Will new trade deals restrict, rather than enhance trade?

By Jim Webster

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Nov. 20, 2013 - For more than a half century, the world's most developed countries have pursued trade policies designed to boost their economies by removing trade barriers and trade-distorting practices. But two recent proposals - one “agreement in principle” and one proposed deal - threaten to “stand the typical goal of a trade agreement on its head,” according to one U.S. trade expert.

Details of the recently-completed Canada-European Union trade agreement suggest that the parties have regressed from the ideal by restricting markets for a number of food products, notably cheeses, while gaining miniscule market-opening in return. At the same time, a plan advanced by India and for a Dec. 3-6 World Trade Organization ministerial meeting in Bali would be “a significant step backwards for the WTO,” according to U.S. farm organizations.

Lets Talk Food

The Canada-EU agreement calls for modest increases in EU imports of Canada's beef and a minimal increase in Canadian imports of EU cheese. More ominous from a “free trade” perspective, it restricts marketing of 145 food products with names protected by the EU's “geographical indications,” known as GIs. The greatest impact is on five cheese names that have long been generic in Canada as well as the United States: asiago, feta, fontina, gorgonzola and Muenster. Companies that already sell these five in Canada will be able to continue to do so but others or new entrants in the market would need to call the products “feta-like” or “asiago-style.”

“This is deeply troubling given the fact that these terms have been used generically in the Canadian market for many years, so any new restrictions on these terms' usage would appear to impose a very disturbing new barrier to competition and trade,” says a National Milk Producers Federation newsletter. One bright spot: the agreement allows the labeling of “parmesan” cheese in Canada but limits “Parmigiano Reggiano” to product produced near Parma, Italy.

The crux of the concern by U.S. and other third country manufacturers is “Canada's agreement to impose new restrictions on trade and competition relating to the use of several generic product names, whereas typically an FTA works to remove barriers to trade and competition,” said NMPF's Shawna Morris, who coordinates the Consortium for Common Food Names, in an email.

Although the deal has been touted in Brussels and Ottawa as a potential template for the U.S.-EU negotiations or a U.S.-Canada contribution in the Trans-Pacific Partnership talks, it falls far short of - and even runs contrary to - the U.S. ambitions for either agreement. The GI protections for European food names are far more onerous than the U.S. industry will accept and its market-opening provisions for EU foods are far less than acceptable to U.S. negotiators.

Efforts at WTO headquarters in Geneva to cobble together a trade package for Bali ministerial meeting have also raised alarms in U.S. farm circles. An Oct. 24 letter from 31 groups spanning the spectrum of traded commodities urged U.S. trade negotiators to resist “the so-called ‘food security' proposal from the Group of 33” because it would “significantly weaken subsidy disciplines by exempting . . . price support regimes that are tied to domestic food aid programs.”

“A Bali agreement that relaxes current disciplines for those countries, even on a temporary basis, would represent a big step in the wrong direction and would set a damaging precedent for future talks,” the letter said, jeopardizing chances of concluding the Doha Round. “It would also increase the likelihood of further subsidy increases and further damage U.S. trade interests.”

According to observers in Geneva, negotiators had not been able to bridge the significant gaps in positions on the agricultural proposal. “There is still a lot of bracketed material” - signaling the lack of consensus - on the agricultural proposal, says Floyd Gaibler, a trade and biotechnology expert at the U.S. Grains Council who has followed the developments.

India is “looking for a ‘get out of jail free' card” to implement a massive food security plan involving subsidized distribution of over 60 million tons of wheat and rice, purchased at minimum support prices, at an annual cost of over $20 billion, Gaibler adds.

However, India already exceeds its domestic support WTO obligations but has not been challenged because the Indian government has not submitted its required notifications to Geneva. “While the legal case is strong, there is real reluctance of any WTO member to bring a case before the WTO,” he says.

The farm groups' letter objects to the idea of tying food aid to price supports, “which have more to do with boosting farm income and increasing production . . . and which often result in the accumulation of excess stocks that are later dumped at subsidized prices onto the world market.”

 

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