Trade Policy for a                              Dynamic U.S. Pork                                  Industry               ...
U.S. Pork Exports              2,250,000                            Canada FTA               China              2,100,000 ...
U.S. Pork Exports                                                            U.S. Pork Exports                            ...
U.S. Pork and Pork Variety Meat Exports                                      Volume                                     Va...
U.S. Pork and Pork Variety Meat Exports                                     Volume                                  Value ...
Free Trade Agreements        (FTAs)
Free Trade Agreements• Focus now shifts to implementation of FTAs• Korea FTA entered into force March 15, 2012   – Opposit...
Free Trade Agreements Why are these three FTAs important to          U.S. pork producers?• Increase U.S. pork exports by m...
Trans-Pacific Partnership         (TPP)
TPP = $$
TPP• NPPC 1st in private sector to support• Address tariff, but real payout for U.S.  pork is resolving sanitary (SPS) iss...
TPP• Vietnam market potential = $600 million• Malaysia market potential = $100 million• Mexico and Canada were invited to ...
Japan & TPP
U.S.-European Union FTA
U.S.-EU FTA• U.S.-EU Working Group considering options to increase  trade through a reduction of barriers – a possible FTA...
Codex Alimentarius
Codex Alimentarius• International standard setting body for food safety and  harmonization of trade standards• Ractopamine...
South Africa
South Africa• South Africa notified the WTO that it is imposing  additional requirements on pork from countries with  PRRS...
Mandatory Country of Origin   Labeling (MCOOL)
MCOOL• U.S. Mandatory Country-Of-Origin Labeling law  found in violation of the United States’ WTO  trade obligations• U.S...
MCOOL       Nov. 18, 2011           Mar. 23, 2012        June 29, 2012   WTO: MCOOL Violates        U.S.: Appealed        ...
Russia’s WTO Accession
Meat Exports to Russia                     U.S. Meat Exports to Russia, 2005-2011 (Quantity)              1,000,000       ...
Russia’s WTO AccessionRussia Political Situation• Presidential election was in March 2012• Vladimir Putin returned as pres...
Russia’s WTO Accession Working Party Report for Pork • Significant achievement with TRQs       •   Global 400,000 MT with ...
Russia—SPS Barriers• Freezing requirements for trichinae, do not allow  fresh/chilled• Zero tolerance for pathogens• Zero ...
RussiaWhy is Russia’s WTO accession important to U.S. pork                   producers? • Without SPS commitments from Rus...
China
China• Domestic pork consumption 50 million (MT)• Estimated that the market for U.S. pork in China could  be well over 1,0...
Comparison of Production    China     $113               Feed cost in China: $61                    USA                   ...
China                 Net Chinese Pork Imports as a Percent of                       Chinese Pork Consumption          1.5...
Why important to U.S. pork producers?      Impact of Additional Chinese Imports of U.S. Pork on the US Economy            ...
Taiwan
Taiwan• Started banning pork raised with ractopamine in 2007, beef in 2011.• Notified to WTO in 2007 adoption of Codex dra...
Thailand
Thailand• Ban on ractopamine despite their FDA risk assessment  that it is safe.• Dept. of Livestock and Development rarel...
Japan’s MHLW Positive   List of Vet Drugs
Japan’s MHLW Request• Japan’s Ministry of Health, Labor and Welfare (MHLW) is  asking for scientific data for on-going wor...
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Laurie Hueneke - Trade Policy for a Dynamic Pork Industry

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Trade Policy for a Dynamic Pork Industry - Laurie Hueneke, Director, International Trade Policy, Sanitary and Technical Affairs, National Pork Producers Council, from the 2012 Boehringer Ingelheim Swine Health Seminar, August 9-11, 2012, Wrightsville Beach, NC, USA.

