Washington Insider-- Tuesday

Pushing to Improve Foreign Access for Dairy

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

State Department Welcomes Taiwan Shift on Imports of US Beef, Pork

The recent announcement by Taiwan that they intend to set a maximum residue level for ractopamine in imports of U.S. pork and remove the BSE-linked limit on the age of cattle for U.S. beef continues to be welcomed by U.S. officials.

Morgan Ortagus, State Department spokesperson, said the U.S. welcomes Taiwan's statement on U.S. pork and beef trade, saying “We look forward to the timely implementation of these actions, which will provide greater access for U.S. farmers to one of East Asia's most vibrant markets, and for Taiwan consumers to high-quality U.S. agricultural products. President Tsai's vision and leadership in removing these long-standing barriers open the door to greater economic and trade cooperation between the United States and Taiwan.”

U.S. Trade Representative Robert Lighthizer has listed the Taiwan limits on U.S. pork and beef as a factor preventing the two sides from seeking closer trade ties.

USDA Sends Packers & Stockyards Update To OMB

USDA has sent forward its final rule on the Packers and Stockyards Act updates specifying which criteria USDA may consider relative to what constitutes undue or unreasonable preference or advantage and a violation of the Act.

The process started in January when the agency released its notice of proposed rulemaking (NPRM) with the comment period on that proposed rule ending March 13.

USDA had targeted publishing the final rule in the Federal Register in August, but that goal will not be met given that the rule was sent to the Office of Management and Budget (OMB) on August 28.


Washington Insider: Pushing to Improve Foreign Access for Dairy

Bloomberg is reporting this week that bipartisan lawmakers in Congress, with the new U.S.-Mexico-Canada Agreement just recently taking effect, are pressuring the administration to make sure America's dairy producers are “treated fairly.”

The U.S. dairy industry scored key wins under the USMCA, including expanded market access in Canada and Mexican commitments around cheese names. The deal, negotiated to replace the North American Free Trade Agreement, took effect July 1 and governs the three nations' $1.25 trillion economic relationship.

Lawmakers and dairy trade groups charge that Canada isn't properly implementing the deal's market access requirements and they're pressing U.S. officials to ensure the countries meet their dairy promises.

“We ask that you use USMCA's enforcement measures, as appropriate, to hold our trading partners accountable to their trade commitments,” 25 bipartisan senators said in a Tuesday letter to Agriculture Secretary Sonny Perdue and U.S. Trade Representative Robert Lighthizer. Senate Agriculture, Nutrition, and Forestry Committee ranking member Debbie Stabenow, D-Mich., was among the signatories.

About 100 House members, including Agriculture Chairman Collin Peterson, D-Minn., ranking member Mike Conaway, R-Texas, and Minority Leader Kevin McCarthy, R-Calif., signed onto a similar Aug. 13 letter.

The agreement's benefits are seen as “vital” for dairy farmers whose markets weakened sharply when restaurants and schools shuttered to slow the spread of the coronavirus. Some producers were forced to pour milk down the drain as commodity prices fell.

“Poor implementation of USMCA provisions on dairy could continue to harm the industry,” said Sen. Kirsten Gillibrand, D., N.Y., an Agriculture Committee member who signed the Tuesday letter.

Lawmakers pressed Canada to fulfill its commitments around dairy tariff-rate quotas, which set limits on the country's duty-free imports. The trade deal expanded market access for U.S. fluid milk, cheese, cream, and yogurt, among other products.

However, Canadian procedures for administering the new system seem to defy the trade deal's requirements, the senators wrote. They added that Canada shouldn't be allowed to hamper the U.S. dairy industry's capacity to fill the tariff-rate quotas at “advantageous price points.”

They also pointed to Canada's obligation to change the “class system” it uses as part of its milk supply management regime. As part of the deal, Canada agreed to eliminate two classes of milk that favored Canadian producers. The senators called for transparency in the new system.

Canada's administration of its tariff-rate quotas is in full compliance with its trade commitments, said Daniel Minden, spokesman for the nation's Minister of Small Business, Export Promotion and International Trade, in a statement Thursday. Like all aspects of the cross-border trade relationship, Canada takes its obligations very seriously, Minden added.

The U.S. lawmakers also implored that Mexico, which is the top market for U.S. cheese, put into regulatory practice the trade deal's protections on common cheese names, including burrata, cheddar, and pepper jack. The Mexican Embassy didn't immediately respond to a request for comment.

“These are unresolved concerns that affect everyday dairy farmers and workers across our industry,” said Tom Vilsack, president and CEO of the U.S. Dairy Export Council and former ag secretary said.

The industry previously pushed for the passage of the new deal, as trade with Mexico and Canada make up about 40% of total U.S. dairy exports, the International Dairy Foods Association reported. Producers now want to see the agreement's provisions put into action.

Once fully implemented, the deal could boost U.S. dairy industry output by almost $227 million, the U.S. International Trade Commission estimated.

“Timely and complete enforcement of USMCA's dairy-related provisions will allow America's dairy industry to harness the full potential of this modernized trade agreement,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “Efforts to maintain unjust trade practices or block market access will not be tolerated.”

So, we will see. Governments in the United States and Canada intervene heavily in the production and marketing of milk and dairy products and these programs have long been the subject of bitter controversies. In addition, the industry is continually stressed by strong productivity growth and shifting consumer demand, especially for fluid milk but also for many other products.

As a result, the positions of producers and governments working to comply with complex trade rules tend to vary widely and generate continuing disputes — fights that seem to be continuing as the USMCA is implemented, and which should be watched closely by producers as they emerge, Washington Insider believes.

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