Washington Insider -- Friday

By DTN's Washington Insider

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

President's Export Council Urges Work on Cuba Embargo Repeal

The Obama administration should work with Congress on a timeline for repeal of the Cuba trade embargo, the President's Export Council said this week in a letter to President Barack Obama.

U.S. exporters will not realize the full benefit of normalized relations with Cuba without lifting the embargo, the council said in the letter. "We therefore recommend that your Administration engage Congress to identify a timeline for legislative actions beginning this year that will culminate in a full repeal of the embargo and the elimination of travel restrictions as soon as possible," the letter stated. The export council approved the letter June 8 during a teleconference meeting.

The letter identified infrastructure as presenting "important opportunities for bilateral engagement." As Cuba designs and implements new infrastructure projects "American businesses offer leading technologies and solutions that Cuban officials should be aware of," the letter said.

The Cuban government must also "continue to address commercial barriers by updating its legal and regulatory framework," the Council noted, saying such modifications are needed for the proposed U.S. policy changes to "have the maximum impact."

Obama has repeatedly asked Congress to repeal the embargo after announcing in late 2014 that the two former adversaries would pursue normalized relations. The Republican leadership has not moved any of the pending legislation that would either revoke the embargo or end travel restrictions. Bills introduced by members of both parties have remained in committee with no hearings scheduled.

Private sector efforts were also urged by the Council. The administration's regulatory dialogues with Cuba should continue to solicit private sector input, the letter said.

Deputy Commerce Secretary Bruce Andrews said he wanted to ensure that Commerce is providing up to date information on the changes, which he said herald a new era of U.S. commercial engagement across the Caribbean and Latin America. Consideration should be given to envisioning Cuba as a regional logistics and supply chain hub as policy makers plan for the future, the letter said.

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EU Court Rules Against Antidumping Duty on US Ethanol

The European Union (EU) General Court has ruled EU's antidumping duty on U.S. ethanol is invalid. The 9.5% duty will remain in place pending appeal from European Commission in about two months.

"The antidumping duty should never have been assessed," Renewable Fuels Assn. President and CEO Bob Dinneen said. "We feel vindicated and thank the EU General Court for its commonsense ruling."

The court found that the duty of about $83 per metric ton was invalid because the commission applied one weighted average duty to all U.S. ethanol imports rather than separate duty rates for each of the major producers, as is common practice under EU law and WTO rules.

In March, nine U.S. farm-state lawmakers called on the Obama administration to use the Transatlantic Trade and Investment Partnership (TTIP) negotiations to push back against the duty, which they said has eliminated the US share of the European ethanol market.

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Washington Insider: The Fight Over Geographic Indicators

No one thought that negotiating a free trade area with the European Union (EU) would be easy because it has a relatively small stake in global markets and its internal protections are often supported by huge political blocs. An example is being pointed out this week in a Politico OpEd piece by Clay Hough, senior group vice president and general counsel of the International Dairy Foods Association (IDFA). Hough argues that the talks are extremely tough and that the EU has become greedy, a trend that can kill any chance of agreement.

The issue Hough is focusing on is an EU effort to expand rules that identify products by their geographic origins, so-called Geographical Indicators. The EU wants to prevent U.S. companies from labeling cheeses with what we call common names such as parmesan, feta and asiago but which the Europeans regulate as Geographic Indicators.

At this time, the U.S. has agreed to abide by GIs for some cheeses that do, in fact, come from very specific regions like Parmigiano Reggiano and Grana Padano. But cheese makers in the United States are still permitted to use other generic cheese names as they have been doing for decades.

Recent emails between U.S. and EU representatives show that European countries aren't willing to accept this arrangement, Hough argues. Last March, the EU released a list of more than 200 food products it believes should be covered by "GI protections," including some of the most popular U.S. cheeses—about 14% of U.S. cheese production valued at approximately $4.2 billion per year.

This reflects greed, Hough argues, since the EU already has an enormous competitive edge in global cheese markets. For example, it sells $972 million worth of cheese to the U.S. annually while buying only about $6 million worth in return.

The arguments over labels are complicated. U.S. trademark law already rightfully recognizes legitimate GIs that correspond to specific regions in Europe and attempts to ensure that American consumers are not misled about the origin of their products.

However, the EU wants more, Hough says, and is pushing to reclaim common cheese names that have been produced in the United States for decades and "are clearly generic." It would deny U.S. cheese producers the ability to use these not just in Europe but in the U.S. as well, and wants to force the U.S. government to enforce this scheme.

A key part of the problem is that the EU wants enforce its "label allocations" as a type of intellectual property regulation. With cheeses, for example, Parmigiano Reggiano must come from the Parma region of Italy. Hough says that the U.S. industry has no problem with "truthful labels" and that no one thinks a cheese produced in the U.S. can be called Parmigiano Reggiano--but the simple label Parmesan is different and the U.S. Patent and Trademark Office has found it to be generic, as it is in several other countries.

Furthermore, the EU is inconsistent in its application of GIs, Hough says. For example, there is no town or region in Greece called "feta," yet this type of cheese also enjoys a GI in the EU.

Hough also argues that this fight is important, and that an entire proposed trade agreement might be at risk since the U.S. dairy industry is "ready to fight the EU on this matter." He thinks such a battle might turn the tide against the deal since "opponents of free trade are eager to exploit the dispute to kill the entire pact." This would be a terrible outcome because the agreement could have huge benefits to all countries involved, but not at the expense of US cheese producers who are simply asking for a fair market, he argues.

The fight over geographical indicators is only one of the important issues at stake in these talks, but it serves to raise questions of whether the EU is serious about prospects of agreement at all. A main negotiating strategy since the beginning has been simply to declare a number of strong protections "off the table," including their use of the "Precautionary Principle" whenever politicians see reliance on science as inconvenient.

Still, the EU market is very large and its many consumers are relatively wealthy, so it seems appropriate to continue to talk. At the same time, it is clear that over the years, EU society has accepted so many very powerful protections that any future commitment to global trade and efficiency certainly needs to be evaluated very carefully by prospective trading partners, Washington Insider believes.

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(GH/CZ)

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