More presentations at http://www.swinecast.com/2012-boehringer-ingelheim-carolina-swine-health-seminar

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Laurie Hueneke - Trade Policy for a Dynamic Pork Industry

  1. 1. Trade Policy for a Dynamic U.S. Pork Industry Laurie HuenekeDirector of International Trade Policy, Sanitary and Technical Affairs National Pork Producers Council BIVI Summer Health Seminar ● Wrightsville Beach NC August 10, 2012
  2. 2. U.S. Pork Exports 2,250,000 Canada FTA China 2,100,000 WTO Accession 1,950,000 Russia Pork 1,800,000 NAFTA TRQs (Mexico) U.S. -Taiwan 1,650,000 Pork Deal U.S. - Korea 1,500,000Metric Tons 1,350,000 1,200,000 WTO Uruguay Round U.S. - Colombia (Japan & South Korea) 1,050,000 900,000 DR-CAFTA 750,000 600,000 450,000 Australia 300,000 FTA 150,000 0 Year
  3. 3. U.S. Pork Exports U.S. Pork Exports Percentage of Production 25%2011 Estimated 20%Percent Exported:23% (Muscle Meat Only) Percentage 15%27% (Plus Variety Meat)Export Value per Hog: about $55 10% % ExportedAbout 25 percent higher than 2010 5% 0% Year
  4. 4. U.S. Pork and Pork Variety Meat Exports Volume Value (Metric Tons) (US $1,000) January-December January-DecemberCountry/Region 2010 2011 % Change 2010 2011 % ChangeJapan 434,799 493,315 13% 1,645,254 1,962,674 19%Mexico 545,914 537,531 -2% 986,987 1,041,998 6%Canada 183,027 206,278 13% 618,325 737,594 19%China/Hong Kong 294,171 483,323 64% 462,665 909,954 97%Russia 82,902 69,382 -16% 204,345 217,076 6%South Korea 86,970 188,307 117% 189,801 497,089 162%Australia 52,449 64,351 23% 148,422 204,637 38%ASEAN 66,618 53,471 -20% 134,457 129,175 -4%Central and South America 59,696 72,172 21% 142,206 187,113 32%Caribbean 42,806 34,147 -20% 92,586 85,652 -7%European Union 14,993 8,228 -45% 46,695 32,042 -31%Taiwan 31,012 26,981 -13% 56,925 53,832 -5%Other 21,642 17,969 -17% 52,261 49,828 -5%World Total 1,916,999 2,255,456 18% 4,780,929 6,108,664 28%
  5. 5. U.S. Pork and Pork Variety Meat Exports Volume Value (Metric Tons) (US $1,000) January-May January-MayCountry/Region 2011 2012 % Change 2011 2012 % ChangeJapan 209,939.9 199,062.1 -5% 790,592 869,147 10%Mexico 220,129.0 254,059.3 15% 408,811 463,551 13%Canada 80,335.3 91,423.8 14% 275,408 328,719 19%China/Hong Kong 144,373.1 192,924.9 34% 212,476 389,197 83%Russia 26,883.9 37,074.40 38% 79,750 109,547 37%South Korea 113,565.4 77,789.6 -32% 275,397 222,804 -19%Australia 28,819.2 29,751.0 3% 92,159 92,209 0%ASEAN 22,856.6 17,995.9 -21% 50,804 47,250 -7%Central and South America 29,572.1 33,398.1 13% 73,419 85,427 16%Caribbean 14,946.1 13,976.8 -6% 35,068 34,862 -1%European Union 3,760.7 3,369.1 -10% 14,234 9,828 -31%Taiwan 14,762.7 8,108.0 -45% 25,722 18,195 -29%Other 6,922.5 9,549.8 38% 20,488 26,348 29%World Total 916,866.5 968,482.8 6% 2,354,328 2,697,084 15%
  6. 6. Free Trade Agreements (FTAs)
  7. 7. Free Trade Agreements• Focus now shifts to implementation of FTAs• Korea FTA entered into force March 15, 2012 – Opposition party did not take control in April – Opposition wanted certain provisions renegotiated: • i.e. auto provisions and tariff schedules for pork• Colombia FTA entered into force May 15, 2012• Panama FTA expected to enter into force later in 2012
  8. 8. Free Trade Agreements Why are these three FTAs important to U.S. pork producers?• Increase U.S. pork exports by more than $770 million annually• Add more than $11 to U.S. live hog prices• Generate more than 10,200 pork industry jobs• Removal of trichinae barrier sets a precedent for addressing it in other markets
  9. 9. Trans-Pacific Partnership (TPP)
  10. 10. TPP = $$
  11. 11. TPP• NPPC 1st in private sector to support• Address tariff, but real payout for U.S. pork is resolving sanitary (SPS) issues – Trichinae risk mitigation requirements – Ban on products due to PRRS or PMWS – Ban on the use of pathogen reduction treatments (PRTs) – Limited plant approvals for export – Residue level differences for vet drugs
  12. 12. TPP• Vietnam market potential = $600 million• Malaysia market potential = $100 million• Mexico and Canada were invited to join the TPP negotiations in June 2012• Japan expressed interest in joining negotiations in Nov. 2011 – U.S. and Japan continuing consultations • U.S. officials have highlighted outstanding issues to Japan’s entry – NPPC supports Japan’s entry as soon as possible• Just finished the 13th Round of negotiations in San Diego, July 2012• Next Round in September, Leesburg, VA
