPO programs, even though the Lisbon Agreement only benefits a small number of WIPO members. The United States is a member of WIPO but not the Lisbon Agreement.

As a result of U.S. efforts, WIPO has resolved to institute a more equitable budgeting process for administration of the Lisbon Agreement, and charged the main committee responsible for GIs to take a broader look at the varying ways countries are dealing with GI protections around the world.

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