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EDITORIAL COMMENT: Trade Agreements Will Boost US Dairy Exports, And Imports

LEAD STORY: ‘YouTube’ Age Makes Animal Care Priority Among US Dairy Producers

OTHER NEWS: Laliberté From Fromagerie du Presbytère Is Champion Of Canadian Cheese Grand Prix

GUEST COLUMNIST:  
Milk Prices Better Than Forecasted Dairy Situation & Outlook by Bob Cropp

COMPANY PROFILE:  
Leelanau Cheese Marks 20 Years, Opens New Cheesemaking Facility, Aging Cellar

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Various Trade Barriers Faced By US Dairy Exporters Detailed In Annual USTR Report


Barriers to exports of US dairy and other products and services are detailed in the 2015 National Trade Estimate Report, which was released earlier this month by the Office of the US Trade Representative (USTR).

The report is the 30th in an annual series that highlights “significant foreign barriers” to US exports. The report is based upon information compiled within USTR, the US Departments of Agriculture and Commerce, and other US government agencies, and supplemented with information provided in response to a notice published in the Federal Register, and by members of the private sector trade advisory committees and US embassies abroad.

USTR’s report classifies foreign trade barriers into 10 different categories, including, among others: import policies (e.g., tariffs and other import charges, quantitative restrictions, import licensing, customs barriers, and other market access barriers); sanitary and phytosanitary measures and technical barriers to trade; export subsidies; lack of intellectual property protection; and government-tolerated anticompetitive conduct of state-owned or private firms.

Import Restrictions In Canada
Canada’s compositional standards for cheese restrict access of certain US dairy products to the Canadian market, the report said.

These regulations limit the ingredients that can be used in cheesemaking, require use of a minimum percentage of fluid milk in the cheesemaking process, and hold importers more accountable for ensuring that the imported product is in full compliance. The compositional standards also apply to cheese that is listed as an ingredient in processed food.

Canada also uses supply management systems to regulate its dairy, chicken, turkey, and egg industries, the report continued. Canada’s supply management regime involves production quotas, producer marketing boards to regulate price and supply, and tariff-rate quotas (TRQs).

Canada’s supply management regime “severely limits” the ability of US producers to increase exports to Canada above TRQ levels and inflates the prices Canadians pay for dairy and poultry products, the report said. Under the current system, US imports above quota levels are subject to “prohibitively high tariffs” (such as 245 percent for cheese and 298 percent for butter). The US continues to press for the elimination of all remaining tariffs and TRQs.

Additional Canadian actions limit the access of US exporters to the Canadian dairy market, the report continued. For example, the US has issues surrounding tariff classification of dairy products that have slowed or stopped trade of certain products.

Last August, Canada and the European Union (EU) announced that they had reached agreement on a complete text of the Canada-EU Comprehensive Economic and Trade Agreement (CETA). Details contained in the agreement have raised “serious concerns” with respect to access for current and future US agricultural and food producers, the report said.

For example, the Canadian government has agreed to the EU’s request to automatically protect more than 170 food and beverage terms, including a number of cheese terms, as geographical indications without providing for due process safeguards, such as the possibility of refusal of applications or objection by third parties, according to the report.

Also, while the agreement appears to provide limited safeguards for the use of generic terms with respect to a short list of specific terms for existing producers, concerns remain about the right for future producers to use those terms and for producers to use generic trems with respect to other products.

The US government continues to examine the effect the agreement will have on the use of individual components of compound terms, the use of translations, and prior rights of existing trademark owners.

Concerns Over EU Policies
EU certification requirements are limiting US agricultural exports such as dairy, meat, eggs, composite products, and animal byproducts, adding unnecessary costs to the movement of exports in Europe, irrespective of whether these goods are designed for commercial sale in the EU, transiting through the EU, or intended for cruise ships or US military installations located in the EU, the report said.

The santiary and phytosanitary requirements are often inconsistent with international standards or appear to have been implemented without scientific justification, the report said. In particular, the certificates are often so rigid that it is nearly impossible to verify the requisite certification requirements even if the product is produced specifically for the EU.

Effective April 1, 2012, all shipments of dairy products requiring EU health certificates must comply with new certification requirements regarding EU somatic cell count (SCC) and standard plate count requirements that reflect farm-level sampling and must be accompanied by an updated Certificate of Conformance. The EU requires attestation and certification to SCC requirements not to exceed 400,000 cells/ml.

The EU SCC requirement is not a public health issue but a quality issue, the report said. The EU maintains that the SCC requirements are an animal health/welfare indicator, but has also surmised that SCC is a quality parameter.

The US maximum SCC for Grade A milk is 750,000 cells/ml and is included in the PMO. The US continues to engage the EU regarding the EU’s SCC requirement and has stressed the fact that the requirement is not a public health concern.

The US continues to have “serious concerns” with the EU’s system that provides “over-broad protection” of geographical indications (GIs), including with respect to its negative impact on the protection of trademark and market access for US products that use generic terms.

Other Dairy Import Barriers
Since May of 2012, when Mexico determined that the Hoja de Requisitos Zoosanitarios (HRZ) veterminary import requirements were not applicable to raw milk, US dairy exporters have been blocked from shipping raw milk for pasteurization to Mexico.

“Raw milk for pasteurization represents a substantial export opportunity for several dairy producers who can supply this product to Mexican milk pasteurization plants when the plants are faced with insufficient domestic supplies of raw milk,” the report said. In 2014, Mexico reinitiated work to develop revised HRZ import requirements, and the US continues to engage with Mexico on a technical level to resolve the issue.

Japan maintains high tariffs that hinder US exports of food products, including dairy products. Examples of double-digit import tariffs include 40 percent on processed cheese, 29.8 percent on natural cheese, and 22.4 percent on shredded frozen Mozzarella cheese.

Since 2003, India has imposed unwarranted SPS requirements on dairy exports, which have essentially precluded US access to India’s dairy market.

India requires the US government to certify that any milk destined for India has been treated to ensure the destruction of paratuberculosis, which, according to India, is linked to Crohn’s Disease. Despite repeated requests from the US, India has not provided scientific evidence to substantiate this assertion, and has declined ... Send me more information.