Trade Disputes: Are Your Products Impacted?

Every year U.S. agribusinesses and manufacturers work to produce high quality goods for global export markets. But each year Sanitary and Phytosanitary (SPS) trade measures continue playing an increasingly critical role in shaping the flow of U.S. agricultural global trade. SPS trade barriers are erected from measures that foreign governments apply on the basis that the measures are necessary to protect human, animal, or plant life or health from risks arising from the entry or spread of plant- or animal-borne pests or diseases, or from additives, contaminants, toxins, or disease-causing organisms in foods, beverages, or feedstuffs.

US Supports Science-based Regulatory Frameworks, Not Barriers to Trade

The U.S. supports the right of other governments to erect science-based regulatory frameworks to protect their people, animals, and plants from health risks. However, the U.S. also acknowledges that at times, some governments impose SPS measures that are really disguises for protectionist barriers to trade and are not science-based. These unwarranted SPS trade barriers prevent U.S. producers from shipping hundreds of millions of dollars worth of goods each year and it is a high priority of the U.S. Government to eliminate them.

How Prevalent is the Problem?

The U.S. is a member of the World Trade Organization (WTO). The WTO officially commenced on January 1, 1995 under the Marrakesh Agreement signed April 15, 1994 by 124 nations including the U.S.  The Marrakesh Agreement replaced the General Agreement on Tariffs and Trade (GATT, 1948). The WTO is the only global international organization that deals with the rules of trade between nations. Currently there are 164 member countries.

The WTO maintains a SPS Committee. The SPS Committee monitors member country’s food safety and animal and plant health standards and how those standards may impact the SPS Agreement.  They also mediate discussions between countries when trade issues arise from the application of standards.  Since the inception of the WTO, the SPS Committee has been notified of a total 15,646 “regular” SPS measures (does not include emergency or addenda SPS measures) and 439 Specific Trade Concerns (STCs).  That’s an average of 680 notifications per year.

The leading recipients of U.S. Government comments included China, Brazil, European Union, Republic of Korea, and Chinese Taipei.  Typically, about one-half of comments are measures regarding processed products; one-third of the comments address requirements for live animals and fish and almost one-quarter of comments are for measures that introduced new standards or entry requirements for plants, bulk commodities (including those made with biotechnology) and horticultural products.

Many countries require food imports to be accompanied by a written certification from the producer and exporting country setting out a variety of SPS-related assurances. These assurances may include, for example, declarations that the products have been produced under sanitary conditions and in disease-free areas. In recent years, however, many trading partners have begun requiring export certificates to include cumbersome and often unnecessary “attestations” that, for example, may subject imports to unwarranted or overly burdensome testing requirements. This new type of export certification has created a significant and growing impediment to trade.

Negotiations Have Proven Somewhat Successful

Robert Lighthizer, U.S. Trade Representative

As an example of past trade concerns raised and successfully negotiated, the Office of the U.S. Trade Representative (USTR) worked to remove specific SPS barriers in Japan and Korea for U.S. cherries and citrus, as well as barriers in South Africa and Sri Lanka for apples and seed potatoes. They also worked with Kuwait and Taiwan to lift unwarranted restrictions on U.S. exports of poultry and poultry products, and negotiated for full market access for U.S. beef to the United Arab Emirates.  More recently, after a 14-year ban on U.S. meat imports the Trump Administration successfully negotiated with China to allow U.S. meat back into its supermarket coolers.

The U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) has also worked in conjunction with the USTR and other federal, international and industry partners to arrange for the release of shipments of American products that have been detained because of SPS measures. Notably, the Animal and Plant Health Inspection Service (APHIS) continued efforts to eliminate trade barriers and ensure that trade decisions are based on science.  In FY 2014, USDA resolved more than 171 trade-related issues involving U.S. agricultural exports valued at $2.5 billion.

While there have been some successes there remain many more SPS issues to resolve.  Click here to review the Office of the U.S. Trade Representatives’ 2018 National Trade Estimate Report on Foreign Trade Barriers.

California Plays Big Role in Facilitating Movement of Ag Products Through Phytosanitary Certificates

In 2016, there were 734,923 shipments of agricultural commodities certified under the APHIS’ Phytosanitary Certification Inspection Tracking (PCIT) system, an interactive web-based system that tracks the inspection of agricultural products and certifies compliance with plant health standards of importing countries. Of this total 676,815 were issued for international trade and 58,108 were state phytos facilitating movement from one state to another.  For international movement, USDA issued 175,827; state cooperators around the nation issued 249,104; and 251,884 were issued in California.

These phytosanitary certifications ensure the shipments they represent meet quarantine and pest cleanliness requirements of the destination countries, allowing the movement of U.S. agricultural products in international markets. PCs are issued by a federal inspector or “certified cooperator”, based on inspection of the entire lot or representative samples drawn by a Federal or “cooperating” (State or County) inspector. In California, more than 90% of the PCs are issued efficiently and effectively by local County Agricultural Commissioners.

In the Future More Investments Will be Needed

USDA-APHIS has taken critical steps to streamline the U.S. phytosanitary certification issuance process and create needed efficiencies. But in the coming years it is quite evident that additional financial and personnel resources will be required to address the escalating number of phytosanitary issues. To ensure unfettered trade of agricultural products the U.S. must continue to invest in these worthwhile programs.

Given pending budget sequestration Congress would be penny wise and pound foolish to consider budget cuts to these vital trade facilitating programs. Continuous and reliable federal funds will be needed for operational support and the regulatory infrastructure necessary to facilitate trade of regulated agricultural commodities for both domestic and international markets.

Strategy, Comply & Monitor

Cansler Consulting can assist in developing compliance strategies, monitoring harmonization standards and potential trade restrictions, navigate trade regulations,  and foresee trends in import/export regulations. With years of experience, Cansler can help you stay ahead of the curve in getting your products to market in a timely fashion.

Cansler Consulting is a certified lobbying practice that is experienced in the multi-faceted and inter-related industries of Agriculture, Food and Drug Safety, Rural Healthcare, Transportation & Infrastructure, International Trade and Energy. Through our congressional and regulatory relationships established for over two decades we can help you influence the policy makers on Capitol Hill and navigate the federal budgeting process. You can contact us at [email protected] or at (202) 220-3150.

Tim Cansler