  13. 13. Japan & TPP
  14. 14. U.S.-European Union FTA
  15. 15. U.S.-EU FTA• U.S.-EU Working Group considering options to increase trade through a reduction of barriers – a possible FTA• EU has PTAs, not FTAs – Must include agriculture• NPPC led coalition letter with 49 ag orgs and businesses• NPPC filed comments on EU pork barriers – TRQ smaller than Uruguay Round minimum access – Ban on Ractopamine – Trichinae mitigation – Prohibition on pathogen reduction treatment – Plant approvals• U.S. and EU leaders have urged the working group to reach a recommendation on negotiations later this year
  16. 16. Codex Alimentarius
  17. 17. Codex Alimentarius• International standard setting body for food safety and harmonization of trade standards• Ractopamine hydrochloride went through the process, found to be safe THREE times by international independent scientists, approved for use in 26 countries, and held at final step for 4 years• Outreach and coordination within US and outside of US• Final international standards adopted in July 2012 – Beef and pork muscle, fat, liver, kidney• Countries not obligated to adopt standards, only a guideline• Increasing importance of Codex due to trading partners adopting for domestic and international trade
  18. 18. South Africa
  19. 19. South Africa• South Africa notified the WTO that it is imposing additional requirements on pork from countries with PRRS, including the U.S.• PRRS is not a food safety issue and does not pose a risk to human health• NPPC will be advocating for South Africa to reconsider their proposed requirements and not move forward with implementation of this unscientific barrier to trade.• Also impose a stringent time/temp requirement• NPPC working with USG to renegotiate pork export certificate• If lift all barriers, market increases $40 million
  20. 20. Mandatory Country of Origin Labeling (MCOOL)
  21. 21. MCOOL• U.S. Mandatory Country-Of-Origin Labeling law found in violation of the United States’ WTO trade obligations• U.S. appealed WTO Panel decision in late March• An Appellate Body decision due late June• Risks retaliation from Canada and Mexico if U.S. does not comply
  22. 22. MCOOL Nov. 18, 2011 Mar. 23, 2012 June 29, 2012 WTO: MCOOL Violates U.S.: Appealed WTO: Upholds U.S. WTO Obligations WTO Ruling Nov. 2011 Ruling July 23, 2012 July - October 2013 May 2014 Implementation Period Implementation Compliance Panel Begins Period Ends Concludes (Avg. 12-15 months)November 2014 - If the United States has failed to comply, theretaliation process can commenceMay or June 2015 - retaliation award should be issued
  23. 23. Russia’s WTO Accession
  24. 24. Meat Exports to Russia U.S. Meat Exports to Russia, 2005-2011 (Quantity) 1,000,000 900,000 800,000 700,000Metric Tons 600,000 500,000 Pork 400,000 Beef 300,000 Poultry 200,000 100,000 0 Year
  25. 25. Russia’s WTO AccessionRussia Political Situation• Presidential election was in March 2012• Vladimir Putin returned as president• Putin faces a new political and economic environmentTimeline• November 10, 2011, Russian WTO Accession Working Party concluded• Approved at WTO Ministerial Conference, December 15-17• Will become a member of the WTO on August 22• Congress must pass Russia Permanent Normal Trade Relations (PNTR) in order to get all the benefits of Russia’s WTO accession.
  26. 26. Russia’s WTO Accession Working Party Report for Pork • Significant achievement with TRQs • Global 400,000 MT with no country specific TRQ, plus 30,000 MT trimmings. • In-quota tariff rate of 0%. • Out-of-quota rate of 65% (down from 75%). • TRQ will be replaced by a flat top rate of 25% as of January 1, 2020. TRQ Level (MT) Global (Country Specific) In-Quota Rate Out-Quota RatePork 400,000 Global 0% 65%Pork TRQ will be replaced by a flat tariff of 25% on of January 1, 2020.Beef 560,000 Global (U.S. 60,000 MT) 15% 55%Poultry 350,000 Global (EU 90,000 MT) 25% 80%No set phase out for Beef & Poultry TRQs • However, we need more on SPS!!
