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Dairy Facts 2016

T-TIP Negotiations Must Be Comprehensive, IDFA and Others Say

Jun 29, 2016

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), the Mexican sugar case and geographical indications.

Transatlantic Trade and Investment Partnership (T-TIP)

A group of 37 food and agriculture organizations sent a letter last week to the Secretary of Agriculture and the U.S. Trade Representative noting the lack of progress made on a number of key agricultural issues. The groups urged the administration “not to proceed with a ‘T-TIP-lite’ agreement, saying it “would do much more harm than good.”

The letter cited a recent report by the U.S. Department of Agriculture that showed the United States ran a record $12-billion trade deficit in farm and food products with the EU in 2015, up 15 percent from 2014. U.S. dairy has a rather large trade deficit, with U.S. exporters shipping about $100 million in dairy products, while the EU sends a $1 billion worth of dairy products to the United States.

In the meantime, the United Kingdom’s vote last week to leave the EU undoubtedly raises a lot of questions about the current state of trade negotiations. Although the UK has two years to negotiate its withdrawal from the EU, it will no longer be involved in decision-making activities. The UK also will have to elect a new prime minister in the fall since David Cameron, the current prime minister, resigned shortly after the vote. With all of this uncertainty, it’s likely that T-TIP talks will cease for now while the EU focuses its efforts on consequences stemming from the UK’s exit.

USTR Michael Froman this week reinforced the Obama administration’s goal of completing the deal by the end of this year, but the lack of progress in many areas and the UK’s vote make a finished agreement in the next six months seem unlikely. The next round of negotiations is scheduled to take place the week of July 11 in Brussels.

Trans-Pacific Partnership (TPP)

Froman also stated recently that the administration is in the process of drafting the implementing bill for TPP. Under Trade Promotion Authority, the administration must submit the draft action plan, along with the final legal text of the agreement, at least 30 days before sending Congress the implementing bill. 

Senator Orrin Hatch (R-UT), chairman of the Senate Finance Committee, has said several issues need to be addressed before he will consider a vote. Without solutions to these issues, many members of Congress have stated they will not vote in favor of the deal. The clock is ticking, but  it’s possible that Congress will take a vote on TPP after the November election.

Just today, the Office of the U.S. Trade Representative sent Congress a report on capacity building activities undertaken in connection with trade agreements negotiated or being negotiated, which is a requirement under Trade Promotion Authority. Several areas were covered in the four-page report, including a section on sanitary and phytosanitary (SPS) measures that outlined activities to ensure SPS measures are based in science and internationally recognized standards, and a section on intellectual property that ensures obligations by trading partners on geographical indications (GIs) are met.

Mexican Sugar Case

IDFA has learned that the United States and Mexico are exploring the renegotiation of the 2014 suspension agreements. The agreements limit the amount of sugar that Mexican companies can export to the United States and require that sale prices reach specified minimums. 

IDFA and the Sweetener Users Association are watching this issue closely because the agreements restrict the flow of sugar into the United States and are in contrast to the open markets provided for in the North American Free Trade Agreement. IDFA and SUA have urged the Department of Commerce, which has jurisdiction, to consider the negative effects of the agreements on U.S. sugar users.  

Geographical Indications (GIs)

Mexico announced last month that it will begin talks with the EU in July to renegotiate its bilateral trade pact from 2000, although the recent UK vote may put those talks on hold. Geographical indications are expected to be one of the topics on the table. IDFA has urged U.S. officials to engage with the Mexican government to ensure any agreement on GIs does not have a negative impact on U.S. dairy exports. IDFA will follow these talks and their progress.

IDFA recently co-sponsored and participated in a day-long seminar in Chicago hosted by the Consortium for Common Food Names. The free seminar featured speakers from the Department of Commerce's U.S. Patent and Trademark Office, the Wine Institute, the North American Meat Institute, the Cato Institute, the U.S. Dairy Export Council, the Wisconsin Department of Agriculture and the law firms of Covington & Burling and Godfrey & Kahn.

The EU has been aggressively targeting U.S. export markets to add GI protections for names that are considered generic in the United States and international markets. The speakers advised more than 70 representatives from U.S. food and beverage companies how to preserve their use of these generic food names.

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