International Trade Policy & SPS
International Trade Policy & SPS Laurie A. Hueneke World Pork Expo Des Moines, IA June 7, 2012
U.S. Pork Exports 2,250,000
2,100,000
Canada FTA
China WTO Accession
1,950,000 1,800,000
Metric Tons
1,650,000
NAFTA (Mexico)
1,500,000
Russia Pork TRQs U.S. -Taiwan Pork Deal
U.S. - Korea
1,350,000
1,200,000 1,050,000
WTO Uruguay Round (Japan & South Korea)
U.S. - Colombia
900,000
DR-CAFTA
750,000 600,000 450,000
Australia FTA
300,000 150,000
0
Year
Free Trade Agreements (FTAs)
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
Trans-Pacific Partnership (TPP)
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 • Freezing, testing carcass, processing
– PRRSv and PCv • Removal of bone, cooking, freezing
– Residue level differences for vet drugs • Just finished the 10th Round of negotiations in Australia (March 2012) • Next Round in May – Dallas, TX
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 • 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 Ractopamine Trichinae testing Pathogen reduction treatment prohibition Plant approvals
Russia’s WTO Accession
Russia Political Situation
• Presidential election was on March 4, 2012 • Vladimir Putin returns as president
• Putin now faces a new political and economic environment.
Meat Exports to Russia U.S. Meat Exports to Russia, 2005-2011 (Quantity) 1,000,000 900,000
Metric Tons
800,000 700,000 600,000 500,000
Pork
400,000
Beef
300,000
Poultry
200,000 100,000 0
Year
Russia--SPS • 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
Russia Why 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 exports 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
China
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
Comparison of Production China $113 Feed cost in China: $61
USA $63
Dollars per Hundredweight
China 1.5
Net Chinese Pork Imports as a Percent of Chinese Pork Consumption
1 0.5
Percent
0 -0.5 -1 -1.5 -2 -2.5
Year
Why important to U.S. pork producers? Impact of Additional Chinese Imports of U.S. Pork on the US Economy Additional Imports as a Percent of Chinese Consumption Economic Indicators
One Quarter Percent
One Half Percent
One Percent
Five Percent
US Pork Export Value (Thousands Dollars)
267,173
534,346
1,068,693
5,343,463
US Pork Export Volume (Thousand Metric Tons - CWE)
125.13
250.25
500.50
2,502.50
Total U.S. Jobs Created
6,849
13,698
27,396
136,981
Direct U.S. Pork Industry Jobs Created
3,393
6,786
13,572
67,862
Share of U.S. Production (Percent)
1.24
2.49
4.98
24.90
Impact on U.S. Live Hog Prices ($/Head)
3.72
7.44
14.88
74.39
Thank you!
U.S. Pork Exports 2,250,000
2,100,000
Canada FTA
China WTO Accession
1,950,000 1,800,000
Metric Tons
1,650,000
NAFTA (Mexico)
1,500,000
Russia Pork TRQs U.S. -Taiwan Pork Deal
U.S. - Korea
1,350,000
1,200,000 1,050,000
WTO Uruguay Round (Japan & South Korea)
U.S. - Colombia
900,000
DR-CAFTA
750,000 600,000 450,000
Australia FTA
300,000 150,000
0
Year
Free Trade Agreements (FTAs)
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
Trans-Pacific Partnership (TPP)
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 • Freezing, testing carcass, processing
– PRRSv and PCv • Removal of bone, cooking, freezing
– Residue level differences for vet drugs • Just finished the 10th Round of negotiations in Australia (March 2012) • Next Round in May – Dallas, TX
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 • 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 Ractopamine Trichinae testing Pathogen reduction treatment prohibition Plant approvals
Russia’s WTO Accession
Russia Political Situation
• Presidential election was on March 4, 2012 • Vladimir Putin returns as president
• Putin now faces a new political and economic environment.
Meat Exports to Russia U.S. Meat Exports to Russia, 2005-2011 (Quantity) 1,000,000 900,000
Metric Tons
800,000 700,000 600,000 500,000
Pork
400,000
Beef
300,000
Poultry
200,000 100,000 0
Year
Russia--SPS • 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
Russia Why 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 exports 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
China
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
Comparison of Production China $113 Feed cost in China: $61
USA $63
Dollars per Hundredweight
China 1.5
Net Chinese Pork Imports as a Percent of Chinese Pork Consumption
1 0.5
Percent
0 -0.5 -1 -1.5 -2 -2.5
Year
Why important to U.S. pork producers? Impact of Additional Chinese Imports of U.S. Pork on the US Economy Additional Imports as a Percent of Chinese Consumption Economic Indicators
One Quarter Percent
One Half Percent
One Percent
Five Percent
US Pork Export Value (Thousands Dollars)
267,173
534,346
1,068,693
5,343,463
US Pork Export Volume (Thousand Metric Tons - CWE)
125.13
250.25
500.50
2,502.50
Total U.S. Jobs Created
6,849
13,698
27,396
136,981
Direct U.S. Pork Industry Jobs Created
3,393
6,786
13,572
67,862
Share of U.S. Production (Percent)
1.24
2.49
4.98
24.90
Impact on U.S. Live Hog Prices ($/Head)
3.72
7.44
14.88
74.39
Thank you!
