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EU-Japan Trade Deal Could Be ‘Ominous Portent’ For US Dairy Exports To Japan: IDFA

NMPF, Other Ag Groups ‘Extremely Concerned’ That Restrictions On Steel, Aluminum Imports Could Hurt Ag Exports

Washington—The Economic Partnership Agreement (EPA) that was reached last week by the European Union (EU) and Japan “could be an ominous portent for US dairy exports to Japan,” according to Beth Hughes, director of international affairs for the International Dairy Foods Association (IDFA).

Under the EPA, for cheese and dairy products, significant market access improvements were agreed for the EU’s core export products to Japan. Also, more than 200 EU agricultural products covered by geographical indications (GIs), including some cheese products, will be given the same level of protection in Japan as they experience in the EU today.

IDFA staff and members met last month with US Trade Representative Robert Lighthizer to stress the importance of pursuing bilateral trade deals with countries in the Asia-Pacific region, especially Japan, Malaysia and Vietnam.

“Bilateral agreements, especially in the Asia-Pacific region, are critical if we are to attain our future export potential and continue to support American jobs,” Hughes said. The EU-Japan trade agreement “enhances the EU as a competitor to the US for dairy exports to Japan now and in the future.”

In the wake of last week’s announcement of the EU-Japan trade deal, the National Pork Producers Council (NPPC) renewed its request that the Trump administration begin negotiations on a free trade agreement with Japan.

“The United States must quickly finalize a trade deal with Japan if it wants to maintain that important market,” said Ken Maschhoff, NPPC’s president and a pork producer from Carlyle, IL. “We can’t stand by while countries around the world negotiate agreements that give them a competitive advantage over American products.”

Meanwhile, NPPC and 17 other food and agriculture organizations, including the National Milk Producers Federation (NMPF), sent a letter this week to the Trump administration urging it to refrain from placing restrictions on imports of steel and aluminum. The organizations said they are “extremely concerned” that such restrictions would boomerang against US food and agriculture exports.

In addition to NMPF and NPPC, the letter to US Commerce Secretary Wilbur Ross was signed by, among others, the American Farm Bureau Federation, National Council of Farmer Cooperatives, American Soybean Association, National Cattlemen’s Beef Association, National Corn Growers Association, US Grains Council, and National Turkey Federation.

The groups were specifically concerned about the consequences of import restrictions under Section 232 of the Trade Expansion Act of 1962. If the Section 232 investigations on steel and aluminum result in new trade barriers, “the aftermath could be disastrous for the global trading system and for US agriculture in particular.”

Many countries that export steel to the US are also large importers of US agriculture products.

“The potential for retaliation from these trading partners is very real,” the letter said. “Short of explicit retaliation, these countries may also stall efforts to resolve current trade issues if they believe they have been unfairly targeted over legitimately traded products.”

Under the 1994 General Agreement on Tariffs and Trade (GATT), Article XXI, national security can be a legitimate reason to restrict trade, but “this has been rarely cited for a very good reason: Article XXI is the Pandora’s Box of the GATT,” the groups noted in their letter to Ross.

“If it is opened for our import-sensitive industries, the results could be devastating,” the letter stated. “National security arguments are so rarely used because there is practically no way to refute them.

“No country can dictate another’s national security needs, so now every country with a sensitive industry would know that it could follow the example of the United States and find a national security reason to circumvent trade commitments, no matter how flimsy the reason might be,” the letter said.

US farmers rely on international commitments made by countries in the WTO and other trade agreements to keep markets open, the letter noted. The strength of that system is not guaranteed, and the US has been a “bulwark” in maintaining it, to the benefit of US agriculture and many other industries.