For the U.S. dairy products industry to pour its products into the British market, the U.K. will need to shed agricultural tariffs and non-tariffs currently shared with the EU.
Parmesan cheese is manufactured and consumed by dairy industries worldwide.
But to the European Union’s regulators, this cheese, technically known as Parmigiano Reggiano, is only produced in the Italian provinces of Parma, Reggio Emilia, Modena, Bologna and Mantua, and no other region of the continent has the right to produce the same cheese and call it parmesan.
Cheeses are among a long list of regional products that the EU has made a concerted effort to protect in recent years from overseas imports through so-called geographical indicators (GIs).
U.S. dairy producers want the United Kingdom to shed GI trade constraints once the country departs the EU, which is expected on March 29.
At an Office of the U.S. Trade Representative public hearing seeking insights into what U.S. industries want from a free trade deal with the U.K. on Tuesday, Dave Carlin, senior vice president of legislative affairs and economic policy for the International Dairy Foods Association (IDFA), urged “the U.S. government to oppose any effort by the U.K. to adopt similar GI regulations that ban our food producers from using cheese names that have long been generic internationally and in the U.S. market and run counter to international trade commitments.”
U.S. dairy producers foresee the U.K. becoming a significant export market once it splits from the EU. According to IDFA, the U.K. in 2017 imported $3 billion in dairy products from the EU and only $8.8 million from the U.S.
Through its EU membership, U.S. dairy product exports to the U.K. have faced high tariffs, including $215.23 per 100 kilograms for cheese, $213.72 per 100 kilograms for butter and $142.94 per 100 kilograms for skim milk powder.
Shawna Morris, vice president of trade policy for the National Milk Producers Federation and U.S. Dairy Export Council, said a bilateral trade agreement should also prove beneficial to the U.K. dairy industry, allowing it to produce specialized cheeses and other dairy products to export to the U.S. “There are broad opportunities in both markets if the non-tariff and tariff barriers are shed,” she said.
U.S. dairy producers are concerned, however, that the U.K. might retain those tariff and non-tariff barriers imposed by the EU on agricultural goods to maintain its strong trade ties to the European mainland markets.
“Until the outcome of Brexit is settled and the customs arrangement between the U.K. and the EU is finalized, it is difficult to quantify the potential gain in market share for the U.S.,” Carlin said. “Furthermore, it is critical that an independent United Kingdom not adopt any of the EU regulations that curtail U.S. dairy exports to the region. Otherwise, any benefit or gains made in market access will not be realized.”
“The [Trump] administration’s aim in negotiations with the U.K. is to address both tariff and non-tariff barriers and to achieve free, fair and reciprocal trade,” USTR said in advance of the Tuesday meeting with various trade association representatives.
Per procedures required by Trade Promotion Authority legislation, USTR on Oct. 16 formally notified Congress of the Trump administration’s intent to enter trade agreement negotiations with the U.K.
Specifically, USTR is asking for comments on general and product-specific negotiating objectives for the proposed agreement, barriers to trade in goods and services, economic costs and benefits to U.S. producers and consumers of removal or reduction of tariffs and non-tariff barriers on goods traded with the U.K., treatment of specific goods — described by Harmonized Tariff Schedule (HTS) numbers — under the proposed agreement, including industry’s experience with “particular measures” that should be addressed in talks and ways to address export priorities and import sensitivities in the agreement’s context.
The agency also is seeking comments on customs and trade facilitation issues, sanitary/phytosanitary measures and technical barriers to trade, as well as “other measures or practices” that undermine fair market opportunities for U.S. businesses, workers, farmers and ranchers that should be addressed in the negotiations, USTR said.
USTR also notified Congress on Oct. 16 of the administration’s intentions to start separate bilateral trade agreement negotiations with the European Union and Japan.
For U.S. dairy producers, it’s becoming dire that the U.S. not be left out of free trade agreement opportunities with the EU and Japan.
On Wednesday, the U.S. Dairy Export Council released the results of a study that suggested that new trade agreements reached between Japan and other countries will result in lost U.S. dairy export sales of $5.4 billion over 21 years.
Dairy producing countries, such as Australia and New Zealand, already have the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in place with Japan, and on Feb. 1, the EU’s trade agreement with Japan takes effect.
“These agreements will give our competition a significant economic advantage that will enable them to increase their market share in Japan, costing the U.S. dairy industry billions of dollars in lost sales,” said Tom Vilsack, the council’s president and CEO, in a statement.
The study said without a U.S.-Japan trade agreement, foreign competitors will carve out $1.3 billion in dairy sales to Japan over the next decade. This amount will increase to $5.4 billion once the CPTPP and Japan-EU agreements are fully implemented, the council said.
Dairy producers want cheese in U.S.-U.K. trade deal