  27. 27. Russia—SPS Barriers• Freezing requirements for trichinae, do not allow fresh/chilled• Zero tolerance for pathogens• Zero tolerance for tetracyclines• Do not recognize systems-based inspection & certification/equivalence• Threatening ban on use of ractopamine
  28. 28. RussiaWhy is Russia’s WTO accession important to U.S. pork producers? • Without SPS commitments from Russia the beneficial TRQs mean very little. NPPC trying to get a bilateral SPS deal. • In 2008, prior to Russia’s actions, U.S. pork reached a record level of over 200,000 MT. Since then exports have fallen by 60%. • Dr. Hayes of Iowa State forecasts U.S. pork exports to be at least $400 million per year the next few years – IF Russia stops using illegitimate SPS measures to limit U.S. pork.
  29. 29. China
  30. 30. China• Domestic pork consumption 50 million (MT)• Estimated that the market for U.S. pork in China could be well over 1,000,000 MT.• U.S. pork imports are constrained by: • Ban on the use of ractopamine in imported pork • Discriminatory value added tax (VAT) • Large subsidies to domestic producers • Other restrictive practices• U.S. pork imports through the roof in 2011. • China: $713 million • China/HK: $909 million
  31. 31. Comparison of Production China $113 Feed cost in China: $61 USA $63Dollars per Hundredweight
  32. 32. China Net Chinese Pork Imports as a Percent of Chinese Pork Consumption 1.5 1 0.5 0Percent -0.5 -1 -1.5 -2 -2.5 Year
  33. 33. Why important to U.S. pork producers? Impact of Additional Chinese Imports of U.S. Pork on the US Economy Additional Imports as a Percent of Chinese Consumption One Quarter One Half Economic Indicators One Percent Five Percent Percent Percent US Pork Export Value 267,173 534,346 1,068,693 5,343,463 (Thousands Dollars) US Pork Export Volume 125.13 250.25 500.50 2,502.50(Thousand Metric Tons - CWE) Total U.S. Jobs Created 6,849 13,698 27,396 136,981 Direct U.S. Pork Industry 3,393 6,786 13,572 67,862 Jobs Created Share of U.S. Production 1.24 2.49 4.98 24.90 (Percent)Impact on U.S. Live Hog Prices 3.72 7.44 14.88 74.39 ($/Head)
  34. 34. Taiwan
  35. 35. Taiwan• Started banning pork raised with ractopamine in 2007, beef in 2011.• Notified to WTO in 2007 adoption of Codex draft MRL.• Some in Taiwan have indicated that it is possible to set safe levels for ractopamine• Taiwanese pork producers are largest segment of Taiwan agriculture.• Legislative Yuan passed legislation on beef MRLs on July 25, 2012• Maintaining all bans on the drug in pork• Department of Health reached agreement for an MRL of 10 ppb for beef, the standard adopted for muscle by Codex in July• Taiwan is concerned TIFA is stalled while rest of the region is negotiating trade deals without them• Must address both beef and pork ractopamine MRLs for TIFA to restart
  36. 36. Thailand
  37. 37. Thailand• Ban on ractopamine despite their FDA risk assessment that it is safe.• Dept. of Livestock and Development rarely grants import licenses for U.S. pork with no justification.• Import duties range from 30% to 40%.• Import permit fee for pork – 5 Baht per kg or US$162 per MT• Removing these barriers will result in annual U.S. pork exports of $30-35 million.
  38. 38. Japan’s MHLW Positive List of Vet Drugs
  39. 39. Japan’s MHLW Request• Japan’s Ministry of Health, Labor and Welfare (MHLW) is asking for scientific data for on-going work to develop a negative list• Over 300 compounds on list and 6 compounds on list approved and used in U.S. pork production• Working with FAS, USTR, AHI & individual companies to submit data to ensure compounds not banned by Japan 1) Altrenogest – Merck 4) Neomycin – Pfizer 2) Bacitracin – Pfizer 5) Sulfachloropyridazine – BI 3) Carbadox – Phibro 6) Virginiamycin – Phibro
  40. 40. Thank you
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