Implementation to be key as trade deals take effect


Issue Date: March 7, 2012
By Ching Lee

When it takes effect on March 15, the U.S.-Korea free trade agreement is expected to bring new export opportunities to California farmers and ranchers, but agricultural leaders say proper implementation and enforcement of current and future trade deals, as well as overcoming other trade barriers, will be critical.

Those comments were made during a forum last week on agricultural trade, hosted by the Madera County Farm Bureau, which brought together a U.S. trade specialist and a panel of experts representing California specialty crops and beef.

Brian Grunenfelder, deputy assistant U.S. trade representative for the Office of Agricultural Affairs, highlighted benefits that U.S. agriculture will reap upon full implementation of the trade agreement with South Korea, which is expected to increase U.S. farm exports to that market by more than $1.9 billion annually. He noted U.S. exports to Korea last year totaled nearly $7 billion.

When the agreement enters into force next week, almost two-thirds of agricultural products to Korea will become duty-free, including almonds, pistachios, cherries, wine, wheat and cotton. The agreement also includes a number of commitments related to nontariff measures, including obligations related to environmental standards, enhanced regulatory transparency and standard-setting.

"Under the Korea agreement, nearly all tariffs will be eliminated either immediately or phased out within 15 years," Grunenfelder said. "And we're going to be seeing about 16 tariff rates that will provide immediate new access for a number of key products—grains, dairy, oranges—that will be implemented as well on day one."

Joel Nelsen, president of California Citrus Mutual, said citrus growers will benefit from lower tariffs in the Korea deal, but pointed out that importing countries tend to create new phytosanitary barriers that restrict trade. For example, he noted that South Korea recently identified the navel orangeworm as a phytosanitary concern in citrus shipments, even though the pest, contrary to its name, does not exist in California citrus groves.

"These barriers come up every time a trade agreement is achieved, no matter how small or how major, as the Korean trade agreement is," Nelsen said.

He urged Grunenfelder and the Office of the U.S. Trade Representative to work more closely with agricultural exporters and the U.S. Department of Agriculture "to focus on making sure that the trade policies are implemented as intended."

"The words on paper are one thing; the actual movement of products is something entirely different," Nelsen said. "If we don't have consistent trade policy going forward to ensure that our product can get into the country of choice, then why are we continuing to allow (other countries') products into the United States?"

Also relating to nontariff trade barriers, Barry Bedwell, president of the California Grape and Tree Fruit League, said a country's quarantine pest list and how it is enforced can be inconsistent year to year depending on trade negotiations. He noted that Mexico has listed certain pests that he says scientific data show already exist in Mexico and shouldn't be on the list.

Bedwell also said growers are concerned about their ability to compete on a level playing field, particularly with respect to the use of methyl bromide, which is being phased out internationally but is still used to fumigate agricultural exports to prevent the spread of invasive pests. With pests such as the European grapevine moth and the light brown apple moth now in the state, he said methyl bromide is often the primary tool for exporters to assure receiving countries that those pests will not enter their borders.

"Our concern with methyl bromide is: Is it going to be available for quarantine use? We're worried as we look toward the future what the impact will be on our exports," he said.

But phytosanitary issues cut both ways and Bedwell said concerns about potential introduction of invasive pests to California will also be raised with China, which has become both an important export destination for California agricultural products and the state's competitor. He noted that China is now the world's No. 1 producer of table grapes and currently imports some California grapes. But down the road, he said, Chinese grapes could be entering the U.S. market.

"We need to be fair. We don't want to be hypocritical and talk about how we want this transparency and not extend it to the other side," he said. "But we need to protect our growers still and make sure that we don't get other invasive pests in."

Caroline Stringer, global technical and regulatory affairs associate for the Almond Board of California, said maximum pesticide residue limits in the European Union, Japan, South Korea and Taiwan are "particularly tricky" for California almond growers and that violations in one market can lead to problems in others.

She said in addition to negotiating free trade agreements, the U.S. government needs to enforce those agreements and phytosanitary measures. She noted the state is expected to produce nearly 2 billion pounds of almonds this year and will be exporting to more than 90 countries, so "consistent access to those export markets is vital for the continued success" of California's almond sector.

Grunenfelder said the USTR recognizes "there's a lot more work to do" in the area of sanitary-phytosanitary issues and pointed to ongoing trade negotiations on the Trans-Pacific Partnership agreement as an opportunity to address some of those concerns with potential trading partners. The deal involves the United States and eight other countries—Australia, New Zealand, Singapore, Brunei Darussalam, Malaysia, Vietnam, Peru and Chile. However, in recent months Canada, Japan and Mexico have expressed interest in joining the TPP.

"Too often we encounter nontariff barriers from other countries that are not made by science or sound-driven assessment," Grunenfelder said, noting that U.S. trade negotiators are making progress on the sanitary-phytosanitary section of the TPP agreement that will include "new provisions aimed at strengthening transparency, science-based risk assessments and laboratory practices."

Kevin Kester, president of the California Cattlemen's Association, urged the USTR not to appeal a ruling made last year by the World Trade Organization against the United States' country-of-origin labeling law that requires U.S meat and fresh produce to carry labels to show which country the products come from.

Canada and Mexico, which Kester noted each imported about $1 billion worth of U.S. beef in 2011, challenged the U.S. COOL law in the WTO, saying it is an unfair trade barrier that reduces their meat exports and violates global trade rules.

"Our beef industry is highly integrated with our two biggest trading partners, Canada and Mexico, and we don't want to jeopardize those trade relationships if we ever get into a retaliatory situation like we experienced with the trucking haul and Mexico," Kester said, referring to the two-year dispute between the United States and Mexico over U.S. cancellation of a cross-border trucking program that allowed Mexican trucks to travel into the United States.

That dispute finally ended last fall but cost the U.S. beef sector some $2 billion in lost trade due to Mexico's retaliatory tariffs that had been imposed on a number of California farm products, Kester noted.

The California Farm Bureau Federation and American Farm Bureau Federation both support country-of-origin labeling. Farm Bureau representatives say they believe the trade concerns with country-of-origin labeling can be addressed with slight modifications to the rule, while maintaining the goals of the rule.

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.