Washington Insider - Thursday
Progress on Japan Ag Trade Talks
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
Progress on Agricultural Trade Talks with Japan
U.S. and Japanese trade officials this week continued discussions aimed at contentious issues in the Trans Pacific Partnership (TPP).
According to a statement from the Office of the U.S. Trade Representative, Acting Deputy USTR Wendy Cutler and Chief Agricultural Negotiator Darci Vetter met over two days with Japanese Ambassador Hiroshi Oe and Ministry of Agriculture Director General Makoto Osawa regarding TPP agriculture market access issues.
"They continued to make some progress in narrowing the gaps on treatment of a range of agricultural products," the statement said. "Dates for the next meetings will be set in the near future, and technical experts continue to meet this week."
As has been the case for months, the U.S.-Japan talks are focused on two main issues: safeguards and other mechanisms for handling Japan's "sensitive" agriculture products: rice, beef, pork, dairy, wheat and sugar; and Japan's call for the United States to open further its market to Japanese automotive products.
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EU, Canada Negotiators Wrap Up Free Trade Deal
European Union and Canadian negotiators have concluded discussions on their Comprehensive Economic and Trade Agreement (CETA), meaning that the bilateral deal is one step closer to implementation. Before that happens the parties next need to go through a lengthy and complex ratification process.
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Once CETA is formally signed, the agreement must be ratified by parliaments on both sides. For the EU, that means the European Parliament and the national parliaments of all 28 member states. For Canada, CETA will have to be ratified by the country's ten provinces and three territories before going to the national parliament in Ottawa for approval. The deal also will undergo a legal review and be translated into all official EU languages before ratification. Once signed, it then will go into force, a step that is not expected for at least a year.
The wait for CETA's implementation appears to be worth it. Once in force, the agreement will rapidly eliminate duties on agricultural and food products, most from day one. By the end of transitional periods, which vary from sector to sector, Canada and the EU will liberalize 92.8 percent and 93.5 percent of tariff lines in agriculture, respectively.
The United States and the EU are in discussions on a similar agreement, the Transatlantic Trade and Investment Partnership (TTIP), but these negotiations are not nearly as advanced as the Canada-EU agreement.
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Washington Insider: Russian Food Import Ban
Russia appears to be reacting about as expected as the United States tightens increasingly broad sanctions intended to punish the Russian administration for its un-neighborly behavior in Crimea and Ukraine.
Yesterday Russian officials announced a retaliatory ban that covers all imports of meat, fish, milk and milk products and fruit and vegetables from the United States, the European Union, Australia, Canada and Norway. Reports are the ban will last for a year.
Before the announcement, Russia had already claimed that it is boosting inspections of imported U.S. beef and chicken primarily in response to health concerns and "findings" of repeated safety violations in foreign food products.
In addition, for the weak-kneed at home, the Russian Federal Service for Veterinary and Phytosanitary Surveillance agency (Rosselkhoznador) says Russian farmers are prepared to boost domestic production to make up any difference. Thus, "cutting off supplies of imported foods is not a matter for concern," the agency says.
"Of course we must restore full volumes of our own agricultural production. Then we will not be dependent on anyone. We won't be subject to the blackmail of other countries' sanctions," Aleksei Alekseenko, assistant to the director of Rosselkhoznador said last week. "We won't be subject to the fluctuations of external markets. Food markets are highly volatile, prices jump, crises happen.… We must restore our own [production]. We have the conditions, [and] we have assets of which we are using only 10 percent," the agency claimed. It also noted that they "look forward" to the opportunity to rely more on domestic production.
Russia is the second largest importer of beef and veal products in the world, according to USDA. Rosselkhoznador had previously announced stepped up surveillance and a risk analysis of those products from the U.S. after the discovery of the antibiotic tetracycline in veal from Marcho Farms.
Rosselkhoznador also claims it has found various microorganisms in chicken from U.S. producers Sanderson Farms and Tyson Foods in violation of Russia's sanitary rules. It recently announced that laboratory tests found tetracycline in the products of several U.S. poultry producers.
Other recent Russian actions affecting imported U.S. food include an investigation of U.S. poultry over alleged safety concern. Government agencies say they have rejected 22 tons of pet food from the U.S. producer C.J. Foods due to safety concerns, along with 27 tons of U.S. poultry. They report seizure of more than 20 tons of frozen shrimp from the United States, and claim to have "discovered, seized and destroyed 60 tons of diseased U.S. corn."
In a somewhat strange note, the agency said it found labeling violations and the presence of phthalates in Kentucky Straight Bourbon from the Barton 1792 Distillery, so had blocked imports of that product.
While Russian food producers likely are happy with the import shutdowns, it will be important to see how Russian consumers support administration policies if they begin to affect the price of staples.
In general, the situation is very bad news for the global economy as the nearly two decades of effort to extend the disciplines of the World Trade Organization to Russia are threatened by the expansionist ambitions of the current regime. Regardless of how the current confrontation turns out, the future Russia likely will be more protectionist than the current one is — and, markets now being shuttered that were built over many years are unlikely to be rebuilt quickly.
Clearly, the current Russian policies are a global disaster with far-reaching implications for U.S. agricultural producers and the U.S. economy as well as that of the West. Developments there should be watched very carefully as they unfold, Washington Insider believes.
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